Public-Sector Loans to Private-Sector Businesses

Research Report

Public-Sector Loans to Private-Sector Businesses

An Assessment of HUD-Supported Local Economic Development Lending Activities (Final Report)

Abstract

This research examines the results and performance of loans to private businesses made by state and local governments through their own lending programs using HUD program funding. Relying on examination of nearly 1,000 loan files in 51 communities, researchers found that although default rates are somewhat higher than those of private-sector lenders, substantial amounts of new economic development money could be raised on a secondary market without undermining the policy goals of the federal programs that supply the funds. HUD could help arrange secondary market sales by accumulating and disseminating information and setting standards for loan underwriting, servicing, and documentation.

To reuse content from Urban Institute, visit copyright.com, search for the publications, choose from a list of licenses, and complete the transaction.