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Interest in a market for buying and selling nonguaranteed portions of SBA loans is slowly taking shape as a need for earning assets outweighs concerns over risk and underwriting costs.
September 11
Wells Fargo and Live Oak Bank were the top lenders in the Small Business Administration's 7(a) loan program, helping lead the agency program to its most successful fiscal year.
The SBA reported Thursday that it approved more than 52,000 loans in its 7(a) program during the fiscal year that ended Sept. 30. The dollar volume rose 7% from fiscal 2013, to $19.2 billion.
The volume of all loans guaranteed by the agency rose 3% from a year earlier, to $26.2 billion.
Wells Fargo was the biggest 7(a) lender during fiscal 2014, making 4,037 loans totaling $1.62 billion. The San Francisco company also topped the prior year's list, making 3,481 loans for $1.47 billion. Live Oak Bank in Wilmington, N.C., was the biggest community bank participant; it made 678 loans totaling $808 million.
Under 7(a), the SBA guarantees up to 85% of loans made by participating lenders. SBA spokesman David Hall said Thursday that 2,244 institutions were registered as 7(a) lenders in fiscal 2014.
The recently ended fiscal year "was a pretty good time" for SBA lending, Gary Youmans, who leads SBA lending at the $617 million-asset First Choice Bank in Cerritos, Calif., said Thursday, adding that he is "cautiously optimistic" about the current fiscal year. (First Choice made 43 loans under the 7(a) program in fiscal 2014, totaling $54.6 million.)
The 7(a) program has funding to guarantee $18.5 billion of loans during the current fiscal year. Youmans, who also serves on the board of the National Association of Government Guaranteed Lenders, said he believes such funding authority should be sufficient to meet demand.
SBA reported that 7(a) chargeoffs totaled $807 million at Sept. 30, or 1.18% of the $68.2 billion of loans on the books.
Youmans, who has been involved with SBA lending in 1983, said delinquencies nationwide were near historic lows. "When I talk to other lenders, I get the sense we're all seeing pretty good numbers right now," he said, adding that asset quality in First Choice's SBA portfolio is pristine. "We don't have any loans overdue 30 days, and there are none in liquidation. It's been that way for a year."
