Finance and Growth at the Firm Level:  Evidence from SBA Loans

We analyze linked databases on all SBA loans and lenders and on all U.S. employers to estimate the effects of financial access on employment growth. Estimation exploits the long panels and variation in ease of access to SBA lenders. The results imply an increase of 3 to 3.5 jobs for each million dollars of loans, suggesting real effects of credit constraints. Estimated impacts are stronger for younger and larger firms and when local credit conditions are weak, but we find no clear evidence of cyclical variation. We estimate taxpayer costs per job created in the range of $21,000 to $25,000.

Keywords: finance, growth, financial access, employment, Small Business Administration, 7(a), loans

JEL Classification: D04, G21, G28, H32, H81, J23, L53

Suggested Citation: Suggested Citation

Brown, J. David and Earle, John S., Finance and Growth at the Firm Level: Evidence from SBA Loans (July 1, 2016). Journal of Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2641184 or http://dx.doi.org/10.2139/ssrn.2641184