While the financial sector at large frets over a new round of recession-fueled chaos, SBA lenders are enjoying a return to normalcy in the New Year.
The Small Business Administration issued $25.7 billion in loans through its SBA 7(a) program last year, the organization reported in December, a significant decrease from the $36.5 billion issued at the height of the pandemic in the 2021 fiscal year. The year still places second overall, edging out the previous second-place record holder 2017, when $25.5 billion in loans were issued.
Despite the downturn, experts say lenders and their clients have a positive outlook heading into this year and are largely unshaken by near-universal reports of recession.
A Bank of America report released in October indicates that 66% of small businesses interviewed were expecting revenues to increase during the next 12 months, a seven-year high for the annual report. More than half plan to expand their business, according to the report, and 83% plan to obtain outside funding. In the event of a recession, 77% of respondents were confident their business is equipped to survive.
Peter Drake, senior vice president and business development officer of Bank of America’s small business program, said Los Angeles continues to be a tremendous market for expanding small businesses, noting the bank is seeing a steady volume for demand in the New Year.
“It’s certainly as strong as it was at the same time last year. This is because SBA products continue to be a relatively affordable financing option for clients with attractive amortization terms,” said Drake. “We are seeing SBA demand (…) in working capital, equipment needs and taking advantage of section 179, and certainly commercial property.”
Clients continue to want to buy commercial real estate, Drake said, “but the challenge in L.A. remains the limited supply for sale that meet their needs.”
With small businesses feeling emboldened, banks and other traditional lenders are…
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