The SBA's Justification IOU
9 Pages Posted: 6 Apr 2007
Supporters of the Small Business Administration's loan program argue that it is necessary because traditional sources of credit do not provide loans for the purposes, in the amounts, and with the terms required by small business borrowers. However, a large economic literature dismisses this argument and demonstrates no failure of the private sector to allocate loans efficiently. Absent such a clearly identified problem, the SBA's activities are simply a wasteful, politically motivated subsidy to this sector.
Keywords: The SBA's Justification IOU, Small Business Administration, loan programs, credit, SBA loan, credit scoring, disadvantaged groups, SBA borrowers, government aid
JEL Classification: E49, E51, E52, E59, E62, G28, H81
Suggested Citation: Suggested Citation