The efficacy of SBA loans on small firm survival rates
In an attempt to support entrepreneurs, the U.S. Small Business Administration (SBA) offers loans to small firms. The SBA claims that it not only offers capital to small firms, but that it offers services and support to help them build capabilities. This study investigates whether the empirical evidence demonstrates an improvement in four-year survival rates for SBA-aided firms over the general population of small firms, and if there is any correlation between loan size and survival rates. Additionally, the study examines if women and minority-owned SBA-aided small firms (who are a traditionally under-represented demographic) improve their four-year survival rate. The results suggest that small firms that receive SBA loans do improve the four-year survival rate over the general population of small firms. However, loan size was not correlated with higher survival rates. The results also suggest that women-owned small firms experience a similar increase in survival rate, while minority-owned small firms do not receive a statistically significant increase.
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Copyright (c) 2020 Alexandra Galli-Debicella
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