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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
DECEMBER 11, 2023

LAGUNA HILLS, CA– 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 30th 2023, that invests predominantly in credit-based strategies. HSBF was founded in February 2016 and is based in Laguna Hills, CA.

Investor Report

Harvest Has Executed Three Securitizations of SBA 7(a) Unguaranteed Portions
  • Harvest SBA Loan Trust 2018-1, August 2018

    • $90.79 million Class A Notes rated BBB by Standard & Poor’s (with a subsequent rating of BBB+ from Kroll Bond Rating Agency)

  • Harvest SBA Loan Trust 2019-1, February 2020

    • $34.92 million Class A Notes rated BBB-/BBB by Standard & Poor’s/Kroll Bond Rating Agency

  • Harvest SBA Loan Trust 2021-1, May of 2021

    • $68.03 million Class A Notes rated BBB-by Kroll Bond Rating Agency

Harvest Has Executed Two Securitizations of SBA 504 and Conventional 1st TDs

  • Harvest Commercial Capital Loan Trust 2019-1, November 2019

    • Kroll Bond Rating Agency rated the HCCLT 2019-1 transaction, with approximately 65% of the certificates (the Class A Certificates) rated AAA

    • $267.00 million Classes M-1 through M-5 were rated AA down to B, with Classes M-6 and M-7 being unrated

  • Harvest Commercial Capital Loan Trust 2020-1, December 2020

    • Kroll Bond Rating Agency rated the HCCLT 2020-1 transaction, with approximately 54% of the certificates (the Class A Certificates) rated AAA

    • $112.60 million Classes M-1 through M-5 were rated AA down to B, with Classes M-6 and M-7 being unrated

    • The securitization closed successfully despite a weak market for small business loan transactions due to the COVID-19 pandemic

Harvest Separates From Competitors
  • Senior/Seasoned Business Development Officers – Generally, Harvest BDOs are hired with at least 10 years (and normally much more) of experience underwriting and selling commercial real estate loans.
     

  • Commercial RE Focused – While other lenders are bogged down looking at all small business products (equipment, working capital, business acquisitions, etc.), Harvest focuses 100% of our efforts on generating commercial real estate loans.

  • Streamlined Processing – Not only does Harvest seek out the best BDOs, but we also hire best-in-class talent in the back office. This allows for efficient underwriting, thorough and accurate credit memoranda, and loan closers who can see “through the woods” to identify potential issues and provide solutions.

  • Solution Oriented in Our Approach to Working with Clients – We are constantly looking for better ways to get from point A to point Z with our clients and to serve as a trusted advisor to our clients during the loan process.

  • Family Environment – Our “secret sauce” is empowering our employees to take ownership of each loan request. This allows for a sense of pride among our employees. Everyone works as a team to accomplish our common goal of closing CRE loans.

  • We understand that you cannot be high priced and slow!

July 2015

Harvest is formed as a California limited liability company under the name BYL Small Business Finance, LLC

November 2015

The Receiver names Harvest as the winning bidder for the SB Capital Assets

March 2016 

Harvest closes its purchase of the SB Capital Assets, including the SBLC license

April-June 2016 

Harvest receives authorization from the SBA and from the California Department of Business Oversight to begin originating loans

July 2016

Harvest originates its first loan!

October 2016

The SBA awards Harvest with Preferred Lender Program (PLP) status, allowing Harvest to originate loans with an SBA guaranty without first submitting the loans to the SBA

May 2017

Harvest surpasses the $100 million mark in originations

December 2017 

Harvest closes on a $60 million senior warehouse facility with Capital One

August 2018 

Harvest closes its first securitization of the unguaranteed portions of SBA 7(a) loans, the $90.79 million Harvest SBA Loan Trust 2018-1 transaction

June 2019 

Harvest surpasses the $500 million mark in originations

December 2019

Harvest Surpasses $1 billion in 7a, 504 and Conventional loan closings

 

February 2020 

Harvest closes the $34.92 million Harvest SBA Loan Trust 2019-1 securitization

April-August 2020

Harvest participates in the first round of the Paycheck Protection Program (“PPP”) and originates approximately $1.2 billion of PPP loans

May 2020

Harvest closes on a $50 million senior warehouse facility with East West Bank to replace the Capital One facility (this facility has since been upsized to $75 million)

September 2020

Harvest originates $59 million, its highest volume month to date

September 2020

Harvest is the 10th largest SBA lender in the country for SBA fiscal year 2020 (ended September 30, 2020)

December 2020

Harvest originates $46.7 million, its second highest month to date, which pushes Harvest originations to over $300 million for calendar year 2020

Jan–July 2021

Harvest participates in the second round of the PPP program and originates over 607,000 loans for approximately $10.6 billion, making Harvest the top PPP lender in the country by number of loans, and the 2nd largest lender by volume

May 2021

Harvest surpasses the $1 billion mark in 7(a) originations

September 2021

Harvest is the 8th largest SBA lender in the country for SBA fiscal year 2021 (ended September 30, 2021)

December 2021 

Harvest originates $383.6 million of SBA 7(a) loans during calendar year 2021, its highest volume year to date

May 2022

Harvest Surpasses $2 billion in 7a, 504 and Conventional loan closings

September 2022

Harvest 11th Largest SBA 7(a) lender, 6th Largest 504 lender in America

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