Do SBA Loans Create Jobs?

Small Business Administration (SBA) loans have long been one of the most significant policy interventions in the U.S. affecting firm behavior, but little is known about their outcomes. This paper estimates the effects on employment using a list of all SBA loans linked to annual data on all U.S. employers from 1976 to 2010. Our methods combine firm fixed-effect regressions with matching on exact firm age, industry, year, and pre-loan size, and on propensity scores as a function of four years of employment history and other variables. The results imply positive average effects on loan recipient employment of about 25 percent, or 3 jobs at the mean. Including loan amount, we find little or no impact of loan receipt per se, but an increase of about 5.4 jobs for each million dollars of loans. Similar results for high-growth counties and industries suggest the estimates are not driven by differential demand conditions across firms. Exploiting variation in the distance of controls from recipient firms, we find only very small displacement effects. In all these cases, the results pass placebo and pre-program specification tests. Other specifications using only matching or only regression imply somewhat higher effects, but they fail these tests. The estimates facilitate calculations of total job creation by the SBA and of the cost per job created.