Introduction
Small Business Association (SBA) loans have been a cornerstone for up-and-coming businesses to obtain low interest-bearing loans for over 70 years. In fact, some of the most recognizable company names, including Nike, Apple, and even Ben & Jerry’s, have utilized SBA loans to start their companies off on the right foot. Within this article, you can find a brief history of SBA loans, the goals SBA as an organization has, the different types of loans offered, and the recent changes being made to them.

History of SBA

The Small Business Association traces its roots back to the Reconstruction Finance Corporation (RFC) in 1932 when President Herbert Hoover was working to encourage business growth in the wake of the Great Depression. The lending program was originally intended for all businesses affected by the Great Depression.

In the midst of World War 2, Congress created the Smaller War Plants Corporation (SWPC) in 1942, replacing the RFC, which aimed to encourage financial institutions to extend credit to small enterprises while also advocating on behalf of small businesses to larger businesses and federal agencies.

After the end of World War 2 in 1945, the SWPC ended and returned to the RFC who brought to attention that small businesses often fail due to a lack of information and expertise. Therefore, they began creating brochures and offering counseling to individual entrepreneurs to assist in managerial practices.

There were a few adjustments made thereafter until 1952 when legislation ended the RFC and transferred all functionality to the Department of Treasury. However, in 1953, President Dwight Eisenhower signed into law the creation of a new agency called the U.S. Small Business Administration (SBA) with the mission to “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns” while simultaneously ensuring that small businesses earned a “fair proportion” of government contracts and sales of surplus property.

SBA Goals

Keeping true to their original mandate, the SBA’s current goals have expanded since 1952. According to their website, they currently have 7 main ways they serve small businesses:

Expanding access to capital
Providing Business Counseling and Mentorship
Boosting Government Contract Opportunities
Helping Small Businesses Recover from Disasters
Constantly Innovating from Within
Supporting International Trade
Serving as a Catalyst for Economic Growth

SBA-Backed Loans Offered

The main proponent that SBA is known for is their SBA-Backed Loans. While they don’t directly loan out funds, they do help small businesses get funding by reducing lender risk and creating safeguards to make it easier for small businesses to get vital funding. Below, we will outline the main SBA-backed loans offered.

7(a) Loan

The main loan type that is offered through their business loan program, this loan can be used for a wide range of business needs from acquiring a new building, working capital, restructuring current business debt, purchasing supplies, and a list of other practical business needs.

The maximum loan amount that you can get is $5 million dollars. The main eligibility requirements are to:

Be an operating business
Operate for profit
Be in the U.S.
Be a small business under SBA guidelines
Be creditworthy and demonstrate reasonable ability to repay the loan

To apply, you would go to SBA’s Lender Match tool which helps you connect to a participating lender part of SBA’s loan program.

504 Loans

The 504 loan program is aimed at providing long-term, fixed-rate financing for large, fixed assets. These fixed assets could range from purchasing existing buildings, creating new facilities, long-term machinery/equipment, and consolidating debt so long as they are debts under certain conditions. These loans are offered through Certified Development Companies (CDCs); community-based nonprofit partners who are certified and regulated by the SBA.

The maximum loan amount is $5.5 million. The eligibility requirements are to:

Operate for-profit in the U.S
Have tangible net worth below $20 million
Have an average net income of less than $6.5 million after federal income taxes for the two years preceding the application

These loans are not meant to be used for the same purposes of a 7(a) loan such as for working capital, real estate, inventory, and a few other qualifications that you could use for a 7(a).

To apply, you would find a CDC near you.

Microloans

Microloans are loans up to $50,000 that are used to help both small businesses and certain not-for-profit childcare centers. These were created with intermediary lenders in mind, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance.

To be eligible is dependent on the lender and the credit requirements they set forth. In general, some sort of collateral is needed as well as a personal guarantee from the business owner. The uses of a microloan can be for a variety of expenses such as working capital, inventory, supplies, machinery, and a laundry list of other uses. A microloan could not be used for paying existing debts or purchasing real estate.

To apply, you would find an SBA-approved intermediary.

Recent Changes to SBA

Recently, there have been several executive orders signed that affect the SBA loan guidelines. In general, the goals have been to increase the borrowing ability of U.S. citizens in a more efficient and streamlined manner.

One change comes from Executive Orders 14241 and reduces barriers to SBIC investments, which encourage investments in critical materials and advanced technologies. Executive Order 14241 reduces the barriers by no longer requiring disclosures of exploration results, supporting documentation, or filing of technical report summaries by a qualified person.

Another change that is effective March 1, 2026 from a recent Policy Notice is the rescinding of SBA Procedural Notice 5000-872050, which allowed up to 5% ownership by a foreign national for 7(a) loans and CDC loans. This notice also included that “SBA is requiring that 100% of all direct and/or indirect owners of a small business applicant be a U.S. Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories, or possessions.” This differs from previous verbiage which included lawful permanent residents (commonly known as “green card holders”).

Conclusion

The SBA has been a key component of the American economic infrastructure for over 70 years. Many companies rely on the continuous support from this organization for all their business needs ranging from lending help to general business guidance. Staying on top of the changes to the organization can be an essential part of any small business trying to make their way through the tumultuous field of their business.

For additional support from a knowledgeable team, reach out to Volpe Consulting & Accounting!

If there’s a pain point within your operation that you’d like to discuss, we’re here. We’d appreciate the opportunity to look into it with you and hopefully provide some insight as to how you can move forward. For more information, or to just put a few faces to the name,

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