Funding Circle is securitizing its first pool of U.S.-based small business loans.
According to Kroll Bond Rating Agency, the online business-loan lender is marketing $198.45 million in notes backed by loans made to small and medium-sized businesses in the U.S. Funding Circle has previously issued notes for asset-backed pools of small-business loans in its native UK.
The transaction consists of four classes of notes, including a $142.8 million Class A tranche with an initial A- rating from Kroll, and benefiting from 32.5% credit enhancement.
The initial collateral pool has an aggregate principal balance of $182.4 million, with an average balance of $130,288 at a 13.1% interest rate. It is expected to total $210 million at close.
Kroll has an estimated loss range of 12%-14% for the life of the transaction.
The loans pooled into the Small Business Lending Trust 2019-A are secured and include a personal guarantee from the borrower. The loans are between $25,000 and $500,000, on original terms between six months and five years.
The loans were initially purchased by Credit Suisse before being assigned to the pool.
Funding Circle, founded in 2010, originates online marketplace loans in the U.S., UK, Germany and the Netherlands. It has originated over $10.2 billion in loans during that time covering 72,000 businesses.
