Recovery Act Report Card: December 2009
Summary
The SBA's preliminary Recovery Act Report Card for December 2009, describing how 2009 stimulus provisions revived its lending after credit markets froze in October 2008. From March 16 SBA offered 90% guarantees on 7(a) loans and fee reductions in the 7(a) and 504 programs, and on November 23 it began moving back to regular provisions. As of December 31 it had approved $13.6 billion in Recovery Act loans supporting $18.2 billion in lending, and 1,019 lenders that had not made a 7(a) loan since at least 2007 made one. Weekly loan volumes rose 79% after the Act passed, and in December 82% of loans sold in the secondary market went at premiums of 106 or above, against zero in January and February.
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U.S. Small Business Administration
Recovery Act Report Card
December 2009
1
PRELIMINARY
SBA Recovery Act Highlights
• In October 2008, credit markets, including SBA’s, froze, and the SBA secondary market slowed dramatically.
• On March 16, SBA implemented two critical Recovery Act provisions:
• 90% guarantees on 7(a) loans, and
• Fee reductions in both the 7(a) and 504 programs.
• On November 23, SBA began to transition from Recovery Act provisions to regular lending provisions for the 7(a) and
504 loan programs.
• The Recovery Act provisions have helped drive significantly improved loan volumes from the depths of the crisis.
• Expanded access to capital: : As of December 31, SBA approved1 $13.6 billion in loans, and supported $18.2 billion in
lending to small businesses2.
• New lenders: From Feb. 17 to December 31, 1,019 lenders who had not previously made a 7(a) loan since at least 2007
made a loan.
• Recovered volumes: From February 17 to mid-November, weekly loan dollar volumes rose 79% in the 7(a) and 504
programs, compared to the weeks preceding the Recovery Act’s passage3.
• Broad-based support: A significant share of loans supported by Recovery Act funding has gone to rural (24%), minority-
owned (21%), women-owned (19%), and veteran-owned (9%) businesses4
• ARC loan program: As of December 31, SBA approved 5,184 loans totaling over $167 million5.
• The secondary market has also recovered.
• Improved secondary market volume: Over the past seven months (June – December), the average monthly loan volume
settled from lenders to broker-dealers in the 7(a) secondary market has been $357 million and $475 million settled in
December 2009
• Recovering premiums: In December, 82% of the loans settled, representing 80% of total dollars, were sold at or above
premiums of 106 – a return to 2007 premium levels. By comparison, in January and February, zero loans sold at premiums
above 106.
1 This is the total gross value of ARRA-funded loans approved since February 17. Typically, due to cancellations and loan size reductions, 15 – 20% of gross approval value does not get disbursed.
Including 7(a) and 504 loans not funded by the Recovery Act, SBA approved $14.2 billion in loans and supported $19 billion in lending and since February 17, 2009.
2 Includes estimate of 504 third-party first mortgages (calculated as 125% of SBA 504 debenture portion due to typical 50/40 split between third-party and SBA portion of 504 loan)
3 Compares average weekly gross approvals in the 7 weeks prior to Recovery Act to the average weekly gross approvals since the Recovery Act was signed. Normalized for market holidays as
well as disruptions caused by Washington, DC water outage (August 7, 2009).
4 Demographic data is self-reported.
5 See Footnote 1.
2
Monthly 7(a) and 504 Loan Volume: FY2007 – 2010
Monthly Gross 7(a) and 504 Loan Approvals
$2,500 M
$2,000 M
$1,500 M
FY08 Average
Post-ARRA Average 12/09
$1.50 B
$1.38 B $1.37 B
$1,000 M FY09 Average
$1.09 B
$500 M Pre-ARRA Average
$0.83 B
$0 M
• December 2009’s gross 7(a) and 504 approval volume was:
o 9 percent below the monthly average for FY 2008
o 26 percent above the monthly average for FY 2009
• Uptick driven by transition from Recovery Act loan provisions to regular loan provisions on November 23, 2009 and
funding of all queued loans on December 24, 2009.
