The Small Business Administration was established in 1953 to protect the interests of the nation’s small business community. The SBA accomplishes this, in part, by working with intermediaries, banks, and other lending institutions to promote both loans and venture capital financing for small businesses.
SBA makes small business loans available through its disaster loan assistance and 504 Certified Development Company (CDC) programs, and venture capital through its Small Business Investment Company Program (SBIC). SBA 7(a) guaranty loans are made to small businesses through banks and nonbank lenders.
When discussing lenders or financial institutions most people immediately think of banks. They are obviously one of the major players, but they are not the only ones. There are other financial institutions which we usually refer to as non-traditional lenders.
The major difference between banks and non-traditional lenders are the criteria used to evaluate borrowers and the level of risk the institutions are willing to assume.