Momentus Securities' Single-Lender Securitization Platform

Momentus Securities has launched a groundbreaking platform that streamlines and reduces the cost of securitizing the unguaranteed portion of SBA 7(a) loans. This opens up the process to smaller, mission-driven lenders who previously found it cost-prohibitive.

The platform and a new impact investment initiative with RBC Global Asset Management enable community-focused lenders to sell their loans on the secondary market, freeing up capital to make more loans and amplify their impact in underserved communities.

Momentus Securities and RBC GAM are bridging the gap between institutional investors seeking impact investments and mission-driven lenders operating in underserved communities. This provides a new avenue for investors to support economic development in these areas.

Momentus Securities' Single-Lender Securitization Platform

• Aims to democratize the securitization process for the unguaranteed portion of SBA 7(a) loans.

• Employs a Master Trust structure with distinct Series Trusts for each lender, simplifying and standardizing documentation.

• Reduces costs and increases efficiency compared to traditional methods, making it accessible to lenders with smaller portfolios.

• First transaction expected to close in Q1 2025.

Impact Investment Initiative with RBC Global Asset Management:

• Launches a separately managed account (SMA) focused on pools of government-guaranteed small-business loans in underserved communities.

• Provides impact-driven investors with direct access to these loan pools.

• Leverages Momentus Securities' expertise in sourcing loans from smaller, mission-driven lenders.

• RBC GAM's BlueBay Fixed Income platform brings 26 years of experience managing impact investments in the U.S.

• Creates an efficient and reliable secondary market for mission-driven lenders to sell loans and recycle capital.

Benefits for Mission-Driven Lenders

Increased liquidity enables them to originate more loans and deepen their impact in underserved communities.

Benefits for Institutional Investors

Access to a new asset class of government-guaranteed small-business loans with positive social impact.

Opportunity to support economic development in underserved communities across the United States.

Overall, these initiatives represent a significant step forward in expanding access to capital for underserved communities and enabling mission-driven lenders to scale their impact.

Video Interview: Merchant Cash Advance Regulatory Compliance Talk | SBFA Director, Steve Denis Interview

Three Critical Regulatory Compliance Patterns

After diving deep into the SBFA's insights, here are three clear patterns that separate successful lenders from those struggling with compliance:

1. The Data Verification Imperative

What's Changing:

• Section 1071 of Dodd-Frank is mandating unprecedented data collection requirements

• The CFPB is intensifying scrutiny of business verification practices

• Traditional manual verification methods are becoming liability risks

Smart Lenders Are:

• Implementing automated verification systems for Secretary of State data

• Creating robust audit trails for all business verifications

• Establishing real-time monitoring of business status changes

2. The Disclosure Evolution

Critical Changes:

• Regulators are pushing for standardized disclosure formats

• Traditional APR calculations are under scrutiny

• Transparency requirements are expanding beyond initial disclosures

Winning Strategies:

• Developing automated disclosure systems that adapt to regulatory changes

• Implementing real-time verification of business data before disclosure generation

• Creating comprehensive audit trails of all disclosures and verifications

3. The Broker Protocol Revolution

New Realities:

• Increased scrutiny of broker practices

• Focus on documentation of broker due diligence

• Emphasis on verified business data in broker transactions

Success Factors:

• Implementing automated broker verification systems

• Creating standardized protocols for business data verification

• Establishing clear audit trails for broker transactions

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