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Thursday, September 16, 2010

Economic Factors Affecting Small Business Lending and Loan Guarantees

N. Eric Weiss
Specialist in Financial Economics

A slowdown in the U.S. economy is likely to reduce the demand for loans by small businesses because the slowdown would reduce the number of profitable projects, and the decrease in loans to small businesses could reduce the demand for Small Business Administration (SBA) loan guarantees. Increases in mortgage delinquencies and defaults that started in 2007 and continue into 2010 are making lenders more cautious about the risks of all kinds of loans, including business loans. This could increase the demand for Small Business Administration guarantees. The ultimate impact of these factors, which work in opposite directions, cannot, however, be predicted with any confidence. 

This report discusses H.R. 3854, Small Business Financing and Investment Act of 2009, and the American Recovery and Reinvestment Act of 2009 (ARRA), which became P.L. 111-5. 

This report lists some sources of information about the condition of the small business loan market.

Date of Report: September 3, 2010
Number of Pages: 11
Order Number: RL34400
Price: $29.95

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