To ascertain the impact that Covid has had on lending to small businesses in America, we analyzed SBA loan data provided to us by the Small Business Administration (SBA). We have been hearing for months from our SBA lending referral network that credit and underwriting standards have tightening due to governmental restrictions on operations, weak customer demand, and general overall uncertainty with the business climate. The data we have reviewed from the SBA confirms what we have been hearing anecdotally for months.
Note regarding data in this study: We analyzed data provided by the SBA. We suspect most loan transactions from June and perhaps even some from May might not be included in the SBA data set yet due to the impact the massive volume of Payroll Protection Program (PPP) loans had on the SBA’s data collection and reporting capabilities. As a result of this hypothesis, we excluded June 2020 data from our analysis.
As expected, the lodging and food service industries, which have always been favorites of SBA bankers, have really been hammered by the coronavirus. Restaurant lending has fallen off a cliff right at the time when restaurants need SBA loans the most:
The carnage has equally spread to hotels:
We do not see these trends snapping back as fast for lodging and dining as they collapsed, but we do predict a slow and steady return to normalcy barring any other economic malaise over the next 18 months. Americans love to eat out and travel and once there are vaccines and therapeutics for the coronavirus, these great American businesses will see SBA bankers return to these industries. We posted some observations on the restaurant and hotel SBA loans climate a few weeks ago.
Fitness Center loan activity was also very weak as SBA banks pulled back from businesses partially or fully shut down due to government restrictions:
Lastly, businesses that were deemed essential like trucking, which were spared from governmental restrictions, were ensnared by general economic weakness:
Who are the top lenders during Covid?
Although loan volumes are down due to Covid, the top lenders in today’s environment include many of the same banks that lead the nation every year in SBA lending:
| Covid Rank | SBA Lenders Rank | Bank | Total Loan $$$ | # Loans | Avg Loan | Avg Rate |
|---|---|---|---|---|---|---|
| 1 | 1 | Live Oak Banking Company | $42,088,000 | 33 | $1,275,394 | 5.3% |
| 2 | 4 | The Huntington National Bank | $32,405,700 | 240 | $135,024 | 5.6% |
| 3 | 10 | Seacoast Commerce Bank | $30,934,600 | 20 | $1,546,730 | 5.1% |
| 4 | 6 | Celtic Bank Corporation | $28,674,300 | 30 | $955,810 | 6.0% |
| 5 | 5 | Byline Bank | $26,342,500 | 26 | $1,013,173 | 6.1% |
| 6 | 32 | Harvest Small Business Finance | $24,905,700 | 19 | $1,310,826 | 5.7% |
| 7 | 23 | United Midwest Savings Bank | $24,630,300 | 51 | $482,947 | 5.8% |
| 8 | 2 | Wells Fargo Bank | $19,006,800 | 72 | $263,983 | 7.5% |
| 9 | 34 | Umpqua Bank | $16,145,400 | 7 | $2,306,486 | 5.4% |
| 10 | 7 | JPMorgan Chase Bank | $15,174,400 | 17 | $892,612 | 6.0% |