It seems that the secondary market for Small Business Administration-backed loans may actually be thawing out a bit. Banks that make SBA-backed loans have historically been able to sell the guaranteed portion of these loans into the secondary market, freeing up their balance sheets to make new loans. The lack of liquidity in the secondary market is one of many factors that has been blamed for banks’ reluctance to lend to small businesses during this economic crisis.
Now, a report from the General Accounting Office shows that the volume of SBA-backed loans sold into the secondary market increased smartly in February, to $135.3 million. That’s up 60% from January’s $84.5 million and the highest monthly total since September 2008, when $310 million in such loans made it to the secondary market. In 2007, by comparison, such sales averaged about $364 million a month.
The irony, of course, is that this mini-rebound predates President Obama’s March 16th announcement that he would use $15 billion from the Troubled Asset Relief Program (TARP) to buy SBA-backed loans in an effort to jumpstart the secondary market. It also predates the launch of TALF (Term Asset-Backed Securities Loan Facility), which relies more heavily on private money. It will be interesting to see if either of those programs make a difference in the March and April numbers