Loan activity picked up considerably in November compared to October, and originations now surpass where they were at the same point in fiscal year 2020.

Through December 4, 2020, SBA 504 loan originations are up 2.6% compared to the prior year, reaching $1.20 billion year-to-date in FY2021 versus $1.17 billion during the same period in FY2020. Last month, originations were down 18.2% compared to the prior year. Unpaid Principal Balance of SBA 504 loan figures for the June 2020 and September 2020 quarters have not yet been updated, and they 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 22.2% through December 4, 2020 compared to the same period in FY2020 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.

Loan originations in the 504 program are growing noticeably, despite the weak economic environment. Total originations in FY2021 through December 4th are up 2.6% compared to FY2020 and well in excess of the volumes achieved at this point in any of the last five years. In dollar terms, most of the growth is being led by mid-and large size loans. However, the smaller size loan groupings are achieving the highest percentage growth, with loans of $150k and under up 11.9% YTD and loans between $150k and $350k up 26.0% YTD.

Is CRA Compliance Enough for Community Banks? Jorge Sun, Banking Exchange

Banks can do more to support their local small businesses and communities in today’s climate. If financial institutions limit their community investment to terms laid out in the Community Reinvestment Act (CRA) or allocated through the CARES Act (of which PPP is part) it will hurt both the banks and their communities.