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Mercatus Center at George Mason University
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Mercatus On Policy - A Guaranteed Success?
Why the SBA Should Not Guarantee Loans
September 24, 2007
Encouraging lending to small business is one of the primary purposes of the Small Business Administration (SBA). In order to accomplish this purpose, the SBA will guarantee $28 billion in loans in FY2008 alone, promising repayment of up to 85 percent if the borrower defaults. Taxpayers on the hook for a total of $83 billion in guaranteed loans might ask whether the SBA should be in the business of guaranteeing loans. The evidence says it should not.
