This is more of a behind-the-scenes development, not an actual new source of capital. However, if banks can and will securitize their loans, they reduce the loan exposure on their books, & hence, their risk. When banks can reduce their risks, they will lend more. (But careful. Too much of a good thing is what led to the bank/credit meltdown in late 2007/2008.) – T.C. Wright
A successful securitization of small business loans may be a good sign for the asset-backed securities market.
Vincent Ryan – CFO.com | US
April 18, 2011
While many parts of the asset-backed securities market are on tenterhooks because of pending regulations regarding home- and commercial-mortgage securitizations, small-business lender Newtek Business Services has completed a rare kind of deal: a securitization of loans backed by the Small Business Administration. The $16 million sale of notes backed by a pool of SBA 7(a) loans was the first securitization of any kind of commercial business loan since the financial crisis, says Newtek chief executive Barry Sloane.
Although the transaction will not necessarily cause a surge in small-business lending, it may be a sign that fixed-income investors are getting hungry for these kinds of instruments once again — if they’re soundly structured.