SBA Small Business Loan Statistics – FYE 2012

Compared to FYE 9/30/2011, the number of SBA loan approvals for FYE 2012 was down 13% (7,841 loans) and the loan $ volume was down 11% ($2.6 billion) YOY, according to data provided by the SBA.   100% of the decline was due to the 23% ($4.5 billion) decline in approved SBA 7A loan volume.

SBA 7A Loans:  Represented 80% of all SBA loan volume in 2011, falling to 69% by FYE 2012. The large YOY decline was attributed to the following:

1. The SBA reinstated a 3% SBA guarantee fee for SBA 7A loans in 2012, which caused a surge in demand prior to 2012 due to borrowers trying to get the loan before the guarantee fee increased.  This made 2012 a difficult comp year for SBA 7A loans.
2. Rural loans – The loan volume to rural areas experienced the largest decline, with $ loan volume falling 45% or $1.9 billion compared to FYE 9/30/2011 as many of these borrowers preferred the 504 loan to finance their fixed assets.
3. Minority loans – Loans approvals to minorities dropped 20%, or $1.0 billion year-over year (“YOY”).
4. Women – 7A loan approvals for women dropped 22% ($0.5) billion YOY.
5. Veterans – Loans to vets declined 35% ($0.4 billion).
6. All 7A loan categories experienced an annual decline of at least 8%.

SBA 504 Loans:  504 approval volume grew 39%, or $1.9 billion, over 2011 but was not enough to overcome the $4.5 billion drop in SBA 7A loan approvals.  The 504 growth was attributed to the following:

1. The ability to refinance debt. For fiscal year 2012 the SBA permitted 504 loan proceeds to be used to refinance existing debt, where it was previously permitted only for the acquisition of new fixed assets (no refi’s).  Given the lower rates and fixed rates associated with 504 loans (compared to 7A loans) in 2012, many borrowers opted to take advantage of this window and refinanced owner occupied commercial real estate with a 504 loan.  In other words, the 504 loan volume increased at the expense of the 7A loans.
2. Rural loans. Whereas 7A loan approvals to Rural borrowers was down 45% YOY, 504 loan approvals were UP 49% to Rural borrowers in FYE 2012.
3. Minorities and veterans, in particular, took advantage of the 504 program (instead of the 7A program), as approvals for minorities and vets were up 31% ($0.4 billion) and 55% ($ $0.2 billion) over FYE 2011.

Summary: 

• If you’re thinking about getting an SBA loan, we recommend you start the process ASAP before any additional unfavorable changes are implemented (loan purpose restrictions, higher fees, lower amortization, etc).
• 504 loans cannibalized ~$1.9 billion of 7A loans in FYE 2012 due to the lower rates and fees associated with 504 loans relative to 7A loans.
• SBA loan approvals to startups were down 8% or $0.4 billion YOY, while existing businesses experienced an 11% or $2.2 billion decline.

Outlook:

• Absent the impact of the upcoming Presidential election, which creates much uncertainty surrounding the SBA loan program, it’s reasonable to assume that demand will shift back to 7A loans (away from 504 loans) now that the ability to refinance debt with 504 loans has been terminated effective 9/30/2012.
• If in 2013, however, the SBA renews the ability to use a 504 loan to refinance existing debt we believe the mix will continue to shift from SBA 7A loans to SBA 504 loans.
• If in 2013 the SBA lowers the guarantee fees to be more competitive with fees for traditional loans, than we believe overall SBA loan volume will increase by at least 2%-3% over FYE 2012.   If the guarantee fees remain as is, we believe the 504 loans will continue to cannibalize the 7A volume.

To apply for an SBA loan or just to learn more, check out http://www.pluraFinancial.com or see your local SBA Small Business Development Center.

-Brandon Hinkle/pluraFinancial.com

SBA Loan Statistics for 7A and 504 Loans, through 6/8/2012

From the blog of pluraFinancial.com, here are the latest SBA loan statistics for SBA 504 and 7A loan approvals, through 6/8/2012:

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• Summary: The 2012 SBA loan trend continues…
  • On a Year-to-Date basis, SBA 7A Loan approvals are down 34% through 6/8/2012 according to sba.gov
    • The 7A Loan’s higher SBA guarantee fees and lower amortization relative to the SBA 504 Loan is attributed to part of the decline in 7A Loans as demand shifts toward 504 Loans.
    • Existing businesses and rural businesses in particular appear to be fleeing SBA 7A loans.
  • SBA 504 Loan approvals are up 27% YOY
    • Borrowers appear to prefer the ability to refinance existing debt, and the relatively low rates & fees associated with SBA 504 Loans

