SBCF - New SBA Funding Just Made These 3 Bank Stocks Way More Attractive
With much of the economy essentially at a standstill and most businesses trying to survive instead of expanding, banks are probably not going to grow in line with projections they had entering the year. Still, one opportunity that has emerged from the $2 trillion stimulus bill is nearly $350 billion in new lending authority from the U.S. Small Business Administration (SBA), which will be disbursed mostly by banks. To understand just how much money that is, consider that total SBA lending nationwide in the fiscal year 2019 was only about $28 billion.
While a lot of these loans come with a low interest rate, and a good deal of the funding might be forgiven instead of repaid, the Financial Times recently reported that banks stand to make billions of dollars in processing fees from the loans, which are 100% guaranteed by the federal government. Banks, according to the publication, are slated to receive fees of 5% for loans under $350,000, 3% for loans under $2 million, and 1% for loans greater than $2 million. The maximum loan amount that can be issued is $10 million, and all loans will not incur a capital charge.
Three bank stocks I expect to benefit tremendously from this program are People's United Bank (NASDAQ: PBCT), BNB Bank (operated by Bridge Bankcorp (NASDAQ: BDGE)), and Seacoast Bank (NASDAQ: SBCF).