The Owner-Occupied CRE Quarterly

Owner-occupied CRE 7(a) approvals peaked in 2021 at $14.3 billion across 10,140 loans, bottomed in 2023 at $6.9 billion, and have rebuilt since: $8.0 billion in 2024 and $8.6 billion across 5,716 loans in 2025, up 8% in dollars year over year. Loan count was nearly flat, so the dollar growth came from a larger median approval, now $1.06 million. Through the first quarter, 2026 approvals are running 6% ahead of the same period in 2025 by dollars, though lighter by count, a continuation of the fewer-but-larger pattern.

WSJ Prime at approval climbed from 3.25% in early 2022 to an 8.50% plateau that held across all of 2024, then eased to 6.75% by early 2026. The median note rate rode it almost tick for tick, peaking at 9.75% in mid-2024 and falling back toward 8.00%. The spread is the line that does not move: the median spread over Prime on variable-rate paper has sat at plus 1.50% essentially every quarter since the start of 2023. Across a violent rate cycle, the index did all the moving and the spread did almost none. Borrowers’ relief came from Prime, not from lenders discounting risk.

An approval is not a closing. Over the past decade, roughly nine in ten approved owner-occupied CRE loans actually funded, and the rate has held in a tight 87% to 90% band through the entire rate cycle. The stability is the story: even as rates tripled and volume swung, the share converting to funded loans barely moved, which says the deals getting approved are real deals. About one in ten approvals falls out, and that is the number worth watching, because a rising fallout rate would be an early sign of tighter credit well before it shows up in distress.

Mind the two scales. The 2007 vintage, the worst in modern small-business lending, came through at 0.66% distress for owner-occupied CRE while the rest of the book hit nearly 30%, almost all of it charged off. When owner-occupied CRE goes bad there is a building to liquidate, so it rarely becomes a terminal loss. One honest watch-item: the 2022 and 2023 owner-occupied CRE vintages are running hotter than any year on record, 4.1% and 4.4%, but almost entirely in-flight rather than charged off, so it is trouble in motion rather than realized loss.

Owner-occupied CRE 7(a) concentrates in operating businesses that own their real estate. Hospitality leads (hotels and restaurants), followed by gas-and-convenience, child care, auto repair, dental offices, and assisted living. The distress figure beside each bar is the fully seasoned 2010 to 2019 rate: even the highest sits near 2%, and dental practices are nearly bulletproof at 0.49%.

California and Texas anchor the map, together roughly a quarter of 2025 owner-occupied CRE approvals, with Florida, Georgia, and the industrial Midwest rounding out the top tier.

The most active owner-occupied CRE 7(a) lenders over the trailing three calendar years (2023 to 2025). The mix spans national money-center banks, the large SBA specialists, and the nonbank lenders, a reminder that borrowers have real choice in who finances the building.

Lenders grouped by institution and FDIC certificate; nonbank lenders shown at the entity level. Trailing three calendar years.