Introduction Federal loan guarantees provided by the U.S. Small Business Administration (SBA) have grown markedly in recent years.

During fiscal year 2007, the SBA guaranteed a record $19-8 billion in loans for small businesses - a 57 percent increase over the $12.6 billion guaranteed for fiscal year 2003 (SBA 2008a).

Veronique De Rugy (2007), a research economist with the American Enterprise Institute, argues that SBA guaranteed lending programs do not help small businesses or improve economic performance in the areas that receive these loans.