SBA Prepay Commentary

March 2021 SBA Prepayment Speeds

Prepayment speeds for March, reflecting activity in February, declined for the third time in four months, reflecting the continued uncertainty among small business owners. While February did see a slight uptick in the NFIB Small Business Optimism Index, going from 95.0 to 95.8, it was still lower than expected and is beneath the 47-year average of 98. Among such concerns are the impending cost and quality of labor, increased taxes, and government regulation. Given the $1.9 trillion stimulus package signed by President Biden on Thursday and the ever-increasing number of individuals vaccinated for COVID-19, one would expect concerns about poor sales to start to wane in future surveys. Combining these factors with the usual increase in prepayments in the spring and summer, and speeds may begin to ramp in the next few months.

Equipment loan pools’ prepayments decreased from 10.7 to 8.6 CPR; a trend reflected in almost every vintage. Speeds on real-estate loan pools also slowed, going from 10.5 to 7.2 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.

Other Helpful Links

Weekly Sector Update | Weekly, Monday

Market Today | Daily

Weekly Recap | Weekly, Friday

Brokered Deposit Rate Indications | Weekly, Monday

Vining Sparks Interest Rate Products Weekly Commentary | Weekly, Monday

Investment Alternatives Matrix | Weekly, Tuesday

MBS Prepay Commentary (March) | Monthly, 5th business day

Adam Hofer

Analyst, Investment Product Strategies

Vining Sparks

Kevin A. Smith, CFA

SVP, Director Investment Product Strategies

Vining Sparks

The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
Copyright © 2021
This is a publication of Vining-Sparks IBG, L.P.
775 Ridge Lake Blvd., Memphis, TN 38120