Hana Small Business Lending is preparing to remarket a securitization backed by the unguaranteed portions of Small Business Administration’s 7(a) program small business loans.
The issuer first began marketing the deal, Hana Small Business Lending Loan Trust 2014-1, led by Guggenheim Securities, in March, only to pull it in June.
JP Morgan Securities has taken over the role as lead underwriter on remarketed deal, Hana SBL Loan Trust 2014.
The SBA Section 7(a) loan program provides financial help for businesses with special requirements. Hana is a direct SBA nonbank lender and the originator and servicer for the series 2014's loan collateral
The capital structure will offer a single tranche of notes with a preliminary 'A' rating from Standard & Poor’s. The deal is expected to close on Sept. 11, 2014. However the issuer can purchase additional assets up to $10.075 million in par amount, using the prefunding account until Dec. 10, 2014. If the amounts remain uninvested in additional assets at the end of the prefunding period, they will likely be available to pay down the class A notes, according to S&P.
Hana can also, according to specified criteria, substitute new eligible loans for any loans that are 150 days delinquent or more for up to 10% of the adjusted portfolio balance in the 90 days after the closing date.
Hana lends to small businesses in several large cities across the U.S., including Los Angeles, Atlanta, Chicago, New York, and Seattle. The company's underwriting guidelines require site visits for loans exceeding $2 million and the borrowers to meet with loan officers in person at their home office at least once a year.
A new breed of issuer has led small business loan securitizations this year that have veered away from the SBA loans. In April, both OnDeck Capital and Kabbage issued debut securitization backed by small business loans.
On Deck’s $175 million deal, led by Deutsche Bank, consists of two tranches; one with weighted average life of 2.32 years and a BBB’ rating from DBRS priced at a spread of 250 basis points over the interpolated swaps curve and one with a WAL of 2.80-years and a BB’ rating that was priced to yield 5.75%. OnDeck lends to small businesses that have historically been underserved by traditional financial institutions and may had difficulty obtaining affordable or timely financing in the past, according to the DBRS presale report.
Kabbage, an online provider of working capital for small businesses, issued $270 million of notes backed by merchant cash advance receivables. That deal was led by Guggenheim Securities. Merchant cash advance providers offer businesses a lump sum payment in exchange for a share of future sales. Kabbage has advanced over $250 million to small businesses in fewer than three years in operation.