Originations of SBA 504 loans slowed down a bit as the SBA’s fiscal year came to a close on September 30.
However, originations for the full fiscal year 2021 still grew 41.0% compared to FY2020, reaching $8.22 billion in FY2021 versus $5.83 billion in FY2020. Last month, originations were up 51.9% compared to the prior year. Unpaid Principal Balance of SBA 504 loan stood at $28.32 billion as of June 30, 2021, up 4.1% compared to the $27.20 billion figure at year-end FY2020. SBA 7(a) loan originations accelerated towards the fiscal year-end. They are now up 62.0% through September 30, 2021 (they were up 57.7% through Sept. 3, 2021) compared to the same period in FY2020 and the unpaid principal balance of 7(a) loans is $101.74 billion at June 30, 2021, up 4.6% compared to year-end FY2020.
The 7(a) program has shown steady growth in loan outstandings in recent years that continued through the end of FY2021 (4.6% in FY2021, 2.3% in FY2020, and 2.9% in FY2019). 504 loans have advanced at a slower pace, but outstandings grew 4.1% to $28.3 billion at year-end 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, which typically amounts to roughly 40% of the financing. The first lien loan financing typically accounts for another 50% of 504 projects, meaning the actual program totals would be more than double the figures shown in the graph above.
The gender breakdown of borrowers for loan originations in the 504 program continues to change since the beginning of the pandemic. Loan originations to companies owned 50% or more by females grew 37.2% in FY2021, just below the 38.0% growth posted by male-owned businesses. However, loans to companies owned less than 50% by women climbed 54.9% over the same period. Still, loan originations to male-owned businesses represented 70.9% of 504 originations in FY2021.
Tug-of-war over anti-redlining law heads back to the drawing board
On September 8, 2021, the Office of the Comptroller of the Currency (OCC) issued a proposal to rescind the Community Reinvestment Act (CRA) rule that the OCC published in June 2020 and replace it with rules based largely on the rules adopted jointly by the federal banking agencies in 1995.
