SBA 504 loan originations are up 21.0% as of March 31, 2025 compared to the prior fiscal year.
This represents a modest deceleration compared to the 25.0% rise posted as of February 28, 2025. Year-to-date approval volumes are at the highest level in the last five years, with the exception of the pandemic year of FY2022. Originations in the SBA’s other major loan program, SBA 7(a) loans, accelerated slightly to a 41.6% increase compared to the prior fiscal year, up from the 40.8% jump in originations recorded through February 28, 2025.
The 7(a) program has shown steady growth in loans outstanding in recent years that continued into FY2024 (up 5.3% in FY2024, 3.1% in FY2023, 3.1% in FY2022, and 6.8% in FY2021). 504 loans posted a 4.1% decline in originations in FY2024 compared to the prior year, after rising 9.7% in FY2023, 6.7% in FY2022, and 6.4% in FY2021. However, as noted above, origination volumes in the 504 program have started strong in FY2025 following two years of lower volumes. If this trend continues, it should lead to renewed growth in loans outstanding. We continue to note that the published 504 loan figures in the chart above include only the CDC/SBA second lien portion of a 504 loan package, If we include the private lender portion of the same loan projects, which typically accounts for roughly 50% of 504 projects, The total projects supported by the SBA 504 second lien loans at September 30, 2024 would be roughly $81 billion, equal to approximately 70% of the 7(a) balance.
The faster growth in loan originations in the 504 program in FY2025 is most pronounced among Black borrowers, with this group experiencing a 71.6% increase in originations versus the prior fiscal year. Origination growth among Hispanic, White, and “Undetermined” borrowers also rose substantially, jumping between 20% and 24% compared to the prior fiscal year. The final two minority groups, American Indian and Asian or Pacific Islander borrowers saw slower growth of 3.0% and 13.3%, respectively vs last year.
