Small Business Association (SBA)

What does it mean

The Small Business Association (SBA) is a government entity with the purpose of fostering small business growth by reducing credit risk for banks to encourage lending.


Why does it matter

For a Community Banker, SBA seeks to fulfill tits mission through two main programs: 7a and 504 (stupid names, I know :). Under the 7a program, the SBA provides a loan guarantee to the bank, and under the 504, the SBA provides direct funding to the borrower. What both programs attempt to do is to bridge the gap between the financial strength of the borrower and the requirements of a banker. Through these programs, SBA encourages additional business loans to occur that otherwise, without their help, may not occur. For a community banker, these programs not only provide a good risk mitigation tool, but it can also provide an attractive financing program for potential borrowers as well.


Other Relevant Terms

Want to Master Banking's Favorite Ratio?

The Debt Service Coverage Ratio (DSCR) is one of banking's favorite ratios. Want to ace it without breaking a sweat? No problem! We've got some simple, no-fuss pointers that will help you nail this ratio every time. You've got this!

Get the Cheatsheet Now

Not Finding What You Are Looking For?

Let me know what terms, ratios or content you want to see covered.

Request Term or Ratio

Am I missing a key term or ratio? Let me know what you want to see covered.

Request Term/Ratio

Request Content

Do you have a topic idea you'd like to see covered?  Send it my way.

Request Content

Checkout Courses

Enhance your skills through a deeper understanding of your customers' businesses.

See Courses

A bit about me

Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities.  Win-win-win.