Startups! An Empirical Analysis of the Small Business Administration’s 7(a) Loan Guarantee Program

Abstract

This paper examines the impact of the Small Business Administration’s 7(a) Loan Guarantee program on local economic outcomes, and compares the growth impacts against private lender financed entrepreneurship. I find that OLS estimates indicate a statistically significant and positive, but economically small, effect on establishment and employment count from 2000-2014. I find that SBA lending disproportionately increases the number of establishments relative to commercial bank lending. I further find that 7(a) loans significantly increase the number of establishments that employ 1-4 individuals, while its effects on larger establishments are not statistically significant.