Through SBA Loan Programs, Capital Support in MA Tops $722 Million

Nationwide SBA FY19 loan volume reaches more than $28 billion and 63,000 approvals; Massachusetts Microloan approvals increased by 22% and 12.5% in dollar amount
Release Date: 
Tuesday, November 5, 2019
Release Number: 
20-2
Contact: 
norman.eng@sba.gov, 617-565-8510

BOSTON The U.S. Small Business Administration announced FY19 lending numbers showing that it guaranteed over $28 billion to entrepreneurs that otherwise would not have access to capital to start, grow, or expand their small businesses.

“A strong economy is powering America’s 30 million small businesses, and the SBA’s FY19 numbers bear that out,” SBA Acting Administrator Chris Pilkerton said. “When the economy is doing well, 7(a) lenders are more willing to provide capital without the need for a federal loan guarantee. Our 504 and Microloan programs continued to grow from last year, as all of these loans are designed to create jobs and grow all small businesses in communities across the country.  We continue to be proud that the SBA is here to help America start, grow, and expand opportunities for entrepreneurs.”

 

National Capital Programs Highlights
In FY19, SBA’s flagship 7(a) loan program made approximately 52,000 7(a) loans totaling $23.17 billion. The 504 loan program had another year of increased performance, with more than 6,000 loans made for a total dollar amount of more than $4.9 billion.

In April of FY18 SBA launched the 25-year Debenture, which offers an extra 60 months of financing at a fixed rate for small businesses. Since its introduction, over 1,000 debentures had been sold by the end of September.

“With a strong economy and historically solid small business optimism, we know that 7(a) lenders are making loans conventionally without the SBA guarantee. We also saw a 4.3% growth in the 504 loan program due to the longer term and low fixed interest rate that the product provides to small businesses,” said Associate Administrator for SBA’s Office of Capital Access William Manger. “We are also proud that our Microloan program had another record year with a nearly 7.5% increase in small business lending.”

In FY19, there was significant growth of dollars lent in the SBA’s Microloan program, with more than 5,500 loans approved for nearly $81.5 million.
 

Massachusetts District Office Capital Programs Highlights
Fewer small businesses in the Commonwealth relied on SBA lending than in the past, but business owners that needed the access to capital used SBA loan programs for higher value projects.   Four banking institutions ranked in the top 10 regionally, including: Eastern Bank, Santander Bank, Berkshire Bank and Leader Bank. 

“Collectively, including 7(a), 504 and microloans, the SBA supported capital to 1971 small businesses for $722 million in Massachusetts,” said Robert H. Nelson, SBA Massachusetts District Director. “Together with over 135 different lenders using SBA loan programs, over 6,000 jobs were created and 7,600 were retained according to self-reported figures.  We thank all of our partners and friends for working with the SBA to ensure small businesses get the access to capital they need to expand.” 

In FY19 the Massachusetts District Office saw a decrease in number of approvals for the 7(a) program but a slight increase in dollar amount of 2.3% or $8 million.  The 504 loan program approvals were down by both units and dollars even with interest rates being at an all-time low.   About 29% of total loan approvals went to new businesses (businesses that are 2 years old or less).    

The SBA through its flagship 7(a) Loan Guaranty Program approved 1,593 loans in Massachusetts for a total of more than $357 million supported by a network of 118 lenders, including 12 credit unions.   The smallest 7(a) loan was $5,000 and the largest was $5 million.

  • Eastern Bank was the #1 SBA 7(a) lender in Massachusetts for the eleventh year in a row with 415 loans totaling $41.66 million and the top third party 504 lender with 32 loans totaling $26.7 million. Eastern Bank is also the #1 SBA lender in New England.
  • TD Bank ranked as the second highest producer of 7(a) loans with 156 approvals totaling $12.59 million; Webster Bank ranked third with 96 loans totaling over $23.98 million.
  • Completing the list of top ten SBA lenders in Massachusetts are Citizens Bank, Leader Bank, Santander Bank, Cambridge Savings Bank, Salem Five, UniBank, and St. Mary’s Credit Union.
     

The 504 Loan Program approved 247 loans, supporting more than $156.31 million. Third Party loans which are part of the 504 projects, totaled in excess of $205.55 million.  Under the SBA 504 program, loans ranged from $58,000 up to $5,000,000 – with three projects in excess of $10,000,000 (SBA 504 loan and Third Party loan combined).

  • Bay Colony Development Corp. was SBA’s highest producer of 504 loans in Massachusetts with 92 loans totaling $56.31 million.
  • Granite State Economic Development Corp. ranked second in volume with 83 projects totaling $48.46 million.
     

The SBA Microloan Program, through ten microloan intermediaries, approved 131 loans totaling $2.33 million.  Massachusetts microloan approvals increased by 22% and 12.5% by dollar amount; this was the largest growth area in the district.  

Microloans provide up to $50,000 to help small businesses start-up and expand; In Massachusetts, an average microloan was $17,824. 

  • Accion East is the #1 microlender for volume of loans, approving 33 loans totaling $451,217.
  • Common Capital ranked second with $359,859 in loan approvals and Dorchester Bay Economic Development Corp., ranked third with $237,900 in total loan approvals; each entity approved 22 loans in FY’19.  

 

The SBA Surety Bond Guarantee Program, through twelve surety companies, approved 114 bonds totaling $53.75 million.  Surety bonds help small businesses win contracts by providing the customer with a guarantee that the work will be completed. Many public and private contracts require bid, performance, and payment surety bonds, which are offered by surety companies.

 

SBA Office of Advocacy
Massachusetts is home to approximately 669,224 small businesses according to data compiled by SBA’s Office of Advocacy.  The 2019 Small Business Profiles for Massachusetts reported that small businesses in the Bay State created 36,355 net new jobs in 2015; are comprised of 89,930 minority-owned businesses; and 9,193 firms export internationally.  (The Small Business Profiles, source data, and methodology are available at go.usa.gov/xmb5R.)

SBA Massachusetts will hold an Annual Meeting honoring lenders at a special awards ceremony in Worcester on Friday, November 8, 2019.  For more information, please visit: www.sba.gov/ma

 

 

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About the 7(a) and 504 loan programs
The 7(a) loan program is the SBA's primary program for providing financial assistance to small businesses and offers guarantees on loans to small businesses of up to $5 million on reasonable terms and conditions. 7(a) loans are commonly used for acquiring land, purchasing equipment, or working capital. The CDC/504 loan program helps small businesses acquire fixed assets to promote economic development in the form of long-term fixed rate financing for fixed assets on reasonable terms. Under this program, the SBA authorizes CDCs (Certified Development Companies) to provide financing to small businesses with the help of third-party lenders (typically banks). The maximum loan amount is generally $5 million; however, certain eligible energy-efficient or manufacturing projects may qualify for more than one 504 loan up to $5.5 million each.

 

About the U.S. Small Business Administration
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.