1009-00005 · Skybridge Fintech Ltd · Diligence

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP

Internal Memorandum

To: Theodore Langston, Partner (Capital Markets); Linda Osei, Partner (Litigation — General)

From: Patrick Gallagher, Associate; Simone Laroche, Associate

Date: March 28, 2024

Re: Issuer Due-Diligence Memorandum — Skybridge Fintech Ltd. (SkyLend Receivables Trust 2024-1 Securitization)

Matter No.: 1009-00005

CONFIDENTIALITY NOTICE: This memorandum is protected by the attorney-client privilege and the work-product doctrine. It is intended solely for internal use by Calderwood & Harkness LLP personnel working on the above-referenced matter and is not to be disclosed to any third party without prior authorization. Any unauthorized disclosure, copying, or distribution of this memorandum or its contents is strictly prohibited. If you have received this memorandum in error, please notify the authors immediately and destroy all copies.

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I. Executive Summary

This memorandum summarizes the findings of the legal due-diligence review performed by Calderwood & Harkness LLP ("C&H") on Skybridge Fintech Ltd. ("SBF" or the "Company") in connection with SBF's role as originator, sponsor, seller, and initial servicer in the proposed $200,000,000 consumer-receivables securitization to be issued through SkyLend Receivables Trust 2024-1 ("SRT 2024-1" or the "Trust"). The due-diligence review was conducted over the period from approximately February 5, 2024, through March 22, 2024, and encompassed a comprehensive examination of SBF's loan-origination practices, underwriting guidelines, regulatory compliance posture, portfolio composition, financial condition, corporate organizational structure, technology infrastructure, and servicer oversight arrangements.

SBF is a Delaware corporation headquartered at 1400 Market Street, Suite 1210, Wilmington, Delaware 19801 (EIN: 84-3291076). The Company was co-founded by Arun Mehta, who currently serves as Chief Executive Officer. Danielle Prescott serves as Chief Financial Officer, and Tomás Reyes serves as General Counsel. SBF operates a direct-to-consumer digital lending platform branded as "SkyLend," which was launched in approximately 2019 and originates fixed-rate, fully amortizing unsecured consumer installment loans. Since its launch, SkyLend has grown to serve approximately 312,000 active borrowers as of December 31, 2023, with a gross receivables portfolio of $876.5 million and fiscal-year 2023 origination volume of approximately $1.4 billion.

Pinnacle Growth Equity Partners, LP ("Pinnacle"), a private equity fund managed under the direction of Managing Partner Catherine Drexler, holds approximately 62.4% of SBF's fully diluted equity following a $95 million Series C investment consummated in 2021. Pinnacle's designee to the SBF board of directors is Marcus Yoon, a Principal at Pinnacle. The remaining equity is held by the Company's co-founders (including Mr. Mehta) and the employee stock option pool.

Subject to the observations, open items, and qualifications set forth in Section IX below, SBF's origination practices, underwriting guidelines, and regulatory posture appear generally consistent with industry standards for a fintech consumer lender of SBF's scale and vintage. The Company's corporate organizational structure, including the special-purpose entity ("SPE") framework established for the proposed securitization, incorporates standard bankruptcy-remoteness and separateness provisions. No pending regulatory enforcement actions, material examination findings, or unresolved legal proceedings that would be material to the proposed transaction were identified during the review period.

Specific areas warranting continued monitoring have been identified, particularly with respect to (i) the oversight of Clearview Loan Servicing, Inc. ("Clearview"), which serves as sub-servicer for SBF's loan portfolios and which underwent a significant technology platform migration in June 2023, (ii) the finalization of the backup-servicing arrangement, and (iii) the outcome of the independent loan-level due-diligence review to be conducted by Broadleaf Analytics Group LLC ("Broadleaf") on behalf of Halcyon Securities LLC ("Halcyon"), the sole bookrunning manager and initial purchaser for the proposed offering. These items are discussed in greater detail throughout this memorandum and are summarized in Section IX.

II. Scope and Methodology

A. Scope of Engagement

C&H was retained as issuer's counsel in connection with the proposed SRT 2024-1 securitization pursuant to an engagement letter dated January 25, 2024, executed by Tomás Reyes on behalf of SBF and by Theodore Langston on behalf of C&H. The scope of C&H's engagement encompasses the provision of legal services in connection with the structuring, documentation, and closing of the proposed securitization, including the preparation and review of transaction documents, the delivery of legal opinions, and the conduct of due-diligence investigations.

The due-diligence review described in this memorandum was conducted to support the following specific workstreams and deliverables:

(i) The preparation of the Preliminary Offering Memorandum for the SRT 2024-1 Notes, with a targeted distribution date of April 5, 2024, for circulation to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S;

(ii) The delivery of legal opinions by C&H, including (a) the true-sale opinion with respect to the transfer of receivables from SBF to SkyLend Funding LLC, (b) the non-consolidation opinion with respect to SkyLend Funding LLC and SRT 2024-1, and (c) the security-interest opinion with respect to the perfection of the Trust's interest in the receivables under Article 9 of the Uniform Commercial Code;

(iii) The preparation and delivery of the draft 10b-5/negative assurance letter (the "10b-5 Letter") to Halcyon Securities LLC ("Halcyon"), the sole bookrunning manager and initial purchaser for the proposed offering (Halcyon deal reference: HLC-ABS-2024-017), confirming, subject to customary qualifications and limitations, that nothing has come to C&H's attention that causes C&H to believe that the Preliminary Offering Memorandum, as of its date, contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; and

(iv) The preparation and support of rating-agency presentations to Meridian Credit Ratings, Inc. ("Meridian") and Carrollton Ratings Group LLC ("Carrollton"), currently scheduled for April 8, 2024.

B. Documents and Materials Reviewed

In conducting the due-diligence review, C&H reviewed the following categories of documents and materials, which were provided by SBF management, SBF's outside auditors, Clearview, and Halcyon, as applicable:

1. Corporate and Organizational Documents. SBF's Certificate of Incorporation (as amended and restated), Amended and Restated Bylaws, and related corporate organizational documents, including the Company's stock ledger and capitalization table.

2. Board Resolutions and Secretary's Certificates. Resolutions of the Board of Directors of SBF authorizing the proposed securitization and related transactions, together with secretary's certificates certifying incumbent officers, authorized signatories, and the authenticity of governing documents.

3. SkyLend Funding LLC Formation Documents. Certificate of Formation of SkyLend Funding LLC, filed with the Delaware Secretary of State on January 30, 2024 (EIN: 93-4187620), and the Limited Liability Company Agreement of SkyLend Funding LLC, dated as of January 30, 2024, designating SBF as the sole member and Danielle Prescott as Manager, and including separateness covenants, bankruptcy-remoteness provisions, and independent-director requirements.

4. Trust Formation Documents. Trust Agreement of SkyLend Receivables Trust 2024-1, dated as of February 14, 2024 (EIN: 93-4201855), between SkyLend Funding LLC, as depositor, and Keymark Trust Company, N.A. (600 North King Street, Wilmington, Delaware 19801), as owner trustee (trust officer: Elaine Marchetti), including limited-purpose provisions, separateness covenants, and restricted-activity clauses.

5. Credit Policy and Underwriting Documents. SBF Credit Policy and Underwriting Guidelines Manual, Version 4.2, effective September 2023, including all appendices, credit-scoring model documentation, and exception-approval procedures.

6. Sample Loan Documentation. Representative sample of executed loan documents, including standard-form promissory notes, loan agreements, Truth in Lending Act disclosure statements, and borrower-consent forms for electronic records and signatures.

7. Master Servicing Agreement. Master Servicing Agreement dated as of October 1, 2022, between SBF and Clearview Loan Servicing, Inc. (the "MSA"), together with Amendment No. 1 to the MSA, executed March 18, 2024 (collectively, the "Servicing Documents").

8. Clearview Due-Diligence Package. Clearview's operational due-diligence package, including descriptions of servicing operations, staffing, technology platforms, disaster-recovery procedures, regulatory-compliance certifications, and servicing-performance metrics.

9. Audited Financial Statements. SBF's audited consolidated financial statements for the fiscal years ended December 31, 2022, and December 31, 2023, prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") and audited by Rowland & Cross LLP (engagement partner: Nathan Delacroix), together with the related independent auditor's reports.

10. State Lending License Register and Compliance Certifications. SBF's internal register of state lending licenses, including license numbers, issuing jurisdictions, effective dates, and expiration dates, together with associated compliance certifications and renewal applications.

11. Consumer Complaint Logs and Regulatory Correspondence. SBF's consumer-complaint tracking logs for the period from January 1, 2022, through December 31, 2023, and correspondence with state and federal regulators, including examination reports and response letters.

12. Technology Platform Documentation. Documentation describing the SkyLend platform architecture, data-flow diagrams, system-security specifications, encryption protocols, access-control frameworks, and disaster-recovery and business-continuity plans.

13. Internal Compliance Policies. SBF's internal compliance-policy manuals, including policies addressing fair lending, Bank Secrecy Act / Anti-Money Laundering ("BSA/AML") compliance, data privacy and security, Servicemembers Civil Relief Act ("SCRA") compliance, and complaint management.

14. Loan-Tape Extracts and Portfolio Stratification Tables. Loan-level data extracts and portfolio stratification tables as of December 31, 2023, provided by SBF and Clearview, including distributions by loan balance, coupon rate, FICO score at origination, geographic location, loan term, seasoning, and delinquency status.

15. Halcyon Engagement Letter. Underwriting engagement letter between SBF and Halcyon Securities LLC, dated February 20, 2024 (deal reference: HLC-ABS-2024-017), setting forth the terms of Halcyon's engagement as sole bookrunning manager and initial purchaser.

16. Rating-Agency Engagement Letters. Engagement letters with Meridian Credit Ratings, Inc., dated February 28, 2024, and Carrollton Ratings Group LLC, dated February 28, 2024, each setting forth the terms of the respective agency's engagement to rate the Class A Notes and Class B Notes issued by SRT 2024-1.

C. Personnel Interviewed

In addition to the documentary review described above, C&H conducted in-person and telephonic diligence interviews with the following individuals during the period from February 19 through March 15, 2024:

1. Arun Mehta — Chief Executive Officer and Co-Founder, Skybridge Fintech Ltd. (in-person interview, February 19, 2024).

2. Danielle Prescott — Chief Financial Officer, Skybridge Fintech Ltd. (in-person interview, February 20, 2024; follow-up telephone call, March 8, 2024).

3. Tomás Reyes — General Counsel, Skybridge Fintech Ltd. (multiple in-person and telephonic discussions throughout the review period).

4. Priya Venkatesh — Vice President of Credit and Underwriting, Skybridge Fintech Ltd. (in-person interview, February 21, 2024).

5. James Huang — Chief Technology Officer, Skybridge Fintech Ltd. (in-person interview, February 22, 2024).

6. Rebecca Moorfield — Chief Compliance Officer, Skybridge Fintech Ltd. (in-person interview, February 22, 2024; follow-up telephone call, March 12, 2024).

7. Meredith Sloane — Vice President of Operations, Clearview Loan Servicing, Inc. (telephone diligence call, March 1, 2024; follow-up call, March 15, 2024).

D. Limitations

The due-diligence review described in this memorandum is based upon the documents, data, and information provided to C&H by SBF management, SBF's outside advisors, Clearview, and Halcyon. C&H has relied upon the accuracy and completeness of the materials provided and the representations made by the individuals interviewed, and has not undertaken any independent verification of such materials or representations except as specifically noted herein. No independent loan-level audit, re-underwriting analysis, or forensic data review was conducted by C&H as part of this engagement.

Loan-level sampling and re-underwriting is to be performed separately by Broadleaf Analytics Group LLC ("Broadleaf"), which was engaged by Halcyon as of March 25, 2024, for the purpose of conducting an independent review of the proposed receivables pool. Broadleaf's engagement contemplates a sample of approximately 1,500 loans, representing approximately 6.5% of the proposed pool by loan count. The Broadleaf engagement commenced on April 10, 2024, and results are expected to be available prior to the anticipated pricing date.

