Usage of different types of small business credit varies by the age and industry of the firm as well as by the gender, race, and ethnicity of the owners. However, the usage represents the intersection of what firms would like to use to finance their firms with what providers are willing to supply. The additional questions in the ASE on loan applications and forgone applications would indicate that--at least for some firms--demand exceeds supply. But it is important to keep in mind that not all credit applications should be approved. There is a great deal of fluctuation in the small business population, and determining which businesses are a good credit risk is a challenge that small business credit providers need to carefully evaluate.
Gross equity issuance by nonfinancial firms has also increased notably since 2012, surpassing pre-crisis levels, owing mostly to the recovery in private equity issuance (figure 1, panel C).3 Public equity issuance, through both initial and seasoned offerings, rose at a moderate pace from 2012 to 2015 but retraced part of that increase in 2016 as a result of a lackluster market for initial public offerings. In contrast, estimates of private equity issuance increased sharply over the period and rebounded to levels last seen before 2009. The pace of equity retirements through cash-financed mergers and share buybacks was very strong and has continued to outpace equity issuance by a wide margin. As a result, net equity issuance remained negative throughout the period.
The survey that was fielded in 2015 solicited information on the firm for 2014. The owner-specific questions cover age, sex, educational attainment, citizenship, ethnicity, race, and veteran status. Firm-specific questions cover a variety of topics, including the year the business was established, how it was funded initially and in the current year, worker types, customer types, digital presence, global presence, and business operations.15 There are also questions on firm owners' motivations for starting the firm, aspirations for the firm, financial challenges, and profitability.16 At the writing of this report, only data for 2014 are available.17
By industry, loans from owners are most common among unclassified firms and least common among management companies. Among unclassified firms that had an owner loan, more than one-fourth received $250,000 or more in funding from their owners. The distribution of loan sizes across industry looks similar to the distribution of loan sizes across age, race, and gender categories.
White-owned firms are the least likely race category to have received any funding from family and friends, while Asian-owned firms are the most likely. Male-owned firms are slightly less likely to have received such a loan than a female-owned firm. Among the firms that received a loan from family and friends, a smaller share of American Indian- and black-owned businesses received loans of $100,000 or more, while Asian-owned businesses were slightly more likely to receive those large loans.
Overall, small business owners report using a variety of sources to fund the day-to-day operations of their firms. These patterns vary by the age and industry of the firm as well as by the gender, race, and ethnicity of the owners. However, the usage represents the intersection of what the firms would like to use to finance their firms with what the providers are willing to supply. The additional questions in the ASE on loan applications and forgone applications would indicate that--at least for some firms--demand exceeds supply. But it is worth keeping in mind that not all credit applications should necessarily be approved. As discussed earlier, there is a great deal of fluctuation in the small business population, and determining which businesses are a good credit risk is a challenge that small business credit providers need to carefully evaluate.
The largest SBA program is the 7(a) Loan Program, which provides lenders with a partial loan guarantee for extending credit to small businesses that meet the SBA's underwriting and eligibility criteria. Participating lenders agree to structure loans according to the SBA's requirements, and they apply for and receive a guarantee from the SBA on a portion of this loan. The SBA does not fully guarantee 7(a) loans--the lender and the SBA share the risk that a borrower will not be able to repay the loan in full. The SBA provides a guarantee of as much as 85 percent for loans less than or equal to $150,000 and a guarantee of as much as 75 percent for loans greater than $150,000. The maximum loan amount is now generally $5 million, increased in 2010 from $2 million under the Small Business Jobs Act of 2010. However, under the Express loan program, which requires less loan documentation and provides quicker turnaround time, only 50 percent of the loan is guaranteed, and the maximum loan amount is $500,000.
Panel B shows time trends in the fraction of 7(a) loans reported to have gone to minority- and women-owned businesses as well as the fraction of loans below $150,000, which qualify for a larger guarantee percentage and are more likely to have gone to smaller businesses. The share of loans to women-owned businesses was between 12 and 14 percent between 2010 and 2016. The share of loans to minority-owned businesses ticked up over the period--from 24 percent in 2010 to 30 percent in 2016. This panel also shows that the fraction of loans under $150,000 has decreased slightlysince 2010.
