Originations of SBA 504 loans accelerated again during the past month.
Through July 2, 2021, SBA 504 loan originations are up 37.8% compared to the prior year, reaching $5.82 billion year-to-date in FY2021 versus $4.22 billion during the same period in FY2020. Last month, originations were up 32.0% compared to the prior year. Unpaid Principal Balance of SBA 504 loan figures have finally been updated. They stood at $27.41 billion as of March 31, 2021, up 0.8% compared to the $27.20 billion figure at year-end FY2020. SBA 7(a) loan originations also accelerated during the past month. They are now up 31.3% through July 2, 2021 (they were up 22.6% through June 11, 2021) compared to the same period in FY2020 and the unpaid principal balance of 7(a) loans is $99.71 billion at March 31, 2021, up 2.5% compared to year-end FY2020.
The 7(a) program has shown steady growth in loan outstandings in recent year that continued through the end of FY2020 (2.3% in FY2020, 2.9% in FY2019 and 7.2% in FY2018). However, 504 loans broke out of the tight range between $25 billion and $27 billion it has occupied over the last nine years, growing 5.5% to $27.2 billion at yearend FY2020. 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. The first lien loan financing typically accounts for another 50% of 504 projects, meaning the actual program totals would be more than double the figures shown in the graph above.
The accelerated growth in loan originations in the 504 program nine months into FY2021 has been concentrated in two groups. In percentage terms, we still see negative growth in the “Undetermined” group, but solid growth in the American Indian, Asian or Pacific Islander, and Black groups, which recorded advances of 16.7%, 25.8% and 21.1%, respectively, year-to-date through July 2, 2021. On the other hand, Hispanic and White borrowers posted strong YTD growth of 53.0% and 81.5%, respectively
News Blurb of the Month
Federal regulators will require 2 banks to increase lending to the minority community in Southern Dallas. Jason Trahan, David Schechter, and Chance Horner, WFAA Investigates
Federal regulators are requiring that two banks seeking to build branches in the Park Cities and Turtle Creek areas must also develop plans to equitably lend to low-and moderate-income borrowers in predominately minority parts of Southern Dallas.