This memorandum constitutes an internal work-product document of C&H and does not constitute, and should not be construed as, a legal opinion or a guaranty of any fact, condition, or legal conclusion described herein. The observations, assessments, and recommendations set forth herein are preliminary in nature and are subject to revision as additional information becomes available and as the transaction progresses toward closing.

III. Corporate Organization and Good Standing

A. SBF Corporate Status

Skybridge Fintech Ltd. is a corporation organized under the laws of the State of Delaware. C&H reviewed a certified copy of SBF's Certificate of Incorporation, as amended and restated, which was originally filed with the Delaware Secretary of State and reflects the Company's authorized capital structure, including provisions for authorized common stock and preferred stock issued in connection with the Series A, Series B, and Series C financing rounds. C&H also reviewed the Company's Amended and Restated Bylaws, which set forth the governance framework for the board of directors, officer appointments, and shareholder rights.

A certificate of good standing for SBF issued by the Secretary of State of the State of Delaware was reviewed, dated January 18, 2024. The certificate confirms that SBF is in good standing and current with all required franchise tax payments as of the date of the certificate. C&H notes that this certificate is now approximately two months old, and an updated good-standing certificate should be obtained closer to the anticipated closing date to confirm continued good standing at the time of execution and delivery of the transaction documents.

SBF's registered agent in the State of Delaware is Cascade Systems, located at 160 Greentree Drive, Suite 101, Dover, Delaware 19904. SBF maintains its principal executive offices at 1400 Market Street, Suite 1210, Wilmington, Delaware 19801.

With respect to capitalization, the Company's stock ledger and capitalization table reflect that Pinnacle Growth Equity Partners, LP holds approximately 62.4% of the Company's fully diluted equity, consisting of preferred stock acquired in connection with Pinnacle's $95 million Series C investment consummated in 2021. The remaining equity is held by the Company's co-founders (including Arun Mehta, who holds a significant founder's stake), certain early-stage investors, and an employee stock option pool established under the Company's equity incentive plan. C&H did not conduct a detailed analysis of the capitalization table or the terms of the Company's various classes of equity securities, as such analysis was not within the scope of this engagement. However, no provisions in the Company's charter documents or equity-related agreements were identified that would restrict or impair SBF's ability to enter into the proposed securitization transactions.

B. SPV Structure

The securitization structure utilizes a two-tier SPE framework that is standard for asset-backed securities transactions of this type. The key entities in the structure are as follows:

SkyLend Funding LLC (Depositor). SkyLend Funding LLC is a single-member limited liability company organized under the laws of the State of Delaware. Its Certificate of Formation was filed with the Delaware Secretary of State on January 30, 2024 (EIN: 93-4187620). The sole member of SkyLend Funding LLC is Skybridge Fintech Ltd. The Manager of SkyLend Funding LLC is Danielle Prescott, the Company's Chief Financial Officer. SkyLend Funding LLC maintains its registered office at 1400 Market Street, Suite 1210, Wilmington, Delaware 19801.

C&H reviewed the Limited Liability Company Agreement of SkyLend Funding LLC in detail. The LLC Agreement includes separateness covenants and bankruptcy-remoteness provisions that are designed to ensure that SkyLend Funding LLC is and will be treated as a legal entity separate and distinct from SBF for all purposes, including in the event of a bankruptcy or insolvency proceeding involving SBF. Specific provisions reviewed include:

(a) Maintenance of separate books and records, bank accounts, and financial statements;

(b) Separate identification in all dealings with third parties;

(d) Observance of all limited liability company formalities;

(e) Compliance with restrictions on incurrence of indebtedness, granting of liens, and engagement in transactions outside the ordinary course of the depositor's limited business purpose;

(f) Appointment of at least one independent director whose affirmative vote is required for the filing of any voluntary bankruptcy petition or consent to the filing of any involuntary bankruptcy petition; and

(g) Non-consolidation representations and covenants restricting commingling of assets and liabilities with those of SBF or any affiliate.

Based on C&H's review, the separateness covenants and bankruptcy-remoteness provisions contained in the LLC Agreement of SkyLend Funding LLC appear adequate and consistent with customary market practice and rating-agency criteria for structured-finance transactions.

SkyLend Receivables Trust 2024-1 (Issuing Entity). SkyLend Receivables Trust 2024-1 is a Delaware statutory trust formed on February 14, 2024 (EIN: 93-4201855), pursuant to a certificate of trust filed with the Delaware Secretary of State. The Trust was established under a Trust Agreement dated as of February 14, 2024, between SkyLend Funding LLC, as depositor, and Keymark Trust Company, N.A., as owner trustee. Keymark Trust Company, N.A., is a nationally chartered trust company with offices at 600 North King Street, Wilmington, Delaware 19801. The trust officer assigned to the SRT 2024-1 account is Elaine Marchetti.

The Trust Agreement includes limited-purpose provisions that restrict the Trust's activities to the acquisition, holding, and administration of the receivables and the issuance of the Notes and the Residual Interest. The Trust Agreement also contains separateness covenants consistent with the provisions described above for SkyLend Funding LLC, including restrictions on indebtedness, asset commingling, and voluntary bankruptcy filings. These provisions were reviewed by C&H and appear consistent with rating-agency criteria for structured-finance issuing entities as published by Meridian and Carrollton.

Asset-Transfer Flow. The contemplated flow of assets through the SPE structure is as follows: SBF, as originator and seller, will sell the receivables to SkyLend Funding LLC, as depositor, pursuant to the Receivables Purchase Agreement (the "RPA"). SkyLend Funding LLC will then transfer the receivables to SRT 2024-1 pursuant to the Sale and Servicing Agreement (the "SSA"). The Trust will issue Notes backed by the transferred receivables. The two-step transfer structure is designed to support the characterization of each transfer as a "true sale" for purposes of federal bankruptcy law and to achieve isolation of the receivables from the bankruptcy estate of SBF and SkyLend Funding LLC, respectively. C&H's true-sale and non-consolidation legal opinions will address these issues in detail.

C. Board Governance

The board of directors of SBF currently consists of five members. The composition of the board includes management representatives and investor-designee directors consistent with the governance provisions of SBF's charter and the investor rights agreement entered into in connection with the Pinnacle Series C investment. Marcus Yoon, a Principal at Pinnacle Growth Equity Partners, LP, serves as Pinnacle's designee to the SBF board.

The board of directors authorized the proposed securitization transaction and the execution and delivery of all related transaction documents pursuant to board resolutions adopted at a duly convened meeting of the board. A secretary's certificate certifying the adoption of these resolutions, the incumbency of the Company's officers, and the designation of Arun Mehta (CEO), Danielle Prescott (CFO), and Tomás Reyes (General Counsel) as authorized signatories for purposes of the securitization-related documents is in the process of being finalized and will be delivered at closing. C&H has reviewed a draft of the secretary's certificate and the underlying board resolutions and has provided comments to SBF's General Counsel.

IV. Business Overview and Loan-Origination Practices

A. Platform Overview — SkyLend

SkyLend is a direct-to-consumer digital lending platform operated by SBF that originates unsecured consumer installment loans. The platform was launched in approximately 2019 and has since grown to become a significant participant in the online consumer-lending market. SkyLend offers fixed-rate, fully amortizing unsecured consumer installment loans with the following general parameters:

• Loan Amount Range: $1,000 to $25,000 per loan

• Loan Term: 12 to 60 months

• Product Type: Fixed-rate, fully amortizing unsecured consumer installment loans

• Origination Channel: Fully digital; all applications, underwriting, and funding are processed through the SkyLend online and mobile platforms with no branch-based or in-person origination

As of December 31, 2023, SkyLend maintained approximately 312,000 active borrowers across its portfolio. The platform serves borrowers across a range of credit profiles, with a primary focus on near-prime and prime borrowers as defined by the Company's internal credit-grading system. SkyLend's borrower base is geographically diversified across the United States, with originations occurring in all states in which SBF holds the requisite lending licenses.

The SkyLend platform was developed in-house by SBF's engineering team under the direction of James Huang, the Company's Chief Technology Officer. The platform leverages a proprietary technology stack that integrates application intake, identity verification, credit decisioning, document generation, e-signature, and funding functions into a unified digital workflow. The technology infrastructure is described in greater detail in Section VIII of this memorandum.

B. Origination Volume and Portfolio Size

SBF has experienced significant growth in origination volume and portfolio size since the launch of the SkyLend platform in 2019. The following summarizes key financial and portfolio metrics for the most recent fiscal year:

• FY 2023 Origination Volume: Approximately $1.4 billion in consumer loans originated through the SkyLend platform

• FY 2023 Revenue: $187.3 million, consisting of interest income on the retained loan portfolio and platform origination fees

• Total Assets as of December 31, 2023: $1.02 billion

• Gross Receivables Portfolio as of December 31, 2023: $876.5 million

• Net Receivables (net of allowance for credit losses) as of December 31, 2023: $841.4 million

These figures reflect the continued growth trajectory of the SkyLend platform from its inception through its current scale. Origination volumes have increased year-over-year in each fiscal year since the platform's 2019 launch, driven by the expansion of SBF's borrower base, the broadening of the Company's geographic footprint as additional state lending licenses were obtained, and the refinement of the Company's marketing and customer-acquisition strategies. Danielle Prescott, the Company's CFO, confirmed during her diligence interview that SBF's management team expects continued growth in origination volumes in FY 2024, although the pace of growth may moderate as the platform reaches a more mature stage of development and as macroeconomic conditions, including the interest-rate environment, evolve.

The audited financial statements for FY 2022 and FY 2023, prepared in accordance with U.S. GAAP and audited by Rowland & Cross LLP (engagement partner: Nathan Delacroix), were reviewed by C&H. The independent auditor's reports for both years were unqualified, and no going-concern qualifications or emphasis-of-matter paragraphs were noted. C&H did not conduct an independent analysis of SBF's financial condition or the adequacy of its allowance for credit losses, as such analysis is beyond the scope of this legal due-diligence engagement.

C. Origination Process

C&H reviewed the end-to-end digital loan-origination process employed by the SkyLend platform, based on documentation provided by SBF and the diligence interviews conducted with Priya Venkatesh (VP of Credit and Underwriting) and James Huang (Chief Technology Officer). The origination process can be summarized as follows:

Application Intake. Prospective borrowers initiate the loan-application process through the SkyLend website or mobile application. The application collects standard borrower information, including name, address, date of birth, Social Security number, employment information, income, and the requested loan amount and term. The application process is designed to be completed in a streamlined digital workflow, typically requiring approximately 10–15 minutes for the borrower to complete.

Identity Verification and Fraud Screening. Upon submission of the application, the SkyLend platform performs automated identity verification using a combination of knowledge-based authentication questions, document verification (where applicable), and third-party identity-verification services. Fraud-screening protocols are applied concurrently, utilizing commercially available fraud-detection tools and SBF's proprietary fraud-detection algorithms, which evaluate the application for indicators of identity theft, synthetic identity fraud, and application manipulation.

Credit-Bureau Pull. Following successful identity verification, the platform initiates a credit-bureau inquiry to obtain the applicant's credit report and credit score. SBF utilizes a primary credit bureau for all applications and supplements with a secondary credit-bureau pull in certain cases based on underwriting-model parameters. The credit-bureau inquiry generates the applicant's FICO score, which is a key input to the underwriting decision.

Proprietary Scoring Model. In addition to the FICO score obtained from the credit bureaus, SBF employs a proprietary credit-scoring model (the "SkyLend Score") that incorporates a range of data inputs beyond traditional credit-bureau data. These inputs include, among other factors, bank-account transaction data (where authorized by the borrower), income stability metrics, employment tenure, educational attainment, and behavioral signals derived from the application process. The SkyLend Score is used in conjunction with the FICO score to generate a composite credit assessment that drives the automated underwriting decision. C&H reviewed the general documentation describing the SkyLend Score methodology, but did not conduct an independent evaluation of the model's predictive accuracy or statistical validity, as such evaluation is beyond the scope of this engagement.

