Small Business ABS: Performance Anchored in Stability

Small Business Administration (SBA) loans are often considered an engine that funds small businesses in the U.S.—with over $37 billion issued in fiscal year 2024 alone. However, various private sector capital sources play a critical role in the small business lending (SBL) sector, including asset-backed securities (ABS). ABS has become an increasingly prominent asset class within the structured finance market, driven by strong demand for alternative capital sources, the rise of fintech originators, and growing investor appetite for higher-yielding assets. Over just a decade, and excluding SBA transactions, KBRA has rated more than $14 billion in small business ABS in the U.S. Of these transactions, 71% were 144A transactions with published ratings (by volume), and 29% were private transactions with unpublished ratings. This report reviews issuance trends, collateral characteristics, and credit performance across this universe of transactions. Further background on the sector is…