THE INTRAMETROPOLITAN DISTRIBUTION OF ECONOMIC-DEVELOPMENT FINANCING - AN ANALYSIS OF SBA-504 LENDING PATTERNS

The declining federal role in economic development in distressed urban areas and concerns over the problems associated with metropolitan dec entralization necessitate increased attention to the intrametropolitan distribution of business development programs. We examine the distrib ution of business loans made by the U.S. Small Business Administration 's 504 development company program in the Chicago metropolitan area ov er a 5-year period and find that, after controlling for firm density, firm size, and industrial min, higher income areas and outlying zip co des receive more loans than lower income and closer-in areas. We sugge st a number of supply- and demand-side explanations for such patterns, call for measures to direct the flow of 504 financing more to lower i ncome areas, and call for examining more loan and subsidy programs for their effects on intrametropolitan business development patterns.