Income and Employment Verification. SBF employs a data-driven approach to income and employment verification. Rather than relying exclusively on traditional methods such as pay stubs and W-2 forms, the SkyLend platform utilizes a combination of bank-account linking (through which the platform can access and analyze the applicant's recent bank-account transaction history, with the applicant's consent) and integration with third-party payroll-verification providers. This approach enables SBF to verify income and employment status in a substantially automated manner, reducing manual intervention and processing time. For applications where automated verification is inconclusive or where the loan amount exceeds certain thresholds established in the credit-policy manual, manual review and supplemental documentation may be required.

Automated Decisioning with Human Escalation. The SkyLend platform employs an automated decisioning engine that evaluates each application against the Company's underwriting criteria and generates an approve, decline, or counteroffer decision. Applications that fall within predefined "edge case" parameters — such as borderline credit scores, unusual income patterns, or other characteristics that warrant human judgment — are escalated to SBF's credit-underwriting team for manual review and decision. Priya Venkatesh confirmed during her diligence interview that approximately 15–20% of applications are escalated for manual review, and that the credit-underwriting team includes experienced consumer-credit professionals with the authority to approve, decline, or modify the terms of escalated applications within the framework of the credit-policy manual.

Loan-Agreement Execution via E-Signature. Upon approval, the SkyLend platform generates the loan documents, including the promissory note, loan agreement, and required regulatory disclosures, and presents them to the borrower for review and execution. Loan documents are executed by the borrower via electronic signature, utilizing a commercially available e-signature platform that complies with the requirements of the Electronic Signatures in Global and National Commerce Act ("E-SIGN Act") and applicable state electronic-transaction laws. Borrower consent to the use of electronic records and signatures is obtained as part of the application process.

Funding. Upon execution of the loan documents, the approved loan amount is disbursed to the borrower via Automated Clearing House ("ACH") transfer. Funding is typically completed within one to three business days of loan approval, depending on the timing of the application and the processing schedules of the borrower's financial institution.

D. Underwriting Guidelines

C&H reviewed the SBF Credit Policy and Underwriting Guidelines Manual, Version 4.2, effective September 2023 (the "Credit Policy Manual"). The Credit Policy Manual sets forth the Company's underwriting standards, eligibility criteria, and exception-approval procedures for loans originated through the SkyLend platform. The key underwriting parameters established in the Credit Policy Manual include the following:

Minimum FICO Threshold. The Credit Policy Manual establishes a minimum FICO score threshold for loan origination. The specific minimum FICO threshold is set forth in the Credit Policy Manual and is calibrated to the Company's risk appetite and target credit-quality profile. For reference, the weighted average FICO score at origination for the proposed SRT 2024-1 receivables pool is 698, which is consistent with the near-prime to prime credit profile targeted by the SkyLend platform.

Maximum Debt-to-Income Ratio. The Credit Policy Manual establishes a maximum debt-to-income ("DTI") ratio for borrowers, calculated as the ratio of the borrower's total monthly debt obligations (including the proposed SkyLend loan payment) to the borrower's verified monthly gross income. Applications that exceed the maximum DTI threshold are declined unless an exception is approved in accordance with the exception-approval process described below.

Employment and Income Verification Standards. As described in Section IV.C above, the Credit Policy Manual requires verification of the borrower's employment status and income level as a condition of loan approval. The verification standards set forth in the Credit Policy Manual specify the acceptable methods and sources for income and employment verification, including bank-account data analysis, payroll-verification provider confirmations, and, in certain cases, traditional documentation such as pay stubs, tax returns, or employer-verification letters.

Exclusion Criteria. The Credit Policy Manual identifies specific borrower characteristics or circumstances that result in automatic disqualification from loan origination. These exclusion criteria include, among others:

(a) Borrowers with an active bankruptcy filing (Chapter 7 or Chapter 13) or a dismissed bankruptcy within the preceding 12 months;

(b) Borrowers with a prior charge-off on an existing or former SkyLend loan;

(d) Borrowers who have previously been identified as engaging in fraudulent activity in connection with a SkyLend application; and

(e) Borrowers who are subject to active litigation or judgment liens that, in the judgment of the underwriting team, indicate a material risk of inability to repay.

Credit-Policy Manual Version History. C&H reviewed the current Credit Policy Manual (Version 4.2, effective September 2023) and compared its key provisions to prior versions provided by SBF management. No material deviations from prior versions were identified. The revisions reflected in Version 4.2 primarily relate to adjustments in scoring-model calibration parameters, refinements to the employment-verification process, and updates to the exclusion criteria to reflect evolving regulatory expectations. None of these changes were assessed by C&H as materially altering the overall credit-risk profile of loans originated under the Credit Policy Manual.

Exception Process. The Credit Policy Manual establishes a formal exception-approval process for applications that do not meet one or more of the standard underwriting criteria but that the underwriting team believes may nevertheless represent an acceptable credit risk. Any exception to the underwriting guidelines requires the approval of the Vice President of Credit and Underwriting or a more senior officer. An exception-tracking log is maintained by the credit-underwriting team, documenting the nature of each exception, the rationale for approval, and the approving officer. C&H reviewed a summary of the exception log for Q3 and Q4 2023 and noted that exception volumes were within the ranges indicated by SBF management as typical for the portfolio.

E. Loan Documentation

C&H reviewed SBF's standard-form promissory note and loan agreement used for loans originated through the SkyLend platform. The loan-documentation package includes the following components:

• Promissory note setting forth the principal amount, interest rate, payment schedule, and maturity date;

• Loan agreement setting forth the terms and conditions of the loan, including representations and warranties of the borrower, events of default, and remedies;

• Truth in Lending Act (TILA) disclosure statement (Federal Reserve Board model form or equivalent), including the annual percentage rate (APR), finance charge, total of payments, total amount financed, and payment schedule, as required by Regulation Z (12 C.F.R. Part 1026);

• Privacy notice consistent with the Gramm-Leach-Bliley Act and implementing regulations; and

• Consent to electronic records and signatures in compliance with the E-SIGN Act.

The standard-form promissory note and loan agreement were reviewed for consistency with applicable federal and state consumer-lending requirements. Based on C&H's review, the terms and provisions of the loan documents appear consistent with the requirements of TILA, the E-SIGN Act, and applicable state lending laws for the jurisdictions in which SBF originates loans. C&H notes that this review was conducted on a sampling basis using representative loan-documentation packages and does not constitute a loan-by-loan review of every loan in the proposed pool.

The TILA disclosure statements included in the loan-documentation package were reviewed and found to include the required disclosures of APR, finance charge, total of payments, total amount financed, and payment schedule in the form and manner prescribed by Regulation Z. The electronic delivery of these disclosures to borrowers was reviewed for compliance with E-SIGN Act requirements, including the requirement that borrowers provide affirmative consent to the receipt of disclosures in electronic form prior to the delivery of such disclosures.

V. Receivables Pool — Proposed Characteristics

A. Pool Statistics (Proposed Cut-Off Date: March 31, 2024)

Based on the loan-tape extracts and portfolio-stratification data provided by SBF and Clearview, the proposed SRT 2024-1 receivables pool, as of the anticipated cut-off date of March 31, 2024, is expected to have the following general characteristics:

The gross aggregate outstanding principal balance of approximately $213,750,000 represents the pre-screening pool from which the final $200,000,000 pool will be carved after application of the eligibility criteria and credit screens described in Section V.B below. The difference between the gross and final pool balances provides a buffer to accommodate the removal of loans that do not satisfy the eligibility criteria and to permit the adjustment of pool composition to achieve the desired portfolio characteristics, including geographic diversification, credit-quality distribution, and single-obligor concentration limits.

C&H notes that the pool statistics set forth above are preliminary and are based on data as of December 31, 2023, projected forward to the anticipated cut-off date of March 31, 2024. Actual pool statistics as of the cut-off date may differ from the preliminary figures set forth herein due to intervening loan payments, prepayments, delinquencies, defaults, and other factors. The final pool statistics will be confirmed in connection with the preparation of the final pool data supplement to the Offering Memorandum.

B. Eligibility Criteria

In connection with the preparation of the transaction documents, C&H has drafted the Eligibility Criteria and Representations Schedule, which will be attached as an exhibit to both the Receivables Purchase Agreement and the Sale and Servicing Agreement. The Eligibility Criteria define the characteristics that a receivable must satisfy in order to be included in the SRT 2024-1 pool. The key eligibility criteria include, among others:

(a) Loan Seasoning. Each receivable must have been originated at least 90 days prior to the cut-off date and must have had at least three scheduled payments due, of which at least two must have been received;

(b) Delinquency Status. No receivable that is 30 or more days past due as of the cut-off date may be included in the pool;

(c) Minimum and Maximum Loan Balance. The outstanding principal balance of each receivable as of the cut-off date must be not less than $500 and not more than $25,000;

(d) Loan Term. The original loan term of each receivable must be not less than 12 months and not more than 60 months, and the remaining term as of the cut-off date must be not less than 6 months;

(e) Geographic Diversification. No more than 20% of the aggregate outstanding principal balance of the pool (measured as of the cut-off date) may consist of receivables originated to borrowers with addresses in any single state;

(f) FICO Floor. Each receivable must have been originated to a borrower with a FICO score at origination of not less than the minimum threshold specified in the Credit Policy Manual;

(g) Compliance. Each receivable must have been originated in compliance with all applicable federal, state, and local laws and regulations and in conformity with the Credit Policy Manual in effect at the time of origination; and

(h) Single-Obligor Concentration. No single obligor may account for more than 0.15% of the aggregate outstanding principal balance of the pool as of the cut-off date.

The Eligibility Criteria are designed to ensure that the receivables included in the pool reflect a minimum credit quality, adequate seasoning, current payment status, and appropriate diversification. These criteria are consistent with the eligibility criteria employed in comparable consumer-loan securitization transactions and are expected to be acceptable to the rating agencies.

C. Static-Pool Performance Data

SBF and Clearview provided historical static-pool performance data for loan vintages originated in calendar years 2021, 2022, and 2023. This data includes monthly delinquency, default, and loss statistics tracked on a vintage basis from the date of origination through the most recently available reporting period.

Based on the data provided, the 30-plus-day delinquency rate for the proposed pool, measured as of the anticipated cut-off date, was reported at 3.21% by SBF and Clearview. This delinquency rate is measured as a percentage of the aggregate outstanding principal balance of all loans in the proposed pool that are 30 or more days past due as of the measurement date. As noted in Section V.B above, loans that are 30 or more days past due as of the actual cut-off date will be excluded from the final pool under the eligibility criteria; accordingly, the delinquency rate of the final pool as of the cut-off date is expected to be zero by definition.

The cumulative net loss rate for the 2022 vintage — which is the most seasoned vintage with a full 12-month performance window — was reported at 4.12% as of the most recent reporting date, based on data provided by Clearview. Cumulative net loss rates for the 2021 and 2023 vintages were also reviewed but are less directly comparable due to differences in seasoning.

C&H notes that the static-pool performance data reviewed was provided by SBF and Clearview and has not been independently verified by C&H. Independent verification of the accuracy and integrity of the servicing data underlying the static-pool performance statistics is within the scope of the Broadleaf Analytics Group LLC engagement, which commenced on April 10, 2024. C&H recommends that the results of Broadleaf's analysis be reviewed carefully upon receipt, and that any material discrepancies between Broadleaf's findings and the data reported by SBF and Clearview be promptly escalated and assessed for potential disclosure implications.

D. Capital Structure

The proposed capital structure of SRT 2024-1 is summarized below. The structure contemplates two classes of rated notes and a subordinated residual interest, supported by initial overcollateralization and a funded reserve account.

The Class A Notes are the senior tranche and benefit from subordination provided by the Class B Notes and the Subordinated Certificate, as well as from the initial overcollateralization target and the reserve account. The Class B Notes are the mezzanine tranche, subordinated to the Class A Notes but senior to the Subordinated Certificate. The Subordinated Certificate represents the residual interest in the Trust and will be retained by SBF through SkyLend Funding LLC; it is unrated and will absorb losses before the rated notes.

The credit-enhancement structure includes the following elements:

• Subordination. The Class B Notes and Subordinated Certificate provide 15% of total subordination to the Class A Notes. The Subordinated Certificate provides 4% subordination to the Class B Notes.

