In FY17, Massachusetts continues leading the nation in loans less than $50k; $150k and underserved; ranks #4 in overall SBA Approvals.
Massachusetts is home to approximately 639,334 small businesses according to data compiled by SBA’s Office of Advocacy. The annual Small Business Profiles for Massachusetts reported that small businesses created 34,568 net jobs in 2014. Among the seven BDS (Business Dynamic Statistics) size-classes, firms employing 20 to 49 employees experienced the largest gains, adding 7,717 net jobs. (Source: Statistics of U.S. Businesses, U.S. Census Bureau)
The national loan volume under the SBA’s flagship 7(a) loan program rose in fiscal year 2017 from the previous year ($24.12 billion) to $25.4 billion.
In fiscal year 2017, the SBA Massachusetts District Office (out of 68 district offices) led the nation in the following categories: #1 on loans less than $50k; #2 on loans less than $150k and underserved; #4 on total loan approvals; #4 in number of 7A loans approved; #6 in number of 504 loans approved.
“SBA capital supported remained steady – off just by a fraction of a percent (.66) on the 7a side and (2.2%) with 504s,” said Robert H. Nelson, SBA Massachusetts District Director. “Overall, FY 2017 was a phenomenal SBA lending year in the Commonwealth. In addition to being very productive on small loans, MA SBA lenders used SBA to finance a number of significant large dollar projects in excess of $10 million.”
Capital Programs Highlights
SBA approved over 68,000 loans in the 7(a) and 504 loan programs in FY17. These programs provided over $30 billion to small businesses.
SBA’s flagship loan program, referred to as 7(a), provides small businesses with guaranteed loans covering the vast majority of small business needs including working capital, fixed and intangible asset financing, as well as refinance and export support through term and revolving loans.
In FY17, the 7(a) program supported a consistent number of loans — more than $25.44 billion combined across 62,430 loans. The SBA continues to streamline and improve access to its loan program for small loans and emerging communities, delivering more than $5 billion in smaller loans of $350,000 or less in FY17.
504 loans provide small businesses with long-term fixed rate financing to acquire fixed assets, and are available through Certified Development Companies (CDCs), SBA’s community-based partners. In FY17, the 504 program remained at zero subsidy, and grew to $5 billion in loan volume.
During FY17, SBA lending had a significant positive effect on businesses that have historically faced greater challenges in obtaining conventional loans. Minority business owners received a record combined $9.58 billion in 7(a) and 504 approved lending, or 31 percent of the SBA’s loan portfolio.
7(a) lending to women-owned businesses (both majority and minority owned) grew in total dollar and volume. FY17 lending exceeded $7.5 billion, an increase of $298 million from FY16.
FY17 504 lending to women-owned businesses reached $955.2 million, a $277 million increase over the previous fiscal year. Loans to veterans totaled $1.15 billion for 7(a) and 504 lending.
There has been yearly growth in SBA’s loan programs, reflecting the important role of its lending partners. In FY17, SBA added 241 new lenders that have contributed to a healthy loan portfolio and one of the lowest loss rates in the SBA’s history.
During the fiscal year, SBA launched its online lender referral tool Lender Match. Lender Match is an upgrade to LINC (Leveraging Information and Networks to access Capital). This tool helps connect small business borrowers with participating SBA lenders.
Lender Match is available to all SBA 7(a) lenders nationwide, including nonprofit lenders that offer free financial advice and specialize in micro lending, loans in SBA’s Community Advantage program, and the SBA’s CDC/504 loan program. Lenders previously signed up for LINC will continue receiving referrals on the Lender Match platform.
During FY17, the SBA approved 27,263 disaster loans for a total of $1.7 billion. That total includes 24,121 home disaster loans for a total of $1.3 billion, and 3,142 business disaster loans for a total of $296 million. The SBA processed 84,705 home loan applications and 10,882 business disaster loan applications—a total of 95,587 disaster loan applications processed.
The SBA guaranteed 2,549 loans through its flagship 7(a) Loan Guaranty Program for a total of more than $351.3 million supported by a network of 126 lenders, including 13 credit unions. 7(a) loan approvals ranged from a low of $1,000 to $5,000,000.
These loans are available for most legitimate business purposes, including: purchase or construct real estate, equipment and inventory, to finance fixtures and leasehold improvements, debt refinancing, and for working capital. Massachusetts ranked #4 nationwide in this category.
Eastern Bank was the #1 SBA 7(a) lender in Massachusetts for the seventh year in a row with 895 loans totaling more than $57 million and the #1 3rd party 504 lender with 39 loans totaling over $16 million. Eastern is also the #1 SBA lender in New England.
- Citizens Bank ranked as the second highest producer of 7(a) loans with 210 approvals totaling over $28 million; TD Bank ranked third with 145 loans totaling over $10 million.
- Completing the list of top ten SBA lenders in Massachusetts are Berkshire Bank, Rockland Trust Company, Leader Bank, UniBank, Cambridge Savings Bank, Santander Bank, and Century Bank and Trust Company.
The 504 Loan Program approved 264 loans, supporting more than $139.2 million. Under the SBA 504 program, loans ranged from $35,000 up to $5,000,000 – with six projects being excess of $10,000,000 (SBA 504 loan and Third Party loan combined).
SBA 504 loans are used to construct, purchase or rehabilitate real estate and can also finance machinery and equipment. Massachusetts ranked #6 nationwide in this category.
- Bay Colony Development Corp. was SBA’s highest producer of 504 loans in Massachusetts with 98 loans totaling over $44.6 million.
- Granite State Economic Development Corp. ranked second in volume with 83 projects totaling over $43 million. New England Certified Development ranked third with 46 projects totaling over $29 million.
The SBA Microloan Program, through nine microloan intermediaries, increased from 79 for $1.4 million in 2016 to 94 loans totaling over $1.6 million in 2017.
These loans provide up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand; an average microloan is about $13,000.
- Accion East located in Cambridge, ranked as the #1 microlender in Massachusetts for both volume of loans and dollar amount, with 33 loans totaling over $518,710 (up from 377k).
Fee Waiver Impact & Small-Dollar Lending
During fiscal year 2017, SBA again zeroed-out fees on loans of $150,000 or less – stimulating small dollar lending. The fee waiver will continue again in fiscal year 2018 – but with a new threshold for all loans under $125,000. Additional no-fee incentives will remain available for veteran owned small businesses on loans up to $350,000.
Massachusetts led the nation on small dollar 7(a) loans, ranking #1 on loans less than $50,000 with a total of 1,322 approvals vs. 1323 in the previous fiscal year; and ranked #2 on loans less than $150,000 when coupled with under-served small businesses with a total 923 approvals vs. 850 approvals in the previous fiscal year.
About the U.S. Small Business Administration:
The U.S. Small Business Administration (SBA) was created in 1953 and since January 13, 2012, has served as a Cabinet-level agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation. The SBA helps Americans start, build and grow businesses. Through an extensive network of field offices and partnerships with public and private organizations, the SBA delivers its services to people throughout the United States, Puerto Rico, the U.S. Virgin Islands and Guam. To learn more, visit www.sba.gov
For more information about SBA Massachusetts lending figures in fiscal year 2016, the following resources are available:
SBA Massachusetts will hold an Annual Meeting honoring lenders at a special awards ceremony at HULT International Business School on Thursday, November 9, 2017. For more information, please visit: www.sba.gov/ma