In August, short- and long-term SBA loan guarantee premiums soared to record high levels as uncertainty around the next phase of economic stimulus options continued to drive loan origination volume down, according to BoeFly. The BoeFly Loan Sale Index for 25-year Prime+2% increased 80 basis points (bp) to 110.8%, while for 10-year Prime+2% loans, the Index jumped 100 bp to 108.4%. Individual transactions also hit record highs with a 25-year Prime+2.75% deal fetching a premium of 113.28% and a 10-year Prime+2.75% deal getting 110.77%.
“The market for SBA loan guarantees reflects the current search for yield,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “With Treasury rates at record lows, there is nowhere to find investments that can deliver decent yield, which is driving up the prices on SBA loan guarantees and other high-quality investments that can deliver an attractive yield.”