• Overcollateralization. The initial overcollateralization target is 3.5% of the aggregate outstanding pool balance, or $7,000,000. Overcollateralization is achieved through the application of excess spread to accelerate the amortization of the notes relative to the amortization of the receivables pool, building overcollateralization to the target level over the initial months following closing.

• Reserve Account. A reserve account will be funded at closing in an amount equal to 1.00% of the initial aggregate outstanding pool balance, or $2,000,000. The reserve account will be available to cover shortfalls in interest and principal payments on the notes.

• Excess Spread. Based on the weighted average coupon of the receivables pool (14.82%) and the weighted average cost of funds of the notes (estimated at approximately 5.8% on a blended basis), the estimated initial excess spread is approximately 2.85% per annum after deducting the servicing fee (0.50% per annum) and estimated credit losses.

The CUSIP prefix allocated for the SRT 2024-1 Notes is 87165Q. The specific CUSIP numbers for the Class A Notes and Class B Notes have been allocated but have not yet been activated.

The offering will be structured as a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) thereof and Rule 144A thereunder. The Class A Notes and Class B Notes will be offered to qualified institutional buyers ("QIBs") in the United States under Rule 144A and to non-U.S. persons in offshore transactions under Regulation S promulgated under the Securities Act. The Subordinated Certificate will not be offered or sold and will be retained by SBF via SkyLend Funding LLC.

VI. Regulatory Compliance

A. State Lending Licenses

SBF originates consumer loans through the SkyLend platform in multiple states across the United States. As a non-bank lender, SBF is required to obtain and maintain state lending licenses or registrations in the states in which it originates loans, unless an exemption from licensing is available. C&H reviewed SBF's internal state lending license register, which catalogs the Company's active lending licenses by state, including license numbers, issuing authorities, effective dates, and expiration dates (where applicable). A summary of the license register is attached as Appendix C to this memorandum.

Based on C&H's review, SBF's lending licenses appear to be current and in good standing in all material operating states. No pending license revocation or suspension proceedings were identified in the regulatory correspondence reviewed by C&H, and SBF's General Counsel, Tomás Reyes, confirmed during his diligence interview that SBF has not received any notice of revocation, suspension, or non-renewal of any state lending license. SBF's Chief Compliance Officer, Rebecca Moorfield, further confirmed that the Company maintains an internal compliance calendar to track license-renewal deadlines and filing requirements.

C&H notes that certain states in which SBF originates loans may utilize bank-partnership or exemption structures rather than direct licensing. C&H's review of the license register and related documentation did not identify any material compliance concerns with respect to these arrangements, although a detailed analysis of each state-specific licensing framework was beyond the scope of this engagement.

B. Federal Consumer-Lending Regulations

1. Truth in Lending Act (TILA) / Regulation Z

C&H reviewed SBF's TILA disclosure practices, including the standard-form TILA disclosure statements provided to borrowers in connection with each loan origination. The disclosure statements were reviewed for compliance with Regulation Z (12 C.F.R. Part 1026) and were found to include the required disclosures, including the annual percentage rate (APR), the finance charge, the total amount financed, the total of payments, the payment schedule, and the late-charge provisions, each as required by Regulation Z and applicable official staff commentary.

The electronic delivery of TILA disclosures was reviewed for compliance with the E-SIGN Act and the applicable provisions of Regulation Z governing electronic delivery. SBF's electronic-disclosure process requires borrowers to provide affirmative consent to the receipt of required disclosures in electronic form prior to the delivery of such disclosures, and provides borrowers with the ability to withdraw consent and receive paper disclosures upon request. Based on C&H's review, SBF's electronic-disclosure practices appear consistent with the requirements of the E-SIGN Act and Regulation Z.

2. Equal Credit Opportunity Act (ECOA) / Regulation B

C&H reviewed SBF's fair-lending policies and practices for compliance with the Equal Credit Opportunity Act ("ECOA") and its implementing regulation, Regulation B (12 C.F.R. Part 1002). ECOA prohibits discrimination in any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public-assistance income, or the exercise of rights under the Consumer Credit Protection Act.

SBF's adverse-action notice forms were reviewed and found to include the required disclosures of the specific reasons for the adverse action, the identity of the consumer-reporting agency whose report was used in making the decision, and the borrower's rights under applicable law, consistent with the requirements of Regulation B and the Fair Credit Reporting Act.

SBF's internal compliance function conducts periodic fair-lending analyses to assess whether the Company's lending practices result in any impermissible disparate impact on protected classes. C&H reviewed the most recent fair-lending analysis, which was conducted in Q3 2023. The analysis reviewed denial rates and loan-pricing outcomes across applicable demographic categories and identified no material disparate-impact concerns. C&H notes that it did not independently verify the methodology or conclusions of SBF's internal fair-lending analysis, and recommends that the Company continue to conduct such analyses on a regular basis.

3. Fair Credit Reporting Act (FCRA)

SBF furnishes consumer-credit information to credit bureaus in connection with its lending activities and is therefore subject to the obligations imposed on "furnishers" of information under Section 623 of the Fair Credit Reporting Act ("FCRA") (15 U.S.C. §1681s-2). C&H reviewed SBF's furnisher policies and procedures, including its processes for investigating consumer disputes and correcting inaccurate information furnished to credit bureaus.

SBF's dispute-resolution processes were reviewed and found to be consistent with the requirements of FCRA §623, including the obligation to investigate disputed information within 30 days of receipt of a dispute notice from a credit bureau, to review all relevant information provided by the credit bureau in connection with the dispute, and to report the results of the investigation to the credit bureau. SBF maintains a dedicated team within its compliance function responsible for handling FCRA disputes.

SBF's permissible-purpose certifications for credit-bureau inquiries were reviewed. Each credit-bureau pull conducted in connection with a loan application is supported by a permissible-purpose certification under FCRA §604(a)(3)(A), which permits a consumer-reporting agency to furnish a consumer report to a person who intends to use the information in connection with a credit transaction involving the consumer. SBF's application process includes a disclosure to the applicant that a credit-bureau inquiry will be performed and obtains the applicant's consent to such inquiry.

4. Servicemembers Civil Relief Act (SCRA)

SBF maintains SCRA compliance policies and procedures designed to ensure that the Company complies with the protections afforded to active-duty servicemembers under the Servicemembers Civil Relief Act (50 U.S.C. §§3901–4043). The Company's SCRA policies include procedures for identifying borrowers who enter active military service after the origination of their loans and for applying the SCRA interest-rate cap of 6% per annum to the accounts of such borrowers during the period of active military service. SBF utilizes the Defense Manpower Data Center's SCRA database to verify the military-service status of borrowers. C&H reviewed SBF's SCRA policies and found them to be consistent with the requirements of the statute.

5. Electronic Fund Transfer Act (EFTA) / Regulation E

C&H reviewed SBF's compliance with the Electronic Fund Transfer Act ("EFTA") and its implementing regulation, Regulation E (12 C.F.R. Part 1005), in connection with the Company's use of ACH transfers for loan funding and payment collection. SBF's ACH authorization forms were reviewed and found to include the required disclosures and authorizations. SBF's error-resolution procedures for electronic fund transfers were reviewed and found to be consistent with the requirements of Regulation E, including the obligation to investigate and resolve errors within the timeframes prescribed by the regulation and to provide provisional credit to borrowers in certain circumstances.

6. Gramm-Leach-Bliley Act (GLBA) / Privacy

SBF's privacy policy was reviewed for compliance with the Gramm-Leach-Bliley Act ("GLBA") and its implementing regulations, including Regulation P (12 C.F.R. Part 1016). The Company's privacy policy describes the categories of nonpublic personal information collected by SBF, the categories of third parties to which such information may be disclosed, and the consumer's right to opt out of certain disclosures. SBF delivers initial and annual privacy notices to borrowers in accordance with GLBA requirements. SBF's information-sharing practices, including disclosures to affiliates, service providers, and other third parties, were reviewed and appear consistent with the exceptions and requirements of GLBA.

C. State Consumer-Protection Laws

C&H reviewed SBF's compliance posture with respect to state consumer-protection laws applicable to consumer lending, including state usury laws and rate-cap statutes, state-specific disclosure requirements, and state licensing requirements. SBF's compliance manual addresses the state-specific requirements for each jurisdiction in which the Company originates loans, and the Company's compliance team monitors legislative and regulatory developments that may affect its state-level obligations.

With respect to usury and rate-cap compliance, C&H reviewed the interest rates charged on loans originated through the SkyLend platform for consistency with the applicable rate limits in the Company's key origination states. Based on the review, the interest rates charged by SBF appear to be within the applicable rate limits in the states reviewed. C&H notes that certain states impose rate caps or fee limitations that require ongoing monitoring, particularly in light of evolving regulatory interpretations and recent legislative activity in several states.

D. CFPB / Regulatory Examination History

SBF has not been the subject of any public enforcement action by the Consumer Financial Protection Bureau ("CFPB") or by any state regulatory agency. Tomás Reyes and Rebecca Moorfield confirmed during their respective diligence interviews that SBF has not received any civil investigative demand ("CID"), notice of charges, or other formal enforcement communication from the CFPB or any state regulator.

C&H reviewed SBF's regulatory-examination correspondence for the period covered by the due-diligence review. The most recent state regulatory examination of SBF was conducted in 2023 and resulted in no material findings, corrective actions, or remedial orders. The examination report and SBF's response letter were reviewed by C&H, and no issues of concern were identified.

C&H also reviewed SBF's consumer-complaint logs for the period from January 1, 2022, through December 31, 2023. The complaint logs document the number, nature, and resolution of consumer complaints received by SBF through direct channels, as well as complaints submitted through the CFPB's consumer-complaint database and state regulatory portals. Complaint volume and resolution rates were assessed by C&H as consistent with industry norms for a consumer lender of SBF's scale, and no patterns or trends were identified that would indicate systemic compliance failures or significant consumer-harm issues.

E. Anti-Money Laundering / Bank Secrecy Act

SBF maintains a BSA/AML compliance program that includes policies and procedures designed to detect and prevent money laundering, terrorist financing, and other illicit financial activities. The Company's BSA/AML program includes a Customer Identification Program ("CIP") that requires the collection and verification of identifying information from all applicants prior to the opening of a loan account, consistent with the requirements of the Bank Secrecy Act and its implementing regulations.

SBF's Chief Compliance Officer, Rebecca Moorfield, confirmed during her diligence interview that the Company monitors customer transactions and accounts for suspicious activity and files Suspicious Activity Reports ("SARs") with the Financial Crimes Enforcement Network ("FinCEN") as required by applicable law. Ms. Moorfield further confirmed that SBF management has not identified any SARs that would be material to the proposed securitization or that would indicate systemic deficiencies in the Company's BSA/AML controls. C&H did not independently review individual SARs, consistent with the confidentiality restrictions applicable to such filings.

VII. Servicing Arrangements and Oversight of Clearview Loan Servicing, Inc.

A. Overview of Servicing Structure

Under the proposed SRT 2024-1 transaction structure, SBF will serve as the "servicer" under the Sale and Servicing Agreement. In this capacity, SBF will be contractually responsible for the servicing, administration, and collection of the receivables in the pool, including the obligation to service the receivables in accordance with the servicing standard set forth in the SSA (which is expected to require servicing in accordance with customary and usual standards of practice of prudent consumer-loan servicers).

In practice, SBF has delegated the day-to-day operational servicing functions to Clearview Loan Servicing, Inc. ("Clearview"), which serves as sub-servicer under the Master Servicing Agreement dated as of October 1, 2022 (the "MSA"), between SBF, as servicer, and Clearview, as sub-servicer. The MSA was amended by Amendment No. 1, executed March 18, 2024, which supplements the MSA with certain reporting requirements and operational provisions specific to the SRT 2024-1 securitization.

