NADCO Releases August Small Business Lending Report (SBLR)

Aug 08, 2013, 14:36 ET from National Association of Development Companies (NADCO)

Impact of Debt-Refinancing Clear As Loan Volume Drops

WASHINGTON, Aug. 8, 2013 /PRNewswire-USNewswire/ -- 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 August.

There were 504 loans in August (as compared to 590 in July) a marked drop from the 12-month average of 643 loans. The 20-year monthly loan pool size was $325,494,000, a 36% drop from $506,996,000 a year ago. This month's debenture rate is 3.16% compared to 2.37% a year ago.

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 rare to see the impact of policy in Washington so clearly in the marketplace - yet that's exactly what we are finding this month. This is a very significant drop in commercial real estate and equipment loans from the SBA as debt-refinanced loans from the JOBS Act of 2010 are now exhausted," said Beth Solomon, President & CEO of NADCO. "While the initiative was originally enacted temporarily, it helped more than 2,700 small businesses unleash nearly $7 billion in capital to invest in their businesses that had been locked in their own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. 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.

"The SBA's 504 Debt-Refinancing initiative was a bipartisan initiative that helped thousands of U.S. small business get better rates on long-term debt, allowing them to use the equity in their businesses to create jobs and grow," said Debbie Partin, Director of REI Business Lending in Oklahoma and NADCO's Vice Chair of Legislative Affairs. "In some cases debt-refi saved companies tens of thousands of dollars per month that they used to sustain jobs, and improve and expand their businesses. In other cases, companies were able to get out of balloon loans and demand notes that threatened the very existence of their companies."

Debt Refi's success has not gone unnoticed. A bill that permanently extends Debt Refi passed out of the Senate Committee on Small Business and Entrepreneurship with bipartisan support.

"The August SBLR is more evidence of the impact of removing this critical opportunity from the marketplace. As rates continue to rise from their historic lows, small businesses should not only take advantage of the unique advantages of the SBA 504 loan, but also urge their elected leaders to support bipartisan, commonsense solutions like the CREED Act which would empower job creators in every Congressional District to invest in growing businesses," Solomon added.

Each month, NADCO provides its debenture rate (plus the twelve month average debenture rate), monthly pool size (loan volume in dollars) and other relevant and insightful data. Combining historic data and assessed monthly, the SBLR serves as a measurement of the health of small business lending -- a core contributor to the health of the U.S. economy. The SBA 504 loan requires every $65,000 of finance to create or maintain one job. Businesses securing 504 loans create 25% more jobs than non-504 businesses, according to the U.S. Census Bureau.


This is a measure that tracks, on a monthly basis, the loan volume for owner-occupied real estate and asset financing administered through the Small Business Administration's Certified Development Company (CDC) lending initiative (also known as the 504).


The 504 loan initiative is a self-funded long-term financing tool at no cost to taxpayers providing small businesses with long-term, fixed-rate loans with down payments as low as 10%. Certified Development Companies (CDC) work with the SBA and private sector lenders to provide financing to small businesses under the 504 loan program.


The National Association of Development Companies (NADCO) is the trade association of Certified Development Companies (CDCs) - nonprofit companies that have been certified by the Small Business Administration (SBA) to provide financing for small businesses under the SBA 504 Program. NADCO represents nearly 270 CDCs, serving all 50 states. In 2012, the industry provided $6 billion to nearly 10,000 U.S. small businesses.

SOURCE National Association of Development Companies (NADCO)