LOANS RECEIVABLE

Loans receivable consist of the following:



	December 31,
	2019			2018
	(in thousands)
SBA 7(a) loans receivable, subject to loan-backed notes	$	27,598		$	36,847
SBA 7(a) loans receivable, subject to credit risk	27,290			29,385
SBA 7(a) loans receivable, subject to secured borrowings	12,644			16,409
Loans receivable	67,532			82,641
Deferred capitalized costs	1,145			1,309
Loan loss reserves	(598		)	(702		)
Loans receivable, net	$	68,079		$	83,248

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).

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 and the government guaranteed portions of such loans that have not yet been fully funded or sold.

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.

At December 31, 2019 and 2018, 99.6% and 99.7%, respectively, of our loans subject to credit risk were current. We classify loans with negative characteristics in substandard categories ranging from special mention to doubtful. At December 31, 2019 and 2018, $1,362,000 and $235,000, respectively, of loans subject to credit risk were classified in substandard categories.

At December 31, 2019 and 2018, our loans subject to credit risk were 98.7% and 98.3%, respectively, concentrated in the hospitality industry.