When the Tiny Small business Act was enacted in 1958, it experienced an exceptionally basic mission. Find a way to get loans diectly to corporations that couldn't get them by traditional channels. It did this in an ingenious way. They knew banking institutions in which reluctant to financial loan to tiny corporations, in particular startups, on account of worry of failure. Hence the SBA collected a rate on each and every financial loan and utilised this for a fund to pay for banking institutions if there was a default. Bingo, there was invented the SBA assurance rate. It does not take a degree in rocket science from MIT and an MBA from Harvard to understand this offers incentives to the banking institutions for making a lot more loans.