Originations are down 22.1% compared to the same point in FY2023, noticeably lower than the 7.5% decline marked at the end of January 2024.
We suspect that the program running the data has trouble recognizing February 29th, but multiple efforts to contact the SBA about the issue have been unsuccessful. The same issue seems to be affecting SBA 7(a) loan origination figures as well. The figures on the SBA website through February 29, 2024 show no change from the figures for January 31, 2024, leaving SBA 7(a) originations down 18.7% compared to the same period in FY2023. This is considerably worse than the 1.6% decline measured at January 31, 2024.
The 7(a) program has shown steady growth in loans outstanding in recent years that continued through FY2023 (up 3.1% in FY2023, 3.1% in FY2022, and 6.8% in FY2021). 504 loans have shown accelerating growth, rising 9.7% in FY2023, 6.7% to $30.9 billion at year-end FY2022, and 6.4% in 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, If we include the private lender portion of the same loan projects, which typically accounts for roughly 50% of 504 projects, The total for SBA 504 loan outstandings (1st and 2nd liens combined) would be somewhere in the neighborhood of $76 billion, still below 7(a) totals, but equal to approximately 69% of the 7(a) balance.
Charge-off rates for the major SBA loan programs remain very low. The chart to the left shows charge- off rates for the CDC/SBA-held second lien position (504 Regular), as well as charge-off rates in the short- lived FMLP program (504 First Lien), authorized in 2009 and ending in 2012. This program held pools of 504 first liens. While accurate data on the privately- held 504 first lien loans is not available, the fact that these loans are in a last loss position after the second lien loans leads to a presumption that charge-off rates would be considerably lower than for the second lien loans, which are only showing a 0.00% rate in FY2023, compared to 0.15% for 504 Regular (second lien) loans and 0.48% for 7(a) loans.
