Monday Morning Quarterbacking on Small Business Loan Decisions


April 9, 2013

LoanStackYesterday we wrote about a federal prosecutor who is going after four Virginia ex-community bankers and criminalizing bad loan decisions.

Today, we cover a Dayton Daily News hit piece that shockingly (yes, note the heavy sarcasm) reveals a $1.3 billion loss in SBA 7(a) loans over a 13 year period.

Buried in the story is the fact that the current SBA portfolio is over  $100 billion. The default rate for the SBA 7(a) program in 2010, the height of the economic recession, was 5.6%. The 2012 default rate has declined to 2.4%.

It continues to amaze me these irresponsible reports fail to note the most important factor about SBA lending – that is unlike Fannie, Freddie, Sallie, GM, Bank of America and AEI, just to name a few, SBA did not need a bailout.

Where is the outrage about GM alone costing the taxpayers $50 billion, or a $250,000 subsidy per job?

SBA borrower and lender fees covered the 13 year loss of $130,000 million per year.

Can you imagine the economic impact to Main Street if it received a $250,000 subsidy, not a loan, but a taxpayer subsidy per employee?

If the politicians had given Main Street 1/10 of that number, If that happened, we wouldn’t be talking about a Detroit renaissance, we would be talking about a Main Street renaissance and a country at full employment with a whopping GDP.

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