Small Business Administration Definition

When an entrepreneur starts a new business, they might need support in a variety of ways. This could include support for day-to-day operations, legal support, financial support, or new business opportunities. There are many ways new business owners can search for business resources and lenders willing to provide start-up money. The Small Business Administration (SBA) is a popular resource for many new companies.

This guide explores what the Small Business Administration is, its advantages, its disadvantages, and more.

What is the Small Business Administration?

The Small Business Administration, by definition, is a federal government agency that provides certain resources to small businesses. These resources include: 

• Financing options
• Business counseling
• Help with getting government contracts

A new small business owner might have to meet certain eligibility requirements to take advantage of the Small Business Administration’s services.

Help with financing

There’s only one type of loan that the SBA makes directly to small businesses: a loan to help with disaster recovery. Otherwise, the SBA matches businesses with different kinds of lenders. The SBA can help match entrepreneurs with lenders that provide:

• 7(a) loans (up to $5 million)
• 504 loans (for buying or fixing certain real or personal property)
• Microloans (up to $50,000)

But even with the SBA’s lender-matching help, it’s important to speak to legal and financial experts before taking on a loan. 

Help with Finding Counseling

The SBA can help some businesses find counseling through SBA-partnering experts and organizations. 

Help with Getting Government Contracts

If a business owner is prepared to take on the responsibility, running a business by getting and fulfilling government contracts can be very lucrative. Recently, the federal government spent over $600 billion on government contracts in only one year. The SBA can help businesses find federal government contracts and secure them.

What are the Small Business Administration’s advantages?

If an entrepreneur is new to the business world, they might not know who to talk to about financing and business opportunities. Using the Small Business Administration can benefit an entrepreneur by helping them find lenders, counseling, and contracts to build capital and bring in revenue.

What are the Small Business Administration’s disadvantages? 

Sometimes the SBA can be more exclusive with its services than other private entities that offer similar benefits. The Small Business Administration might deny services to a new company if:

• The business is too big
• The business receives funding from other sources
• The business owner doesn’t have a certain immigration status
• The business doesn’t have the right purpose

This is only a handful of eligibility issues an entrepreneur might encounter when using the SBA for services. These same eligibility issues could pop up when using other services, but there are some resource services that can be more flexible with the characteristics of a business.

Summary

The Small Business Administration is a federal agency put in place to help small businesses get off the ground. If a small business fits the criteria, it can get help from the SBA to find financing, government contracts, and business counseling. 

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To use many SBA resources, an entrepreneur needs to have an officially registered and fully operating business. ZenBusiness can help with that! Their large catalog of business formation services can help an entrepreneur easily register a new business in their state and keep it running smoothly. ZenBusiness can help entrepreneurs get started, handle their money, and stay legally compliant from start to finish.