A Promising Sign for Small Business Loans

A Promising Sign for Small Business Loans

Tuesday, April 21,2009 05:04 AM

It seems that the secondary market for Small Business Administration-backed loans may actually be thawing out a bit. Banks that make SBA-backed loans have historically been able to sell the guaranteed portion of these loans into the secondary market, freeing up their balance sheets to make new loans. The lack of liquidity in the secondary market is one of many factors that has been blamed for banks' reluctance to lend to small businesses during this economic crisis.

Now, a report from the General Accounting Office shows that the volume of SBA-backed loans sold into the secondary market increased smartly in February, to $135.3 million. That's up 60% from January's $84.5 million and the highest monthly total since September 2008, when $310 million in such loans made it to the secondary market. In 2007, by comparison, such sales averaged about $364 million a month.

Read more at: http://www.businessweek.com/smallbiz/running_small_business/archives/2009/04/a_promising_sig.html