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KBRA Assigns Preliminary Rating to Harvest SBA Loan Trust 2019-1

Kroll Bond Rating Agency (KBRA) assigns preliminary rating to the Class A Notes issued by Harvest SBA Loan Trust 2019-1, a securitization backed by the unguaranteed portions of small business loans made pursuant to Section 7(a) of the Small Business Act of 1953.

Harvest SBA Loan Trust 2019-1 is Harvest's second SBA 7(a) securitization and the third securitization including the recent Commercial Capital Loan Trust deal. The transaction features a payment waterfall whereby collections after expenses and interest payments will turbo principal until the target advance rate of 63% is reached, at which time the remaining funds will continue to flow through the remaining priority of payments.

The securitization includes a 90-day prefunding period for up to an additional 20% of collateral. Once the 90-day prefunding period is complete the transaction will have a static collateral pool. As of the November 30, 2019 cut-off date, the collateral consists of 136 SBA loans with an unguaranteed balance of $33.66 million, approximately 25% of the full outstanding current principal balance. The collateral has an average full loan balance of approximately $1.02 million and a weighted average remaining term of 289 months. All the loans are amortizing, monthly pay, floating rate, and originally 10 or 25-year term loans. The obligors have a weighted average FICO of 718 and the property used to collateralize the loans are all commercial real estate with a weighted average LTV of 77.5%.

The transaction structure includes a single class (Class A notes). Credit enhancement includes overcollateralization, a cash reserve account, performance triggers and excess spread. The Class A notes initially benefit from 17% overcollateralization. The priority of payments will turbo the Class A notes until a 63% advance rate (37% overcollateralization) is achieved, at which point any additional funds will continue through the priority of payments. The overcollateralization has a floor of 20% of the initial collateral balance.

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200121006037/en/

Contacts

Analytical Contacts:
John Lampasona, Director
(646) 731-2318
jlampasona@kbra.com

Zara Shirazi, Director
(646) 731-3326
zshirazi@kbra.com

Daniel Tegen, Senior Director
(646) 731-2429
dtegen@kbra.com

Business Development Contact:
Ted Burbage, Managing Director
(646) 731-3325
tburbage@kbra.com