LOANS RECEIVABLE

3 Months Ended

Mar. 31, 2022

5. LOANS RECEIVABLE

Loans receivable consist of the following (in thousands):


	March 31, 2022		December 31, 2021
SBA 7(a) loans receivable, subject to credit risk	$	45,802	$	42,103
SBA 7(a) loans receivable, subject to loan-backed notes	16,869		18,050
SBA 7(a) loans receivable, Paycheck Protection Program	3,386		5,050
SBA 7(a) loans receivable, subject to secured borrowings	6,458		6,857
SBA 7(a) loans receivable, held for sale	6,415		1,200
Loans receivable	78,930		73,260
Deferred capitalized costs, net	1,454		1,226
Loan loss reserves	(980)		(943)
Loans receivable, net	$	79,404	$	73,543

SBA 7(a) Loans Receivable, Subject to Credit Risk—Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were retained by the Company.

SBA 7(a) Loans Receivable, Subject to Loan-Backed Notes—Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were transferred to a trust and are held as collateral in connection with a securitization transaction. The proceeds received from the transfer are reflected as loan-backed notes payable (Note 7). These loans are subject to credit risk.

SBA 7(a) Loans Receivable, Paycheck Protection Program—As an SBA 7(a) licensee, the Company originated loans under the PPP. As of March 31, 2022, a significant portion of these loans have been either forgiven or repaid, and the Company expects that all of the outstanding PPP loans will be forgiven, either in part or in full, by the SBA or be repaid by the borrower, including both principal and accrued interest.

SBA 7(a) Loans Receivable, Subject to Secured Borrowings—Represents the government guaranteed portions of loans originated under the SBA 7(a) Program which were sold with the proceeds received from the sale reflected as secured borrowings—government guaranteed loans. There is no credit risk associated with these loans since the SBA has guaranteed payment of the principal.

SBA 7(a) Loans Receivable, Held for Sale— Represents the government guaranteed portion of loans held for sale at the end of the period or that had been sold but in respect of which proceeds had not been received as of the end of the period.

Other

As of March 31, 2022 and December 31, 2021, the Company’s loans subject to credit risk were 99.9% and 99.8%, respectively, concentrated in the hospitality industry. As of March 31, 2022 and December 31, 2021, 100.0% and 100.0%,

respectively, of the Company’s loans subject to credit risk were current. The Company classifies loans with negative characteristics in substandard categories ranging from special mention to doubtful. As of March 31, 2022 and December 31, 2021, $1.0 million and $1.1 million, respectively, of loans subject to credit risk were classified in substandard categories.