Pub. 4 2014-2015 Issue 3

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S November • December 2014 17 Kirk of Cantor Fitzgerald’s SBA Trading Group in Memphis, Tennessee. Here are answers to common questions we at J.R. Bruno & Associates are hearing from lenders: Q: What is the major factor that affects the bid when selling on the secondary market, rate or maturity/loan term? A. It’s a combination of the two. As a general rule, the longer the term, the higher the spread, the more the premium. A 25- year loan at prime plus 2.75% is the maximum spread the SBA allows. In comparing a 25-year loan at 1.5% and a 10-year loan at 1.5%, the 25-year loan will get a much better bid. Q: Are unusual rate adjusters a factor, for example rates adjusted every three or five years? A: There’s amarket for these loans, which are “non-poolable” one-offs. They can’t be pooled/sold as a group and must be sold individually. There are investors who will buy the annual three- year and five-year adjusters. These are variable rate loans but they are priced like fixed rates for the three-to-five years the rate takes to adjust. There are an increasing number of investors looking for these loans. Q: Is there a practice a lender can adhere to that will gain the highest bids at sale? A: The best time to consider selling a loan is at origination, when the loan is funded. This is the time to consider the value of the entire SBA loan portfolio, including the new loan, and determine what portion to sell. Q: Given that newer loans are more in demand on the mar - ket, is there an age that tends to bring the better bids? A: It depends on the maturities. As a rule of thumb, lenders are advised to sell early. A 10-year loan will start losing premium when it has been on the books for three-to-four months, so the earlier the better. A 25-year loan will start losing premium at nine-to-12 months. To reiterate, the best time to sell is when a loan is new, closed, and fully funded. I hope this information has brought some clarity. Whatever your SBA and business lending needs, we at J.R. Bruno & As- sociates are here to assist you and act as an ongoing resource. Feel free to call me directly at 720.663.8431 to discuss your organization’s needs. n Vern Hansen is an associate at J.R. Bruno & Associates and heads the company’s Col- orado office. J.R. Bruno & Associates is a leading consulting firm to SBA and business lenders and a nationwide SBA Lender Service Provider (LSP). www.jrbrunoassoc.com Congratulations 2014 Graduates from Colorado We congratulate you on completing the rigorous 25-month program and joining the more than 20,000 alumni who have gone on to leadership positions in their organizations, associations and the financial services industry. Best wishes for continued success! 5315 Wall Street #280, Madison, WI 53718 | Ph. 800-755-6440 | Please visit gsb.org Sponsored by: Educating Professionals, Creating Leaders Brandon P. Moore Vice President - Loan Operation FirstBank Lakewood Barry T. Schroeder Vice President FirstBank Conifer Ashley N. Stewart Vice President FirstBank Boulder