Small Business Administration: A Primer on Programs Page: 6 of 24
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Small Business Administration: A Primer on Programs
As a general principle and following its statutory mandate, the SBA is willing to accept a higher
level of default risk than other lenders will (through its loan guarantees), but there is a limit to the
amount of risk it is willing to accept. Although the SBA does not make direct loans (except in the
case of disasters), it may be responsible for covering up to 90% of loan guarantees in case of loan
defaults. To manage risk, it seeks collateral and examines the borrower's ability to repay a loan.
For example, loans and loan guarantees of more than $10,000 usually require collateral. Personal
guarantees are required if the collateral is considered insufficient by the lender or the SBA. In
short, these are loans that must be repaid, not grants that are not repaid.
The SBA's FY2012 budget justification includes funding for the following programs and offices:
1. disaster loan program;
2. business loan guarantee programs (7(a) program, 504 Certified Development
Company program, microloans and Small Business Investment Company loans);
3. government contracting and business development programs (some of which are
limited to businesses owned by socially and economically disadvantaged
4. capital access programs (international trade programs, new market venture
capital programs, and surety bond programs);
5. entrepreneurial development programs (including Women's Business Ownership,
and Small Business Development Centers);
6. SBA Office of the Inspector General (OIG);
7. executive direction programs (advocacy, National Women's Business Council,
Ombudsman, and veteran's business development); and
8. a residual category, including regional and district office programs, and
Figure 1 shows the SBA's budget classified into these previously mentioned programs and
Congressional Research Service
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Small Business Administration: A Primer on Programs, report, June 22, 2011; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc805667/m1/6/: accessed April 26, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.