<<Back to Article National Association of Government Contractors www.governmentcontractors.org Urban Institute releases study of small business loan programs Jan 26, 2008 Commissioned by the U.S. Small Business Administration, the Urban Institute recently released six research reports evaluating four programs managed by SBA’s Office of Capital Access: the 7(a) Loan Guaranty Program , the Certified Development Company 504 Loan Program, the Small Business Investment Company Debentures (SBIC) Program, and the MicroLoan Program. The reports were part on an attempt to answer three key questions: (1) Does SBA assistance help the firms that receive it, (2) To what extent does SBA assistance serve its market, and (3) Do SBA programs duplicate or overlap with other public sector programs? The findings of the reports are overwhelmingly positive. The study finds that small firms receiving SBA financing increased their average sales and average employment over time and were overall satisfied with the loan programs they used. The study also reports that lenders believe that there is little overlap between SBA and conventional lending and that the SBA’s loan programs allow them to serve borrowers who would not be eligible for traditional bank loans. The study also indicates that women- and minority- owned small businesses, and start-up firms receive a higher share of loans and a larger lending volume under the 7(a) and 504 programs than under conventional small-business lending. It also reveals that the small-business recipients of SBA loans have fewer employees and lower sales than firms receiving conventional small-business loans. The study asserts that these differences suggest that the 7(a) and 504 programs play an important role in serving borrowers who face a capital gap. The study also finds much merit in the SBIC program. It reports substantial variation in debenture SBIC investments and comparable private-venture capital. The study also finds that, compared to investments made by venture-capital firms, SBIC investments are much less likely to be in high-tech industries and more likely to be in low- and moderate- income areas. It also finds that SBIC investments are more regionally dispersed. Finally, the study does identify some degree of overlap between the 7(a) and 504 programs and a small amount of duplication between the SBA programs and similar lending programs administered by other federal agencies. The study also identified that duplication does occur at the state and local level. Article URL: http://www.governmentcontractors.org/articles/a.506.asp © Copyright 2005-2008 The National Association of Government Contractors