Clearview is an Ohio corporation headquartered at 8800 Brecksville Road, Suite 300, Cleveland, Ohio 44141. Warren Pettigrew serves as Clearview's Chief Executive Officer. The primary Clearview contact for the SRT 2024-1 transaction is Meredith Sloane, Vice President of Operations. The servicing account es

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP
Internal Memorandum
To: Theodore Langston, Partner (Capital Markets); Linda Osei, Partner (Litigation — General)
From: Patrick Gallagher, Associate; Simone Laroche, Associate
Date: March 28, 2024
Re: Issuer Due-Diligence Memorandum — Skybridge Fintech Ltd. (SkyLend Receivables Trust 2024-1 Securitization)
Matter No.: 1009-00005
CONFIDENTIALITY NOTICE: This memorandum is protected by the attorney-client privilege and the work-product doctrine. It is intended solely for internal use by Calderwood & Harkness LLP personnel working on the above-referenced matter and is not to be disclosed to any third party without prior authorization. Any unauthorized disclosure, copying, or distribution of this memorandum or its contents is strictly prohibited. If you have received this memorandum in error, please notify the authors immediately and destroy all copies.
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I. Executive Summary
This memorandum summarizes the findings of the legal due-diligence review performed by Calderwood & Harkness LLP ("C&H") on Skybridge Fintech Ltd. ("SBF" or the "Company") in connection with SBF's role as originator, sponsor, seller, and initial servicer in the proposed $200,000,000 consumer-receivables securitization to be issued through SkyLend Receivables Trust 2024-1 ("SRT 2024-1" or the "Trust"). The due-diligence review was conducted over the period from approximately February 5, 2024, through March 22, 2024, and encompassed a comprehensive examination of SBF's loan-origination practices, underwriting guidelines, regulatory compliance posture, portfolio composition, financial condition, corporate organizational structure, technology infrastructure, and servicer oversight arrangements.
SBF is a Delaware corporation headquartered at 1400 Market Street, Suite 1210, Wilmington, Delaware 19801 (EIN: 84-3291076). The Company was co-founded by Arun Mehta, who currently serves as Chief Executive Officer. Danielle Prescott serves as Chief Financial Officer, and Tomás Reyes serves as General Counsel. SBF operates a direct-to-consumer digital lending platform branded as "SkyLend," which was launched in approximately 2019 and originates fixed-rate, fully amortizing unsecured consumer installment loans. Since its launch, SkyLend has grown to serve approximately 312,000 active borrowers as of December 31, 2023, with a gross receivables portfolio of $876.5 million and fiscal-year 2023 origination volume of approximately $1.4 billion.
Pinnacle Growth Equity Partners, LP ("Pinnacle"), a private equity fund managed under the direction of Managing Partner Catherine Drexler, holds approximately 62.4% of SBF's fully diluted equity following a $95 million Series C investment consummated in 2021. Pinnacle's designee to the SBF board of directors is Marcus Yoon, a Principal at Pinnacle. The remaining equity is held by the Company's co-founders (including Mr. Mehta) and the employee stock option pool.
Subject to the observations, open items, and qualifications set forth in Section IX below, SBF's origination practices, underwriting guidelines, and regulatory posture appear generally consistent with industry standards for a fintech consumer lender of SBF's scale and vintage. The Company's corporate organizational structure, including the special-purpose entity ("SPE") framework established for the proposed securitization, incorporates standard bankruptcy-remoteness and separateness provisions. No pending regulatory enforcement actions, material examination findings, or unresolved legal proceedings that would be material to the proposed transaction were identified during the review period.
Specific areas warranting continued monitoring have been identified, particularly with respect to (i) the oversight of Clearview Loan Servicing, Inc. ("Clearview"), which serves as sub-servicer for SBF's loan portfolios and which underwent a significant technology platform migration in June 2023, (ii) the finalization of the backup-servicing arrangement, and (iii) the outcome of the independent loan-level due-diligence review to be conducted by Broadleaf Analytics Group LLC ("Broadleaf") on behalf of Halcyon Securities LLC ("Halcyon"), the sole bookrunning manager and initial purchaser for the proposed offering. These items are discussed in greater detail throughout this memorandum and are summarized in Section IX.
II. Scope and Methodology
A. Scope of Engagement
C&H was retained as issuer's counsel in connection with the proposed SRT 2024-1 securitization pursuant to an engagement letter dated January 25, 2024, executed by Tomás Reyes on behalf of SBF and by Theodore Langston on behalf of C&H. The scope of C&H's engagement encompasses the provision of legal services in connection with the structuring, documentation, and closing of the proposed securitization, including the preparation and review of transaction documents, the delivery of legal opinions, and the conduct of due-diligence investigations.
The due-diligence review described in this memorandum was conducted to support the following specific workstreams and deliverables:
(i) The preparation of the Preliminary Offering Memorandum for the SRT 2024-1 Notes, with a targeted distribution date of April 5, 2024, for circulation to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S;
(ii) The delivery of legal opinions by C&H, including (a) the true-sale opinion with respect to the transfer of receivables from SBF to SkyLend Funding LLC, (b) the non-consolidation opinion with respect to SkyLend Funding LLC and SRT 2024-1, and (c) the security-interest opinion with respect to the perfection of the Trust's interest in the receivables under Article 9 of the Uniform Commercial Code;
(iii) The preparation and delivery of the draft 10b-5/negative assurance letter (the "10b-5 Letter") to Halcyon Securities LLC ("Halcyon"), the sole bookrunning manager and initial purchaser for the proposed offering (Halcyon deal reference: HLC-ABS-2024-017), confirming, subject to customary qualifications and limitations, that nothing has come to C&H's attention that causes C&H to believe that the Preliminary Offering Memorandum, as of its date, contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; and
(iv) The preparation and support of rating-agency presentations to Meridian Credit Ratings, Inc. ("Meridian") and Carrollton Ratings Group LLC ("Carrollton"), currently scheduled for April 8, 2024.
B. Documents and Materials Reviewed
In conducting the due-diligence review, C&H reviewed the following categories of documents and materials, which were provided by SBF management, SBF's outside auditors, Clearview, and Halcyon, as applicable:
1.  Corporate and Organizational Documents. SBF's Certificate of Incorporation (as amended and restated), Amended and Restated Bylaws, and related corporate organizational documents, including the Company's stock ledger and capitalization table.
2.  Board Resolutions and Secretary's Certificates. Resolutions of the Board of Directors of SBF authorizing the proposed securitization and related transactions, together with secretary's certificates certifying incumbent officers, authorized signatories, and the authenticity of governing documents.
3.  SkyLend Funding LLC Formation Documents. Certificate of Formation of SkyLend Funding LLC, filed with the Delaware Secretary of State on January 30, 2024 (EIN: 93-4187620), and the Limited Liability Company Agreement of SkyLend Funding LLC, dated as of January 30, 2024, designating SBF as the sole member and Danielle Prescott as Manager, and including separateness covenants, bankruptcy-remoteness provisions, and independent-director requirements.
4.  Trust Formation Documents. Trust Agreement of SkyLend Receivables Trust 2024-1, dated as of February 14, 2024 (EIN: 93-4201855), between SkyLend Funding LLC, as depositor, and Keymark Trust Company, N.A. (600 North King Street, Wilmington, Delaware 19801), as owner trustee (trust officer: Elaine Marchetti), including limited-purpose provisions, separateness covenants, and restricted-activity clauses.
5.  Credit Policy and Underwriting Documents. SBF Credit Policy and Underwriting Guidelines Manual, Version 4.2, effective September 2023, including all appendices, credit-scoring model documentation, and exception-approval procedures.
6.  Sample Loan Documentation. Representative sample of executed loan documents, including standard-form promissory notes, loan agreements, Truth in Lending Act disclosure statements, and borrower-consent forms for electronic records and signatures.
7.  Master Servicing Agreement. Master Servicing Agreement dated as of October 1, 2022, between SBF and Clearview Loan Servicing, Inc. (the "MSA"), together with Amendment No. 1 to the MSA, executed March 18, 2024 (collectively, the "Servicing Documents").
8.  Clearview Due-Diligence Package. Clearview's operational due-diligence package, including descriptions of servicing operations, staffing, technology platforms, disaster-recovery procedures, regulatory-compliance certifications, and servicing-performance metrics.
9.  Audited Financial Statements. SBF's audited consolidated financial statements for the fiscal years ended December 31, 2022, and December 31, 2023, prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") and audited by Rowland & Cross LLP (engagement partner: Nathan Delacroix), together with the related independent auditor's reports.
10.  State Lending License Register and Compliance Certifications. SBF's internal register of state lending licenses, including license numbers, issuing jurisdictions, effective dates, and expiration dates, together with associated compliance certifications and renewal applications.
11.  Consumer Complaint Logs and Regulatory Correspondence. SBF's consumer-complaint tracking logs for the period from January 1, 2022, through December 31, 2023, and correspondence with state and federal regulators, including examination reports and response letters.
12.  Technology Platform Documentation. Documentation describing the SkyLend platform architecture, data-flow diagrams, system-security specifications, encryption protocols, access-control frameworks, and disaster-recovery and business-continuity plans.
13.  Internal Compliance Policies. SBF's internal compliance-policy manuals, including policies addressing fair lending, Bank Secrecy Act / Anti-Money Laundering ("BSA/AML") compliance, data privacy and security, Servicemembers Civil Relief Act ("SCRA") compliance, and complaint management.
14.  Loan-Tape Extracts and Portfolio Stratification Tables. Loan-level data extracts and portfolio stratification tables as of December 31, 2023, provided by SBF and Clearview, including distributions by loan balance, coupon rate, FICO score at origination, geographic location, loan term, seasoning, and delinquency status.
15.  Halcyon Engagement Letter. Underwriting engagement letter between SBF and Halcyon Securities LLC, dated February 20, 2024 (deal reference: HLC-ABS-2024-017), setting forth the terms of Halcyon's engagement as sole bookrunning manager and initial purchaser.
16.  Rating-Agency Engagement Letters. Engagement letters with Meridian Credit Ratings, Inc., dated February 28, 2024, and Carrollton Ratings Group LLC, dated February 28, 2024, each setting forth the terms of the respective agency's engagement to rate the Class A Notes and Class B Notes issued by SRT 2024-1.
C. Personnel Interviewed
In addition to the documentary review described above, C&H conducted in-person and telephonic diligence interviews with the following individuals during the period from February 19 through March 15, 2024:
1.  Arun Mehta — Chief Executive Officer and Co-Founder, Skybridge Fintech Ltd. (in-person interview, February 19, 2024).
2.  Danielle Prescott — Chief Financial Officer, Skybridge Fintech Ltd. (in-person interview, February 20, 2024; follow-up telephone call, March 8, 2024).
3.  Tomás Reyes — General Counsel, Skybridge Fintech Ltd. (multiple in-person and telephonic discussions throughout the review period).
4.  Priya Venkatesh — Vice President of Credit and Underwriting, Skybridge Fintech Ltd. (in-person interview, February 21, 2024).
5.  James Huang — Chief Technology Officer, Skybridge Fintech Ltd. (in-person interview, February 22, 2024).
6.  Rebecca Moorfield — Chief Compliance Officer, Skybridge Fintech Ltd. (in-person interview, February 22, 2024; follow-up telephone call, March 12, 2024).
7.  Meredith Sloane — Vice President of Operations, Clearview Loan Servicing, Inc. (telephone diligence call, March 1, 2024; follow-up call, March 15, 2024).
D. Limitations
The due-diligence review described in this memorandum is based upon the documents, data, and information provided to C&H by SBF management, SBF's outside advisors, Clearview, and Halcyon. C&H has relied upon the accuracy and completeness of the materials provided and the representations made by the individuals interviewed, and has not undertaken any independent verification of such materials or representations except as specifically noted herein. No independent loan-level audit, re-underwriting analysis, or forensic data review was conducted by C&H as part of this engagement.
Loan-level sampling and re-underwriting is to be performed separately by Broadleaf Analytics Group LLC ("Broadleaf"), which was engaged by Halcyon as of March 25, 2024, for the purpose of conducting an independent review of the proposed receivables pool. Broadleaf's engagement contemplates a sample of approximately 1,500 loans, representing approximately 6.5% of the proposed pool by loan count. The Broadleaf engagement commenced on April 10, 2024, and results are expected to be available prior to the anticipated pricing date.
This memorandum constitutes an internal work-product document of C&H and does not constitute, and should not be construed as, a legal opinion or a guaranty of any fact, condition, or legal conclusion described herein. The observations, assessments, and recommendations set forth herein are preliminary in nature and are subject to revision as additional information becomes available and as the transaction progresses toward closing.
III. Corporate Organization and Good Standing
A. SBF Corporate Status
Skybridge Fintech Ltd. is a corporation organized under the laws of the State of Delaware. C&H reviewed a certified copy of SBF's Certificate of Incorporation, as amended and restated, which was originally filed with the Delaware Secretary of State and reflects the Company's authorized capital structure, including provisions for authorized common stock and preferred stock issued in connection with the Series A, Series B, and Series C financing rounds. C&H also reviewed the Company's Amended and Restated Bylaws, which set forth the governance framework for the board of directors, officer appointments, and shareholder rights.
