SBA 504 loan origination growth seems to have stabilized after slowdowns due partly to reduced economic activity and partly to the significant efforts expended for the PPP and EIDL programs.

Through July 31, 2020, SBA 504 loan originations were up 15.0% compared to the prior year, reaching $4.73 billion year-to-date in FY2020 versus $4.11 billion during the same period in FY2019. Through July 3, 2020, SBA 504 loan originations were up 14.9% compared to the prior year. The unpaid principal balance of outstanding 504 loans stood at $25.72 billion as of March 31, 2020, down 0.2% compared to the $25.83 billion figure at year-end FY2019. SBA 7(a) loan originations are down 12.5% through July 31, 2020 compared to the same period in 2019 and the unpaid principal balance of 7(a) loans is $95.64 billion at March 31, 2020, up 0.6% compared to year-end FY2019.

While 7(a) loan outstandings were still growing at solid pace through the end of FY2019 (2.9% in FY2019 and 7.2% in FY2018), 504 loans have remained in a fairly tight range between $25 billion and $27 billion over the last nine years. Of course, the published 504 loan figures in the chart above includes only the CDC/SBA second lien portion of a 504 loan package, which typically amounts to roughly 40% of the financing. If the first lien loan and borrower investment were included, the 504 loan totals would be closer to 7(a) loan totals.

The strong growth in loan originations in the 504 program ten months into FY2020 has been unevenly distributed among a variety of groupings. In percentage terms, we see negative growth in the American Indian and Asian or Pacific Islander groups, which recorded declines of 52.8% and 7.0%, respectively, year-to-date through July 31, 2020. On the other hand, Black, and Hispanic borrowers posted YTD growth of 19.8% and 11.2%, respectively.

Community Development Found to be Largest Value of CRA, Krista F.Brock, DSNews

Community development and single-family mortgage lending account for the greatest dollar volume of lending that qualifies under the Community Reinvestment Act (CRA), according to analysis from the Urban Institute’s Housing Finance Policy Center.