SBA Prepay Commentary

October 2021 SBA Prepayment Speeds

Prepayment speeds on equipment loan pools decreased for the first time since March, while those for real-estate loan pools rose for the sixth time in seven months. As can be seen in the chart below, it appears that speeds may be following the seasonal trend of plateauing during the autumn months, albeit still at lower levels than recent pre-pandemic years. Availability and quality of labor is an increasing concern among small business owners, as reported by the NFIB, with 51% of business owners saying they have job openings they are unable to fill, topping the last two months’ respective 48-year record highs. This also is likely the cause of the increase in respondents pointing to cost of labor as their primary concern. For the month of September, 42% of small business owners reported that they increased employee compensation, which is a 48-year record high percentage of respondents.

Equipment loan pools’ prepayments decreased, going from 14.5 to 13.5 CPR, with most individual vintages seeing reduced speeds. Prepayments on real-estate loan pools picked up, rising from 13.4 to 15.0 CPR, an increase also seen among 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.

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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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