SBA Loans and Their Positive Effect On the Economy

SBA Loans and Their Positive Effect On the Economy

Why SBA Loans are Good for the Economy


The future is looking bright for small businesses in the United States. In the two weeks since the U.S. House of Representatives voted to increase the Small Business Administration’s lending cap to $23.5 billion for the 7(a) loan guaranty program it has become ever more apparent that small businesses, and the economic boost they provide - are here for good.


Fiscal year 2015 was a record year for small business lending – which was clearly depicted when the SBA reached its $18.75 billion cap with two months left in the fiscal year. Although the Small Business Administration is not the only, or largest source of capital for small business owners, their programs are a good indicator of the overall health of U.S. small businesses and the small business market.


Because more and more businesses are looking for small business loan opportunities, and as these businesses grow and thrive – so does the U.S. Economy. According to an Experian Small Business Credit Index, credit balances and trades are continually expanding, as delinquency rates are declining and small businesses are hiring new employees at an even greater rate. All of these factors contribute to a growing quarterly index showing the health of the small business sector, which is currently at an all time high (116.7 – revised from 115.2 in the 3rd quarter).


As the Small Business Health Index continues to rise, and with a newly funded and higher lending cap it seems as if there has never been a better time to a be a small business owner – and it doesn’t look as if the sector will be losing momentum anytime soon. SBA backed loans put the majority of the risk on the government, making interest rates lower and allowing more small businesses to find capital than ever before – setting our economy up for a banner year.


Small business is good for the economy, making it good for everyone. As small businesses grow, more jobs become readily available – putting more money in the hands of the people, who can then spend it and boost our economy.

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