Loan Seasoning
Seasoning describes the maturity of an MCA portfolio measured by months-since-origination — used in capital markets diligence and portfolio analytics to compare credit performance across funders or time periods.
Why This Matters
Seasoning matters because credit losses emerge over time. Comparing two portfolios at different seasoning levels misleads — a 3-month-seasoned portfolio with 5% delinquency is performing worse than a 12-month-seasoned portfolio with 8% delinquency, since the older portfolio has already absorbed most of its losses. Capital markets investors normalize for seasoning when comparing funders. Securitization structures often require minimum seasoning (e.g., 90 days) for pool inclusion to ensure adequate performance visibility.
Frequently Asked Questions
Frequently Asked Questions
Why does seasoning matter in portfolio comparison?
Two portfolios with identical loss rates may have very different ultimate performance if measured at different seasoning levels. Younger portfolios will continue accumulating losses; older portfolios are largely past their loss emergence period.
What's a fully-seasoned MCA portfolio?
18-24 months — the point at which most credit losses have emerged and remaining performance is stable. Older portfolios provide most reliable performance benchmarks.