KBRA Assigns Preliminary Ratings to Mulligan Asset Securitization II LLC, Series 2024-1 Notes

KBRA assigns preliminary ratings to three classes of notes issued by Mulligan Asset Securitization II LLC, Series 2024-1 (“Mulligan 2024-1”), a small business loan ABS transaction. Mulligan Asset Securitization LLC (the “Issuer”) will issue three classes of Series 2024-1 Notes, totaling $120 million. This transaction (“Mulligan 2024-1”) represents Mulligan Funding, LLC’s (“Mulligan” or the “Company”) second securitization. The proceeds of the sale of the Series 2024-1 Notes will be used to purchase receivables, fund the reserve account, and pay related fees and expenses.

Founded in 2008, Mulligan provides financing to small and medium-sized business through the use of proprietary risk scoring models, transactional data and technology systems. Since inception, Mulligan has funded over $1.5 billion to more than 25,000 merchants. The Company is primarily owned by its senior management as well as Ptolemy Capital LLC. The Company has 160 employees and is headquartered in San Diego, CA. Mulligan has been profitable in most years since 2008, according to the Company.

The Notes are “expandable” term notes such that at any time during the Revolving Period (defined below), the Issuer may periodically upsize the current Notes, up to a maximum amount of $500 million, as long as certain conditions are met, including providing Rating Agency Confirmation (“RAC”). .

This transaction is secured by a revolving portfolio of receivables (“Receivables”) consisting of participation interests related to Business Loans (“Business Loans”) with fixed terms and rates made to Merchants. The transaction features a 36 month revolving period unless a Rapid Amortization Event has occurred (the “Revolving Period”). During the Revolving Period, the Issuer will purchase additional receivables that meet the eligibility criteria and concentration limits.

Credit enhancement will consist of subordination, excess spread, an excess funding account, and a reserve account, which will be funded at closing.

KBRA applied its Global General Rating Methodology for Asset-Backed Securities as well as its Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA considered its operational review of the Company, as well as periodic update calls with the Company. Operative agreements and legal opinions will be reviewed prior to closing.

To access rating and relevant documents, click here.

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Methodologies

• ABS: General Global Rating Methodology for Asset Backed Securities
• Structured Finance: Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1006356

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