If you remember, the
economy peaked in December of 2007 and then plunged like a rollercoaster.
SBA 7(a) loan volume
foreshadowed this drop in gross domestic product.
SBA 7(a) loan
approvals peaked at $15,223,526,000 for the fiscal year ending September 30,
2005.
They then dropped to
$14,525,100,000 for the fiscal year ending September 30, 2006.
Approvals continued
to drop over the next twelve months to $14,292,141,000.
SBA 7(a) loan
approval volume continued to fall by more than 48 percent.
The drop in economic
activity soon followed.
The correlation of
SBA 7(a) loan approvals with our nation's economic performance appears to be
quite strong.
Just for fun I
calculated the correlation coefficient between SBA 7(a) loan volume and GDP for
over six years using the Microsoft CORREL function. It came out to a
statistically significant 0.86.
So what caused that initial drop in SBA loan volume?
The drop in SBA 7(a) loan approvals was
attributed to the elimination of a small loan program – LowDoc – and more
importantly an increase in the guaranty fee for SBA loans.
Thanks for this informative lens. Commercial lenders administer and screen the loan applications, applying the SBA 7a
ReplyDeleteand their criteria before passing along the loan application to the SBA.