A certificate of good standing for SBF issued by the Secretary of State of the State of Delaware was reviewed, dated January 18, 2024. The certificate confirms that SBF is in good standing and current with all required franchise tax payments as of the date of the certificate. C&H notes that this certificate is now approximately two months old, and an updated good-standing certificate should be obtained closer to the anticipated closing date to confirm continued good standing at the time of execution and delivery of the transaction documents.
SBF's registered agent in the State of Delaware is Cascade Systems, located at 160 Greentree Drive, Suite 101, Dover, Delaware 19904. SBF maintains its principal executive offices at 1400 Market Street, Suite 1210, Wilmington, Delaware 19801.
With respect to capitalization, the Company's stock ledger and capitalization table reflect that Pinnacle Growth Equity Partners, LP holds approximately 62.4% of the Company's fully diluted equity, consisting of preferred stock acquired in connection with Pinnacle's $95 million Series C investment consummated in 2021. The remaining equity is held by the Company's co-founders (including Arun Mehta, who holds a significant founder's stake), certain early-stage investors, and an employee stock option pool established under the Company's equity incentive plan. C&H did not conduct a detailed analysis of the capitalization table or the terms of the Company's various classes of equity securities, as such analysis was not within the scope of this engagement. However, no provisions in the Company's charter documents or equity-related agreements were identified that would restrict or impair SBF's ability to enter into the proposed securitization transactions.
B. SPV Structure
The securitization structure utilizes a two-tier SPE framework that is standard for asset-backed securities transactions of this type. The key entities in the structure are as follows:
SkyLend Funding LLC (Depositor). SkyLend Funding LLC is a single-member limited liability company organized under the laws of the State of Delaware. Its Certificate of Formation was filed with the Delaware Secretary of State on January 30, 2024 (EIN: 93-4187620). The sole member of SkyLend Funding LLC is Skybridge Fintech Ltd. The Manager of SkyLend Funding LLC is Danielle Prescott, the Company's Chief Financial Officer. SkyLend Funding LLC maintains its registered office at 1400 Market Street, Suite 1210, Wilmington, Delaware 19801.
C&H reviewed the Limited Liability Company Agreement of SkyLend Funding LLC in detail. The LLC Agreement includes separateness covenants and bankruptcy-remoteness provisions that are designed to ensure that SkyLend Funding LLC is and will be treated as a legal entity separate and distinct from SBF for all purposes, including in the event of a bankruptcy or insolvency proceeding involving SBF. Specific provisions reviewed include:
(a) Maintenance of separate books and records, bank accounts, and financial statements;
(b) Separate identification in all dealings with third parties;
(c) Adequate capitalization for its intended business purposes;
(d) Observance of all limited liability company formalities;
(e) Compliance with restrictions on incurrence of indebtedness, granting of liens, and engagement in transactions outside the ordinary course of the depositor's limited business purpose;
(f) Appointment of at least one independent director whose affirmative vote is required for the filing of any voluntary bankruptcy petition or consent to the filing of any involuntary bankruptcy petition; and
(g) Non-consolidation representations and covenants restricting commingling of assets and liabilities with those of SBF or any affiliate.
Based on C&H's review, the separateness covenants and bankruptcy-remoteness provisions contained in the LLC Agreement of SkyLend Funding LLC appear adequate and consistent with customary market practice and rating-agency criteria for structured-finance transactions.
SkyLend Receivables Trust 2024-1 (Issuing Entity). SkyLend Receivables Trust 2024-1 is a Delaware statutory trust formed on February 14, 2024 (EIN: 93-4201855), pursuant to a certificate of trust filed with the Delaware Secretary of State. The Trust was established under a Trust Agreement dated as of February 14, 2024, between SkyLend Funding LLC, as depositor, and Keymark Trust Company, N.A., as owner trustee. Keymark Trust Company, N.A., is a nationally chartered trust company with offices at 600 North King Street, Wilmington, Delaware 19801. The trust officer assigned to the SRT 2024-1 account is Elaine Marchetti.
The Trust Agreement includes limited-purpose provisions that restrict the Trust's activities to the acquisition, holding, and administration of the receivables and the issuance of the Notes and the Residual Interest. The Trust Agreement also contains separateness covenants consistent with the provisions described above for SkyLend Funding LLC, including restrictions on indebtedness, asset commingling, and voluntary bankruptcy filings. These provisions were reviewed by C&H and appear consistent with rating-agency criteria for structured-finance issuing entities as published by Meridian and Carrollton.
Asset-Transfer Flow. The contemplated flow of assets through the SPE structure is as follows: SBF, as originator and seller, will sell the receivables to SkyLend Funding LLC, as depositor, pursuant to the Receivables Purchase Agreement (the "RPA"). SkyLend Funding LLC will then transfer the receivables to SRT 2024-1 pursuant to the Sale and Servicing Agreement (the "SSA"). The Trust will issue Notes backed by the transferred receivables. The two-step transfer structure is designed to support the characterization of each transfer as a "true sale" for purposes of federal bankruptcy law and to achieve isolation of the receivables from the bankruptcy estate of SBF and SkyLend Funding LLC, respectively. C&H's true-sale and non-consolidation legal opinions will address these issues in detail.
C. Board Governance
The board of directors of SBF currently consists of five members. The composition of the board includes management representatives and investor-designee directors consistent with the governance provisions of SBF's charter and the investor rights agreement entered into in connection with the Pinnacle Series C investment. Marcus Yoon, a Principal at Pinnacle Growth Equity Partners, LP, serves as Pinnacle's designee to the SBF board.
The board of directors authorized the proposed securitization transaction and the execution and delivery of all related transaction documents pursuant to board resolutions adopted at a duly convened meeting of the board. A secretary's certificate certifying the adoption of these resolutions, the incumbency of the Company's officers, and the designation of Arun Mehta (CEO), Danielle Prescott (CFO), and Tomás Reyes (General Counsel) as authorized signatories for purposes of the securitization-related documents is in the process of being finalized and will be delivered at closing. C&H has reviewed a draft of the secretary's certificate and the underlying board resolutions and has provided comments to SBF's General Counsel.
IV. Business Overview and Loan-Origination Practices
A. Platform Overview — SkyLend
SkyLend is a direct-to-consumer digital lending platform operated by SBF that originates unsecured consumer installment loans. The platform was launched in approximately 2019 and has since grown to become a significant participant in the online consumer-lending market. SkyLend offers fixed-rate, fully amortizing unsecured consumer installment loans with the following general parameters:
•  Loan Amount Range: $1,000 to $25,000 per loan
•  Loan Term: 12 to 60 months
•  Product Type: Fixed-rate, fully amortizing unsecured consumer installment loans
•  Origination Channel: Fully digital; all applications, underwriting, and funding are processed through the SkyLend online and mobile platforms with no branch-based or in-person origination
As of December 31, 2023, SkyLend maintained approximately 312,000 active borrowers across its portfolio. The platform serves borrowers across a range of credit profiles, with a primary focus on near-prime and prime borrowers as defined by the Company's internal credit-grading system. SkyLend's borrower base is geographically diversified across the United States, with originations occurring in all states in which SBF holds the requisite lending licenses.
The SkyLend platform was developed in-house by SBF's engineering team under the direction of James Huang, the Company's Chief Technology Officer. The platform leverages a proprietary technology stack that integrates application intake, identity verification, credit decisioning, document generation, e-signature, and funding functions into a unified digital workflow. The technology infrastructure is described in greater detail in Section VIII of this memorandum.
B. Origination Volume and Portfolio Size
SBF has experienced significant growth in origination volume and portfolio size since the launch of the SkyLend platform in 2019. The following summarizes key financial and portfolio metrics for the most recent fiscal year:
•  FY 2023 Origination Volume: Approximately $1.4 billion in consumer loans originated through the SkyLend platform
•  FY 2023 Revenue: $187.3 million, consisting of interest income on the retained loan portfolio and platform origination fees
•  Total Assets as of December 31, 2023: $1.02 billion
•  Gross Receivables Portfolio as of December 31, 2023: $876.5 million
•  Net Receivables (net of allowance for credit losses) as of December 31, 2023: $841.4 million
These figures reflect the continued growth trajectory of the SkyLend platform from its inception through its current scale. Origination volumes have increased year-over-year in each fiscal year since the platform's 2019 launch, driven by the expansion of SBF's borrower base, the broadening of the Company's geographic footprint as additional state lending licenses were obtained, and the refinement of the Company's marketing and customer-acquisition strategies. Danielle Prescott, the Company's CFO, confirmed during her diligence interview that SBF's management team expects continued growth in origination volumes in FY 2024, although the pace of growth may moderate as the platform reaches a more mature stage of development and as macroeconomic conditions, including the interest-rate environment, evolve.
The audited financial statements for FY 2022 and FY 2023, prepared in accordance with U.S. GAAP and audited by Rowland & Cross LLP (engagement partner: Nathan Delacroix), were reviewed by C&H. The independent auditor's reports for both years were unqualified, and no going-concern qualifications or emphasis-of-matter paragraphs were noted. C&H did not conduct an independent analysis of SBF's financial condition or the adequacy of its allowance for credit losses, as such analysis is beyond the scope of this legal due-diligence engagement.
C. Origination Process
C&H reviewed the end-to-end digital loan-origination process employed by the SkyLend platform, based on documentation provided by SBF and the diligence interviews conducted with Priya Venkatesh (VP of Credit and Underwriting) and James Huang (Chief Technology Officer). The origination process can be summarized as follows:
Application Intake. Prospective borrowers initiate the loan-application process through the SkyLend website or mobile application. The application collects standard borrower information, including name, address, date of birth, Social Security number, employment information, income, and the requested loan amount and term. The application process is designed to be completed in a streamlined digital workflow, typically requiring approximately 10–15 minutes for the borrower to complete.
Identity Verification and Fraud Screening. Upon submission of the application, the SkyLend platform performs automated identity verification using a combination of knowledge-based authentication questions, document verification (where applicable), and third-party identity-verification services. Fraud-screening protocols are applied concurrently, utilizing commercially available fraud-detection tools and SBF's proprietary fraud-detection algorithms, which evaluate the application for indicators of identity theft, synthetic identity fraud, and application manipulation.
Credit-Bureau Pull. Following successful identity verification, the platform initiates a credit-bureau inquiry to obtain the applicant's credit report and credit score. SBF utilizes a primary credit bureau for all applications and supplements with a secondary credit-bureau pull in certain cases based on underwriting-model parameters. The credit-bureau inquiry generates the applicant's FICO score, which is a key input to the underwriting decision.
Proprietary Scoring Model. In addition to the FICO score obtained from the credit bureaus, SBF employs a proprietary credit-scoring model (the "SkyLend Score") that incorporates a range of data inputs beyond traditional credit-bureau data. These inputs include, among other factors, bank-account transaction data (where authorized by the borrower), income stability metrics, employment tenure, educational attainment, and behavioral signals derived from the application process. The SkyLend Score is used in conjunction with the FICO score to generate a composite credit assessment that drives the automated underwriting decision. C&H reviewed the general documentation describing the SkyLend Score methodology, but did not conduct an independent evaluation of the model's predictive accuracy or statistical validity, as such evaluation is beyond the scope of this engagement.
Income and Employment Verification. SBF employs a data-driven approach to income and employment verification. Rather than relying exclusively on traditional methods such as pay stubs and W-2 forms, the SkyLend platform utilizes a combination of bank-account linking (through which the platform can access and analyze the applicant's recent bank-account transaction history, with the applicant's consent) and integration with third-party payroll-verification providers. This approach enables SBF to verify income and employment status in a substantially automated manner, reducing manual intervention and processing time. For applications where automated verification is inconclusive or where the loan amount exceeds certain thresholds established in the credit-policy manual, manual review and supplemental documentation may be required.
