SBA Prepay Commentary

February 2021 SBA Prepayment Speeds

After an unexpected uptick last month, February speeds decreased, falling back in line with historical trajectory trends. This may be due in part to seasonality as well as January having fewer business days than the month prior, but other factors could also be at play in this decline. Small business owners remain concerned over their sales, with confidence wavering in the last several months and recently hitting an eight-month low according to an NFIB survey (see graph below). However, the effects of both the upcoming government stimulus checks and an increasing percentage of the population vaccinated for COVID-19 may instill fewer concerns in small business owners’ outlook. Combine this potential confidence boost with speeds’ historical seasonality during the spring and summer, and there is potential for a pickup in prepayments in the coming months.

Equipment loan pools’ prepayments decreased from 13.8 to 10.7 CPR; a trend reflected in almost every vintage. Real-estate loan pools also dropped, going from 12.3 to 10.5 CPR, though individual results were mixed across 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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