In the year of PPP, big banks put a break on SBA lending


The epidemic and the federal government’s response have led to the opposite results of the largest participants in the Small Business Administration’s 7 (a) loan-guarantee program.

Many of the nation’s most prominent SBA lenders experienced lower volumes in FY 2020 as compared to a year earlier as a slowing economy, tied to closure orders and social disturbances, cut demand.

The $ 525 billion paycheck protection program, which began in April to provide emergency loans to small businesses, diverted lenders’ attention and resources from SBA’s traditional programs.

“Something had to give,” said Coleman Report editor Bob Coleman. “PPP went from an idea to reality in three weeks. Lenders did not have time to add staff or ramp up.”

JPMorgan Chase’s 7 (a) volume fell 54% to $ 218.9 million and in Houston’s BBVA it fell 46% to $ 147.1 million. Wells Fargo in San Francisco had a 31% drop to $ 544 million, and volume fell 23% to $ 493 million at Huntington Bancshares in Columbus, Ohio.

While the volume of those lenders was small, activity intensified at Live Oak Bancshares in Byline Bancorp, Wilmington, NC, Chicago, and Fulton Financial in Lancaster, Pa., Largely because they targeted businesses that were relatively sluggish from the epidemic. Went or attracted large customers.

Overall, 7 (a) volume fell 3% to $ 22.6 billion as lenders focused on PPP.

JPMorgan Chase in New York was the nation’s most prolific PPP lender, with $ 29.3 billion in loans. TD Bank, Huntington, M&T, Wales and BBVA are among the 25 busiest PPP participants.

“It was an unprecedented year with the ongoing health crisis and our efforts in small business in 2020, while individual in 2020 were extremely helpful to our customers,” said Greg Clarkson, BBVA’s SBA division manager. “We have consistently perforated our own weights in recent years at SBA 7 (A), and in 2021 we will continue to strive for that general success.”

7 (a) lending declined at TD Bank due to the “turbulent economic environment associated with COVID-19,” said Tom Sundar, bank head of SBA Lending.

“The economic impact of the epidemic caused many businesses to focus on keeping their doors open rather than strategic development priorities,” Sundar said. “As the economy recovers and industries continue to regenerate, we expect SBA lending activities to return to their regular volumes in 2021 and beyond.”

Calls to JP Morgan Chase, Huntington, M&T and Wales were not immediately returned.

Nevertheless, some banks gave 7 (a) loans while participating in PPP.

In Live Oak, the nation’s largest SBA lender, 7 (a) volume rose 10% to $ 1.5 billion. It received over $ 1.7 billion in PPP loans.

Huntley Garrett, president of Live Oak Bank, recently loaned $ 430 million to Live Oak in the third quarter to discuss quarterly results during a conference call.

“We have seen some market fluctuations from competitors and we are seeing some very good credits,” Garritot said. “We are exceptionally considerate of the types of deals prepared for finance in this market.”

A fifth of Live Oak’s third-quarter origins included self-storage facilities, solar power, investment advisors and bioenergy.

Live Oak also demanded large borrowers, president and CEO Chip Mahan said.

“We have a chance to step into the market,” Mahan said. “It is true in some verticals that the Darwinian doctrine prevailed, that the strong would survive, which would give opportunities to the bigots in our vertical.”

Byline had a 20.5% increase in 7 (a) volumes to $ 633 million, while Fulton had a 37% spike, to $ 75.2 million.

During the company’s quarterly call, Byline officials reported that the end of the financial year was boosted by the SBA’s pledge to cover principal, interest and fees for 7 months, 7 (a) loans that were on the books by the sept . 27.

That commitment “made the product very attractive to borrowers”, said Alberto Perachini, president and CEO of Byline. “I would say that, if you make something out of that extraordinary effect, the demand was good.”

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