The Small Business Investment Company (SBIC) program was initiated in 1957 to provide debt and equity capital to young and growing companies. Although the venture capital market has matured, the SBIC program remains important because many small, growing firms find it difficult to obtain equity financing from venture capital companies. Banks and bank holding companies can own and operate SBICs, which are licensed and regulated by the SBA. SBICs can be organized as separate subsidiaries of one institution or of multiple institutions and other private investors, or they can be controlled by private interests not affiliated with financial institutions. To obtain capital, SBICs often sell long-term debentures that are guaranteed by the SBA. The proceeds of these debentures are used to provide longer-term financing for small businesses, often in conjunction with the issuance of equity interests in the small business to the SBIC. In fiscal year 2016, SBIC's gross approvals were $2.5 billion in 65 debentures. This figure represents about a 30 percent increase over 2012 gross approvals of $1.9 billion.
Historically, most of the small business loans that have been securitized involved the guaranteed portion of loans made under the SBA's 7(a) Loan Program. These securitizations have been fairly common because they do not involve the risk and information impediments typically associated with the securitization of small business loans. SBA 7(a) loans tend to be highly standardized because the underlying loans are often backed by similar types of collateral and loan documentation. In addition, the originators are SBA "preferred lenders" and are perceived to have clear and rigorous underwriting standards that are consistently applied.
The other large loan program from the SBA is the 504 program, which primarily finances real estate. As noted earlier, 504 loans are typically funded through a combination of funds from a private lending institution, the SBA CDC, and the business owner. CDCs assist small business borrowers in preparing and submitting the SBA 504 loan applications. The debentures are packaged with other debentures into a national pool and sold monthly to investors. As the traditional markets become more volatile, the demand for these safe investments generally increases. The market for the guaranteed portion of SBA 504 loan on the secondary market has traditionally been much smaller than that for the 7(a) program.
Psychological research has explored camera perspective bias with African American and Chinese American suspects. African Americans are victims to strong stereotypes linking them with criminal behavior, but these stereotypes are not prevalent towards Chinese Americans, making the two ethnicities ideal for comparison. Participants were randomly assigned to view mock police interrogations developed using a male Caucasian detective questioning a Caucasian, Chinese American, or African American male suspect regarding his whereabouts at a given time and date. All interrogations were taped in an equal-focus perspective. Voluntariness judgments varied as a function of the race of the suspect. More participants viewing the Chinese American suspect and the African American suspect versions of the interrogation judged the suspect's statements to be voluntary than did those viewing the Caucasian suspect version. Both the African American suspect and the Chinese American suspect were judged to have a higher likelihood of guilt than the Caucasian suspect. Racial salience bias in videotaped interrogations is a genuine phenomenon that has been proven through empirical data.
Our analysis suggests that larger ovarian volume among postmenopausal women is associated with breast and endometrial cancer, and possibly colon cancer. The identification of similar relationships of ovarian volume with breast and endometrial cancer is affirming, given the etiologic similarities of these tumors. Adjusting for race, age, parity, BMI, smoking history and use of hormones did not alter these findings. In particular, the persistent association between large ovarian size and endometrial cancer after adjusting for BMI (a risk factor) and smoking (a protective factor) is notable and deserves further study. Although large ovarian volume was associated with increased risk for colon cancer, a clear link between progressively greater volume and risk was not found and the role of hormones (particularly androgens) in the etiology of this tumor is unclear. Interestingly, a previous report found that colon cancer risk was increased among obese women with an apparently high estrogenic milieu (6). The presence of ovarian cysts was not associated with the three cancers studied; however, given the older age of the women in this analysis, surface inclusions cysts undoubtedly predominated (as opposed to follicular cysts or other types) and these are not known to dramatically affect hormone levels. 2b1af7f3a8