NOTE: All loan volumes are gross loan value approved. Typically, due to cancellations and loan size reductions, 15 – 20% of gross approval value does not get disbursed. 3
Monthly Secondary Market Metrics: December 31, 2009
Volume Pricing
7(a) Secondary Market Settled Value 7(a) Secondary Market Premium Ranges
$ Million 12/09
500 $475 M 90%
450 103 or below
80%
400 103-106
70%
350 Monthly Avg. to
106 or above
9/2008, $328 M
60%
300
50%
250
40%
200
150 30%
100 20%
50 10%
- 0%
1/08
2/08
3/08
4/08
5/08 1/08
2/08
3/08
4/08
5/08
6/08
7/08
8/08
9/08
10/08 6/08
7/08
8/08
9/08
10/08
11/08
12/08
1/09
2/09
3/09 11/08
12/08
1/09
2/09
3/09
4/09
5/09
6/09
7/09
8/09 4/09
5/09
6/09
7/09
8/09
9/09
10/09
11/09
12/09 9/09
10/09
11/09
12/09
Recovery Continuing: Over the past seven months, the Premiums Recovering: Premiums have begun to recover in the
average monthly loan volume settled from lenders to 7(a) secondary market, and for the past 5 months have been
broker-dealers in the 7(a) secondary market has been $357 at 2007 levels.
million, which is above pre-recession averages.
Pricing Improving: In November, 82% of the loans settled,
representing 80% of the total dollars, were sold at or above
In December 2009, $475 million settled in this market,
premiums of 106. By comparison, in January and February,
which is the highest amount settled since December 2007.
zero loans sold at premiums at or above 106.
4
Recovery Act contracts are getting into the hands of small
and disadvantaged businesses
ARRA contracts are getting into the hands of The SBA is taking steps to support disadvantaged
small businesses small businesses in government contracting
• SBA is responsible for ensuring that 23% of all Stakeholder Outreach Initiative
federal government contracts go to small businesses
• Vice President Biden, SBA and the Department of
Commerce are co-leading a Recovery Act contracting
• As of December 31, 2009, 28.6% of federal agency
outreach initiative for small and disadvantaged
Recovery Act contracting dollars have gone into the
businesses
hands of small businesses
Prime Contracting to Small Businesses Prime Contracting to Disadvantaged Businesses
ARRA, December 31, 2009, % of Federal Contract Dollars ARRA, December 31, 2009, % of Federal Contract Dollars
Goal: 5%
Goal: 23%
SDBs 10.9%
Women- 4.8%
SB Other than Owned
$5.51 B Small Serv.-Disabled 4.0%
(28.6%) $13.76 B Veterans
HUBZone 7.6%
Goal: 3%
NOTE: Preliminary figures. These numbers are only used by management to measure estimated progress towards government contracting goals. This data is reviewed annually at the end of
the fiscal year and is corrected at that point for errors in data entry.
Counseling and Training helped drive business results
in Fiscal Year 2009
SBDCs Su r p asse d An n u al OED Pr o g r am s ar e Dr i v i n g Bu si n e ss Cr e at i o n
Cap i t al In f u si o n Go al o f $ 2 .5 Bi lli o n As o f Se p t e m b e r 3 0 , 2 0 0 9 , OED Pr o g r am s t o g e t h e r h e lp e d cr e at e
As o f Se p t e m b e r 3 0 , 2 0 0 9 SBDCs 1 4 ,2 0 1 n e w b u si n e sse s, su r p assi n g t h e co m b i n e d g o al b y m o r e
assi st e d cli e n t s i n o b t ai n i n g $ 3 .4 8 Bi lli o n t h an 6 ,0 0 0 .
OED Pr o g r am s Su r p asse d
An n u al Pe r f o r m an ce Me t r i cs f o r Cli e n t Act i v i t y
Base d o n Dat a as o f Se p t e m b e r 3 0 , 2 0 0 9
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