SBA 504 loan originations continued at a rapid pace in January.
Eighteen weeks into the new fiscal year (started October 1st), 504 loan originations are up 59.8% compared to the same period a year ago. This is not due to COVID slowdowns in the prior year. Originations this year are up 72.7% compared to the same period two years ago, which was pre-COVID. Originations were up 65.6% from the prior year one month ago, so while slowing, this is still exceptional growth. Unpaid Principal Balance of SBA 504 loans stood at $28.94 billion as of September 30, 2021, up 6.4% compared to the $27.20 billion figure at year-end FY2020. SBA 7(a) loan originations started the year more slowly, but they have accelerated recently and are now up 5.3% decline compared to the same period the previous year, much better than a month ago, when originations were down 11.3% compared to the same period in FY2021. The unpaid principal balance of 7(a) loans is $103.89 billion at September 30, 2021, up 6.8% 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 (6.8% in FY2021, 2.3% in FY2020, and 2.9% in FY2019). 504 loans have shown accelerating growth, rising 6.4% to $28.9 billion at year-end FY2021, after climbing 5.5% in FY2020 and (0.2%) in FY2019. 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 50% of 504 projects, The total for SBA 504 loan outstandings (1st and 2nd liens combined) would be somewhere in the neighborhood of $65 billion, still below 7(a) totals, but much closer.
Loan originations in the 504 program are growing noticeably, despite the volatility driven by changing COVID conditions. Total originations in FY2022 through February 4th are up 72.7% and 59.8% compared to the same point in the prior two fiscal years. prior two years. In dollar terms, most of the growth is being led by mid- and large size loans. In fact, the largest size loan groupings are achieving the highest percentage growth, with loans of $350k-$2.0M rising 47.8% YTD and loans greater than $2.0M climbing 97.8%.
