SBA Prepay Commentary

May 2020 SBA Prepayment Speeds

May 2020

After three straight months of declining prepayments for both loan pool types, Equipment pools increased slightly for the month of May while Real-Estate pool speeds continued to decrease as expected. This past month also saw a second round of funding for Paycheck Protection Program (PPP) loans to the tune of $310 billion. As of May 14th, 2.7 million businesses have been approved for these loans with an average loan size of $71,254. As the effects of the COVID-19 pandemic carries on, it is fair to assume many businesses will continue withholding from making loan prepayments for the sake of maintaining available liquidity. Pairing this hesitancy with the cushion PPP can provide against defaults, one would expect to continue to see low speeds such as these in the coming months.

Equipment loan pools increased from 12.0 to 12.4 CPR, with results mixed among individual vintages. Real-Estate loan pools decreased yet again, going from 13.4 to 12.5, though results were also mixed on a vintage-by-vintage basis.

Equipment Loan Pool CPRs

Real-Estate Loan Pool CPRs

SBA Prepayment Tables (PDF)

Prepared according to methodologies described by SIFMA.

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Kevin A. Smith, CFA

SVP, Director Investment Product Strategies

Vining Sparks

Adam Hofer

Analyst, 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.
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