CAN Capital Prices Merchant Cash Advance Securitization

CAN Capital has completed its inaugural, $191 million securitization of small business loans amd merchant cash advances (MCAs) via the Guggenheim Securities led CAN CAPITAL 2014-1.

A $171 million tranche of  'A'/'A' rated, 2.9-year notes yield 3.117% and a 3.4-year tranche of notes, rated ‘BBB-’/ ‘BBB-’ yield 4.25%. Both Standard & Poor’s and DBRS rated the deal.

The deal is the only the third securitization of this type of asset. In early April Guggenheim led the inaugural deal in the space, a $270 million deal for Kabbage, an online provider of working capital for small businesses. Later that month Deutsche Bank managed a $175-million deal backed by small business loans for OnDeck Capital.

DBRS has rated all three transaction; CAN Capital’s transaction is S&P’s first in the asset class.

OnDeck’s securtization, which was rated solely by DBRS, priced the ‘BBB’ rated, 2.32-year, class A notes  at a spread of 250 basis points over interpolated swaps curve, according to a person familiar with the deal. The 2.80-year, class B notes, rated ‘BB’, were priced to yield 5.75%.

“Obtaining an investment grade rating on this transaction from both S&P and DBRS is a very big deal for CAN Capital,” said  Shiladitya Ray, chief financial officer at CAN Capital in a press release.

The transaction is the latest development in a year of significant growth for CAN Capital.  CAN Capital recently raised $33 million from Meritech Capital Partners, Accel Partners, and other private investors, with the funds utilized to expand and accelerate the growth of its small business finance offerings.   

Earlier this year, the Company reached a milestone of providing access to over $4 billion in capital with more than 139,000 transactions with small businesses.   

All assets that CAN Capital sources are either originated directly through its subsidiaries (MCAs and a small percentage of loans) or through an outside relationship with WebBank (most loans). WebBank is an FDIC-insured, state-chartered industrial bank headquartered in Salt Lake City, Utah. The underwriting for the small business loan program is controlled by WebBank. The bank uses CAN’s technology platform, including CAN Scores and the proprietary servicing system to underwrite the loans.