• A closer look into the numbers: On a YTD basis, total SBA loan approvals were down $4.1 Billion, or 23% YOY
  • SBA 7A Loan approvals were down $4.9B YOY, or 34%, responsible for 100% of the YOY total SBA loan decline
    • 7A Loan approvals to existing business were down $4.1B
      • Loans to Rural businesses were down $1.8 B
      • Loans to Asian-American owned businesses were down $0.9B
      • PLP loans represent ~half of all 7A loans, and were down 57% YOY
    • 7A Loan approvals to startups were down $0.8B
      • Express loans, a popular SBA loan product for startups, were down $0.7B YOY
    • 7A Loans represented 82% of SBA Loans last June, and currently represent 71%.
  • SBA 504 Loan approvals were up $0.8B, or 27% YOY
    • Loans to Existing businesses were responsible for ~90% of the 504 Loan growth.
    • Approvals were up in nearly every SBA 504 loan category (minorities, existing businesses, startups, rural businesses, etc.)
• Projections: We expect a continued shift toward SBA 504 loans in 2012 given the favorable rates and amortization relative to other SBA loan products.  This assumes the SBA will continue to permit 504 loan proceeds to refinance existing debt.  

-James Timberview/www.plurafinancial.com

SBA Statistics for 7A and 504 Loans, through 3/23/2012

-James Timberview/www.plurafinancial.com

The SBA recently posted its latest results for small business loans. With the SBA’s FYE being September 30, we are nearly halfway through its fiscal year.  Here are some interesting takeaways from the SBA’s loan approval results through YTD 3/23/2012:

• As of 3/23/2012, total SBA approved loan volume was down 35%, or $4.8 billion, YOY
  • The drop in approved Preferred Lender Program (PLP) loans was responsible for 39% of the total YOY decline.
  • The drop in loans to rural-based businesses was responsible for 20% of the total YOY decline in SBA loans.
  • The decrease of approved loans to Asian Americans was responsible for 13% of the total volume decline YOY.
• SBA 7A loans are down 45% YOY
  • 7A loans to existing businesses had the largest decline, shrinking 47% YOY.  This is likely attributed to 7A loan fees being reinstated in FY 2011; hence, borrowers (and lenders) were rushing to get 7A loans done prior to the fees going up.
• SBA 504 loans were up 15% YOY, slightly offsetting the 7A volume decline
  • The uptick in 504 volume was likely due to folks rushing to take advantage of the ability to use SBA 504 loans to refinance debt, a favorable attribute that is set to expire in September 2012.
• The mix of SBA loans approved for startups versus existing businesses has remained relatively flat at 23% and 77% of total volume, respectively.
• Wells Fargo approved the largest volume of SBA loans thus far in 2012, and an average loan size of ~$350k.
• Chase approved the largest # of SBA loans, with an average loan size of ~$125k.

To apply for an SBA loan online, or to learn more about the SBA, visit pluraFinancial or the SBA.

Small Business Development Centers (SBDCs): Free Business Management Support!

By: James Timberview/www.plurafinancial.com

A Small Business Development Center (SBDC) is one of the most underutilized resources available to small business owners.  Private business consultants can be expensive; SBDCs, however, are paid for by the government, so don’t pass up the opportunity to utilize their free, valuable assistance and vast networks.

According to the SBA (sba.gov), Small Business Development Centers are partnerships primarily between the government and educational facilities, administered by the Small Business Administration and aims to give educational services to small business owners and aspiring entrepreneurs.

An SBDC generally provides the following services for small business owners & startups:

• One-on-one consultation in business finance, marketing, management, research and more
• Assistance with business plan development and business expansion
• Help develop marketing plans and access market information
• Advice on securing a grant, bank loan, and equity investment
• Expertise in financial planning & analysis
• Training opportunities and business education

Quick facts about SBDCs:

• SBDC Locations: There are a total of 63 SBDCs nationwide, with at least one in all 50 states.  Click here to find the location nearest you.
• SBDC Cost: All services given at SBDCs are free.  Optional, low-cost training is also available.
• SBDC Eligibility: Anyone can join an SBDC, but strongest consideration is given to those who are creating their first small business and cannot afford private consultation.

SBA Requirements for 504 Loans, 7A Loans and Micro Loans

To apply for an SBA loan, check out www.plurafinancial.com.  To learn more about the SBA, go to http://www.sba.gov.