September 12, 2013
CONTACT: Daniel Son | 202.822.1207
NADCO Releases September Small Business Lending Report (SBLR)
Loan Volume Continues To Drop, But Historic Opportunity For SBA Borrowers Remains
WASHINGTON, DC, August 8 – The National Association of Development Companies (NADCO) monthly Small Business Lending Report (SBLR) showed a drop in commercial real estate and equipment finance loans to small businesses for the month of September.
There were 482 loans finalized for September (as compared to 504 in August), which is more than 20% under the 12-month average of 606 loans. A year ago there 684 loans. The 20-year monthly loan pool size was $313,427,000 -- below the 12-month average of $403,200,000 and a 36% drop from $495,038,000 a year ago. This month's debenture rate is 3.62% compared to 2.2% a year ago, but still much lower than the historic average of 6.36%.
Rates have been rising over the past four months, stemming from concerns that the Federal Reserve will begin tapering their monthly bond-buying program. Home mortgages exhibited parallel declines, with home mortgage lenders reporting a 13.5% decline in the week ending Sept. 6 from the previous week, according to the Mortgage Bankers Association.
As part of the JOBS Act of 2010, small businesses in good financial standing were enabled to refinance their old, expensive debt locked up in their property and use the savings to reinvest in growing their businesses through the Small Business Administration's (SBA) Real Estate Advantage (504) Loan Debt Refinance program. "Debt Refi" was enacted as a temporary program and during that time more than 2,700 businesses were helped and 400 applied for the program on the last day of its trial. NADCO has been a consistent advocate for its renewal and extension.
"It's clear that the lack of Debt Refi is having an impact on loan volume," said Beth Solomon, President & CEO of NADCO. "The reality is that this initiative helped more than 2,700 small businesses unleash nearly $7 billion in capital to invest in their businesses that had been locked in their own property. In some cases, companies were able to save tens of thousands of dollars that they used to create or preserve jobs and grow their businesses. Debt Refi needs to be reinstated to boost America's fragile economic recovery."
Legislation passed by the Senate Committee on Small Business and Entrepreneurship would reinstate the program permanently at no cost to the taxpayer.