We’re still awaiting updates to SBA Loan Program Outstandings through March.
As expected however, SBA 504 loan origination growth slowed down considerably since our report last month, due at least partly to the significant efforts expended for the PPP and EIDL programs. Through June 5, 2020, SBA 504 loan originations were up 20.4% compared to the prior year, reaching $3.87 billion year-to-date in FY2020 versus $3.22 billion during the same period in FY2019. Through April 17, 2020, SBA 504 loan originations were up 34.5% compared to the prior year. Despite the slowdown, 504 loan originations are still growing, whereas SBA 7(a) loan originations are down 8.2% through June 5, 2020 compared to the same period in 2019.
While 7(a) loan outstandings continue to grow at solid pace (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 closer to 7(a) loan totals.
Loan originations in the 504 program are growing substantially so far eleven months into FY2020. Total originations in 2020 through June 5th are well in excess of the volumes achieved at this point in any of the last five years. It appears that most of the growth is being led by mid- and large size loans. In fact, loans between $350k and $2 million are up 21.3% year-to-date, and loans of greater than $2 million are up 22.4% compared to the prior year. These two categories account for roughly 59% and 32% of year-to-date growth, respectively.
Bank Regulator’s Battle With Anti-Redlining Law Comes to an End, Emily Flitter and Jeanna Smialek, New York Times
May 28, 2020 – Pedersen, American Banker to pause CRA reform as banks manage pandemic response, Brendan Joseph Otting, the top overseer of the country’s largest banks, drew from his own experiences as a banker to rewrite rules for the Community Reinvestment Act. Not everyone is on board.