SBA Loan Fundings Top $10 Billion Since Oct 1st
SBA Loans (primarily 7a and 504 loans) funded after the signing of the “Small Business Jobs Act” recently surpassed the $10 billion mark.
That’s Billion with a “B.”
According to the SBA, 19,103 SBA 7a loans totaling $8,681,598,112 were funded between Oct 1st and Dec 28th with approximately $283 million still pending.
And 2,323 SBA 504 loans totaling $1,331,668,000 were funded with roughly $7.5 million still pending.
That’s A LOT of small business lending.
Keep in mind that 504 fundings are just for the 2nd mortgage piece guaranteed by the SBA which typically equates to only 30 to 40% of the financing and that means the total 504 volume was more than double the reported number…AND the 504 numbers were more than likely new construction or expansion money and did not include much refinance volume because current 504 refinance guidelines do not allow for a refinance without an expansion…AND the new SBA 504 refinance rules will be out soon…which should lead to a surge in 504 refinance volume given the changes to the program which allow larger businesses to qualify, larger loans to be done and more property types (like self storage), etc.
Additionally, all of this activity has occurred without the use of the Small Business Lending Fund yet to be rolled out by the Treasury which will allow more lenders to make SBA guaranteed loans.
Combine all of this with the fact that many more lenders have discovered the benefits of SBA lending and we should expect that 2011 will be a very good year for Small and Mid-Sized Businesses in need of financing.
View Comments (6)
Any concern that SBA limits (specifically 7a) will be reduced? How long will we have the 5 million dollar threshold?
Nope. The new SBA 7a loan limit of $5 million is a permanent change along with the new 504 (second mortgage) loan limit of $5 million. ($5.5 million for "manufacturers," energy efficient projects or those using "enough" renewable energy).
I'm wondering if any new progress has been made on the guidelines for 504? When we went to our bank they were very excited about the new guidelines that were due out in Nov and felt that it would suit us well. We purchased our site (with building), have been approved by the town and state (Plaistow, NH) and have converted the site to commercial. The bank along with their SBA contact, suggested we waited for the new guidelines and after discussing our options with them we agreed. We received information from our town last week, that was giving to them during an SBA seminar and although it wasn't the guidelines, one of the bullet points of the 504 loan was refinancing. This seems like all great news, however new to this process I'm just concerned and I don't want to miss out because we not pushing hard enough on the banks. I've been a member of the WSB for a long time however our local office was closed last year, therefore I know longer have the resource for guidance.
Hi Jennifer,
Nothin' yet and the estimates I am hearing are anywhere from end of January to end of March. The sooner, the better because there are a lot of small business owners and lenders waiting on the new rules. You won't miss out though (assuming your transaction qualifies) because the SBA refinance window is supposed to be open for 2 years, although if the clock started ticking when the legislation was passed then it will only be a 1.5 year window.
You might also consider an SBA 7a loan. The mostly fixed nature of the 504 typically makes it a better long term solution if you are only financing commercial real estate and "long life" equipment, but the 7a offers additional flexibility and can be used for "any legitimate business purpose" including real estate.
John
You note a 7a limit of $5,000,000 - my understanding is that it is $4,000,000. any word at all the fee waiver?
Hi Jim,
The SBA 7a loan limit is $5,000,000 as a result of HR 5297 - the Small Business Jobs Act. (It used to be $2,000,000)
$4,000,000 was the old maximum 504 (second) mortgage limit prior to the Act.
The Fee waiver is toast. It went away right after Congress voted to extend it past 12/31. (The voted to extend it because at the time there was still funding available, but the volume of loans funded by SBA in the last week of the year depleted the funds almost overnight).
John