SBA Prepay Commentary
December 2021 SBA Prepayment Speeds
Prepayment speeds on equipment loan pools increased for the eighth time in nine months while those for real-estate loan pools slowed. Concerns over quality of labor continue to mount for small business owners, as reported by the NFIB. 48% of business owners claim they have job openings they are unable to fill. For the month of November, 59% of owners reported raising their selling prices, which is the highest reading of respondents in 42 years. Concerns over inflation also continue to grow, as 18% of respondents listed it as the single most important problem facing their business in November, up from 16% the month prior.
Equipment loan pools’ prepayments increased from 15.4 to 15.6 CPR, though results were more mixed when viewed on a vintage-by-vintage basis. Prepayments on real-estate loan pools slowed from 17.1 to 15.4 CPR, which was also reflected in most individual vintages.
Equipment Loan Pool CPRs
- Increases/decreases were fairly evenly mixed when viewed on a vintage-by-vintage basis.
- The largest of increase was seen in the 2017 vintage, which went from 15.7 to 18.2 CPR. The largest decrease was experienced by the 2013 vintage, which fell from 25.2 to 11.8 CPR.
- Most newer vintages are prepaying above their respective 6- and 12-month averages while older ones are below said averages.
|1Equipment loan pools have original WAMs between 8 and 13 years|
Real-Estate Loan Pool CPRs
- Most individual vintages saw their prepayments slowdown in the month of November.
- The largest decrease was experienced by the 2010 vintage, which went from 35.6 to 23.8 CPR.
- Most vintages are still prepaying above their respective 12-month averages, though results are a bit more mixed when comparing to their 6-month figures.
|2Real-estate loan pools have original WAMs greater than 18 years|
Prepared according to methodologies described by SIFMA.
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Analyst, Investment Product Strategies
Kevin A. Smith, CFA
SVP, Director Investment Product Strategies