Automated Decisioning with Human Escalation. The SkyLend platform employs an automated decisioning engine that evaluates each application against the Company's underwriting criteria and generates an approve, decline, or counteroffer decision. Applications that fall within predefined "edge case" parameters — such as borderline credit scores, unusual income patterns, or other characteristics that warrant human judgment — are escalated to SBF's credit-underwriting team for manual review and decision. Priya Venkatesh confirmed during her diligence interview that approximately 15–20% of applications are escalated for manual review, and that the credit-underwriting team includes experienced consumer-credit professionals with the authority to approve, decline, or modify the terms of escalated applications within the framework of the credit-policy manual.
Loan-Agreement Execution via E-Signature. Upon approval, the SkyLend platform generates the loan documents, including the promissory note, loan agreement, and required regulatory disclosures, and presents them to the borrower for review and execution. Loan documents are executed by the borrower via electronic signature, utilizing a commercially available e-signature platform that complies with the requirements of the Electronic Signatures in Global and National Commerce Act ("E-SIGN Act") and applicable state electronic-transaction laws. Borrower consent to the use of electronic records and signatures is obtained as part of the application process.
Funding. Upon execution of the loan documents, the approved loan amount is disbursed to the borrower via Automated Clearing House ("ACH") transfer. Funding is typically completed within one to three business days of loan approval, depending on the timing of the application and the processing schedules of the borrower's financial institution.
D. Underwriting Guidelines
C&H reviewed the SBF Credit Policy and Underwriting Guidelines Manual, Version 4.2, effective September 2023 (the "Credit Policy Manual"). The Credit Policy Manual sets forth the Company's underwriting standards, eligibility criteria, and exception-approval procedures for loans originated through the SkyLend platform. The key underwriting parameters established in the Credit Policy Manual include the following:
Minimum FICO Threshold. The Credit Policy Manual establishes a minimum FICO score threshold for loan origination. The specific minimum FICO threshold is set forth in the Credit Policy Manual and is calibrated to the Company's risk appetite and target credit-quality profile. For reference, the weighted average FICO score at origination for the proposed SRT 2024-1 receivables pool is 698, which is consistent with the near-prime to prime credit profile targeted by the SkyLend platform.
Maximum Debt-to-Income Ratio. The Credit Policy Manual establishes a maximum debt-to-income ("DTI") ratio for borrowers, calculated as the ratio of the borrower's total monthly debt obligations (including the proposed SkyLend loan payment) to the borrower's verified monthly gross income. Applications that exceed the maximum DTI threshold are declined unless an exception is approved in accordance with the exception-approval process described below.
Employment and Income Verification Standards. As described in Section IV.C above, the Credit Policy Manual requires verification of the borrower's employment status and income level as a condition of loan approval. The verification standards set forth in the Credit Policy Manual specify the acceptable methods and sources for income and employment verification, including bank-account data analysis, payroll-verification provider confirmations, and, in certain cases, traditional documentation such as pay stubs, tax returns, or employer-verification letters.
Exclusion Criteria. The Credit Policy Manual identifies specific borrower characteristics or circumstances that result in automatic disqualification from loan origination. These exclusion criteria include, among others:
(a) Borrowers with an active bankruptcy filing (Chapter 7 or Chapter 13) or a dismissed bankruptcy within the preceding 12 months;
(b) Borrowers with a prior charge-off on an existing or former SkyLend loan;
(c) Borrowers with one or more trade lines reflecting delinquency of 90 or more days within the preceding six months;
(d) Borrowers who have previously been identified as engaging in fraudulent activity in connection with a SkyLend application; and
(e) Borrowers who are subject to active litigation or judgment liens that, in the judgment of the underwriting team, indicate a material risk of inability to repay.
Credit-Policy Manual Version History. C&H reviewed the current Credit Policy Manual (Version 4.2, effective September 2023) and compared its key provisions to prior versions provided by SBF management. No material deviations from prior versions were identified. The revisions reflected in Version 4.2 primarily relate to adjustments in scoring-model calibration parameters, refinements to the employment-verification process, and updates to the exclusion criteria to reflect evolving regulatory expectations. None of these changes were assessed by C&H as materially altering the overall credit-risk profile of loans originated under the Credit Policy Manual.
Exception Process. The Credit Policy Manual establishes a formal exception-approval process for applications that do not meet one or more of the standard underwriting criteria but that the underwriting team believes may nevertheless represent an acceptable credit risk. Any exception to the underwriting guidelines requires the approval of the Vice President of Credit and Underwriting or a more senior officer. An exception-tracking log is maintained by the credit-underwriting team, documenting the nature of each exception, the rationale for approval, and the approving officer. C&H reviewed a summary of the exception log for Q3 and Q4 2023 and noted that exception volumes were within the ranges indicated by SBF management as typical for the portfolio.
E. Loan Documentation
C&H reviewed SBF's standard-form promissory note and loan agreement used for loans originated through the SkyLend platform. The loan-documentation package includes the following components:
•  Promissory note setting forth the principal amount, interest rate, payment schedule, and maturity date;
•  Loan agreement setting forth the terms and conditions of the loan, including representations and warranties of the borrower, events of default, and remedies;
•  Truth in Lending Act (TILA) disclosure statement (Federal Reserve Board model form or equivalent), including the annual percentage rate (APR), finance charge, total of payments, total amount financed, and payment schedule, as required by Regulation Z (12 C.F.R. Part 1026);
•  Privacy notice consistent with the Gramm-Leach-Bliley Act and implementing regulations; and
•  Consent to electronic records and signatures in compliance with the E-SIGN Act.
The standard-form promissory note and loan agreement were reviewed for consistency with applicable federal and state consumer-lending requirements. Based on C&H's review, the terms and provisions of the loan documents appear consistent with the requirements of TILA, the E-SIGN Act, and applicable state lending laws for the jurisdictions in which SBF originates loans. C&H notes that this review was conducted on a sampling basis using representative loan-documentation packages and does not constitute a loan-by-loan review of every loan in the proposed pool.
The TILA disclosure statements included in the loan-documentation package were reviewed and found to include the required disclosures of APR, finance charge, total of payments, total amount financed, and payment schedule in the form and manner prescribed by Regulation Z. The electronic delivery of these disclosures to borrowers was reviewed for compliance with E-SIGN Act requirements, including the requirement that borrowers provide affirmative consent to the receipt of disclosures in electronic form prior to the delivery of such disclosures.
V. Receivables Pool — Proposed Characteristics
A. Pool Statistics (Proposed Cut-Off Date: March 31, 2024)
Based on the loan-tape extracts and portfolio-stratification data provided by SBF and Clearview, the proposed SRT 2024-1 receivables pool, as of the anticipated cut-off date of March 31, 2024, is expected to have the following general characteristics:
The gross aggregate outstanding principal balance of approximately $213,750,000 represents the pre-screening pool from which the final $200,000,000 pool will be carved after application of the eligibility criteria and credit screens described in Section V.B below. The difference between the gross and final pool balances provides a buffer to accommodate the removal of loans that do not satisfy the eligibility criteria and to permit the adjustment of pool composition to achieve the desired portfolio characteristics, including geographic diversification, credit-quality distribution, and single-obligor concentration limits.
C&H notes that the pool statistics set forth above are preliminary and are based on data as of December 31, 2023, projected forward to the anticipated cut-off date of March 31, 2024. Actual pool statistics as of the cut-off date may differ from the preliminary figures set forth herein due to intervening loan payments, prepayments, delinquencies, defaults, and other factors. The final pool statistics will be confirmed in connection with the preparation of the final pool data supplement to the Offering Memorandum.
B. Eligibility Criteria
In connection with the preparation of the transaction documents, C&H has drafted the Eligibility Criteria and Representations Schedule, which will be attached as an exhibit to both the Receivables Purchase Agreement and the Sale and Servicing Agreement. The Eligibility Criteria define the characteristics that a receivable must satisfy in order to be included in the SRT 2024-1 pool. The key eligibility criteria include, among others:
(a) Loan Seasoning. Each receivable must have been originated at least 90 days prior to the cut-off date and must have had at least three scheduled payments due, of which at least two must have been received;
(b) Delinquency Status. No receivable that is 30 or more days past due as of the cut-off date may be included in the pool;
(c) Minimum and Maximum Loan Balance. The outstanding principal balance of each receivable as of the cut-off date must be not less than $500 and not more than $25,000;
(d) Loan Term. The original loan term of each receivable must be not less than 12 months and not more than 60 months, and the remaining term as of the cut-off date must be not less than 6 months;
(e) Geographic Diversification. No more than 20% of the aggregate outstanding principal balance of the pool (measured as of the cut-off date) may consist of receivables originated to borrowers with addresses in any single state;
(f) FICO Floor. Each receivable must have been originated to a borrower with a FICO score at origination of not less than the minimum threshold specified in the Credit Policy Manual;
(g) Compliance. Each receivable must have been originated in compliance with all applicable federal, state, and local laws and regulations and in conformity with the Credit Policy Manual in effect at the time of origination; and
(h) Single-Obligor Concentration. No single obligor may account for more than 0.15% of the aggregate outstanding principal balance of the pool as of the cut-off date.
The Eligibility Criteria are designed to ensure that the receivables included in the pool reflect a minimum credit quality, adequate seasoning, current payment status, and appropriate diversification. These criteria are consistent with the eligibility criteria employed in comparable consumer-loan securitization transactions and are expected to be acceptable to the rating agencies.
C. Static-Pool Performance Data
SBF and Clearview provided historical static-pool performance data for loan vintages originated in calendar years 2021, 2022, and 2023. This data includes monthly delinquency, default, and loss statistics tracked on a vintage basis from the date of origination through the most recently available reporting period.
Based on the data provided, the 30-plus-day delinquency rate for the proposed pool, measured as of the anticipated cut-off date, was reported at 3.21% by SBF and Clearview. This delinquency rate is measured as a percentage of the aggregate outstanding principal balance of all loans in the proposed pool that are 30 or more days past due as of the measurement date. As noted in Section V.B above, loans that are 30 or more days past due as of the actual cut-off date will be excluded from the final pool under the eligibility criteria; accordingly, the delinquency rate of the final pool as of the cut-off date is expected to be zero by definition.
The cumulative net loss rate for the 2022 vintage — which is the most seasoned vintage with a full 12-month performance window — was reported at 4.12% as of the most recent reporting date, based on data provided by Clearview. Cumulative net loss rates for the 2021 and 2023 vintages were also reviewed but are less directly comparable due to differences in seasoning.
C&H notes that the static-pool performance data reviewed was provided by SBF and Clearview and has not been independently verified by C&H. Independent verification of the accuracy and integrity of the servicing data underlying the static-pool performance statistics is within the scope of the Broadleaf Analytics Group LLC engagement, which commenced on April 10, 2024. C&H recommends that the results of Broadleaf's analysis be reviewed carefully upon receipt, and that any material discrepancies between Broadleaf's findings and the data reported by SBF and Clearview be promptly escalated and assessed for potential disclosure implications.
D. Capital Structure
The proposed capital structure of SRT 2024-1 is summarized below. The structure contemplates two classes of rated notes and a subordinated residual interest, supported by initial overcollateralization and a funded reserve account.
The Class A Notes are the senior tranche and benefit from subordination provided by the Class B Notes and the Subordinated Certificate, as well as from the initial overcollateralization target and the reserve account. The Class B Notes are the mezzanine tranche, subordinated to the Class A Notes but senior to the Subordinated Certificate. The Subordinated Certificate represents the residual interest in the Trust and will be retained by SBF through SkyLend Funding LLC; it is unrated and will absorb losses before the rated notes.
The credit-enhancement structure includes the following elements:
•  Subordination. The Class B Notes and Subordinated Certificate provide 15% of total subordination to the Class A Notes. The Subordinated Certificate provides 4% subordination to the Class B Notes.
