The Small Business Administration (SBA)'s primary funding mechanisms to small businesses has been through its 7(a) and 504 programs.
The 7(a) program is SBA's primary business loan program for providing financial assistance to small businesses. It provides loan guaranties to lenders (maximum value $5 million) so small businesses can go about:
The 504 Loan Program provides long-term, fixed rate financing for major fixed assets that promote business growth and job creation. These are available through Certified Development Companies (CDCs), SBA's community-based partners who regulate nonprofits and promote economic development within their communities. The maximum loan amount for a 504 loan is $5.5 million, with no more than 3 projects totaling $16.5 million.
Understanding the trend of funding prior to the COVID-19 pandemic and during will help the SBA understand the impact of the economic shock of COVID and whether the stimulus provided in other forms (Paycheck Protection Program loans, Economic Injury Disaster Loans, Pandemic Unemployment Assistance, etc.) was sufficient to help small businesses weather the storm.
This chart captures the annual loan value approved across the 7a (left) and 504 (right) financing programs from 2018-2023.
We observe a significant spike in 504 loans in 2020, while 7a loans spiked later in 2021.
Source: Small Business Administration Website
Legend:
Light Blue: Pre-COVID years
Dark Blue: Post-COVID years
D3 Visualization: Grouped bar chart
This chart represents the average size of an individual loan disbursed under the 7a (left) and 504 (right) financing program and shows the rise and decline in average ticket size post Covid from 2018-2023.
7a has much smaller ticket sizes of working capital loans.
Source: Small Business Administration Website
Legend:
Light Blue: Pre-COVID years
Dark Blue: Post-COVID years
D3 Visualization: Grouped bar chart
This chart captures the number of approved loans (absolute value) under the 7a and 504 financing scheme from 2018-2023.
While 7a loans have increased after Covid, the number of 504 loans have tapered down after 2021.
Source: Small Business Administration Website
Legend:
Light Blue: Pre-COVID years
Dark Blue: Post-COVID years
D3 Visualization: Grouped bar chart
Based on the 7a and 504 lending data at a State and sector-level as reported by SBA, we observed the following trends from 2018 to 2023.
We took average value of shares of lending allocated from the total loan value in USD at a State and sector level during the years.
The top 5 States who received the largest share of average 7a funding from 2018-2023 were:
In terms of share of financing for 7a loans, the following States received the lowest over 5 years:
Source: Small Business Administration Website
D3 Visualization: Bar Chart with Time Scale
Visualization: Generated using the help of ChatGPT
Source: Small Business Administration Website
D3 Visualization: Bar Chart with Time Scale
Visualization: Generated using the help of ChatGPT
In terms of largest share of average 504 funding from 2018 to 2023, the top 5 States were:
In terms of share of financing for 504 loans, the following States received the lowest over 5 years:
Source: Small Business Administration Website
D3 Visualization: Bar Chart with Time Scale
Visualization: Generated using the help of ChatGPT
Source: Small Business Administration Website
D3 Visualization: Bar Chart with Time Scale
Visualization: Generated using the help of ChatGPT
States that received a much higher share of 7a loans than their share of business (by at least 2%) were California and Texas
States that received a much higher share of 504 loans than their share of business (by at least 2%) were California and Utah
Where did these excess shares come from?
The States that received much lower funding than their share of the businesses are highlighted below:
The top 5 sectors receiving the highest share of 7a and 504 funding are:
Sectors receiving a higher share of 7a financing than their share of business are:
Sectors that received a lower share of 7a funding than their share of business (by at least 1% or more difference in share) were:
Sectors that received a lower share of 504 funding than their share of business (by at least 1% or higher difference), were:
*Coding and visualizations on this page were created with the assistance of ChatGPT