SBA has at least one office in each U.S. state. In addition, the
agency provides grants to support counseling partners, including approximately
900 Small Business Development Centers (often located at colleges and
universities), 110 Women's Business Centers, and SCORE, a volunteer mentor
corps of retired and experienced business leaders with approximately 350
chapters.
These counseling services provide services to over 1 million
entrepreneurs and small business owners annually. President Obama announced in
January 2012 that he would elevate the SBA into the Cabinet, a position it last
held during the Clinton administration, thus making the Administrator of the
Small Business Administration a cabinet-level position.
It’s not
necessary to have all the answers, said Ms. Contreras-Sweet, head of the Small
Business Administration. A leader’s job is to create an empowering environment
where the best ideas can surface.
WBCs are
designed to assist women in starting and growing small businesses, though their
services are available to all. WBCs help women succeed in business by providing
training, mentoring, business development, and financing opportunities to over
100,000 women entrepreneurs annually across the nation. Women’s Business
Centers are mandated to serve a significant number of socially and economically
disadvantaged individuals.
SCORE’s
core service offering is its mentoring program, through which volunteer mentors
(all experienced in entrepreneurship and related areas of expertise) provide
free counsel to small business clients. Mentors, operating out of 300 chapters
nationwide, work with their clients to address issues related to starting and
growing a business, including writing business plans, developing products,
conceiving marketing strategies, hiring staff, and more. Clients access their
mentors via free, ongoing face-to-face mentoring sessions or through email or
video mentoring services.
If a
business with a Disaster Relief Loan defaults on the loan, and the business is
closed, the SBA will pursue the business owner to liquidate all personal
assets, to satisfy an outstanding balance. The IRS will withhold any tax refund
expected by the former business owner and apply the amount toward the loan
balance.
SBA loans
are made through banks, credit unions and other lenders who partner with the
SBA. The SBA provides a government-backed guarantee on part of the loan. Under
the Recovery Act and the Small Business Jobs Act, SBA loans were enhanced to
provide up to a 90 percent guarantee in order to strengthen access to capital
for small businesses after credit froze in 2008. The agency had record lending
volumes in late 2010.
The Cato
Institute has challenged the justification of the federal government in
intervening in credit markets. Among other criticisms, Cato argues that
"the SBA benefits a relatively tiny number of small businesses at the
expense of the vast majority of small business that do not receive government
assistance. SBA subsidies also represent a form of corporate welfare for the
banking industry." Cato notes that the failure rate of all SBA loans from
2001 to 2010 is 19.4%, contributing to a cost to taxpayers of $6.2 billion in
2011.
Business
Briefing House Approves Expansion of S.B.A. Loan Program A popular
government-backed small-business lending program, suspended last week after
reaching its limit for the year, is on the verge of restarting.
SBA
programs and services support you, the small business person. Learn about
SBA-backed loans, government contracting opportunities, disaster assistance,
and training programs to help your business succeed.
Businesses
are also eligible for long-term, low-interest loans to recover from declared
disasters. Similar to the homeowner's loan program mentioned above, small
business owners pledge any available assets and acquire a similar pledge from a
spouse or partner in the case of shared assets. If defaulting on the debt, the
spouse or partner must surrender their value in the assets. The total value of
an applicant’s assets is not considered by the SBA; therefore, a company may be
approved for a loan regardless of whether that entity has little or substantial
net worth.
The
primary use of the programs is to make loans for longer repayment periods based
in part upon looser underwriting criteria than normal commercial business
loans, though these programs can enable owners with bad credit to receive a
loan. A business can qualify for the loan even if the yearly payment
approximates previous year's profit. Most banks want annual payment for loans
no more than two-thirds (2/3) of prior year's operating profits. Lower
payments, longer terms and loosened criteria allow some businesses to borrow
more money than otherwise.
Research
conducted by the Association of Women’s Business Centers indicates that 64% of
WBC clients in 2012 were low-income, 39% were persons of color, and 70% were
nascent businesses. WBC services are provided in more than 35 languages, with
64% of WBCs providing services in two or more languages. In addition to
business training services, 68% of WBCs provide mentoring services, and 45%
provide microloans.
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