Small Business Administration

As you research the ideas you have for your home business, consider using the Small Business Administration resources.

Specifically, make sure you know the laws and regulations in your area.

For example, when I started building one of my home businesses I discovered, by way of the Small Business Administration, that the city in which I lived required all business owners to have a business license.

I also found out that I needed a seller’s permit and had to charge sales tax for the products I was selling. I further learned I was able to choose the frequency at which I submited my sales tax to the government – I chose quarterly versus monthly or annually.

Don’t worry – you’ll be guided through the maze of government rules and regulations. The Small Business Administration (SBA) helps you do this with their business.gov site. From this site you can even access information by region.

But, what exactly is the SBA? A little history might help:

    A Brief History of the Small Business Administration:

  • July 30, 1953 - the United States Congress passes the Small Business Act, establishing the Small Business Administration.

  • The SBA’s function is to "aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns."

  • In addition, the SBA is to ensure a "fair proportion" of government contracts and sales of surplus property to small business. This is accomplished primarily through the Small Business Innovative Research program and government "set-asides."

  • The SBA also makes loans directly to businesses and acts as a guarantor on bank loans.

  • The SBA has directly or indirectly helped nearly 20 million businesses and currently holds a portfolio of roughly 219,000 loans worth more than $45 billion making it the largest single financial backer of businesses in the United States.

  • The SBA has survived a number of threats to its existence. In 1996 the then newly Republican-controlled House of Representatives planned to eliminate the agency. It survived and went on to receive a record high budget in 2000. Renewed efforts by the Bush Administration to end the SBA loan program have met congressional resistance, although the SBA's budget has been repeatedly cut and in 2004 certain expenditures were frozen.

    What about those loans? The most visible aspect of the Small Business Administration is the loan programs it administers.

    How do the Small Business Administration loan programs work? Let’s break the answer to this question down into a few pieces:

      Small Business Administration Loans

    1. The administration guarantees against default certain portions of business loans made by banks that conform to its guidelines.

    2. Contrary to popular belief, these programs are not generally for persons with bad credit who can't get bank loans, nor are they primarily used for startup funding, rather the primary use of the programs are to make loans for longer repayment periods and with looser affordability requirements then normal bank loans.

    For example, the 7(a) program has a maximum repayment period of 7 years whereas most similar bank loans would have a maximum period of 5 years.

    3. A business can qualify for the loan even if the yearly payment would be the same as the previous years profit, whereas most banks would want payment for a loan to be no more then 2/3rds of the prior years profits for a business.

    4. The lower payments because of longer terms, combined with the looser affordability calculations, can allow businesses to borrow more money then they could otherwise.

    5. One of the most popular uses of Small Business Association loans is for commercial mortgages on buildings occupied by a small business. These programs are attractive to some business owners because most bank programs, while having similar payments and rates, require borrowers to refinance every five years.

    So, if you’re looking for capital to start your home business the Small Business Administration may or may not be a place to look.

    If you’re looking for capital to help you grow an already existing home business, the Small Business Administration may be of some help to you.

    Still looking for more information? There are additional resources provided by several organizations related to the Small Business Administration:

  • On the State Technical Assistance Programs site, each state listed operates a small business assistance program that might be able to help you. Select a state for more information.

  • SCORE is a Resource Partner with the Small Business Administration. SCORE's 1,200 email counselors are ready to assist you. Counseling is:

    Confidential—Counselors abide by a code of ethics and honor confidentiality.

    Fast—Ask questions 24/7; get answers in 48 hours. Receive advice straight to your email.

    Free—Offered free-of-charge, as a public service.

    Available to all U.S. citizens & green card holders.

    Still not finding what you need? Let me know. I am here to help.


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