Once again (for the 4th time in six months), the SBA website data for YTD loan volumes for the SBA 7(a) and 504 programs is only partially updated, with prior fiscal year figures updated through June 30, but current year figures unchanged from May 31.
We are using data from a separate page of the website that provides current loan volumes through July 13, 2024 for FY2024, but not prior years, so our growth figures do not compare volumes on the same dates. In any case, through July 13, 2024, 504 loan originations are up 2.6% compared to the prior year at June 30. They were down 1.6% compared to the prior year last month, though this month’s figures are skewed by the extra two weeks included in the FY2024 figures. Likewise, SBA 7(a) originations are now up 16.3% fiscal year-to-date (through July 13) compared to the same period (through June 30) in FY2023, which is up considerably over the 8.5% advance measured at May 31, 2024.
The chart on the right above shows cumulative gross charge-offs on SBA 504 second lien loans by year of origination. As a reminder, an SBA 504 project has three components; an equity portion contributed by the borrower, the second lien portion held by the SBA through a CDC, and the first lien portion originated by a private lender. Comprehensive statistics on the private lender portion are not available, but statistics on the SBA/CDC second lien portion are. Since this is the loan that takes the first loss position, this portion of the loan project is likely to see higher charge-offs than the private lender first lien portion. As shown in the chart above, gross charge-offs for the SBA/CDC portion have been very low since the end of the financial crisis. In fact, cumulative gross charge-offs have been below 1.0% for every fiscal year since FY2013, and below 0.5% since FY2017. There have been no gross charge-offs in any of the fiscal years starting with FY2020.
There appear to be differences between the way loans are categorized between the two different pages we’ve used for the current fiscal year and prior fiscal years on the SBA website. This results in a sharp drop on originations of loans in the smaller loan size categories, with most of that volume showing up in the largest category; loans above $2.0 million. The biggest drop is in the loans between $350k and $500k. According to this categorization, roughly 90% of current year SBA 504 loan origination volume falls into the two largest categories, loans of $500k-$2.0M and loans above $2.0M.
