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The second ever multi-lender securitization of unguaranteed portions of US Small Business Administration loans closed in September and another is on the way, as community banks and other SBA lenders tap into institutional investor demand to increase their capacity to lend to mom and pop businesses across the country.

These deals securitize loans that are partly guaranteed through the SBA’s 7(a) loan program, which is designed to help small businesses obtain financing that is not otherwise available.

For investors, these transactions provide exposure to fixtures of Main Street such as diners, nail salons, plumbers and sporting goods stores, while for community banks they bring in funding and free up capital to lend more.

In particular, the new multi-originator deals help to solve a problem faced by smaller SBA lenders — what to do with the unguaranteed portions of SBA loans sitting on their balance sheets, since there is no thriving secondary market to sell them into and individual loan books can be too small to securitize on their own.

“It's an interesting transaction for a small institution that allows us to revolve our balance sheet and revolve our liquidity so that we can provide more assistance to more businesses out there,” said Jeremy Gilpin, chairman of the board at Community Bankshares, which owns Community Bank & Trust – West Georgia (CB&T), one of the participating lenders in the latest multi-lender securitization, SOUP 7(a) Trust 2025-FBC1.