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Small Business Administration SBA
Also called SBA, U.S. Small Business Administration.
The federal agency that guarantees a portion of loans made by banks and non-bank lenders to small businesses, rather than lending the money itself in most programs.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
The agency sets eligibility rules, size standards, permitted uses of proceeds, maximum maturities and pricing ceilings, then backs a share of the lender's exposure. If the borrower defaults, the lender liquidates collateral and may claim the guaranteed portion from the agency. That backstop is why a bank will write a longer, cheaper loan to a business it would otherwise decline.
The money almost always comes from a participating lender: a bank, a credit union, or a licensed non-bank Small Business Lending Company. Disaster loans are the main exception, where the agency lends directly. A business does not apply "to the SBA" for a 7(a) or 504; it applies to a lender who then follows agency rules.
Eligibility runs on size standards by industry, for-profit status, US operation, owner character and eligibility screens, and the credit-elsewhere test: the borrower must not be able to get comparable credit on reasonable terms without the guarantee. Certain industries and uses are excluded outright.
Where this one catches people
The guarantee protects the lender, not the borrower. It does not cap what you owe, does not remove the personal guarantee, and does not stop collection or collateral liquidation if the loan goes bad. Owners routinely assume a "government-backed loan" means the government absorbs their default. It means the government reimburses the bank after the bank has come after them.
Where you will meet this term
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Small Business Administration — common questions
What does small business administration mean?
The federal agency that guarantees a portion of loans made by banks and non-bank lenders to small businesses, rather than lending the money itself in most programs.
Where does small business administration catch people out?
The guarantee protects the lender, not the borrower. It does not cap what you owe, does not remove the personal guarantee, and does not stop collection or collateral liquidation if the loan goes bad. Owners routinely assume a "government-backed loan" means the government absorbs their default. It means the government reimburses the bank after the bank has come after them.
Is small business administration the same as an interest rate?
Small Business Administration is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does small business administration apply to?
SBA Loan.
Is there a worked example of small business administration?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside small business administration?
Credit elsewhere test, Microloan, Personal guarantee, SBA 504 loan, SBA 7(a) loan.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.