Tuesday, May 14, 2013

SBA loans are good for the economy

Small business is the engine that runs the U.S. economy as it has generated 65 percent of net new jobs over the past 17 years.   The fuel that runs that engine is the SBA 7(a) loan program.

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.

The correlation of SBA 7(a) loan approvals with our nation's economic performance is 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.

For the week ending May 10th, $352,951,000 SBA 7(a) loans were approved bringing the year to date total to $10,091,740,000.  

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