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INFOGRAPHIC: History of the Small Business Administration (SBA)

The SBA’s roots date back to the 1930s, when Herbert Hoover created the Reconstruction Finance Corporation to help businesses get out of the Great Depression. Here’s a look at the SBA and how it came to be:

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For almost 60 years, the Small Business Administration (SBA) has been helping businesses get their start by offering an array of services. More than 20 million businesses have received direct or indirect help from the SBA program.

Dating back to WWII, the SBA’s focus has been to make sure that small business can participate and stay competitive in the marketplace. Here’s a look at the SBA and how it came to be:

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History of the SBA

  • In 1932, the Reconstruction Finance Corporation (RFC) was created by President Herbert Hoover
  • In 1942 the Smaller War Plants Corporation (SWPC) was created by Congress
  • In 1952, the RFC was abolished.
  • In 1953, the Small Business Administration (SBA) was founded and established by Congress under the Small Business Act. The function was to “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns.”
  • In 1954, the SBA was making direct business loans and guaranteeing bank loans to small businesses.
  • In 1958, the Investment Company Act of 1958 established the Small Business Investment Company (SBIC) Program. It was SBA licensed and regulated and helped provide funds for privately owned and operated venture capital investment firms.
  • In 1964, the SBA created the Equal Opportunity Loans (EOL) Program. This relaxed credit and collateral requirements for applicants living below the poverty line.
  • In 1976, the Office of Advocacy was created to protect SBA programs and small businesses within the Federal Government.
  • In 1996, the House tried to eliminate the SBA
  • In 2000, despite threats, the SBA survived and received high budgets
  • In 2004m, SBA expenditures were frozen
  • In 2009, the Obama Administration supported SBA budgets and strengthened it through the American Recovery and Reinvestment Act of 2009
  • In 2010, the SBA budgets were further strengthened by the Small Business Jobs Act of 2010
  • In 2011, Obama announced that the SBA will double its current rate in rural small businesses to $350 million in the next 5 years
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About the Author

  • Dan Bischoff

Comments

  1. This is a load of propoganda – the federal government isn’t supporting small business, it’s cutting them off. The proposed SBA budget stands at $985 million for 2012 — down from the $1.8 billion the SBA received in 2010, a total that was fueled in large part by $962 million in supplemental stimulus appropriations that were designed to help boost small-business loans. Those appropriations are no longer available for 2012. Other areas slated for budget cuts include Small Business Development Centers, which provide support and mentoring to entrepreneurs, and administrative costs, including a $7 million drop in salaries and expenses.

    • Good information, Douglas. The intent of it was to show the timeline and history of the SBA, not as much to show its effectiveness (or lack thereof). From most feedback and comments about the SBA we’ve seen, I think a lot of people agree with you.

  2. An appropriate historical representation of the SBA would show that at its origin there was significant disagreement with the size of businesses the politicians ended up defining as “small”. 500 employees is not a small business and that condemned the SBA to the trash heap of irrelevance from the day it was born.

    With that in mind, it’s not 99.7% of businesses defined as small, which would be absurd enough, but 99.98%. There are 27.3 million businesses and only 6,060 are bigger than 500 employees – do the math.

    The other stat that would show the proper historical perspective on the SBA is the percentage of small business loans the SBA actually delivers, which is less than 2.5%. That is almost a statistically irrelevant percentage. When you show those loan amounts on your graph, it gives the appearance these are all backed by the SBA.

    The SBA should be eliminated, simply because it’s never represented small business. That lack of representation should show up clearly in any historical view of the SBA.

  3. A small business is defined as having LESS than 500 employees – or did I miss something?