An Empirical Examination of SBA Guaranteed Loans: Rates, Collateral, Agency Costs, and the Time to Obtain the Loan

We empirically examine a sample of over 350 entrepreneurial firms that successfully receive an SBA guaranteed loan. The first portion of the paper contains descriptive statistics that lend anecdotal evidence concerning the organization type of borrowers, the incidence of collateral, the reasons for choosing the financial institution in which the SBA loan is secured, the main purpose for the SBA loan, and alternative actions that would have been undertaken had the SBA guaranteed loan not been obtained. The second portion of the paper poses theoretical predictions and tests them via multivariate models. Issues that are considered include the number of days required to obtain the SBA loan, management assistance services, agency theory, interest rate determinants, and collateral determinants.