The Small Business Administration is the federal agency that helps the country’s 30 million small businesses. It offers financial assistance programs and advocates for business owners in state and local governments.
One of SBA’s priority goals is to expand access to capital for small businesses. Another is maximizing the amount of federal prime contracting dollars going to small businesses.
Loans
The Small Business Administration offers loans for a variety of purposes. These include start-up, expansion and acquisition. The agency also provides insurance to protect the investment of small businesses.
The maximum interest rate for SBA loans over $50,000 is WSJ prime plus 2.75%. This is significantly lower than the average bank loan rate. The agency also provides loans to disaster survivors.
In addition to these programs, the Small Business Administration offers a number of other services. This includes counseling and advocating for small business owners at the local, state and federal level.
In order to receive a loan from the Small Business Administration, you must have been in business for two years and have a business plan. You must also provide personal guarantees. The 8(a) Program opens the door for disadvantaged firms to grow and create jobs. This program is reported to have a 23% return rate for Black-owned firms. In addition, it awards 5% of government contracts to these firms.
Contracts
Small business contracts are a key part of the federal government’s effort to support the economy. The government tries to award 23 percent of its prime contract dollars, about $100 billion, to small businesses. In some cases, these contracts are set aside entirely for small businesses or reserved for specific types of companies such as HUBZone-certified companies.
In addition, the 8(a) Business Development program opens up contracts to socially and economically disadvantaged companies for a period of nine years. The government also offers contracting opportunities to women-owned and service-disabled veteran-owned businesses.
The Biden-Harris administration has established a goal to increase the number of contracts awarded to disadvantaged businesses to 15% by 2025. The agency is working to achieve this goal by improving contract data and streamlining the process of certifying small businesses. The federal government is implementing new disaggregated procurement data that allows for a more refined examination of issues related to contract equity. The new data also allows for a more detailed comparison of how different groups are faring in the government contracting arena.
Advocacy
The federal government has a statutory goal of giving 23% of contracting dollars to small businesses, and the SBA helps connect these companies with government opportunities. The office also focuses on financial assistance and loan guarantees for people who want to start and run their own business.
It conducts economic research and policy analysis to identify issues of concern to small business owners, and advocates on their behalf at the national and local levels. The Office of Advocacy is an independent agency within the SBA and is headed by a Chief Counsel for Advocacy, who is nominated by the president and confirmed by the Senate.
It is the only office in the federal government to be designated as an official ombudsman for small business and operates the National Ombudsman Program, which offers resources such as free speakers for small businesses, chambers of commerce, schools, colleges and trade associations. The office also provides information on the Regulatory Flexibility Act and other federal laws that help protect against overly burdensome regulations.
Research
The Small Business Innovation Research (SBIR) program stimulates technological innovation in the United States by investing federal R&D funds into innovative high-tech small businesses. SBIR provides small businesses with the funding needed to explore their technological potential and gives them an incentive to profit from commercialization of that technology.
Ten years after the passage of SBIR, Congress created the Small Business Technology Transfer (STTR) program to increase opportunities for small businesses in the federal R&D arena. STTR requires federal agencies with extramural R&D budgets of $100 million or more to reserve a percentage of their programs for small businesses that conduct research and development in cooperation with non-profit scientific and educational research institutions.
The Office of Naval Research (ONR) promotes opportunities for small disadvantaged business, woman-owned, veteran-owned and service-disabled veterans-owned businesses, Historically Underutilized Businesses (HUBZone), and Historically Black Colleges and Universities/Minority Institutions to participate as prime contractors and subcontractors in the acquisition of research, technology and equipment from ONR. It also facilitates achievement of the ONR Small Business Program targets.