What is the SBA?

What is the Small Business Administration?

The Small Business Administration (SBA) is a United States government agency established in 1953. Its primary mission is to support small businesses by providing loan guarantees, counseling services, and contracting opportunities.

The SBA does not directly lend money to most borrowers. Instead, it sets guidelines for loans made by partner lenders (banks, credit unions, and other financial institutions) and guarantees a portion of the loan. This guarantee reduces risk for lenders, theoretically making them more willing to approve loans for small businesses.

What the SBA Actually Does

• Loan Guarantees: Backs loans made by approved lenders, reducing their risk
• Disaster Loans: Provides direct loans to businesses affected by declared disasters
• Counseling: Offers free business counseling through SCORE, SBDCs, and WBCs
• Contracting: Helps small businesses compete for federal contracts
• Advocacy: Represents small business interests within the federal government

SBA Loan Programs Explained

The SBA administers several loan programs, each designed for different purposes. Understanding which program applies to your situation is critical before applying.

COVID-19 Emergency Programs (2020-2023)

During the COVID-19 pandemic, the SBA administered two major emergency programs:

• Paycheck Protection Program (PPP): Forgivable loans to help businesses keep employees on payroll. The program distributed approximately $800 billion across two rounds.
• Economic Injury Disaster Loans (EIDL): Low-interest loans for businesses suffering economic injury from the pandemic. The program provided over $400 billion in direct loans.

How the Application Process Works

The SBA loan application process varies by program type, but generally follows these steps:

For 7(a) and 504 Loans (Bank-Mediated)

1. Find an SBA-approved lender: Not all banks participate in SBA programs. You must work with an approved lender.
2. Submit application to the lender: Provide business plan, financial statements, tax returns, and personal financial information.
3. Lender underwrites the loan: The bank evaluates your creditworthiness and business viability.
4. Lender submits to SBA: If approved by the bank, your application goes to the SBA for guarantee approval.
5. SBA reviews and decides: The SBA reviews the application and either approves, denies, or requests more information.
6. Closing and disbursement: If approved, you close the loan and receive funds.

For Disaster Loans (Direct from SBA)

1. Disaster declaration: A disaster must be declared by the President or SBA Administrator.
2. Apply online or by mail: Submit application directly to the SBA.
3. SBA processes application: A loan officer reviews your application and may request additional documentation.
4. Verification: The SBA may verify your information and losses.
5. Loan decision: The SBA approves, declines, or modifies your loan request.
6. Closing and disbursement: If approved, sign loan documents and receive funds.

Common Problems and Delays

Many borrowers experience significant challenges when dealing with the SBA. Understanding these common issues can help you navigate the process more effectively.

Application Processing Delays

During periods of high volume (such as after disasters or during COVID-19), the SBA's processing capacity is often overwhelmed. Applications that should take weeks can take months. Communication from the agency may be limited or nonexistent.

Documentation Requests

The SBA may request additional documentation multiple times, sometimes asking for the same documents repeatedly. Each request can reset processing timelines.

Portal and Technology Issues

The SBA's online portals have experienced significant technical problems, including crashes during high-demand periods, lost applications, and interface errors that prevent borrowers from completing required steps.

Communication Problems

Borrowers frequently report difficulty reaching SBA representatives. Phone hold times can exceed several hours. Email responses may take weeks. Different representatives may provide conflicting information.

Denial and Reconsideration

Denials may be issued without clear explanation. The reconsideration process can be lengthy and opaque. Borrowers often struggle to understand what additional information would change the decision.

What to Do If Your Application Is Stuck

If you are experiencing delays or problems with an SBA application, here are concrete steps you can take:

Document Everything

Keep records of every communication with the SBA, including dates, times, representative names, and what was discussed. Save confirmation numbers and screenshots of portal submissions.

Contact Your Congressional Representative

Congressional offices have liaisons who can inquire about your case with federal agencies. Contact your U.S. Representative or Senators' offices and provide them with your application details.

File a FOIA Request

You can request your SBA file under the Freedom of Information Act. This can reveal what documents the SBA has received and the status of your application.

Contact the SBA Office of Inspector General

If you believe you have experienced misconduct or fraud related to your application, you can file a complaint with the SBA OIG.

Seek Legal Counsel

For complex situations or significant loan amounts, consulting with an attorney experienced in SBA matters may be advisable.