Four months into fiscal year 2025, SBA 504 loan originations are up 25.0% as of February 28, 2025 compared to the prior fiscal year.
This represents a noticeable acceleration compared to the 18.5% rise posted as of January 31, 2025. Year-to-date approval volumes are at the highest level in the last five years, with the exception of the pandemic year of FY2022. Originations in the SBA’s other major loan program, SBA 7(a) loans, accelerated to a 40.8% increase compared to the prior fiscal year, up from the 39.3% jump in originations recorded through January 31, 2025.
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.
Originations have grown substantially in all business age categories so far in FY2025. Leading the charge is loans involving a change of ownership of an existing business, which have shown an increase in originations of 60.1% compared to last year through February. Loans to new businesses or businesses less than 2 years old, and businesses 2 or more years old have grown less, but these categories still posted impressive growth of 31.2% and 24.8%, respectively, versus last year. Lastly, loans funding a startup have risen 17.1% over the same period.
