What is a small business?
A small business is an independently owned and operated company that is limited in size and revenue depending on the industry.
According to statistics, the share of small businesses in the U.S economy is:
99.7 percent of U.S. employer firms,
64 percent of net new private-sector jobs,
49.2 percent of private-sector employment,
42.9 percent of private-sector payroll,
46 percent of private-sector output,
43 percent of high-tech employment,
98 percent of firms exporting goods,
33 percent of exporting value.
Source: U.S. Census Bureau, SUSB, CPS;
Let us look at the share of different types of small businesses:
|Kind of Business Share||Percent|
Source: U.S. Census Bureau, SBO, SUSB.
Backin 1950s, the US government realized the importance of small businesses for the economy. President Dwight Eisenhower first proposed the creation of a new small business agency, which led to the formation of SBA in 1953.Thus SBA was borne out in response to the pressures of the Great Depression and World War II.
What is an SBA loan?
SBA loans are small-business loans guaranteed by the SBA and issued by partnering lenders, mostly banks.The SBA has established two main criteria for a business to qualify as a “small business”:
The SBA can guarantee up to 85% of loans of $150,000 or less and 75% of loans of more than $150,000.
Your business reasons to approach the SBA may be many:
- You want to start a new business
- Buy out a partner
- Purchase equipments for your firm
- Refinance your existing loan
- Borrow more finance and others
SBA loan rates and terms typically are more manageable for borrowers than other types of financing as they offer low interest rates, flexible terms etc.
However, there is a downside: It can be tough to get a loan from the SBA.
You mustbe wondering how does SBA help small businesses and US economy as a whole. We have listed some pretty interesting facts and use cases of SBA below:
1. The SBA doesn’t charge the taxpayers.
The SBA funds itself with the guarantee fee it collects from borrowers. That means in exchange for the financing SBA provides to the 45,000 businesses in US,it doesn’t charge anything to the taxpayers.
Every year small businesses borrow more than $20 billion loans from the SBA.
3. The SBA offers much more than loans.
The SBA not only offers loans, but has a variety of services to help established entrepreneurs and people who are just starting their business.
It offers programs which help small businesses secure government contracts. It also reaches out to the weaker sections of society i.ewomen, minorities, disabled business owners and armed forces veterans by extending them special loans.
TheSBD conducts various workshops for free, or for a low fee if they occur on a regular basis.
Thus If you need help writing a business plan, finding sources of funding, managing your business, recovering from a natural disaster or selling your product to the government
4. SBA refinances your existing high-cost loans–
Many small business owners trapped in high-cost loans can now secure an SBA loan to help improve their financial health and save thousands of dollars each month.
5. SBA LINC
Funding is a continuous process for any business.Small business owners can fill out a brief questionnaire on SBA LINC(an online tool) about their business. The answers are reviewed by nearby SBA-approved lenders who then contact business owners they may be interested to work with. Thus SBA LINC provides a platform for businesses and lenders to find each other.
6. SBA provides funding for technological innovation.
SBA did grant a loan to Apple, to develop its fingerprint-scan technology which is being used on new models of iPhones.
Finally we end our discussion about small businesses with a nice example:
Booty's Street Food
800 Louisa Street, New Orleans, La.
What it is: A food restaurant of international street food with a hidden art gallery
What makes it cool: Inspired by their travels around the world, co-owners Nick Vivion and Kevin Farrell has brought the concept of eating your way around the world to life. The menu features classic street cart dishes like frites from Belgium, banh mi from Vietnam, and empanadas from Venezuela.The art gallery ups the wow factor!
Shahid Mansuri Co-founded Peerbits, one of the leading Top mobile application developments company USA, in 2011. Top companies hire android app developers which have been groomed under his visionary leadership and flamboyant management style which have yield fruitful results for the company. He believes in sharing his strong knowledge base with learned concentration on entrepreneurship and business.