Small Business Administration History
The history of The Small Business Administration (SBA) dates back to 1953. It was created as a replacement for Reconstruction Finance Corporation (RFC), an independent US government agency whose primary objective had been dealing with the depression. The RFC had come under intense criticism from people in the banking sector because it would take the best loan assets of the bank as collateral.
While the RFC helped provide liquidity, most people in the banking sector felt the price banks were being made to pay was way too steep. Instead of simply disbanding the RFC, the then President Eisenhower decided to create a smaller body to help small businesses with their financial needs.
The SBA was created as an independent US government agency tasked with providing support to small business owners and entrepreneurs. The government of the day hoped the SBA would help maintain the US economy by helping entrepreneurs set up small businesses.
Why the SBA was started
After the RFC was dissolved, President Eisenhower saw the need to help small businesses survive the tough economic climate that the Great Depression had created across the nation. Through an act of Congress, the SBA came into existence. On July 30 in 1953, President Eisenhower signed into law the Small Business Act.
The Small Business Administration was expected to encourage banks and other private lenders to agree to lend money to small business owners and aspiring entrepreneurs. It would achieve this by offering government loan guarantees. From inception, the SBA was also mandated to offer direct loans to people who had been hit by a disaster, thereby helping them through their journey to recovery. In addition, the SBA was also intended to help small businesses get government contracts that were, until then, largely a reserve of big businesses.
Positive Outcomes of the SBA
At the present, the SBA's primary function is to guarantee loans for small business owners from banks and other private lenders. Through these guarantees, small businesses can get access to credit to buy business property, build facilities and even run operations. Without this help from the SBA, many small businesses would be forced to operate under extremely unfavorable terms to get credit from private lenders. Other small business owners and entrepreneurs would never get financing from these lenders without the helping hand of the SBA.
There have been several attempts to dissolve the SBA in the past. Back in 1996, a plan by the Republicans in the House of Representatives to do away with the agency almost succeeded. During the Bush Administration, government officials tried to end the program. However, the plan was opposed by Congress. Though it survived, its budget was significantly and severely cut. The Obama Administration has, however, supported the SBA. Some of the concerns presented by the proponents of the campaign to eliminate the SBA include allegations that some of its loan money has funded businesses of the rich as well as an apparent failure by the agency to clearly explain the positive impacts the program has had on the economy.
The SBA considered successful overall
The Small Business Administration continues to help small businesses and small business owners. It also does special outreach to minority groups, women and even veterans from the US armed forces. As a small business owner or an aspiring entrepreneur, the SBA can give you specialized advice or assistance in getting into trade beyond the US borders. The SBA has succeeded in helping many small business owners get access to finances to boost their businesses. While there have been concerns and even push for it to be closed down, there is no denying that many small businesses are still standing because the SBA helped their owners get the financial help that they needed to take the business into profitability.
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