Structure of the SBAThe SBA is an independent agency that operates under the authority of the Small Business Act of 1953. The secretary of commerce delegates small business responsibilities to the SBA. The organization and management of the SBA consists of an administrator and deputy administrator, who are appointed by the president and approved by Congress; field office directors; and administrators for the various program areas. The SBA also has associate administrators for the following offices: Disaster Assistance; Field Operations; Public Communications, Marketing, and Customer Service; Congressional and Legislative Affairs; Equal Employment Opportunity and Civil Rights Compliance; Hearings and Appeals; and Management and Administration. There are also associate administrators for Investment; Small Business Development Centers; Surety Guarantees; regular Government Contracting; and Minority Enterprise Development. Assistant administrators handle International Trade; Native American Affairs; Veterans Affairs; Women's Business Ownership; and Size Standards, and Technology. There is an associate deputy administrator for Government Contracting and Minority Enterprise Development. These offices are then the backup and resource for over 68 field offices that administer the programs and monitor loans. The Inspector General Office audits and maintains the integrity of the loans and the SBA programs. What are Sba loan programs?The most visible elements of the administration are the loan programs it administers. The SBA itself does not grant loans with the exception of Disaster Relief Loans. Instead, the SBA guarantees against default certain portions of business loans made by banks and other lenders that conform to its guidelines. Disaster Relief Loans are issued directly from the SBA. 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 than normal commercial business loans. Also, a business can qualify for the loan even if the yearly payment would be the same as the previous year's profit, whereas most banks would want payment for a loan to be no more than two-thirds (2/3) of the prior year's profits for a business. The lower payments, longer terms and looser affordability calculations allow some businesses to borrow more money than they could otherwise.One of the most popular uses of Sba loans is for commercial mortgages on buildings occupied by a small business. These programs are chosen because most bank programs, while having similar payments and rates, require borrowers to refinance every five years.Types of Guaranteed Business Loans through SBA Lending institutions include:•Loan Guarantee Program: The 7 Loan Guarantee Program are designed to help small entrepreneurs start or expand their businesses. The program makes capital available to small businesses through bank and non-bank lending institutions.•504 Fixed Asset Financing Program: This program provides funding for purchasing land or construction. Of the total project costs, a lender must provide 50% of the financing, a Certified Development Company provides up to 40% of the financing through a 100% SBA guaranteed debenture, and the applicant provides approximately 10% of the financing.What is SBA Basic 7(a) Loan Program?7(a) loans are the most basic and most used type loan of SBA's business loan programs. Its name comes from section 7(a) of the Small Business Act, which authorizes the Agency to provide business loans to American small businesses. All 7(a) loans are provided by lenders who are called participants because they participate with SBA in the 7(a) program. Not all lenders choose to participate, but most American banks do. There are also some non-bank lenders who participate with SBA in the 7(a) program which expands the availability of lenders making loans under SBA guidelines. Remember Sba loans are only for owner occupied real estate refinancing and purchases.
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