How Have SBA 7(a) and 504 Loans Been Distributed?

Concern over the state of small business, devastated by mandated lockdowns and restrictions, continues to rise. Understanding the loan programs available to small businesses is increasingly important in economic recovery.

Recently, PolicyMap published data on the PPP program from the Small Business Administration (SBA), and we’re excited to keep digging deeper. We’re tracking both the locations of small business loanrecipients and the amount of money invested into local communities to create better visibility into the impact of the programs.

Now, PolicyMap has published data on the SBA’s most popular loan programs – 7(a) and 504. These loan programs remain particularly appealing to small businesses who may not be eligible to pursue loans from a traditional route as a financial institution may deem them too risky, or the borrower lacks collateral. SBA structures the loans by guaranteeing a portion of it if the borrower defaults; the financial institution is not entirely responsible. The loans are therefore more appealing to financial institutions and more accessible for small businesses.

These datasets allow filtering by specific industries. Below displays the concentrations of small agricultural, forestry, fishing, and hunting businesses that received 7(a) Loans. Businesses concentrate in the southern part of the country in Georgia, Alabama, and Mississippi.

By overlaying the most recent unemployment rate and identifying concentrations, we see that small businesses can bring investment to local communities by expanding offerings and employment opportunities. As seen below, areas with the lowest unemployment rate also have large clusters of small businesses that received 7(a) loans.

Similarly, we can see how many jobs each business supported from their 504 loans. Below displays, the number of jobs supported by each borrower in Sioux Falls, South Dakota.

Each program provides a variety of benefits to small businesses. For example, 7(a) proceeds may be used to purchase machinery and fixtures, improve land and buildings, augment working capital, and refinance existing debt under certain conditions while, 504 loans focus primarily on purchasing or building commercial real estate and supporting job creation.

Many small businesses need outside investment to grow. The 7(a) and 504 loan programs provide an invaluable service to small businesses that might not be available through traditional lending. Observing how small business loans play a role within communities regarding jobs and equitable growth is essential for refining and growing future programs.

Have questions? Interested in digging deeper? Don’t hesitate to get in touch.