Through September 30, 2019, which is the end of the fiscal year for the program, SBA 504 loan originations were up 4.3% compared to the prior year, reaching $4.96 billion year-to-date in 2019 versus $4.75 billion during the same period in 2018.
This reflects a deceleration in originations over the past month, as originations were up 4.7% year-to date a month ago. The unpaid principal balance of outstanding 504 loans stood at $25.68 billion as of June 30, 2019, down 0.6% compared to the $25.83 billion figure at year-end 2018. In contrast, SBA 7(a) loan originations are down 8.7% year-to-date (through September 30) to $23.18 billion and the unpaid principal balance of 7(a) loans is $94.60 billion at June 30, 2019, up 2.4% compared to year-end 2018.
While 7(a) loans continue to grow at solid pace (7.2% in 2018), 504 loans have remained in a fairly tight range between $25 billion and $27 billion over the last nine years. Of course, 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, usually supplied by a bank or other private sector lender, typically provides another 50% of the project funding.
Loan originations in the 504 program are grew again in 2019 after a modest decline in 2018. Total originations in 2019 through September 30th did not quite reach the levels recorded in 2017. However, the mix of loans by borrower gender size is changing. Majority male owned businesses have always accounted for the bulk of SBA 504 loans, accounting for as much as 87.0% of originations in 2014, with majority female owned businesses accounting for just 0.5% that year. In 2019, majority female owned businesses represented 20.7% of originations.
News Blurb of the Week – SBA Small Business Lending Reflects Strong Economic Trends, Small Business Administration
October 10, 2019 – WASHINGTON – The U.S. Small Business Administration announced FY19 lending numbers showing that it guaranteed over $28 billion to entrepreneurs that otherwise would not have access to capital to start, grow, or expand their small businesses.