July Small Business Lending Report Shows Strong Signs of Growth

Loan volume increases as small businesses adapt to rising rate environment

black woman who owns business smilingThe National Association of Development Companies (NADCO) released their monthly Small Business Lending Report (SBLR), and various pointers for small business lending look strong.

The report showed a rise in commercial real estate and equipment finance loans to small businesses in the month of July, even in the midst of increasing rates. This demonstrates increased strength among small businesses and positive news for job creation.

The SBLR, released the second Thursday of every month, offers nationwide monthly metrics and insight on availability and access to capital for small businesses, job creation, interest rates and small business loan volume through the SBA 504 real estate and asset finance program.

The 504 loan initiative is a self-funded long-term financing tool at no cost to taxpayers providing small businesses with long-term, fixed-rate loans with down payments as low as 10%. Certified Development Companies (CDC) work with the SBA and private sector lenders to provide financing to small businesses under the 504 loan program.

According to the report, over the past 12 months there have been 7,711 loans totaling $5.2 billion at an average debenture rate of 2.26%. There were 590 loans in July (as compared to 539 in June) and the 20-year monthly loan pool size was $398,994,000 vs. $385,598,000 a year ago.

This month’s debenture rate is 3.15% compared to 2.38% a year ago. Additionally, there were 53 ten-year loans totaling $34,982,000. The debenture rate for these ten-year loans that are funded bi-monthly and represent equipment purchases is 1.89%, compared to 1.19% in July 2012.

“We see more small business loans delivered compared to last month and year-over-year, which is putting oxygen into the economy for job creation. Borrowers should lock in these historically low interest rates given the sharp, recent increases we’ve seen,” said Beth Solomon, President and CEO of NADCO. ”Small businesses can lock in a very low rate for 20 years with the SBA 504 loan – which is very unusual in small business finance. They should run, not walk, to their nearest Certified Development Company or bank to ask about it.”

“As we continue to climb out of the recession, small business lending volume remains historically high and even at current, higher funding levels borrowers are accessing long term fixed rate funds at historically low rates,” Solomon continued.

Solomon concluded: ”If we want to strengthen and sustain the economic progress we’ve seen recently, we need to ensure small businesses get the capital they need. Our members will continue to work closely with the Small Business Administration and local business leaders and lenders to equip and empower small businesses to grow and create jobs.”

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