When the SBA makes a loan guarantee, banks are willing to consider riskier deals that they normally would refuse.

Question

Quizplus · Accepted Answer

This is because the SBA's loan guarantee reduces the risk for the bank, as the government is essentially promising to repay a portion of the loan if the borrower defaults. This makes banks more willing to lend to small businesses that may be considered riskier or have less collateral.

When the SBA Makes a Loan Guarantee, Banks Are Willing