A Promising Sign for Small Business Loans

Posted by: Kimberly Weisul on April 17, 2009

It seems that the secondary market for Small Business Administration-backed loans may actually be thawing out a bit. Banks that make SBA-backed loans have historically been able to sell the guaranteed portion of these loans into the secondary market, freeing up their balance sheets to make new loans. The lack of liquidity in the secondary market is one of many factors that has been blamed for banks’ reluctance to lend to small businesses during this economic crisis.

Now, a report from the General Accounting Office shows that the volume of SBA-backed loans sold into the secondary market increased smartly in February, to $135.3 million. That’s up 60% from January’s $84.5 million and the highest monthly total since September 2008, when $310 million in such loans made it to the secondary market. In 2007, by comparison, such sales averaged about $364 million a month.

The irony, of course, is that this mini-rebound predates President Obama’s March 16th announcement that he would use $15 billion from the Troubled Asset Relief Program (TARP) to buy SBA-backed loans in an effort to jumpstart the secondary market. It also predates the launch of TALF (Term Asset-Backed Securities Loan Facility), which relies more heavily on private money. It will be interesting to see if either of those programs make a difference in the March and April numbers

Reader Comments

FELICIA MBATHA

April 24, 2009 01:23 AM

i would love to open a guesthouse but i don't where i can get financial help

Sarah King

April 27, 2009 06:58 PM

We're trying to get a loan to purchase a binding machine and some other office equipment, but it seems that the banks are holding on tight to their money.

yogesh patel

May 12, 2009 05:55 PM

We are trying to open a strawhat pizza we have 75%of the job done we just need working capital please advice were can we get money.

lisa

January 12, 2010 07:15 AM

i would love to finally open a storefront for my bakery....ive been working from home for 4 years please help

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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