Business continues its return to normal following the Government shutdown in the U.S., which lasted from October 1 through November 12, a period that coincides with the beginning of the SBA’s fiscal year 2026.
The chart on the left below shows SBA 504 loan origination volumes through the end of April, with origination volumes down 8.2% year-over-year. This marks an improvement over the 8.8% YoY decline reported at March 31, 2026. There was also improvement in the SBA’s other major loan program. SBA 7(a) loans, which are now down 21.7% compared to the prior fiscal year through the same date, after being down 25.2% at the prior month end.
Cumulative gross charge-offs for the SBA 504 program have traditionally been very low, as seen in the graph above right. Demonstrating the strong credit quality of this program is the fact that cumulative net charge-offs on 504 loans remain below 1.0% for all fiscal years since 2015, and at 0.2% or below for every fiscal year since 2018.
Given the disruptions caused by the government shutdown, it is no surprise that 504 loan originations are down substantially year to date in all business age categories so far in FY2026. Leading the decline is loans to new businesses or businesses less than 2 years which have shown a decrease in originations of 47.6% compared to last year through April. Following closely behind, loans involving a change of ownership of an existing business have fallen 36.0% from the prior year. Showing a less rapid drops, businesses 2 or more years old have declined 3.8%, while loans funding a startup have decreased 11.9% over the same period.
