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

Arbeitspapier

We analyze linked databases on all Small Business Administration (SBA) loans, on all SBA lenders, and on all U.S. employers to estimate the effects of financial access on employment growth. Our methods combine regressions with matching on firm age, size, industry, year, and employment history, and with instrumental variables capturing ease of access to SBA lenders. The estimation results imply an increase of 3-4 jobs for each million dollars of loans, suggesting that credit constraints impede small business growth prior to loan receipt. We also investigate the variation in estimated employment effects for the SBA 504 versus 7(a) programs, and with respect to the business cycle, local credit conditions, and within-county versus non-SBA county-industry control firms. Finally, for loans issued over the 1992-2007 period, we estimate total job creation of 1.0-2.1 million and the government's cost per job of $8,200-$18,000 measured five years after the loan year.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 9267

Classification and Topics

• Classification: Wirtschaft ; Microeconomic Policy: Formulation, Implementation, and Evaluation ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation ; Fiscal Policies and Behavior of Economic Agents: Firm ; Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts ; Labor Demand ; Enterprise Policy
• Subject: finance ; financial access ; loans ; employment ; growth ; small business administration ; small business finance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Brown, J. David ; Earle, John S.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/114139
• Last update: 10.03.2025, 11:46 AM CET