Restaurant Owners Most
Frequent Users Of SBA Loans
you�re a business owner with financing through the U.S.
Small Business Administration�s largest loan-guarantee
program, odds are you own a restaurant with five to 19
employees, and obtained the money through a non-bank lender.
1997, $9.5 billion in SBA loans were approved. The cost to
taxpayers--$183 million--is a fraction of the loan volume
because the government doesn�t directly make the loans. It
merely guarantees them and pay, eventually, for loans gone
Because the SBA guaranteed loan program is driven by demand
rather than geographic allocation, it tends to benefit most
the midsized small business.
companies have other sources of revenue and loans. And small
companies find it easier to borrow on credit cards rather
than go through the hoops of an SBA loan application.)
California, for example, companies with five to 49 employees
get a greater percentage of SBA loans than their share of
the total business population.
Another way that demand shapes the SBA loan program is
manifested by the lenders who agree to participate. Many of
the most active ones aren�t banks. (The Money Store and AT&T
Small Business Lending Corp are two very active lenders.)
big banks stepped up their SBA lending after the SBA�s
Office of Advocacy in 1996 pointed out their dismal record
of small loans to businesses, according to SBA Chief Counsel
some banks do SBA loans to have something to point to when
they ask regulators to approve their mergers.)