"The most interesting part is their SBA lending department. These loans for small businesses have government backing, which makes them less risky for lenders. Essentially, the US guarantees up to 85% of the loan amount to the lender."
Hi Komodo, I did not see them posting their detailed default statistics for different segments - only total numbers. That said, you can have a look at their earnings calls - they normally mention what biggest non-performing loans are.
Good article. Well presented. I like your conclusion and would do same. Start a small initial position and hope we get a correction and look to add then…too bad no options…I like starting with selling puts
From my understanding SBA loans over $150k are only securitized 75%, not 100%. Their average loan size is $2M.
Hi, yes sure. I mentioned it in the article:
"The most interesting part is their SBA lending department. These loans for small businesses have government backing, which makes them less risky for lenders. Essentially, the US guarantees up to 85% of the loan amount to the lender."
I believe the guarantee should be 75%, am I missing something?
Some programs are up to 85%, not all. But most are 75%, you are right. I just mentioned the highest possible guarantee.
But they wouldn’t qualify for 85% guarantee since their average loan is $2M, so that’s not really relevant to them.
For average loan yes. But for loans smaller than $150K 85% is applicable.
Also question: do you know if they show their CRE loan default rate? Been unable to find that. Cheers.
Hi Komodo, I did not see them posting their detailed default statistics for different segments - only total numbers. That said, you can have a look at their earnings calls - they normally mention what biggest non-performing loans are.
Good article. Well presented. I like your conclusion and would do same. Start a small initial position and hope we get a correction and look to add then…too bad no options…I like starting with selling puts
Thanks for the feedback! Let's see how it develops