Thursday, November 01, 2007

SBA Gets Grilled by Senate

The SBA just announced its sixth straight year of record loan volume, but the U.S. Senate still found plenty to question during the SBA's recent visit to Capitol Hill.

I'll let you read the article, but here's what caught my eye.

The SBA estimates that its 7(a) loan default rate is 6.96% over the 25 year life of the loans. No one seems to be sure if that's comparable to loan default rates on commercial loans from FDIC-insured banks. But according to the article, the default rate for commercial loans from FDIC-insured banks is currently 1.5% a year.

Just because a loan goes into default doesn't mean the entire loan is a loss, but that seems to be a pretty high default rate. As a taxpayer, I think that the SBA should be doing a better job of managing its risk.

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Tags : SBA , 7a loan , small business

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