Harvest Small Business Finance's Remarkable Securitization Success

Harvest Small Business Finance Achieves New Milestone

Harvest Small Business Finance, LLC (“HSBF”), recognized as a leading non-bank originator of SBA 7(a) loans, has accomplished its fifth securitization of primarily first-lien unguaranteed portions of SBA 7(a) loans. This latest achievement was marked by a transaction valued at $95.2 million, known as the Harvest SBA Loan Trust 2024-1. In this significant event, Performance Trust Capital Partners, LLC served as the sole structuring agent, while East West Markets, LLC joined as co-manager.

Understanding the Significance of HSLT 2024-1

The Harvest SBA Loan Trust 2024-1 is noteworthy within the realm of securitization as it stands as one of only two REMIC structured securitizations issued within the SBA space. The trust secured ratings from Morningstar DBRS, which assigned A(low)(sf), BBB(low)(sf), and BB(sf) ratings to the Class A, Class B, and Class C Notes respectively. These ratings highlight the trust's quality and expected performance.

A Commitment to Excellence

Leaders at HSBF, including Adam Seery, Todd Massas, and Jason Raefski, expressed their unwavering commitment to excellence. They emphasized, "HSBF continues to outperform other lenders in its space. This is attributed to our dedication to offering high-quality commercial real estate loans to well-vetted businesses. We pride ourselves on setting the standard for performance, pricing, and creativity within the SBA securitization market." This sentiment echoes the firm’s philosophy of remarkable service and dependability.

Key Characteristics of the Deal

The $95.2 million transaction remains an integral part of HSBF's strategy. As the fifth SBA 7(a) securitization and the eighth issuance overall, this deal features pro-rata payments across the Class A, Class B, and Class C Notes. This structure allows for equitable distribution of payments among the note holders, showcasing HSBF's robust management.

Additionally, the deal includes a 90-day prefunding period, which permits up to 20% of collateral to be added. Once this period wraps up, a static collateral pool will be established. According to recent reports, the cutoff date for collateral was set at October 31, 2024. The collateral is comprised of the unguaranteed portions of 361 SBA 7(a) loans, amounting to $86.24 million, representing approximately 25% of the full outstanding principal balance of the loans.

Evaluating the Loan Characteristics

The average full balance of loans within this collateral pool is around $1.01 million. Each loan presents a weighted average remaining term of roughly 271 months. Most of these loans are structured to require monthly payments and are linked to adjustable interest rates tied to the Prime Rate. Notably, many are 25-year, fully-amortizing loans.

In terms of borrower reliability, the obligors boast a weighted average FICO score of 729, indicating a strong credit profile. The properties securing these loans are entirely commercial real estate, with a weighted average original loan-to-value ratio (LTV) calculated at 77.3%. Furthermore, the average time businesses have been operational stands at an impressive 18 years, showcasing the stability and experience of HSBF's clientele.

About Harvest Small Business Finance, LLC

Harvest Small Business Finance, LLC, established to originate and service loans backed by owner-occupied, multi-purpose real estate, adheres to the guidelines of the Small Business Administration’s 7(a) loan program. The company has made significant strides in several major markets across the United States and is empowered by a Small Business Lending Company (SBLC) license acquired in March 2016.

With its establishment dating back to February 2016, HSBF is based in Laguna Hills, California, and operates under the ownership of an affiliate of Medalist Partners, LP, which manages approximately $1.8 billion in net assets across various strategies in structured and asset-based private credit.

Frequently Asked Questions

What is HSBF's latest securitization deal?

HSBF's latest deal is the Harvest SBA Loan Trust 2024-1, valued at $95.2 million and primarily focused on SBA 7(a) loans.

What ratings did Morningstar DBRS assign to the notes?

Morningstar DBRS assigned A(low)(sf) to Class A, BBB(low)(sf) to Class B, and BB(sf) to Class C Notes.

How long is the average remaining term of the loans?

The average remaining term for these loans is approximately 271 months.

What is the weighted average FICO score of obligors?

The obligors in this loan pool maintain a weighted average FICO score of 729.

When was Harvest Small Business Finance established?

Harvest Small Business Finance was founded in February 2016, in Laguna Hills, California.

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