Critics contend that SBA loans are a small part of financing for small business and that they are irrelevant.
In 2007, the Government Accounting Office reported that SBA’s share of loans guaranteed by the 7(a) program was an estimated 4.1 percent of all outstanding small business loan dollars for loans under $1 million (GAO 07-769 Small Business Administration: Additional Measures Needed to Assess 7(a) Loan Program’s Performance).
Despite this apparent small slice of the small business financing pie, SBA 7(a) loans account for most long term loans made to small businesses. When comparing SBA term loans with bank CALL report term loans, SBA loans account for as much as 70% of all long term loans made to small businesses. The longer term amortization conserves precious cash flow and improves the permanent working capital of small business (Testimony before the U.S. Senate Committee on Small Business and Entrepreneurship by Anthony Wilkinson, President and Chief Executive Office, National Association of Government Guaranteed Lenders, March 29, 2012).
The Small Business Administration, created in 1953, has become the largest single guarantor of financing to small business in America (The Importance of Financial Market Development on the Relationship between Loan Guarantees for SMEs and Local Market Employment Rates Craig E. Armstrong, Ben R. Craig, William E. Jackson III, and James B. Thomson Working Paper 10-20 Federal Reserve Bank of Cleveland).