This report synthesizes the findings, conclusions, and policy recommendations derived from six reports generated by our evaluation of SBA’s 7(a) Loan Guaranty, CDC 504 Loan, MicroLoan, and SBIC programs. The various studies were conducted to address three key research questions of particular interest to SBA and its constituents: 1) Does SBA assistance help the firms that receive it? 2) To what extent does SBA assistance serve its market? 3) Do SBA programs duplicate or overlap with other public sector programs?
This report addresses two questions about outcomes for firms receiving assistance through SBA's 7(a), CDC 504, or SBIC programs between 1999 and 2001: 1) what happens to sales, employment, and survival before and after firms receive SBA financing; and 2) what explains the changes observed in sales or employment after firms receive SBA financing? Descriptive analyses found that prior to financing and each year thereafter, average sales increased over time, as did average employment. Multivariate analyses found that firm age, industry, and region of the country were significantly related to percent change in sales and employment for all three programs.
This report presents customer satisfaction outcomes and a limited number of other indicators based on a sub-sample of the same assisted firms that were targeted in the more rigorous, quantitative performance analyses (Brash and Gallagher, 2008). Analyses of the Survey of Assisted Businesses found only minor differences between 504, 7(a), and MicroLoan recipients in overall satisfaction indicators, but more substantial differences in uses of loan proceeds and other sources of financing. Most respondents were satisfied, although overall satisfaction was apparently lower in the SBIC program.
SBA programs are required to serve only borrowers unable to secure loans from another source. This report examines whether lenders comply with the credit elsewhere requirement, based on interviews with 23 commercial bank lenders that originate both SBA and conventional small business loans. Overall, lenders: are aware of the credit elsewhere requirement, say that SBA programs allow them to serve borrowers who do not meet standard conventional underwriting guidelines, indicate there is little overlap between SBA and conventional lending. SBA loans are offered with longer terms than conventional loans allowing borrowers, who commonly lack sufficient NOI, to meet DSCR requirements.
This study analyzes the extent to which the SBA's 7(a) and 504 programs serve borrowers facing capital gaps. Comparative and market share analyses show that women-, minority-owned, and start-up firms accounted for a higher share of the loans and larger share of lending volume under the 7(a) and 504 Programs compared to such firms' share of conventional small business loans. 7(a) and 504 loans went to firms that, on average, had lower sales and fewer employees than firms that received conventional small business loans. These differences suggest that SBA's 7(a) and 504 Programs served borrowers who face a capital gap.
The SBIC program provides venture capital and mezzanine finance to start-up and expanding small businesses through SBICs, and is intended to fill the gap in smaller debt/equity financings, and to expand the reach of venture capital into underserved urban and rural markets. We find that debenture SBIC investments varied substantially from comparable private venture capital. Total financings by SBICs are much less likely to be in high-tech industries than those made by venture capital firms, are more dispersed regionally, and appear more likely to be in low- and moderate-income areas.
This study assessed 1) whether duplication of SBA’s 7(a), 504, MicroLoan, and SBIC programs exists at federal, state, and local levels; 2) if duplication occurs between SBA’s two largest programs, 7(a) and 504; and, 3) the nature of such overlaps. The study found some overlap exists between SBA’s 7(a) and 504 programs, and a small degree of duplication exists between SBA programs and similar programs run by other federal agencies. More potential duplication exists at state and local levels, where general-purpose loan and loan guarantee programs are more likely to resemble SBA’s 7(a) program, than its other programs.