LOANS RECEIVABLE

12 Months Ended

Dec. 31, 2022

5. LOANS RECEIVABLE

Loans receivable consist of the following:


	December 31,
	2022		2021
	(in thousands)
SBA 7(a) loans receivable, subject to credit risk	$	56,116	$	42,103
SBA 7(a) loans receivable, subject to loan-backed notes	—		18,050
SBA 7(a) loans receivable, Paycheck Protection Program	—		5,050
SBA 7(a) loans receivable, subject to secured borrowings	6,127		6,857
SBA 7(a) loans receivable, held for sale	117		1,200
Loans receivable	62,360		73,260
Deferred capitalized costs, net	1,293		1,226
Loan loss reserves	(1,106)		(943)
Loans receivable, net	$	62,547	$	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 were reflected as loan-backed notes payable (Note 7). These loans were 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 December 31, 2022, all of the loans originated under the PPP have been repaid in full.

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 was 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 December 31, 2022 and 2021, the Company’s loans subject to credit risk were 99.9% and 99.8%, respectively, concentrated in the hospitality industry. As of December 31, 2022 and 2021, 98.4% 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 December 31, 2022 and 2021, $1.0 million and $1.1 million, respectively, of loans subject to credit risk were classified in substandard categories.