The U.S. Small Business Administration (SBA) is maintaining the 89.0 percent minimum maturity ratio for SBA Standard Pools and Weighted-Average Coupon (WAC) Pools. The minimum m...
The U.S. Small Business Administration (SBA) is maintaining the 89.0 percent minimum maturity ratio for SBA Standard Pools and Weighted-Average Coupon (WAC) Pools. The minimum maturity ratio is a pool-formation characteristic intended to support the estimated cost of SBA's timely payment guaranty for newly formed pools of SBA-guaranteed portions of 7(a) loans. SBA will incorporate this notice, as appropriate, into the SBA Secondary Market Program Guide and other applicable SBA Secondary Market program materials.
DATES:
The notice will apply to SBA 7(a) loan pools with an issue date on or after October 1, 2026.
( printed page 61272)
ADDRESSES:
Submit comments concerning this Notice to Phillip Frechette, Office of Credit Risk Management, U.S. Small Business Administration by email to
phillip.frechette@sba.gov.
FOR FURTHER INFORMATION CONTACT:
Phillip Frechette, Office of Credit Risk Management at (603) 225-1600; or by email to
phillip.frechette@sba.gov.
Individuals who are deaf, hard of hearing, or have a speech disability, may dial 7-1-1 to access telecommunications relay services.
SUPPLEMENTARY INFORMATION:
The Small Business Secondary Market Improvements Act of 1984, 15 U.S.C. 634(f) through (h), authorizes SBA to guarantee the timely payment of principal and interest on Pool Certificates. A Pool Certificate represents a fractional undivided interest in a Pool, which is an aggregation of the SBA-guaranteed portions of loans made under section 7(a) of the Small Business Act, 15 U.S.C. 636(a). Consistent with 13 CFR part 120, subpart F, SBA guarantees to each Registered Holder the timely payment of principal and interest installments, as well as any prepayment or other recovery of principal, to which the Registered Holder is entitled under the Pool Certificate.
To support SBA's timely payment guaranty, SBA established the Master Reserve Fund (MRF). Borrower payments on the guaranteed portions of pooled loans and SBA guaranty payments on defaulted pooled loans are deposited into the MRF. Those funds are held in the MRF pending distributions to Registered Holders of Pool Certificates. Interest earned on funds held in the MRF supports the timely payment of amounts due to Registered Holders.
SBA periodically establishes and updates pool-formation characteristics for Pool Assemblers through the SBA Secondary Market Program Guide, Fiscal Transfer Agent (FTA) program guidance, and other applicable SBA Secondary Market materials. These characteristics include the minimum number of guaranteed portions required to form a Pool, permissible differences among the gross and net interest rates of the guaranteed portions in a Pool, and the minimum maturity ratio.
For purposes of this notice, the minimum maturity ratio is the ratio of the shortest remaining term to maturity to the longest remaining term to maturity among the guaranteed portions included in a Pool. The remaining terms are measured as of the Pool issue date. The ratio establishes the minimum permitted relationship between the shortest and longest remaining maturities of the guaranteed portions included in a Standard Pool or WAC Pool.
Based on SBA's expectations regarding the performance of future Pools, Pool Assemblers must continue to maintain a minimum maturity ratio of 89.0 percent. Accordingly, for Standard Pools and WAC Pools with an issue date on or after October 1, 2026, all guaranteed portions presented to SBA's Fiscal Transfer Agent for settlement must satisfy a minimum maturity ratio of at least 89.0 percent. Pool Assemblers must continue to comply with all other applicable statutory, regulatory, program-guide, and FTA requirements governing pool formation and settlement.
SBA will continue to monitor loan and pool characteristics and may issue additional guidance or notices as appropriate. This notice does not alter SBA's obligation to honor its guaranty of amounts owed to Registered Holders of Pool Certificates. That guaranty continues to be backed by the full faith and credit of the United States.
SBA will incorporate this program requirement, as appropriate, into the SBA Secondary Market Program Guide and other applicable SBA Secondary Market program materials.
Phillip Frechette,
Supervisory Financial Analyst, Office of Credit Risk Management.
15 U.S.C. 634(f)
13 CFR part 120, subpart F