SBA Commercial Loans – Poised For a Come Back?

Year to date we have seen 6 major national SBA lenders come back to the market. That is very encouraging news, despite all of the continued talk of the recession and how bad it might get. The fact that these leaders in the industry have the confidence to put both their necks on the line and capital, is the most important and significant statement of belief they could provide.

SBA commercial loans, including the SBA 7a and the 504 loan program have received a lot of press lately, both good and bad. On the positive side, SBA loans have been one of the most durable programs throughout the credit crisis and though down sustainably for 2008 (37%) and year to date 2009 (estimated at 50% though that is not confirmed) – SBA loans are still funding. We know this because we still are closing SBA loans.

Liken this to the CMBS market that is all but dead and was down 98% in 2008, compared to 2007... 98%... This is according to the Mortgage Bankers Association, the most reputable association in our industry.

Many people are still disappointed by the SBA performance though. After all, the SBA was created to help small business through difficult times and to get loans that they would not have otherwise been qualified for.

Borrowers need to keep in mind that the SBA does not fund loans. Rather banks/lenders fund SBA loans and they provide a guarantee to the funding bank that if the borrower defaults, the Small Business Association will pay the bank back and make them whole. However, some backs have had a difficult time getting their capital back from the SBA… Which has caused fear in upper bank management and have forced banks to further scrutinize loan requests.

Despite these concerns and the media (which continue to pound fear pound into our society), many leading experts are hopeful that we have bottomed out, and they are backing their words, with the most valuable form of confidence – their capital.