In year of PPP, big banks curb SBA lending
The pandemic and the federal government’s response led to mixed results among the largest participants in the Small Business Administration’s 7 (a) loan guarantee program.
Many of the nation’s largest SBA lenders saw a drop in volume in FY20 year compared to the previous year as a slower economy, linked to shutdown orders and social distancing, reduced Requirement.
The $ 525 billion paycheck protection program, launched in April to provide emergency loans to small businesses, has also diverted the attention and resources of lenders from traditional SBA programs.
“Something had to give,” said Bob Coleman, editor of The Coleman Report. “PPP went from idea to reality in three weeks. Lenders have not had time to add staff or scale up.
JPMorgan Chase’s volume 7 (a) fell 54% to $ 218.9 million, and at BBVA in Houston it fell 46% to $ 147.1 million. Wells Fargo in San Francisco was down 31% to $ 544 million, and volume at Huntington Bancshares in Columbus, Ohio, fell 23% to $ 493 million.
While these lenders had lower volume, activity increased at Live Oak Bancshares in Wilmington, North Carolina, Byline Bancorp in Chicago, and Fulton Financial in Lancaster, Pa., Largely because they were targeting companies that were relatively safe from the pandemic or courting larger customers.
Overall, volume 7 (a) fell 3% to $ 22.6 billion, with lenders focusing on P3s.
JPMorgan Chase in New York was the country’s most prolific PPP lender, with $ 29.3 billion in loans. TD Bank, Huntington, M&T, Wells and BBVA were among the top 25 most active PPP participants.
“It has been an unprecedented year with the ongoing health crisis, and our efforts in small business lending, although different in 2020, have always been extremely helpful to our clients,” said Greg Clarkson, SBA division manager. by BBVA. “We have continually exceeded our own weight in SBA 7 (a) loans over the past few years, and in 2021 we will continue to strive for that usual success.”
“The turbulent economic environment associated with COVID-19” has caused TD Bank 7 (a) loans to decline, said Tom Pretty, the bank’s SBA lending manager.
“The economic impact of the pandemic has prompted many companies to focus on keeping their doors open rather than strategic growth priorities,” Pretty said. “As the economy recovers and industries continue to rebound, we expect the SBA’s lending activity to begin to return to its usual volume in 2021 and beyond.”
Appeals to JPMorgan Chase, Huntington, M&T and Wells were not immediately returned.
However, some banks have made more 7 (a) loans while also participating in the PPP.
At Live Oak, the nation’s largest SBA lender, volume 7 (a) grew 10% to $ 1.5 billion. It had also approved more than $ 1.7 billion in PPP loans.
Live Oak loaned about $ 430 million in the third quarter to its “least affected verticals,” Huntley Garriott, chairman of Live Oak Bank, said on a recent conference call to discuss quarterly results.
“We have seen some market pullback from our competitors and we are getting some really good views on much stronger credit,” Garriott said. “We are extremely attentive to the types of agreements that we are prepared to finance in this market. “
A fifth of Live Oak’s third-quarter creations were in self-service storage facilities, solar power, investment advisors and bioenergy.
Live Oak also sought out larger borrowers, said chief executive officer Chip Mahan.
“We have a chance to enter the market,” Mahan said. “It is true in some verticals that Darwinian theory prevails, that the strong will survive, which will provide opportunities for the bigger ones in our verticals. “
Byline saw a 20.5% increase in volume 7 (a), to $ 633 million, while Fulton saw a peak of 37%, to $ 75.2 million.
Byline executives noted during the company’s quarterly call that activity was boosted at year-end due to a ASB’s commitment to cover six months of principal, interest and charges for the 7 (a) loans that were on the books as of September 27.
“The product has become very attractive to borrowers” because of this commitment, said Alberto Paracchini, President and CEO of Byline. “I would say if you take some of that awesome effect out, the demand was good.”