Three months into fiscal year 2025, SBA 504 loan originations are up 13.9% through December 31, 2024 compared to the prior year.
This represents a modest deceleration compared to the 18.6% rise posted as of November 30, 2024. Year-to-date volumes are the highest since the origination levels produced during the pandemic year of FY2022. Originations in the SBA’s other major loan program, SBA 7(a) loans, grew significantly to a 37.8% increase compared to the prior fiscal year, up from the 26.1% jump in originations in recorded through November 30 2024.
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.
Overall, the number of SBA 504 loans originated year-todate through December 31, 2024 was up 9.3% compared to the same period in FY2024. Driving this growth were loans in the lower size range, specifically loans between $150k and $250k, which grew 27.5% from the prior year
and accounted for 4.2% of loan originated YTD. Originations volumes are still dominated by loans in the second largest size category, $250k-$2M, which grew a more modest 12.1% compared to the prior year period, but still accounted for 51.3% of year-to-date 504 origination volume.
