Originations of SBA 504 loans continue to chug along in FY2021, as loan activity accelerated once again in February.
Through March 5, 2021, SBA 504 loan originations are up 16.8% compared to the prior year, reaching $3.07 billion year-to-date in FY2021 versus $2.63 billion during the same period in FY2020. Last month, originations were up 9.7% compared to the prior year. Unpaid Principal Balance of SBA 504 loan figures for the June 2020, September 2020, and December 2020 quarters have still not 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 have recovered some and are now down 4.2% through March 5, 2021 (they were down 11.0% through February 5, 2021) 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 a bit closer to 7(a) loan totals.
The accelerated growth in loan originations in the 504 program five months into FY2021 has been concentrated in two groups. In percentage terms, we still see negative growth in the American Indian, Asian or Pacific Islander, and “Undetermined” groups, which recorded declines of 27.4%, 6.8% and 13.8%, respectively, year-to-date through March 5, 2021, while originations to Blacks were up just 1.7%. On the other hand, Hispanic and White borrowers posted YTD growth of 44.7% and 41.0%, respectively.
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