Renewed focus on SBA loans pays off for BofA

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Bank of America said August was its best month for Small Business Administration loans and a new program to help women and minority entrepreneurs get commercial mortgages could help boost production in 2023.

According to Steve Turner, who leads SBA lending for BofA, its Aug. 7(a) activity set records for both dollar volume and number of loans. In the first 11 months of the agency’s 2022 fiscal year, which began October 1, 2021, Bank of America closed 427 7(a) loans; they totaled $176.4 million, up 44% compared to fiscal 2021. Bank of America’s 504 loans grew 14% over the same period.

“I still think we can do more,” Bank of America’s Steve Turner said of the bank’s strong performance in SBA lending in the fiscal year ending Sept. 30.

Turner, who took over as head of the SBA in January, said he and his team were pleased with Bank of America’s fiscal 2022 results, but made it clear there was still more work to be done. “I still think we can do more,” Turner said in an interview.

Despite its status as one of the largest in the country small business lenders, Bank of America’s SBA business has rarely stood out in recent years. Indeed, for all of fiscal year 2021 — a banner year for the SBA — Bank of America, with assets of $2.4 trillion, ranked #53 among 7 lenders (a ); it reported 303 loans for $157 million.

This year, Bank of America improved its SBA product lineup and increased its staff, Turner said, adding that the changes have “definitely helped” improve the bottom line.

Just-launched business down payment program offers grants of up to $25,000 to women and minority-owned business owners looking to use 7(a) or 504 programs to purchase property , which is likely to push Bank of America’s SBA numbers even higher. There is currently no cap on spending under the program, which has been announced last weeksaid a spokesperson.

According to Jill Calabrese Bain, head of small business onboarding and transformation at Bank of America, the goal of the down payment program is to stimulate business activity and growth in low-income neighborhoods, creating mobility economic and generational wealth opportunities that entrepreneurs can share with their families.

More than half of black women and business owners “say they don’t have the same access to capital as other groups,” Calabrese Bain said. Bank of America opted for a grant rather than a loan program because down payments are typically one of the biggest obstacles preventing cash-strapped entrepreneurs from moving forward with their business plans. she added.

“They sometimes struggle with the burden of upfront money,” Calabrese Bain said. “It’s easier to provide an affordable and cost-effective solution.”

Moving from rented facilities to a building they own is a key step on the road to expansion for many small businesses, Turner said. “The less money they use for a down payment, the more entrepreneurs can spend on growing the business.”

The 7(a) program — under which the SBA guarantees small business loans made by banks, credit unions and a small group of noncustodial lenders — is having a banner year, with approvals exceeding $23 billion between October 1 and September 2. Even so, activity still lags behind the record pace set in fiscal 2021, when the government waived user fees and subsidized some monthly payments as part of its COVID relief efforts.

The 504 program, which focuses on CRE loans, as well as expensive equipment purchases, has already broken its annual record, approving 8,705 loans for $8.6 billion through Sept. 2.

Those numbers are expected to rise in fiscal 2023, which begins Oct. 1, as inflation and rising interest rates hit businesses that previously might have benefited from conventional financing, Turner said.