SBA Prepay Commentary
June 2021 SBA Prepayment Speeds
Prepayment speeds on both equipment and real-estate loan pools increased for the month of June as expected. Concerns among small business owners over poor sales due to COVID-19 appear to be in the rearview mirror, judging by the NFIB Small Business Economic Trends survey results. Instead, worry over the quality of labor available is mounting. Given that the overall concerns breakdown look similar to pre-pandemic levels (see table below) and that over half of the United States adult population has been fully vaccinated against COVID-19, we may see prepayments begin to follow seasonal trends again as they generally pick up in the warmer months and begin to slow as we head into the fall and winter.
Equipment loan pools’ prepayments increased from 11.4 to 12.1 CPR. This pick up can be seen among most individual vintages. Speeds on real-estate loan pools rose as well, going from 10.8 to 11.8 CPR, though vintage-by-vintage results were mixed.
Equipment Loan Pool CPRs
- Prepayments on most vintages picked up for the month.
- The largest increase was experienced by the 2016 vintage, which went from 10.2 to 22.2 CPR.
- Most vintages 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
- Results were mixed on a vintage-by-vintage basis.
- The largest increase was experienced by the 2015 vintage, which went from 11.5 to 18.8 CPR. The largest decrease was experienced by the 2008 vintage, which decreased from 20.1 to 2.1 CPR.
- There is an even mix of results when comparing individual vintages speeds to 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