Small Business Administration Background and Steps to get Certification
Small Business Administration Background
The Small Business Administration(SBA) was established in 1953. Since that time the agency has dispensed huge amounts of money in loans and loan guarantees, contracts, consulting assistance and other programs for business across the United States.
The seeds of the formation of the SBA were sown within the challenges of the Great Depression and World War I and grew due to numerous predecessor organizations.
Earlier Small Business Administration Agencies
In 1932 Herbert Hoover instituted the Reconstruction Finance Corporation. The agency sought to ameliorate the consequences of the Great Depression.It sought to achieve this through the establishment of a loan program to support businesses adversely effected by the Great Depression. It had been adopted as the personal project of Hoover's successor, President Franklin D. Roosevelt.
The need to assist small business intensified with the onset of World War II, when they were placed at a competitive disadvantage vis-a-vis larger concerns. The Smaller business War Plants Corporation was formed in 1942 to help with minor businesses, enhance their financial strength and enable them to more fully take part in the war effort. The Smaller War Plants Corporation accomplished this through providing loans directly to private entrepreneurs, providing incentives to large financial institutions to increase lending to small enterprises and acting as an advocate for small business in the federal procurement process.
After the war the SWPC was absorbed into the Reconstruction Finance Corporation. In addition to the services offered by the RFC the Commerce Department also had an Office of Small Business. The charter of the Office of Small Business was primarily educational, predicated on the stance that the lack of success of many business was insufficient access to information of operating a business and business skills. The Office focused its offerings on pamphlets and management consulting to individual entrepreneurs.
Through the Korean War the Congress created yet one more agency focusing on small business, the Small Defense Plants Administration. It carried a portfolio just like its predecessor Smaller War Plants Corporation with the exception that small business lending authority remained with the Reconstruction Finance Corporation. The Small Defense Plants Administration performed initial screening and provided counseling services to small businesses and provided certification that they were qualified to receive government contracts. The businesses then entered the loan process of the Reconstruction Finance Corporation.
The Founding of Small Business Administration
To streamline government support for minor business President Eisenhower proposed the organization of the Small Business Administration and it was developed by Congress in July 1953." The charter also stipulated that SBA would ensure minor businesses a "fair proportion" of government contracts and sales of surplus property.
Initially the SBA concentrated on providing direct loans to small businesses, guaranteeing bank loans and making loans to victims of natural disasters. The Administration also provided help to small businesses to obtain government contracts and provided management consulting and technical assistance.
The Investment Company Act of 1958 established the Small Business Investment Company (SBIC) Program, under which SBA licensed, regulated and helped provide funds for privately operated and operated venture capital investment firms. They specialized in providing long-term debt and equity investments to high-risk minor businesses. Its creation emerged as the result of a Federal Reserve study that discovered, in the basic form, that these businesses cannot get the credit they needed to keep pace with technological advancement.
In 1964 the SBA expanded its portfolio to join the War on Poverty, with the Equal Opportunity Loan Program (EOL). The Equal Opportunity Loan Program presented citizens living below the poverty level with the chance to receive credit with reduced collateral and application requirements. This enabled businesses with sound employment opportunities to obtain the financing that they needed to pursue them.
Small Business Administration Today
The breadth and scope of programs offered by the SBA has never been more extensive than it is today. The SBA helps and is an advocate for all U.S. businesses in every enterprise category and every State and Territory. Whether its providing procurement assistance for federal contracts, management consulting, or outreach to women, minorities and veterans, the SBA is an able partner. SBA also provides loans to victims of disasters and specialized advice and assistance in international trade.
Michael Saunders is an editor of TopGovernmentGrants. He maintains Websites providing resources on small business grants and artist grants.
Small Business Administration Certification Programs
There are two great assistance programs available to small business owners through the U.S. Small Business Administration (SBA) that could help give your business the boost it needs during tough economic times. The assistance programs, the small disadvantaged business (SDB) certification program and the 8 (a) business development program, can be an asset to any type of business, regardless of length of operation. In addition to increased funding and training, becoming classified as an SDB or 8 (a) business can substantially increase your chances of receiving government grants or federal and state contracts.
Steps to get Certification
The first step in becoming certified is to understand what a small business is, and then you must know the difference between each certification/classification. According to the SBA, a small business is defined as an independent business having fewer than 500 employees, although the definition used for government programs and contracting varies by industry. If you qualify as a small business, in order to receive SDB or 8 (a) certification, the owner of the business must be economically and socially disadvantaged. However, the key difference between the two classifications is the owner's personal net worth (I'll talk about this more later).
In order to be considered socially disadvantaged, the owner must "have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group," according to the SBA. Typically small business owners who are Hispanic, Native American, Asian or African American meet this requirement. There is also a broad statement saying that "other individuals can qualify if they show by a preponderance of the evidence that they are disadvantaged." Due to this rather ambiguous language, many women small business owners can be considered socially disadvantaged as well if they can prove that they have been a victim of long-term gender-based discrimination. For example, if a woman faced discrimination from professors and administrators at a military college due to the fact that she went to a predominately male school, she could claim that the discrimination hindered her ability to form a business later in life. Women who have previously filed sex discrimination cases are more likely to be able to qualify as socially disadvantaged. Contrary to popular belief, White males are also not excluded from the "socially disadvantaged" group. If a White male has a disability or is handicapped in any way, there is a possibility he could qualify as socially disadvantaged. Those suffering from mental health issues, such as depression, or those who may feel as though they are socially disadvantaged due to religious preference could qualify, but must prove that they were discriminated against solely for those reasons.
Now that you know whether you would be considered a socially disadvantaged individual, you must figure out if you can also classify as an economically disadvantaged individual. This is where the difference between SDB certification and 8 (a) business certification comes into play. Small business owners can qualify for SDB certification if their personal assets are worth less than $750,000. If a small business owner's personal assets do not exceed $250,000, he or she can qualify for the 8 (a) business development program. Please note: The SBA does not consider home equity as a personal asset. If a business is classified as an 8 (a) business, it is automatically SDB certified. However, all SDB businesses are not 8 (a) businesses due to the personal asset qualifier.
If you believe you qualify for either the SDB or 8 (a) SBA programs-or both-do not hesitate to apply to the programs. For more information, visit http://www.sba.gov.
J. Mariah Brown is the owner and editor-in-chief of Writings by Design, LLC. To learn more about how Writings by Design can help your business apply for funding or certification programs, or connect with customers, clients and other key stakeholders, please visit us at [http://www.writingsbydesign.com], email your question to inquiry@writingsbydesign.com or call us at (866) 937-2361.
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