The Small Business Administration SBA

The SBA grew out of the Depression-era Reconstruction Finance Corporation and the wartime Smaller War Plants Corporation, both created to keep small firms alive and in business with the government. When the finance corporation was being wound down, Congress passed the Small Business Act, signed by Dwight Eisenhower on July 30, 1953, creating an agency to aid, counsel, assist, and protect the interests of small business concerns. The agency has survived repeated proposals to abolish or merge it, including from presidents of both parties.

The SBA mostly guarantees loans rather than making them. Under its 7(a) program, its largest, it guarantees up to 85 percent of loans that private banks make to small businesses that cannot get conventional credit, and its 504 program finances real estate and equipment. Together they back roughly 40 to 50 billion dollars in lending a year. The agency does lend directly after hurricanes, floods, and other disasters, offering low-interest loans to homeowners, renters, and businesses, which makes it a major part of disaster recovery alongside FEMA. It also funds a network of advice centers, licenses small business investment companies, and runs research grant programs across the government.

In federal contracting the SBA sets size standards that define a small business industry by industry and enforces the goal that about 23 percent of federal contract dollars go to small firms. Its 8(a) program reserves contracts for businesses owned by socially and economically disadvantaged people, and others favor women-owned, veteran-owned, and HUBZone firms. During the pandemic the agency ran the Paycheck Protection Program, which pushed out about 800 billion dollars in forgivable loans in little more than a year, a feat of speed that also produced widespread fraud.

The Administrator holds cabinet-level status in most recent administrations and is confirmed by the Senate. In 2025 the agency cut about 43 percent of its staff, moved regional offices out of several cities, and took on management of a portion of student loans under a proposal to move them out of the Education Department. A 2023 court ruling that presumptions of disadvantage in the 8(a) program were unconstitutional led to sweeping changes, and in 2025 the agency began auditing participants and narrowing the program, steps supporters called restoring fairness and critics called the end of an important path for minority entrepreneurs.