Through the end of November 2023, loan originations under the 504 loan program are down 13.6% compared to the same point in FY2023, which represents a modest deterioration from the 13.3% decline versus the prior year measured one month ago.

Although year-over-year comparisons are impacted by the surge in government lending during the Covid years, the current year figures are down, even compared to pre-Covid years. Our second chart below is based on stale data, as the SBA has not published updates on program outstandings for more than a year. Principal Balance of SBA 504 loans stood at $32.00 billion as of December 31, 2022, up 3.7% compared to the $30.87 billion figure at year-end FY2022. SBA 7(a) loan originations are doing somewhat better than the 504 program. Through November 30, 2023, SBA 7(a) originations are down 4.7% compared to the same period in FY2023. The unpaid principal balance of 7(a) loans was $108.43 billion at December 31, 2022, up 1.2% compared to year-end FY2022.

The 7(a) program has shown steady growth in loans outstanding in recent years that continued into FY2023 (up 1.2% year-to-date in FY2023, 3.1% in FY2022, and 6.8% in FY2021). 504 loans have shown accelerating growth, rising 3.7% year-to-date in FY2023, 6.7% to $30.9 billion at year-end FY2022, and 6.4% in FY2021. Of course, 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 for SBA 504 loan outstandings (1st and 2nd liens combined) would be somewhere in the neighborhood of $72 billion, still below 7(a) totals, but equal to approximately 67% of the 7(a) balance.

Some interesting patterns emerge when looking at the age of the businesses being funded. Loans funding a change of ownership have fallen a bit over 44% versus the same point in the prior fiscal year and loans to new businesses or businesses less than 2 years old have dropped 43% over the same period. Loans going to fund established businesses 2 or more years old have declined almost 17% compared to this time last year. Bucking the downward trend are loans to start-ups, which are up almost 22% compared to last year.