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