Harvest Small Business Finance, LLC Closes Its Fourth Securitization of Owner-Occupied, First-Lien SBA 7(a) Unguaranteed Interests - $115.7 Million of Offered Notes Rated by Kroll Bond Rating Agency

LAGUNA HILLS, Calif.--(BUSINESS WIRE)--Harvest Small Business Finance, LLC (“HSBF”) (http://www.harvestsbf.com), one of the top non-bank originators of SBA 7(a) loans, closed its fourth securitization of unguaranteed interests of primarily first-lien SBA 7(a) CRE loans. The $115.7 million Harvest SBA Loan Trust 2023-1, Unguaranteed SBA Loan-Backed Notes, Series 2023-1 (“HSLT 2023-1”) closed on November 30, 2023. Guggenheim Securities was the sole structuring advisor and sole book running manager. East West Bank was a co-manager.

HSLT 2023-1 was the first unguaranteed SBA 7(a) transaction to involve a REMIC structure, as well as the first transaction in this asset class to involve the issuance of a “BB” rated note. This transaction involved the issuance of three classes of notes rated by KBRA. The Class A, Class B and Class C Notes were rated “A-”, “BBB-”, and “BB”, respectively.

HSBF leaders Adam Seery, Todd Massas and Jason Raefski commented, “HSBF has been one of the top SBA 7(a) lenders across the nation since our inception in 2016. We take pride in our ability to provide growing small businesses with much needed access to capital. Our exceptional team cares deeply about our mission of “Funding the American Dream” through commercial real estate ownership, creating jobs and furthering growth.”

Deal Characteristics

Harvest SBA Loan Trust 2023-1 is Harvest‘s fourth SBA 7(a) securitization and its sixth Harvest issuance overall, including transactions from Harvest Commercial Capital.

The offered notes on the HSLT 2023-1 transaction pay principal pro rata. The assets of the issuer include a prefunding account which allows for the sale of additional collateral within a 90-day prefunding period. As of the October 31, 2023 cut-off date, the initial collateral pool consisted of 529 unguaranteed participation interests with an aggregate principal balance of $121.3 million, which increases to $133.3 million with the inclusion of the prefunding account. The blended advance rate on the offered Notes is 86.77%. The underlying SBA 7(a) loans securing the unguaranteed participation interest have an average principal balance of $991,639 and an average remaining term of 296 months. All of the loans are monthly pay, with an adjustable interest rate based on the Prime Rate. Most of the pool consists of 25-year, fully-amortizing loans. The obligors have a weighted average FICO of 729 and the properties used to collateralize the loans are all commercial real estate with a weighted average LTV of 77.89%. The average time in business of the underlying businesses is approximately 14 years.

Harvest Small Business Finance, LLC

Harvest Small Business Finance, LLC, a California limited liability company, was created to originate and service loans backed by owner-occupied, multi-purpose real estate, in accordance with the Small Business Administration’s ("SBA") 7(a) loan program. The Company is a significant originator in a number of major markets throughout the United States, pursuant to the authority of a Small Business Lending Company (“SBLC”) license that it acquired in March of 2016. HSBF is majority owned by an affiliate of Medalist Partners, LP, an SEC registered investment manager with approximately $1.7 billion of net assets under management as of September 30^th 2023, that invests predominantly in credit-based strategies. HSBF was founded in February 2016 and is based in Laguna Hills, CA.