There is an active secondary market
in the loans guaranteed by the Small Business Administration. This
market was created to increase the attractiveness of small business
lending to the lending community. Through the market, lenders are
able to sell the guaranteed portion of SBA guaranteed loans to investors
and thereby improve their liquidity and increase their yield on
the un-guaranteed portion of SBA loans.
In addition, the secondary market provides a hedge against future
liquidity problems because the guaranteed portion of an SBA guaranteed
portfolio may be readily sold by the lender. The market also allows
a lender to meet the credit needs of a local small business community
by importing capital from other parts of the country. Additional
information on SBA's secondary market program is available from
SBA's Secondary Market and 504 Sales Branch on (202) 205-6024.
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