SBA 504 loan originations slowed a bit in December from the blistering pace set in the first two months of fiscal year 2022.
Fifteen weeks into the new fiscal year (started October 1st), 504 loan originations are up 65.6% compared to the same period a year ago. This is not due to COVID slowdowns in the prior year. Originations this year are up 75.2% compared to the same period two years ago, which was pre-COVID. Originations were up 93.2% 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, exhibiting an 11.3% decline compared to the same period the previous year, not much changed from a month ago, when originations were down 11.1% 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.
The accelerated growth in loan originations in the 504 program three months into FY2022 has been most dramatic in the American Indian group, which is up 509.6% so far in FY2022. Also showing exceptional increases in growth are the Asian or Pacific Islander, White and Black groups, which registered growth of 101.1% 78.4% and 61.8%, respectively. Even in the Hispanic group, which posted the lowest year-over-year growth, originations are up 28.1%.
