SBA Prepay Commentary

April 2021 SBA Prepayment Speeds

After prepayments declined for three of the previous four months, speeds reversed course for April. This is perhaps reflective of business owners’ growing positivity, gauged by the NFIB Small Business Optimism Index. For the month of March, the index came in at 98.2, which is both 2.4 points higher than the previous month and is the first time it has been in-line with the historical average since November. While government restrictions have begun to roll back and a significant portion of the population has been vaccinated against COVID-19, business owners’ concerns over poor sales have dropped to their lowest level in a year. This growing optimism, mixed with the historical trend of increased prepayments in the warmer months, may be an indication that speeds will continue to ramp in the coming months.

Equipment loan pools’ prepayments saw a slight uptick, going from 8.6 to 8.7 CPR, though results were mixed among vintages. Speeds on real-estate loan pools increased as well, going from 7.2 to 9.1 CPR, which was reflected in most individual vintages.

Equipment Loan Pool CPRs

1Equipment loan pools have original WAMs between 8 and 13 years

Real-Estate Loan Pool CPRs

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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Adam Hofer

Analyst, Investment Product Strategies

Vining Sparks

Kevin A. Smith, CFA

SVP, Director Investment Product Strategies

Vining Sparks

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