XML 32 R20.htm IDEA: XBRL DOCUMENT
v3.24.1.1.u2

FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended
--- | ---
Mar. 31, 2024
Fair Value Disclosures [Abstract] |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 13. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company determines the estimated fair value of financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. The hierarchy for inputs used in measuring fair value is as follows: Level 1 Inputs—Quoted prices in active markets for identical assets or liabilities Level 2 Inputs—Observable inputs other than quoted prices in active markets for identical assets and liabilities Level 3 Inputs—Unobservable inputs In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Management’s estimation of the fair value of the Company’s financial instruments is based on a Level 3 valuation in the fair value hierarchy established for disclosure of how a company values its financial instruments. In general, quoted market prices from active markets for the identical financial instrument (Level 1 inputs), if available, should be used to value a financial instrument. If quoted prices are not available for the identical financial instrument, then a determination should be made if Level 2 inputs are available. Level 2 inputs include quoted prices for similar financial instruments in active markets for identical or similar financial instruments in markets that are not active (i.e., markets in which there are few transactions for the financial instruments, the prices are not current, price quotations vary substantially, or in which little information is released publicly). There is limited reliable market information for the Company’s financial instruments and the Company utilizes other methodologies based on unobservable inputs for valuation purposes since there are no Level 1 or Level 2 inputs available. Accordingly, Level 3 inputs are used to measure fair value. In general, estimates of fair value may differ from the carrying amounts of the financial assets and liabilities primarily as a result of the effects of discounting future cash flows. Considerable judgment is required to interpret market data and develop estimates of fair value. Accordingly, the estimates presented are made at a point in time and may not be indicative of the amounts the Company could realize in a current market exchange. The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities. Debt—The carrying amounts of the Company’s secured borrowings - government guaranteed loans, SBA 7(a) loan-backed notes, 2022 Credit Facility and variable rate mortgage payable approximate their fair values, as the interest rates on these securities are variable and approximate current market interest rates. The Company determines the fair value of fixed rate mortgage notes payable and junior subordinated notes by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. Loans Receivable—The Company determines the fair value of loans receivable by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration the credit risk and using an anticipated prepayment rate. The value of the government guaranteed portions of loans held for sale is based primarily on the anticipated proceeds to be received upon sale. The following summarizes the ranges of discount rates and prepayment rates used to arrive at the estimated fair values of the Company’s loans receivable:
| March 31, 2024 |  | December 31, 2023
| Discount Rate |  | Prepayment Rate |  | Discount Rate |  | Prepayment Rate
SBA 7(a) loans receivable, subject to credit risk | 7.83% - 11.00% |  | 4.88% - 17.50% |  | 7.83% - 11.00% |  | 4.88% - 17.50%
SBA 7(a) loans receivable, subject to loan-backed notes | 10.00% - 11.00% |  | 4.88% - 17.50% |  | 10.00% - 11.00% |  | 4.88% - 17.50%
SBA 7(a) loans receivable, subject to secured borrowings | 10.00% - 10.50% |  | 5.00% - 17.50% |  | 10.00% - 10.50% |  | 5.00% - 17.50%
Derivative Instruments — The Company’s derivative instruments are comprised of interest rate caps. All derivative instruments are carried at fair value and are valued using Level 2 inputs. The fair value of these instruments is determined using interest rate market pricing models. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the respective counterparties. Other Financial Instruments—The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses approximate their fair values due to their short-term maturities at March 31, 2024 and December 31, 2023. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments. The estimated fair values of those financial instruments which are not recorded at fair value on a recurring basis on the Company’s consolidated balance sheets are as follows (dollar amounts in thousands):
|  | March 31, 2024 |  | December 31, 2023 |  |
|  | Carrying Amount |  | Estimated Fair Value |  | Carrying Amount |  | Estimated Fair Value |  | Level
Assets: |  |  |  |  |  |  |  |  |  |
SBA 7(a) loans receivable, subject to credit risk |  | $ | 12,337 |  |  | $ | 12,153 |  |  | $ | 10,539 |  |  | $ | 10,482 |  |  | 3 |
SBA 7(a) loans receivable, subject to loan-backed notes |  | $ | 40,962 |  |  | $ | 44,187 |  |  | $ | 43,263 |  |  | $ | 46,701 |  |  | 3 |
SBA 7(a) loans receivable, subject to secured borrowings |  | $ | 2,508 |  |  | $ | 2,508 |  |  | $ | 3,105 |  |  | $ | 3,105 |  |  | 3 |
SBA 7(a) loans receivable, held for sale |  | $ | 422 |  |  | $ | 439 |  |  | $ | 98 |  |  | $ | 82 |  |  | 3 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Mortgages payable (1) |  | $ | 163,700 |  |  | $ | 159,052 |  |  | $ | 163,700 |  |  | $ | 158,529 |  |  | 2, 3
Junior subordinated notes (1) |  | $ | 27,070 |  |  | $ | 24,708 |  |  | $ | 27,070 |  |  | $ | 24,667 |  |  | 3 |
______________________ (1)The carrying amounts for the mortgages payable and junior subordinated notes represents the principal outstanding amounts, excluding deferred debt issuance costs and discounts.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration