Small business loans (including SBA 7(a))

Does your product fit here?

Small business loans fall into two fundamentally different categories: SBA-guaranteed loans and conventional (non-guaranteed) loans. The government guarantee on SBA loans changes everything about how these assets are priced, traded, and financed. Understanding which bucket your product falls into determines your entire capital markets strategy.

Products that fit here:

SBA 7(a) loans: The flagship SBA program. Loans up to $5M with federal government guarantees of 75-85% of the principal balance. Used for working capital, equipment, real estate acquisition, debt refinancing. The guarantee is what you’re really financing.
SBA Express loans: A streamlined 7(a) variant with faster approval, smaller amounts (up to $500K), and only 50% guarantee coverage. Higher volume but lower protection per dollar.
Conventional small business term loans: Non-guaranteed loans to businesses with under $5M annual revenue, typically secured by business assets, accounts receivable, inventory, or real estate. You’re taking pure credit risk here.
Small business lines of credit: Revolving facilities to small businesses. Can be asset-based (secured by AR/inventory) or cash flow-based. Short duration, higher monitoring intensity.
Merchant cash advances (structured as loans): When structured as term loans rather than purchases of future receivables, these fall here. High yield (25-50% APR equivalent), high default (15-25%), very short duration (6-18 months).

What does NOT fit here:

SBA 504 loans: Different program entirely. 504 loans involve a Certified Development Company (CDC) and are structured with a first-lien bank loan plus a CDC debenture. Real estate and heavy equipment focused. Separate investor universe.
Equipment leases or loans: Even if the obligor is a small business, equipment-secured paper belongs in Equipment Leases and Loans. The collateral drives the analysis.
Commercial real estate loans to small businesses: If the real property is the primary collateral and underwriting is based on property value/cash flow, this is CRE (Bridge / Fix-and-Flip, CMBS, or CRE CLOs).
Trade receivables and factoring: See Trade Receivables and Supply Chain Finance.
Revenue-based financing: See Revenue-Based Financing.

Edge cases

PPP loans: The Paycheck Protection Program loans were effectively grants when forgiven (98%+ forgiveness rate). Unforgiven PPP loans carry an SBA guarantee but the program has no ongoing origination. Not a viable asset class for new facilities.

USDA business loans: Similar guarantee structure to SBA but focused on rural businesses. Much smaller market with limited secondary liquidity.

Microloans (under $50K): While technically small business loans, microloans have very different economics. Servicing costs per dollar are high, default rates run 10-20%, and the investor universe is mostly impact-focused or CDFIs.

How lenders classify your product

Type	Guarantee	Secondary Market Premium	Facility Pricing
SBA 7(a) 85% guarantee	85%	108-112% of UPB	Prime + 0-150 bps
SBA 7(a) 75% guarantee	75%	104-108% of UPB	Prime + 50-200 bps
SBA Express (50%)	50%	98-102% of UPB	Prime + 150-300 bps
Conventional secured	None	70-85% advance	SOFR + 400-700 bps
Conventional cash flow	None	60-75% advance	SOFR + 600-1000 bps

Illustrative pricing. See pricing disclaimer.

The premium on SBA guaranteed paper reflects the near-zero loss exposure on the guaranteed portion. You’re essentially buying government-backed cash flows at a yield above Treasuries.

Market benchmarks and comps

SBA 7(a) performance benchmarks

Metric	7(a) Standard (75-85% gtee)	SBA Express (50% gtee)
Default rate (annual)	2.5-4.5%	4.0-7.0%
Charge-off rate (annual)	1.5-3.0%	2.5-5.0%
Net loss to investor (after guarantee)	0.3-0.8%	1.5-3.0%
CPR (annualized)	12-20%	15-25%
WAL	5-8 years	3-5 years
Secondary premium	+8-12 pts	+2-6 pts

The critical number for SBA 7(a) investors is net loss after guarantee, not gross default. A portfolio with 4% annual defaults but 85% guarantee coverage has investor-borne losses of only 0.6% annually. This is why SBA paper trades at substantial premiums.

