SBA Lending up 25% on weekly dollar volume. Is this tied to the major comeback of the Secondary Market?

I have been tracking the sentiment on SBA lending since the beginning of the year. The input comes from 350 small business lending department managers from across the country. The purpose of the survey is to track small business lending practices during this lending recovery period. It has turned out to be a fascinating study into what makes small business lending tick.

Let’s start with the secondary market. A full 2/3rds of small business lending entities rely heavily on the secondary market. So, is it any surprise that lending stopped last October when the secondary market collapsed. Now investors have come back to the table and the secondary market is doing better than any period since 2007.

Then the Obama Administration decides to rejuvenate small business, “the economic engine that drives new employment” by awarding less than 1% of the February Stimulus to the SBA. But, that is more than we would have been given under a Republican administration. So now the SBA turns to its bank partners and says we will guaranty 90% of the loan you make to small business. The $735 million is leveraged to over $24 Billion. That is called a very effective “private – public partnership”!

Since March 16th when the new SBA guaranty went into effect, weekly loan volume has grown 28% in the 7(a) program and 22% in the 504 loan program. While we are far from a full turn-around, what we see in the survey is a very impressive improvement in lending to small business.

Read the entire survey at http://tinyurl.com/pyuvst.