Thursday, January 30, 2014

SBA Loans Are Good For the Economy

SBA 7(a) loan volume slowed in the fourth quarter of 2013.  As if on cue, the economy also slowed.

According to the Department of Commerce, the U.S. economy grew at a 3.2% annual clip in the fourth quarter.   That represents a slowdown from the third quarter's growth rate of 4.1%.

Here is what GDP has been doing and this week’s interesting little table of data:

4th quarter 2013              3.2%
3rd quarter 2013              4.1%
2nd quarter 2013             1.7%
1st quarter 2013              1.1
4th quarter 2012:             0.1%
3rd quarter 2012:             2.8%
2nd quarter 2012:          1.2%
1st quarter 2012:            3.7%

Contrast that with quarterly SBA 7(a) loan volume:

4th quarter 2013:             $3,989,696,000
3rd quarter 2013:             $5,371,662,000
2nd quarter 2013              $4,273,683,000
1st quarter 2013               $4,049,146,000
4TH quarter 2012             $4,173,790,000
3rd quarter 2012              $4,359,166,000
2nd quarter 2012              $4,039,042,000
1st quarter 2012                 $3,443,723,000

Notice how third quarter growth in GDP had jumped over the prior period?  Same thing happened with SBA 7(a) loan volume.

Notice how fourth quarter 2012 growth really slowed?  SBA 7(a) loan volume had also declined.

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.

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