Building on the momentum shown in late 2020, loan activity accelerated again in December and early January 2021.
Originations are now further ahead of where they were at the same point in fiscal year 2020. Through January 8, 2021, SBA 504 loan originations are up 6.8% compared to the prior year, reaching $1.90 billion year-to-date in FY2021 versus $1.78 billion during the same period in FY2020. Last month, originations were up 2.6% compared to the prior year. Unpaid Principal Balance of SBA 504 loan figures for the June 2020 and September 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 are now down only 9.9% through January 8, 2021 (they were down 22.2% through December 4, 2020) 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 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 have declined 6.7% so far in FY2021. Though loans to companies owned less than 50% by women are up 14.8% over the same period, the percentage of originations to maleowned businesses remains at 70.4% so far in FY2021, down just slightly from the 70.6% recorded in FY2020.
New Stimulus Package Clears Path for Increased SBA Lending. John Reosti, American Banker
The new stimulus package is providing more than just emergency relief for small businesses. While the $900 billion legislation revives the Paycheck Protection Program, it also enhances key elements of the Small Business Administration’s traditional lending efforts. That could result in a major lift for lenders and borrowers when the time comes to invest in an economic recovery, industry experts said.