Los Angeles-based Centerstone SBA Lending is sponsoring its first securitization, a collateral pool of unguaranteed portions of SBA 7(A) small business loans.
The inaugural asset-backed transaction for the Los Angeles-based lender will include $34.86 million in Class A notes, with an initial BBB rating from S&P Global Ratings.
The 175 loans in the pool have an aggregate loan balance of $47.27 million, contributing to a 27.25% credit enhancement to the notes balance as a cushion against potential losses for investors. Each loan has an average balance of $270,000, and weighted-average remaining terms of 212 months after 18 months of seasoning.
Over 61% of the loans – which include first-lien and junior-lien – are tied to real estate, and 26.7% were used by property purchases. Hotels (18.35%) make up the highest concentration of business types in the pool.
The Class A notes will carry an interest rate that will be the lesser of one-month Libor with a spread (to be determined) or the prime rate less a spread.
Centerstone is one of 14 non-depository financial institutions qualified as a lender under the U.S. Department of Commerce’s Small Business Administration loan program. The company primarily lends in the Western U.S., with the majority of borrowers in California. The industries it serves include hospitality, food service, medical and retail businesses.
