The Importance of Small Business and the SBA

In an article recently published by Harvard Business School Working Knowledge, Karen Mills discusses the importance of small businesses and the vital role the SBA plays in stimulating growth. Despite recent criticism, SBA loan guarantee programs, which enable banks to lend to small businesses (even at the height of the credit crisis), facilitate economic growth and create vast opportunity.

"A look under the hood at SBA... reveals a small but important agency... a public-private partnership driving valuable outcomes to a critical (but often neglected) part of the economy, all at a low cost to taxpayers."

"Half of the people who work in America either own or work for a small business. And small businesses have created 60 percent of all net new jobs since 1995..."

"SBA’s loan guarantee programs were actually a mechanism that helped unlock capital to small businesses at a time when most banks had stopped lending to small businesses altogether. In fact, SBA’s guarantee brought many banks back to small business lending, helping resuscitate this critical sector of our economy right where it was needed, on our nation’s Main Streets."

"While new private sector players like online lenders can help (provide loans to small businesses), they will certainly not replace the SBA. A well-functioning, low-cost agency—that expands access to credit to small businesses across America with an overall loss rate under 5 percent—should be viewed as a huge asset."

Read Karen Mills' full article in Harvard Business School Working Knowledge.

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