Small Business Financing under the Small Business Act and the Small Business Investment Act of 1958
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SMALL BUSINESS FINANCING UNDER THE SMALL
BUSINESS ACT AND THE SMALL BUSINESS
INVESTMENT ACT OF 1958
Larry D. Gilbertson*
When the Small Business Act of 1953 was enacted, Congress stated:
The essence of the American economic system of private enterprise is free
competition. Only through full and free competition can free markets, free entry
into business, and opportunities for the expression and growth of personal initiative
and individual judgment be assured. The preservation and expansion of such com-
petition is basic not only to the economic well-being but to the security of this Nation.
Such security and well-being cannot be realized unless the actual and potential
capacity of small business is encouraged and developed.'
Although the federal government had recognized the need for assistance to
small business since 1941,2 the Small Business Administration (SBA) was the
first peace-time independent agency of the Government created solely for the
purpose of fostering the interests of small business. SBA has other programs
which are designed to aid, counsel, assist and protect insofar as is possible,
the interests of small business concerns . . . .' Through its Office of Procure-
ment and Technical Assistance, it assists small firms to obtain a fair share of
Government contracts. Its educational program is designed to help small
businessmen fill gaps in their knowledge and experience in both management
and technical assistance problems. This article, however, will be confined to
a discussion of the Financial Assistance Program under the Small Business Act,
as amended,4 and the Small Business Investment Company Program under the
Small Business Investment Act of 1958.'
THE FINANCIAL ASSISTANCE PROGRAM
The Financial Assistance Program is designed primarily to provide inter-
mediate-term loans to small business concerns to enable them to finance plant
construction, conversion, or expansion, including the acquisition of land; or to
finance the acquisition of equipment, facilities, automotive machinery, supplies,
or materials; or to supply such concerns with working capital to be used in the
manufacture of articles, equipment, supplies, or materials for war, defense, or
essential civilian production or as may be necessary to insure a well-balanced
*General Counsel, Small Business Administration, Washington, D.C. B.A. 1940, University of Min-
nesota; LL.B. 1942, University of Wisconsin.
'Small Business Act § 202, 67 Stat. 232 (1953), 15 U.S.C. § 631(a) (1958).
'Barnes, What Government Efgorts Are Being Made To Assist Small Business, 24 LAw & CONTEMP.
PROB.3 (1959).
'Small Business Act § 202, 67 Stat. 232 (1953), 15 U.S.C. S 631(a) (1958).
'72 Stat. 384-96, 15 U.S.C. §§ 631-47 (1958), as amended, 73 Stat. 647 (1959).
72 Stat. 689-99, 15 U.S.C. §§ 661-96 (1958) [hereinafter referred to as Investment Act].
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Small Business Financing under the Small Business Act and the Small Business Investment Act of 1958
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