A pool of small business loans originated through the U.S. Small Business Administration (SBA) will collateralize $90.5 million in asset-backed securities (ABS) from the SOUP 7(a) Trust 2025-FBC1 transaction.
Small business borrowers use the loan proceeds for such business purposes as working capital, commercial real estate, and machinery, according to DBRS.
The deal will issue one tranche of notes, which are expected to mature on June 25, 2050, and are rated BBB from Morningstar | DBRS.
Three lenders—Lendistry SBLC, Community Bank & Trust and Millennium Bank—partnered with the SBA to originate the underlying loans. The companies are sellers to the trust, and they are expected to service their respective loans. Loans from Millenium account for 22.73% of the total unguaranteed balance and is backed by the first lien on commercial real estate properties.
Loans for hotels and motels, except those that have casinos, account for 19.43% of the pool balance, the largest portion. Full-service restaurants, general freight trucking, gasoline stations and custom computer programming services, account for 3.83%, 3.51%, 3.27% and 2.72% of the pool balance, respectively.
Falcon Bridge Capital is the asset manager on the deal, which is slated to close on September 25.
Standard SBA 7(a) loans account for most of the pool, 60.6%, while SBA 7(a) accounts for 39.2%.
SOUP's notes be pegged to the lesser amount of the 30-day average compounded Secured Overnight Financing Rate (SOFR), or the prime rate, according to the rating agency.
The notes benefit from credit enhancement in the form of initial overcollateralization amounting to 23.89% of the aggregate unguaranteed interest balance as of the deal's cutoff date. The notes also benefit from a reserve account funded to $2.7 million and representing 2.31% of the pool balance, DBRS said.
SOUP's collateral pool is composed of 1,542 loans The collateral pool has an unguaranteed principal balance of $118.9 million as of the deal's cut-off date. According to DBRS, the assets had a FICO score of 742 on a weighted average (WA) basis.
The loans have an original loan-to-value (LTV) ratio of 101.8%, an original term of 178 months, and an original debt service coverage ratio (DSCR) of 1.87x, DBRS said.
