SBA Prepay Commentary

May 2021 SBA Prepayment Speeds

Prepayments continued to speed up for the month of May, which should come as no surprise given the direction of COVID-19 vaccinations and restrictions along with general seasonal trends. The NFIB Small Business Optimism Index for April came in at 99.8, a third-straight increase. When surveyed about the single most important problem they are facing, only 8% of small business owners responded with concerns over poor sales, the lowest percentage since before the pandemic hit the United States. Looking forward, hopes will likely be high for businesses’ outlook as over 45% of the US adult population has been fully vaccinated against COVID-19 and the CDC no longer recommends social distancing for vaccinated individuals. Given that prepayments historically pick up in the summer, last year notwithstanding, speeds may continue to rise over the next few months as they gear back towards seasonal norms.

Equipment loan pools’ prepayments rose from 8.7 to 11.4 CPR, an increase reflected on a vintage-by-vintage basis. Speeds on real-estate loan pools sped up as well, going from 9.1 to 10.8 CPR, this pick up could also be seen in most individual 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 (May) | Monthly, 5th business day

NFIB Small Business Economic Trends (April) | Monthly, 2nd Tuesday of each month

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 © 2023
This is a publication of Vining-Sparks IBG, LLC
775 Ridge Lake Blvd., Memphis, TN 38120