Client emails

---------- Forwarded message ----------
From: "William Arrington" <>
Date: May 3, 2017 3:48 PM
Subject: Re: UB Update & Data Question
To: "Robert Villarreal" <>
Cc: "David Lynn" <>

Unfortunately, I have not found a one-stop solution to many of the questions David laid out, especially at the county level. We currently track and have San Diego County data on CRA lending, which I've broken out into sub-$100,000, $100,001-$250,000 and $250,000+ which covers through 2015. That data also includes all lending to small businesses with under $1M in revenues. This data can also be broken down on a bank-by-bank basis. As noted its through 2015 with 2016 data becoming available I believe after the summer so its bit of a lagging indicator. On the SBA side, we have 504 and 7A lending data at the city and county level through end of 2016 and that data has been broken out into those dollar ranges as well. The CRA data is anonymized so no underlying borrower details while the SBA data contains NAICS codes which provide both industry and business description.

In terms of approval rates, there's no definitive source. Biz2Credit publishes a monthly report on national lending approval rates at both large and small banks for small business lending. While not specific to the county it provides a nice narrative to how lenders are adjusting for the changing interest rate environment.

By combining the disparate source data a narrative can be built around the lending landscape in SD County. In CDC's case we tap into our own internal data and compare our portfolio characteristics to that of the market as a whole. Ultimately, we still have reliance on external reports and studies to help bridge those gaps to be able to paint a full picture especially when drilling down into specific demos and populations.

Attached is a snapshot of CRA lending statistics for San Diego. Let me know if there's anything else needed on this front. Actually have a call Friday to discuss microlending / sub-$250,000 lending so it's a rather timely discussion.

---------- Forwarded message ----------
From: "William Arrington" <>
Date: May 4, 2017 11:05 AM
Subject: Re: UB Update & Data Question
To: "David Lynn" <>
Cc: "Robert Villarreal" <>

The CRA data is broken down as follows:
Either in aggregate by census tract or by individual bank
4 Loan Amount Categories with dollars/units for each: $100k and under, $100k-$250k, $250k-$1M, and businesses with under $1M in revenues

The SBA 7(a) lending data captures at time of origination:
Borrower Location - this may be different from the actual business location which is what the loan is based upon
Initial Interest Rate and Term
NAICS Code and Business Description - you can back your way into the NAICS primary industry category
Congressional District and Project County
Jobs Created/Supported
Charge Off Date & Amount - this data is updated for each release of annual 7a lending data so those loans that have failed at time of data release will be noted - between FY2010-2016 in LA County there were 12,392 7A loans with 314 being charged off (2.5%) - those charge-offs only represented 0.4% of dollars loaned

As noted, the borrower's full contact information is provided however this is not the same as the project address which is where the business will be located that's tied to the actual loan. You would though be able to determine some borrower demographics based on where they live. Ultimately to drill down into location based demographics you'll need full addresses which you can then pull the census tract data and at the very least determine average income in the area, low-to-moderate communities, unemployment and other census tracked data points. If you were basing analysis on borrower's address and not project address, then the interest rate data could be looked as well. The SBA only provides data on approved loans unfortunately so rejection data is difficult to come by.

I looked at some rejection/approval data from Lending Club. Because they only provide personal loans compared to say Ondeck it has limited application. Nonetheless, I looked at Q4 2016 rejections for CA residents that noted the loan was for small business purposes. I also compared this data to loan approvals from LC using the small business designation under loan purpose.

There were 4,700 such requests out of 1,048,574 or roughly 0.50% of all LC rejections.
Average loan amount requested was $13,000
75% of the applicants having less than 1 year employment
Average credit score of 630 and
Debt-to-income ratio between 30%.

For approvals: 191 loan approvals from CA residents out of 103,546 total loan approvals for the quarter or 0.20% of all loans approved
Average approved amount was $14,000
40% of approvals went to applicants with 10+ years employment
Average interest rate of 13.65%
Average Debt-to-income ratio of 20%