The History of the Small Business Administration
A Home Business Article Contributed by Sharon Hill
The Start of the Small Business Administration
While the Small Business Administration was formally created in 1953, its predecessor agencies were founded in response to two crises - the Great Depression and World War II.
The initial predecessor was the Reconstruction Finance Corporation created in 1932 by President Herbert Hoover as a response to the financial crises of the Great Depression. Its basic premise was a federal loan program for small business. Franklin Roosevelt took over its administration with its presidency.
Subsequently, during World War II, smaller businesses suffered severe financial setbacks as large firms gained federal contracts to produce wartime-related products. It was then that the Smaller War Plants Corporation was created in 1942. The agency lent funds to entrepreneurs and advocated small business interests.
After the war, the SWPC was disbanded, but in the Small Business Act of 1953, Congress created the Small Business Administration, to aid, counsel and promote the success of small businesses. Its mission also included the commitment to secure a substantial portion of government contracts for small business firms.
In 1958, the Investment Company Act the Small Business Investment Company program under which the Small Business Administration licensed, regulated and helped provide funds for long term equity and debt investments to high risk ventures.
Small Business Administration Poverty Programs Begin
In 1964 the SBA created the Equal Opportunity Loan Program, which relaxed the credit and collateral requirements for applicants who lived below the poverty level. The purpose was to encourage the creation of new small businesses who had been unable to acquire financial backing even though the entrepreneurial concept was sound.
Small Business Administration Helps Millions
Almost 20 million small businesses have benefited from Small Business Administration assistance. The largest single financial backer of small U.S. businesses, the SBA currently provides over 200, 000 small businesses with nearly $50 million in loaned funds. on 2002 the SBA provided $1 billion dollars to small businesses for disaster recovery assistance and helped small businesses secure over forty billion in federal contracts.
SBA programs are varied, and included technical assistance, financial backing, contracting assistance, disaster recovery, and advocacy laws and regulations.
Its office of Entrepreneurial Development, for instance, offers several programs that include a teen entrepreneurial guide to owning a small business, Best Practices guidance in areas such as business growth counseling with the help of SCORE (Service Corps of Retired Executives), helping clients dress for success, partnerships with Community Development Corporations to reach targeted neighborhoods and communities, Spanish speaking counselors, and many other programs whose purpose is to assist in the economic success of small business.
The SBA community Small Business Development Centers provide management assistance to current and prospective small business owners. They provide information and guidance for business start up and expansion at centers that are easily accessible and centrally located. Each center has a Director, staff members, volunteers and part time personnel. Volunteers include retired business executives, members of trade and professional associations, educators, and Chamber of Commerce members.
The SBDC also uses paid consultants, testing laboratories and consulting engineers where the business type warrants it.
There are over 1100 small business development centers in the United STates.
