November 12, 2019
By Caity Witucki
Contributing Editor, SBA Hot Topic Tuesday
SBA Hot Topic Tuesday — Change of Ownership Loans Up in FY 2020
According to Chief Executive Magazine, 80% of business owners want to pass their family businesses on to the next generation. However, many of those businesses would fail without additional funding. As a result of more small business owners retiring, the number of SBA change of ownership loans is increasing.
On November 1, 2019, the SBA released a weekly lending report. The report showed 504 and 7(a) change of ownership lending activity was up from the previous year with 561 change of ownership loans in FY 2020 to date (a 7.2% increase from the previous year). Additionally, the amount of 7(a) and 504 loan funds was up from $449,826,300 the previous year to $501,604,700 (a 10.8% increase).
Here are the highlights from the lending report:
- Change of ownership accounts for 13% of FY 2020 7(a) loans to date.
- The SBA has done 548 7(a) change of ownership loans (a 5% increase from FY 2019).
- 7(a) funds used for change of ownership accounts for 27% of all 7(a) funds (up 3 percentage points from FY 2019)
- The SBA has approved $490,228,700 in 7(a) loans for change of ownership (compare to $449,572,300 in FY 2019).
- Change of ownership accounts for 2% of FY 2020 SBA 504 loans to date.
- The SBA has done 13 SBA 504 change of ownership loans so far in FY 2020 (a remarkable 171.4% increase from FY 2019 which only had 1).
- SBA 504 funds used for change of ownership accounts for 2% of all 504 funds (up 2 percentage points from FY 2019)
- The SBA has approved $11,376,000 in SBA 504 loans for change of ownership (compare to $254,000 in FY 2019).