dent Hoover in 1932 to lend funds to all businesses hurt by the Great Depression, large and small; the Smaller War Plants Corporation, authorized by the Small Business Mobilization Act of 1942, which made loans to and advocated for small enterprises; the Office of Small Business in the U.S. Department of Commerce, which provided individual entrepreneurs with education and training; and the Small Defense Plants Administration, established during the Korean War, which certified small businesses to the RFC that it determined to be competent to perform the work of government contracts.

In the Small Business Act of July 30, 1953, Congress created the Small Business Administration, whose function was to “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns.” Its charter also stipulated that it would ensure small businesses a “fair proportion” of government contracts and sales. By 1954, the SBA was making direct business loans and guaranteeing bank loans to small businesses, working to obtain government procurement contracts for small businesses, and helping business owners with management and technical assistance and business training. The Investment Company Act of 1958, among other things, authorized the SBA to license, regulate, and help provide funds for privately owned and operated venture capital investment firms, which provided long-term debt and equity investments to high-risk small businesses. The creation of this program resulted from a Federal Reserve Board study that determined, in the simplest terms, that small businesses could not get the credit they needed to keep pace with technological advancement.1

1961 to 1980

The 1960s saw the beginning of small business contracting assistance programs that focused specifically on socially and economically disadvantaged small businesses (principally minority-owned businesses), subsequently bringing in women-owned small businesses. In 1964, the SBA adopted the Equal Opportunity Loan Program. The program relaxed the credit and collateral requirements for business loan applicants living below the poverty level in an effort to encourage new businesses that had been unable to attract financial backing but were nevertheless deemed to be sound commercial initiatives.

Following the 1967 Report of the Commission on Civil Disorders (the Kerner Commission), which found that minorities did not own many busi-


Every 5 years since 1987, the Federal Reserve Board has conducted a Survey of Small Business Finances, which provides information on credit availability for businesses with fewer than 500 employees (see Federal Reserve Board, 2002).

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