SBA Prepay Commentary
August 2021 SBA Prepayment Speeds
Prepayment speeds for both equipment and real-estate loan pools increased for the fifth straight month, which appears to follow the seasonal trend of late-summer months. Also worth noting, a recently-effected rule change by the SBA regarding debt refinancing may prevent speeds from experiencing the same dip they historically experience in the fall and winter, but it is still too early to tell. In regard to small business owners’ confidence and concerns, worries over the availability and quality of labor continue, as 49% of owners reported to the NFIB that they have job openings they are unable to fill, breaking a 48-year record. Inflation is another area concern, with 11% of respondents naming it as the single most important problem facing their business, though worries do appear to be easing.
Equipment loan pools’ prepayments increased from 14.0 to 14.4 CPR, with most individual vintages experiencing an increase. Prepayments on real-estate loan pools also picked up, going from 12.2 to 14.5 CPR, though results were mixed among vintages.
Equipment Loan Pool CPRs
- Most individual vintages saw an increase in prepayments for the month.
- The largest increased was seen by the 2010 vintage, which went from 5.2 to 25.6 CPR. The largest decrease was seen by the 2009 vintage, which went from 14.3 to 5.3 CPR.
- Most vintages’ speeds were above their respective 6- and 12-month average speeds.
|1Equipment loan pools have original WAMs between 8 and 13 years|
Real-Estate Loan Pool CPRs
- Changes in prepayments were mixed on a vintage-by-vintage basis.
- The largest increase was experienced by the 2012 vintage, which went from 31.1 to 51.0 CPR. The largest decrease was experienced by the 2013 vintage, which dropped from 30.1 to 23.7 CPR.
- Most vintages are still prepaying above their respective 6- and 12-month averages.
|2Real-estate loan pools have original WAMs greater than 18 years|
SBA Prepayment Tables (PDF)
Prepared according to methodologies described by SIFMA.
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Analyst, Investment Product Strategies
Kevin A. Smith, CFA
SVP, Director Investment Product Strategies