U.S. Small Business Administration loans and U.S. state-level employment

This study examines the relationship between the U.S. Small Business Administration’s (SBA) lending programs and state-level employment from the early 1990s to 2013 using quarterly panel data for U.S. states with fixed effects. The results show a positive statistical relationship between the growth in SBA lending per capita and the change in the state’s civilian employment rates. Despite these statistically significant relationships, the coefficient sizes are small. An analysis of high and low personal income states shows no meaningful differences in the relationship between SBA lending and employment across these groups. These findings support the idea that SBA lending programs may help with the public policy goal of assisting small businesses and may contribute to the finance–growth nexus. © 2019, Academy of Economics and Finance.