When the SBA was launched on July 30, 1953, during the Dwight D. Eisenhower administration, nobody anticipated it would become as big-or as controversial-as it is today. (See timeline.) The original impetus for the agency was to make sure small-business owners had a chance to rebuild in the aftermath of World War II. Many big businesses thrived in the wartime economy-some at the expense of smaller competitors. Eisenhower wanted to ensure that small businesses weren't squeezed out of the recovery by advocating for them and ensuring that they got their share of government contracts and sales of surplus property.
The new agency quickly took off. Just a year after it started, it was giving and guaranteeing loans to growing businesses, making disaster loans and setting up training programs. In 1958, the SBA established the Small Business Investment Company (SBIC) Program, which is geared toward providing venture capital. Last year, the program participated in $5.5 billion in investments through commercial lenders and investment firms.
Not surprisingly, in the early 1970s, the SBA edged into programs that advocated social advancement through economic opportunity. Lending and advisory programs targeting aspiring business owners who lived in economically depressed areas started to take root. Today, the agency sponsors targeted outreach, loan and advisory efforts to a vast array of special interest groups, including women, minorities, the disabled, young people, veterans and, in numerous incarnations, economically disadvantaged entrepreneurs.
Slowly, the SBA's role in making and guaranteeing loans evolved. In the 1990s, the agency stopped making direct loans. In the mid-1990s, complaints about the frustratingly long approval process moved the agency to roll out its low-documentation approval (LowDoc) program, which significantly streamlined paperwork and reduced approval time. Last year, the agency participated in 48,000 loans, with 90 percent of those made through its 7(a) Loan Guaranty Program.
With dozens of programs being introduced, changed and phased out over the years, it's not hard to see why the SBA has a murky, undefined image. People aren't sure what good it will be to them and their particular circumstances.