KBRA assigns ratings to ByzFunder's inaugural $170 million ABS notes

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KBRA rates ByzFunder ABS notes

Highlights

KBRA assigns ratings to three classes of ByzFunder Asset Securitization I, LLC, Series 2026-1 notes totaling $170 million, backed by business loans and merchant cash advances.
The notes feature an expandable structure allowing increases up to $500 million during a roughly 36-month revolving period ending no later than May 31, 2029, without noteholder approval.
A partial call option allows redemption of up to 30% of notes at 103% of par until June 2027, 101% until June 2028, and par thereafter.

Transaction structure and ratings scope

As reported by Kroll Bond Rating Agency, KBRA assigns ratings to three classes of notes issued by ByzFunder Asset Securitization I, LLC, Series 2026-1.

ByzFunder NY LLC serves as sponsor, seller and servicer for the transaction. The New York-based specialty finance company, founded in 2019, provides working capital financing to small and medium-sized businesses across the country through receivable advances, term loans and lines of credit, using proprietary risk models, third-party data and technology systems.

As of April 30, 2026, the company has about 139 employees and has funded more than $1.4 billion to over 26,000 small and medium-sized businesses. The company originates primarily through Independent Sales Organizations.

Revolving period and noteholder implications

Series 2026-1 is secured by a revolving collateral pool of business loans and merchant cash advances. The revolving period ends on the earlier of May 31, 2029, roughly 36 months after the initial closing date, or the occurrence of a rapid amortization event.

During that period, the seller may transfer additional receivables to the issuer if the transaction documents' conditions are met and no rapid amortization event has occurred or is continuing. The transaction also includes eligibility standards and concentration limits for the collateral pool.

The notes are structured as expandable term notes, allowing the issuer to increase the outstanding amount up to a maximum of $500 million during the revolving period if specified conditions are satisfied, including receipt of Rating Agency Condition. Existing noteholders do not need to approve those upsizes, a feature that may dilute their control and voting rights.

The deal also includes a partial call option under which up to 30% of the notes may be redeemed at 103% of par until, but excluding, the June 2027 payment date, and at 101% of par for the following 12 months until, but excluding, the June 2028 payment date. The transaction may be called in whole or in part at 100% of par on or after June 2028.

Our earlier coverage of AM Best’s rating action on Merchants Bonding Co (Mutual) Group explained why the agency revised the outlook to positive while affirming the insurer’s existing ratings. We noted that the decision was underpinned by strongest-level risk-adjusted capitalization supported by surplus growth, consistently profitable underwriting, solid liquidity, and enhanced risk management aided by AI-driven platforms.

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