Trends in SBA's 7(a) Program

Pursuant to a congressional request, GAO reviewed the Small Business Administration's (SBA) 7(a) loan program, focusing on: (1) the program's budget and the number and amount of loans from fiscal year 1986 through FY 1995; (2) the loans' maturities; (3) the characteristics of the borrowers; and (4) the program's cost. GAO noted that between FY 1986 and FY 1995: (1) budget authority for the 7(a) program ranged from $214 million to $195 million; (2) the number and amount of 7(a) loans increased each year, reaching 34,000 loans worth $8.3 billion in FY 1995; (3) most of the 7(a) loans were between $100,001 and $500,000, but the trend shifted toward smaller loans in FY 1994; (4) the average loan maturity for 7(a) loans ranged from 9.9 years to 12.3 years; (5) 7(a) loans to minority borrowers amounted to less than 19 percent of the loan dollars and loans disbursed; (6) the loan dollars and number of loans disbursed to minority and female borrowers accounted for a relatively small but growing percentage of the annual amount of loan dollars and number of loans disbursed; (7) borrowers in the West received the largest percentage of loan dollars and loans, borrowers in the South and Midwest received the second largest percentage of loan dollars and loans, and borrowers in the Mid-Atlantic received the smallest percentage of loan dollars and loans; and (8) 7(a) program costs consist of defaulted loans and administrative costs.