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Small Business Administration (SBA): Definition & Overview

Updated: February 27, 2023

The Small Business Administration (SBA) is a government agency in the United States. It began in 1953 as a means to improve the economy by helping small business owners. The SBA counsels people who want to start small businesses. They also work with existing small businesses to fuel growth. 

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    • Established in 1953, the SBA helps small business owners with a range of services. 
    • The Senate confirms an administrator and deputy administrator to lead the SBA.
    • Resources include raising capital, entrepreneur education, government contracting, and small business advocacy. 
    • The loan guarantee program is among the SBA’s most popular resources. 

    What Does the Small Business Administration Do? 

    The SBA has a website with tools and resources for small businesses. There are SBA offices strategically located around the U.S. They offer one-on-one services to small business owners in person. It has a strong focus on startup businesses and promoting growth. The resources available to small business owners include:

    • Raising capital – They offer financing to small business owners who don’t qualify for traditional financing. Microlending and small loans are great ways to raise capital. 
    • Counseling and education – These resources help small business owners learn how to manage their businesses. The services are free or low-cost. 
    • Contracting – The U.S. government sets aside 23% of government contracting opportunities for small businesses. Other federal departments and agencies participate in this program, too.
    • Advocating – The SBA team reviews upcoming legislation to make sure it aligns with SBA priorities. 
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    SBA Offices

    • Office of management and budget
    • Government accountability office
    • Office of women’s business ownership
    • Office of veteran business development
    • Congressional research service office

    Business Counseling

    The SBA counsels entrepreneurs on a variety of topics, including:

    • Federal Contracts: Procurement center representatives (PCRs) assist small business owners with winning federal business contracts. They often help ahead of contract announcements. This allows small business owners to prepare their bids and applications in advance. PCRs help conduct market research, address payment issues, and counsel on the contract processes.
    • Subcontracting program assistance (SPA): If an entrepreneur wins a contract, the SBA also offers mentoring services to answer your questions about the contract. They can help you narrow your reach to match with contractors that are the best fit for your business.
    • Online learning: In addition to one-on-one help, entrepreneurs also have access to the learning center. There are resources, courses, and videos that you can access at your leisure.
    • Procurement technical assistance centers (PTACs): These team members help you to win government contracting dollars set aside for small business owners. If your company isn’t prepared to apply for government contracts, they can help you through business training services. When you do apply for a government contract, you can do so with confidence.
    • SCORE: This nonprofit association employs thousands of people who volunteer to counsel entrepreneurs. You can access workshops, in-person counseling, or online resources.
    • Small business development centers (SBDCs): These offices are in each state. They offer in-person assistance with SBA resources. 
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    Assistance Writing a Startup Business Plan

    The SBA offers two types of business plan templates. The first is a startup plan. The format is simpler and is best for entrepreneurs looking to get their business off the ground quickly. The SBA offers tips for your outline in addition to template samples. Items you should include in a startup business plan include:

    • Key Partnerships: Highlight other businesses or people you plan to work with. This may include your business partners, suppliers, and subcontractors.
    • Activities That Set You Apart: How does your business stand out from the competition? What makes your product or service unique in the industry? 
    • Key Resources: This is similar to your business activities. You want to outline how your resources add value for customers. This is especially important for underserved or minority markets like women, veterans, and Native Americans. 
    • Value Proposition: This should be a succinct statement that sums up your business’s unique value. 
    • Customer Segments: Know who your customers are. You can’t appeal to everyone, so you have to know who your niche audience is. 
    • Customer Relationships: Outline how you envision customer relationships playing out. It helps to identify your target demographic and understand their personal motivations. Your relationship outline should begin with identifying and attracting potential customers. Then follow the customer journey through acquisition and retention. 
    • Communication Channels: How do you plan to talk to your customers? Consider marketing, retargeting, feedback, customer service, etc. 
    • Pricing Structure: It’s important to outline the cost of your product or service. You also need to explain your profit margin and how you offer value at this price point. You can use this as an opportunity to outline your significant costs and ideas for reducing expenses. 
    • Revenue Streams: Your revenue may come from a variety of spaces. You can offer direct sales, memberships, packages, and even bulk sales. 

    Assistance Writing a Traditional Business Plan

    If you want to write a more traditional business plan, you’ll need to include more details. In addition to items in a startup plan, you also want to utilize: 

    • Executive Summary: This should include your mission, vision, and values. It’s a high-level overview of your company. You may highlight executive leaders and high-level financials.
    • Business Description: Now it’s time to get into the more specific details. Dig deep to define the problem your business solves for customers. Be as specific as you can about your solution and how you plan to achieve your goals. Play up your strength and back up each statement with proof. 
    • Market Analysis: This is where you want to show future investors and partners that you’ve done your homework. You understand your niche industry. More importantly, you know your competitors and their strengths. This awareness helps you set the stage for how your business stands apart from others. 
    • Organization and Leadership: Outline your leadership structure. If your growth plan includes adding employees, show what that looks like over five, ten, or even twenty years. Sketch an organizational chart that outlines individual responsibilities. 
    • Product or Service: This is where you get into the details of your product or service. If you have filed patents or copyrights, include them here. If you have research that backs up your unique product or service, share those details here. 
    • Marketing and Sales: You may be tempted to focus on the marketing channels and sales strategies. Instead, cover these three important points: How will you attract customers? How will you close a sale? How will you retain customers? 
    • Request Funding: If the goal of your business plan is to raise capital, explain that here. Provide specific funding amounts and what they go toward. How will these funds fuel growth? What are your projections for the future if you receive these funds? Remember to include the next steps for maintaining funds for your business. 
    • Financial Projections: You want to show a future of stability, but don’t oversell it. Venture capitalists and other investors understand finances. You want to be realistic about your business plans. 
    • Appendix: If you have any supporting documents, organize them here. Examples include past financial records, resumes, licenses, patents, and contracts. 

    Help Applying for Loans

    Loans are the most popular SBA program. The only direct loans are types of disaster loans. Otherwise, loans funnel through banks and other lenders. The SBA guarantees the loans to protect those lenders so they fund small business owners. Many of the loans have longer repayment terms. 

    Guaranteed SBA loans for small business owners include:

    • CAPLines loans
    • Disaster relief loans
    • Express loans
    • Export loans
    • Microloans

    Some are forgivable loans, although most you have to pay the loan balance in full. Most are long-term, low-interest loans. The maximum loan amount may vary based on your financial history. They go through bank and non-bank lending institutions. The goal is to help you get your business off the ground without too much financial pressure. Other types of SBA loans include:

    • Forgivable loans
    • Minority loans
    • Black loans


    The SBA offers rich resources for entrepreneurs and small business owners. If you’re not sure where to begin, they can help with that, too. A core service offering is making access to loans easier. They also offer advocacy services and business contracting programs. They help thousands of people each year create thriving small businesses.

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    FAQs About SBA

    Who runs the Small Business Administration?

    The SBA has an administrator and deputy administrator. They work together to lead the organization and report to the inspector general. 

    Does the SBA have local offices?

    Yes. There is at least one local SBA office in each state. 

    Do you have to have good credit for an SBA loan?

    Sometimes. If you’re a sole proprietor, loans depend on your personal credit. Business loans for other small businesses depend on the health of your business and not your personal credit. 

    Does the SBA have a business development program?

    Yes. The program includes access to capital, counseling services, and education.

    Do you have to pay back SBA loans?

    Most of the time, yes. There are unique circumstances where they forgive loans. Most loans require repayment.


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