The Impact of SBA Lending Activity on Micropolitan Statistical Areas in the U.S. Southeast

This study examines the economic impact of Small Business Administration (SBA) guaranteed lending activity on the 12 states comprising the Southeast region (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia) for the 1990-2015 period. Past studies find that the effect of Small Business Administration loans on regional economic performance, particularly in low-income areas, is positive but negligible. The study adds to the literature by focusing on a government-defined geographic unit called the micropolitan statistical area (which consists of at least one county with an urban core population of 10,000-50,000). The objective is to measure and evaluate the effect of Small Business Administration loans on various indicators of micropolitan area economic activity (gross regional product, employment, and income growth), while also controlling for other determinants of local economic growth. The study applies fixed effects regression model on a cross-section of 153 micropolitan areas for three subperiods in 1990-2015. It finds that micropolitan area economic growth in the Southeast region is dependent on Small Business Administration -guaranteed lending, industrial composition, human capital, and demographic factors