An Analysis of SBA Loan Defaults by Maturity Structure

Document Type



Published by Springer Science & Business Media B.V. in the Journal of Financial Services Research, volume 28 issue 1/2, 2005. Bryant users may access this article here.


Small business loans; default risk; survival analysis


Springer Science+Business Media B.V.


The financial intermediation literature on small business lending focuses on the determinants and costs to credit access. There is, however, little research examining the repayment behavior of small firms that actually receive loans. In this paper, we address this shortcoming in the literature by examining the default behavior of a sample of Small Business Administration 7(a) guaranteed loans with three distinct maturity structures. We employ a discrete-time hazard approach and show that SBA defaults are time-dependent and that the factors impacting default behavior, as well as its timing, are maturity specific. Specifically, we show the importance of loan maturity, seasoning, economic conditions, and other firm-specific factors in predicting the likelihood of SBA loan defaults.