•  Overcollateralization. The initial overcollateralization target is 3.5% of the aggregate outstanding pool balance, or $7,000,000. Overcollateralization is achieved through the application of excess spread to accelerate the amortization of the notes relative to the amortization of the receivables pool, building overcollateralization to the target level over the initial months following closing.
•  Reserve Account. A reserve account will be funded at closing in an amount equal to 1.00% of the initial aggregate outstanding pool balance, or $2,000,000. The reserve account will be available to cover shortfalls in interest and principal payments on the notes.
•  Excess Spread. Based on the weighted average coupon of the receivables pool (14.82%) and the weighted average cost of funds of the notes (estimated at approximately 5.8% on a blended basis), the estimated initial excess spread is approximately 2.85% per annum after deducting the servicing fee (0.50% per annum) and estimated credit losses.
The CUSIP prefix allocated for the SRT 2024-1 Notes is 87165Q. The specific CUSIP numbers for the Class A Notes and Class B Notes have been allocated but have not yet been activated.
The offering will be structured as a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) thereof and Rule 144A thereunder. The Class A Notes and Class B Notes will be offered to qualified institutional buyers ("QIBs") in the United States under Rule 144A and to non-U.S. persons in offshore transactions under Regulation S promulgated under the Securities Act. The Subordinated Certificate will not be offered or sold and will be retained by SBF via SkyLend Funding LLC.
VI. Regulatory Compliance
A. State Lending Licenses
SBF originates consumer loans through the SkyLend platform in multiple states across the United States. As a non-bank lender, SBF is required to obtain and maintain state lending licenses or registrations in the states in which it originates loans, unless an exemption from licensing is available. C&H reviewed SBF's internal state lending license register, which catalogs the Company's active lending licenses by state, including license numbers, issuing authorities, effective dates, and expiration dates (where applicable). A summary of the license register is attached as Appendix C to this memorandum.
Based on C&H's review, SBF's lending licenses appear to be current and in good standing in all material operating states. No pending license revocation or suspension proceedings were identified in the regulatory correspondence reviewed by C&H, and SBF's General Counsel, Tomás Reyes, confirmed during his diligence interview that SBF has not received any notice of revocation, suspension, or non-renewal of any state lending license. SBF's Chief Compliance Officer, Rebecca Moorfield, further confirmed that the Company maintains an internal compliance calendar to track license-renewal deadlines and filing requirements.
C&H notes that certain states in which SBF originates loans may utilize bank-partnership or exemption structures rather than direct licensing. C&H's review of the license register and related documentation did not identify any material compliance concerns with respect to these arrangements, although a detailed analysis of each state-specific licensing framework was beyond the scope of this engagement.
B. Federal Consumer-Lending Regulations
1. Truth in Lending Act (TILA) / Regulation Z
C&H reviewed SBF's TILA disclosure practices, including the standard-form TILA disclosure statements provided to borrowers in connection with each loan origination. The disclosure statements were reviewed for compliance with Regulation Z (12 C.F.R. Part 1026) and were found to include the required disclosures, including the annual percentage rate (APR), the finance charge, the total amount financed, the total of payments, the payment schedule, and the late-charge provisions, each as required by Regulation Z and applicable official staff commentary.
The electronic delivery of TILA disclosures was reviewed for compliance with the E-SIGN Act and the applicable provisions of Regulation Z governing electronic delivery. SBF's electronic-disclosure process requires borrowers to provide affirmative consent to the receipt of required disclosures in electronic form prior to the delivery of such disclosures, and provides borrowers with the ability to withdraw consent and receive paper disclosures upon request. Based on C&H's review, SBF's electronic-disclosure practices appear consistent with the requirements of the E-SIGN Act and Regulation Z.
2. Equal Credit Opportunity Act (ECOA) / Regulation B
C&H reviewed SBF's fair-lending policies and practices for compliance with the Equal Credit Opportunity Act ("ECOA") and its implementing regulation, Regulation B (12 C.F.R. Part 1002). ECOA prohibits discrimination in any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public-assistance income, or the exercise of rights under the Consumer Credit Protection Act.
SBF's adverse-action notice forms were reviewed and found to include the required disclosures of the specific reasons for the adverse action, the identity of the consumer-reporting agency whose report was used in making the decision, and the borrower's rights under applicable law, consistent with the requirements of Regulation B and the Fair Credit Reporting Act.
SBF's internal compliance function conducts periodic fair-lending analyses to assess whether the Company's lending practices result in any impermissible disparate impact on protected classes. C&H reviewed the most recent fair-lending analysis, which was conducted in Q3 2023. The analysis reviewed denial rates and loan-pricing outcomes across applicable demographic categories and identified no material disparate-impact concerns. C&H notes that it did not independently verify the methodology or conclusions of SBF's internal fair-lending analysis, and recommends that the Company continue to conduct such analyses on a regular basis.
3. Fair Credit Reporting Act (FCRA)
SBF furnishes consumer-credit information to credit bureaus in connection with its lending activities and is therefore subject to the obligations imposed on "furnishers" of information under Section 623 of the Fair Credit Reporting Act ("FCRA") (15 U.S.C. §1681s-2). C&H reviewed SBF's furnisher policies and procedures, including its processes for investigating consumer disputes and correcting inaccurate information furnished to credit bureaus.
SBF's dispute-resolution processes were reviewed and found to be consistent with the requirements of FCRA §623, including the obligation to investigate disputed information within 30 days of receipt of a dispute notice from a credit bureau, to review all relevant information provided by the credit bureau in connection with the dispute, and to report the results of the investigation to the credit bureau. SBF maintains a dedicated team within its compliance function responsible for handling FCRA disputes.
SBF's permissible-purpose certifications for credit-bureau inquiries were reviewed. Each credit-bureau pull conducted in connection with a loan application is supported by a permissible-purpose certification under FCRA §604(a)(3)(A), which permits a consumer-reporting agency to furnish a consumer report to a person who intends to use the information in connection with a credit transaction involving the consumer. SBF's application process includes a disclosure to the applicant that a credit-bureau inquiry will be performed and obtains the applicant's consent to such inquiry.
4. Servicemembers Civil Relief Act (SCRA)
SBF maintains SCRA compliance policies and procedures designed to ensure that the Company complies with the protections afforded to active-duty servicemembers under the Servicemembers Civil Relief Act (50 U.S.C. §§3901–4043). The Company's SCRA policies include procedures for identifying borrowers who enter active military service after the origination of their loans and for applying the SCRA interest-rate cap of 6% per annum to the accounts of such borrowers during the period of active military service. SBF utilizes the Defense Manpower Data Center's SCRA database to verify the military-service status of borrowers. C&H reviewed SBF's SCRA policies and found them to be consistent with the requirements of the statute.
5. Electronic Fund Transfer Act (EFTA) / Regulation E
C&H reviewed SBF's compliance with the Electronic Fund Transfer Act ("EFTA") and its implementing regulation, Regulation E (12 C.F.R. Part 1005), in connection with the Company's use of ACH transfers for loan funding and payment collection. SBF's ACH authorization forms were reviewed and found to include the required disclosures and authorizations. SBF's error-resolution procedures for electronic fund transfers were reviewed and found to be consistent with the requirements of Regulation E, including the obligation to investigate and resolve errors within the timeframes prescribed by the regulation and to provide provisional credit to borrowers in certain circumstances.
6. Gramm-Leach-Bliley Act (GLBA) / Privacy
SBF's privacy policy was reviewed for compliance with the Gramm-Leach-Bliley Act ("GLBA") and its implementing regulations, including Regulation P (12 C.F.R. Part 1016). The Company's privacy policy describes the categories of nonpublic personal information collected by SBF, the categories of third parties to which such information may be disclosed, and the consumer's right to opt out of certain disclosures. SBF delivers initial and annual privacy notices to borrowers in accordance with GLBA requirements. SBF's information-sharing practices, including disclosures to affiliates, service providers, and other third parties, were reviewed and appear consistent with the exceptions and requirements of GLBA.
C. State Consumer-Protection Laws
C&H reviewed SBF's compliance posture with respect to state consumer-protection laws applicable to consumer lending, including state usury laws and rate-cap statutes, state-specific disclosure requirements, and state licensing requirements. SBF's compliance manual addresses the state-specific requirements for each jurisdiction in which the Company originates loans, and the Company's compliance team monitors legislative and regulatory developments that may affect its state-level obligations.
With respect to usury and rate-cap compliance, C&H reviewed the interest rates charged on loans originated through the SkyLend platform for consistency with the applicable rate limits in the Company's key origination states. Based on the review, the interest rates charged by SBF appear to be within the applicable rate limits in the states reviewed. C&H notes that certain states impose rate caps or fee limitations that require ongoing monitoring, particularly in light of evolving regulatory interpretations and recent legislative activity in several states.
D. CFPB / Regulatory Examination History
SBF has not been the subject of any public enforcement action by the Consumer Financial Protection Bureau ("CFPB") or by any state regulatory agency. Tomás Reyes and Rebecca Moorfield confirmed during their respective diligence interviews that SBF has not received any civil investigative demand ("CID"), notice of charges, or other formal enforcement communication from the CFPB or any state regulator.
C&H reviewed SBF's regulatory-examination correspondence for the period covered by the due-diligence review. The most recent state regulatory examination of SBF was conducted in 2023 and resulted in no material findings, corrective actions, or remedial orders. The examination report and SBF's response letter were reviewed by C&H, and no issues of concern were identified.
C&H also reviewed SBF's consumer-complaint logs for the period from January 1, 2022, through December 31, 2023. The complaint logs document the number, nature, and resolution of consumer complaints received by SBF through direct channels, as well as complaints submitted through the CFPB's consumer-complaint database and state regulatory portals. Complaint volume and resolution rates were assessed by C&H as consistent with industry norms for a consumer lender of SBF's scale, and no patterns or trends were identified that would indicate systemic compliance failures or significant consumer-harm issues.
E. Anti-Money Laundering / Bank Secrecy Act
SBF maintains a BSA/AML compliance program that includes policies and procedures designed to detect and prevent money laundering, terrorist financing, and other illicit financial activities. The Company's BSA/AML program includes a Customer Identification Program ("CIP") that requires the collection and verification of identifying information from all applicants prior to the opening of a loan account, consistent with the requirements of the Bank Secrecy Act and its implementing regulations.
SBF's Chief Compliance Officer, Rebecca Moorfield, confirmed during her diligence interview that the Company monitors customer transactions and accounts for suspicious activity and files Suspicious Activity Reports ("SARs") with the Financial Crimes Enforcement Network ("FinCEN") as required by applicable law. Ms. Moorfield further confirmed that SBF management has not identified any SARs that would be material to the proposed securitization or that would indicate systemic deficiencies in the Company's BSA/AML controls. C&H did not independently review individual SARs, consistent with the confidentiality restrictions applicable to such filings.
VII. Servicing Arrangements and Oversight of Clearview Loan Servicing, Inc.
A. Overview of Servicing Structure
Under the proposed SRT 2024-1 transaction structure, SBF will serve as the "servicer" under the Sale and Servicing Agreement. In this capacity, SBF will be contractually responsible for the servicing, administration, and collection of the receivables in the pool, including the obligation to service the receivables in accordance with the servicing standard set forth in the SSA (which is expected to require servicing in accordance with customary and usual standards of practice of prudent consumer-loan servicers).
In practice, SBF has delegated the day-to-day operational servicing functions to Clearview Loan Servicing, Inc. ("Clearview"), which serves as sub-servicer under the Master Servicing Agreement dated as of October 1, 2022 (the "MSA"), between SBF, as servicer, and Clearview, as sub-servicer. The MSA was amended by Amendment No. 1, executed March 18, 2024, which supplements the MSA with certain reporting requirements and operational provisions specific to the SRT 2024-1 securitization.
Clearview is an Ohio corporation headquartered at 8800 Brecksville Road, Suite 300, Cleveland, Ohio 44141. Warren Pettigrew serves as Clearview's Chief Executive Officer. The primary Clearview contact for the SRT 2024-1 transaction is Meredith Sloane, Vice President of Operations. The servicing account es

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