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SBA Hot Topic Tuesday – Taxpayers Pay $4 Billion for SBA Loan Losses, Really?

May 27, 2014

By Bob Coleman
Editor, Coleman Report

closedThese SBA loan program hit pieces tend to throw out really big numbers without any support or context.

This Rochester Democrat & Chronicle article claims taxpayers are footing the bill for $4 billion in loan losses over the past 14 years.

If you are faced with these kinds of numbers, keep the discussion focused on the big picture facts.

I wouldn’t engage in a dueling statistics loan loss discussion. Big loan loss numbers look a lot more scary than a small loan loss percentage – all calculated from the same data.

I don’t believe the $4 billion number is correct. However, even if it is inflated by 100%, it is difficult to put $2 billion over 14 years in the proper context.

Here are some talking points to consider if you are interviewed for this type of hit piece.

1) While about 10% of SBA loan borrowers have failed in the past 10 years, the economic benefit to the community of the 90% who succeed and hire employees and pay taxes is incalculable. These jobs would not exist without the SBA loan program.

2) SBA program costs are covered many times over by taxes generated by new jobs and taxes paid from increased economic activity.

3) The taxpayer does not pay for SBA 7(a) loan losses. They are covered by lender and borrower loan fees.

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