The strongest variable

A long term is worth thirteen times a short one

Expected loss by loan term. Term is set by use of proceeds, so it is a reliable signal of what secures the loan.

SBA maximum terms are ten years for working capital and equipment, twenty-five for real estate. A long term therefore means there is property behind the credit — and that single fact moves expected loss more than industry, loan size or borrower experience.

6.73%expected loss, loans under seven years
0.51%expected loss, loans of twenty years or more
13×the spread — the largest effect in the dataset
Source: Analysis of SBA 7(a) FOIA loan-level data (as of 31 March 2026), seasoned FY2010–FY2019 originations. Severity is gross charge-off as a share of original approval, before recoveries. Published by sba-feasibility-study.com.