The following in an except from an article published in the Los Angeles Business Journal (Dec 2022) issue. For subscription information, visit labusinessjournal.com.
Slowing Surge
Lenders are starting to see the first significant drop in demand for Small Business Administration loans from post-pandemic highs, though the volume remains well above pre-pandemic lows.
According to the Small Business Administration, there were $25.7 billion worth of 7(a) loans nationwide this year, down from $36.5 billion last year.
Jacky Dilfer told the Business Journal that from June 2020 on through the early quarters of this year, her nonprofit lending group, the downtown-based Business Finance Capital, saw its biggest boom in SBA lending demand in recent history. (See page 23 for The Lists of top SBA lenders in Los Angeles.)
Local businesses in particular flourished thanks to L.A.’s hub-city status.
“Because the area is so heavy with warehousing and transportation and distribution, these are the industries that are our primary focus,” Dilfer, the chief executive of Business Finance Capital, said. “Los Angeles is one of the largest ports in the world, and the demand for goods and the means to deliver them has only increased since Covid. We happen to be in a great niche of the market.”
But that momentum showed its first signs of tapering in the early parts of this year, and “while sentiment is still overall positive in the long term,” Dilfer said, the pullback has only become more pronounced as the year nears its end.
“I think it’s been a bit stagnant,” she said. Even though deals are closing, “everything is taking a bit longer,” she said.
One issue is interest rates. “A year ago, the rates were around 2.5% to 3%; nowadays they’re at around 6.5%. However, over the course of the last 10 years, that’s not actually that big of an increase.”
Hart Food Products workers sort one of the company’s products.
Bill and Leila Hall of Hart Food Products. (Photo by Ringo Chiu)