Conventional small business benchmarks

Metric	Bank Term Loans	Fintech/Alt Lenders
Default rate (annual)	3-6%	8-18%
Loss severity	50-70%	60-80%
Net loss (annual)	2-4%	6-14%
CPR	15-25%	25-40%
WAL	2-4 years	0.5-2 years
Net yield	8-12%	18-35%

Fintech small business lending is a high-yield, high-loss business. The math works when you can price at 25-40% APR and absorb 10-15% annual losses while still making double-digit returns. But the loss volatility is significant, and vintage deterioration can happen quickly.

The guarantee purchase reality

SBA guarantees are not automatic. The lender must follow SBA Standard Operating Procedures (SOPs) throughout origination, servicing, and liquidation. If documentation is deficient or procedures weren’t followed, the SBA can deny or reduce the guarantee claim.

For compliant originators, guarantee honor rates run 95-98% of claims filed. The 2-5% that get denied or reduced typically involve:

Missing or incomplete borrower eligibility documentation
Use of proceeds documentation issues
Collateral liquidation procedure violations
Borrower fraud discovered post-default

Your diligence must include the originator’s historical guarantee honor rate. Below 95% is a red flag that will affect pricing and may indicate systemic origination deficiencies.

What “good” SBA performance looks like

Annual default rate below 3.5% for loans over $350K
Guarantee purchase processing within 60 days of claim filing
Portfolio weighted average guarantee percentage above 80%
Industry concentration below 25% in any single NAICS code
Geographic concentration below 20% in any single state
Guarantee honor rate above 97%

What “good” conventional small business looks like

CDR below 5% for secured loans with perfected liens
Recovery rate above 45% on charged-off loans
Average loan size above $100K (smaller loans have disproportionate costs)
Borrower average time in business above 4 years
Vintage-over-vintage performance consistency within 2% CDR variance

Red flag performance benchmarks

SBA guarantee purchase denials above 3%: compliance or documentation issues
Default rate above 6% in first 24 months of loan life: poor underwriting
Prepayment spike coinciding with rate environment changes: refinancing risk
Concentration above 30% in retail or restaurant NAICS codes: high-failure industries
Any vintage with month 12 CDR exceeding 1.5x prior vintage: deteriorating underwriting

What lenders and investors focus on

For SBA-guaranteed loans

1. Guarantee Percentage and Eligibility Compliance

The guarantee is the asset. An 85% guarantee on loans up to $150K provides substantial protection; a 75% guarantee on larger loans still leaves only 25% exposed. But the guarantee only pays if the originator followed SBA rules.

Key questions to answer:

What is the originator’s historical guarantee honor rate? Target: 97%+
What is the guarantee repair rate (deficiencies cured before denial)?
Are there any outstanding SBA exam findings?
How is origination compliance monitored internally?

2. Originator SBA Status and Compliance Infrastructure

Preferred Lender Program (PLP) status means the originator can approve loans without SBA pre-approval on each transaction. PLP lenders generally have:

More experienced SBA lending teams
Better documentation practices
Lower guarantee denial rates
Faster loan processing

Non-PLP lenders require SBA approval on each loan. This adds time but provides a compliance checkpoint. For capital providers, PLP status is generally preferred, but strong non-PLP originators can work if their honor rates support it.

3. Industry and Geographic Concentration

Small business default rates vary dramatically by industry:

Industry	Typical Default Rate	Investor Concern
Professional services	3-5%	Lower
Healthcare practices	4-6%	Moderate
Manufacturing	5-8%	Moderate
Retail	8-12%	Higher
Restaurants	12-18%	Highest

Illustrative pricing. See pricing disclaimer.

A portfolio concentrated above 25% in restaurants or retail is a red flag. These industries have structurally higher failure rates regardless of economic conditions.

Geographic concentration creates exposure to regional economic shocks. Hurricane damage in Florida, oil price collapses in Texas, tech layoffs in California can all spike defaults in geographically concentrated portfolios.

4. Loan Size Distribution and Economics

Loan size drives both risk and economics:

Under $150K: 85% guarantee but higher per-dollar servicing cost and default rate
$150K-$500K: 75% guarantee, balanced economics
$500K-$2M: Sweet spot for securitization. Better documentation, lower default rates, efficient servicing
Above $2M: Lower default rates but larger exposure per obligor; concentration risk

5. Collateral Position on Unguaranteed Portion

The 15-25% unguaranteed portion is where you take actual credit risk. SBA loans often have relatively weak collateral positions: personal guarantees, blanket UCC liens on business assets, but limited hard collateral.

For the unguaranteed portion, evaluate:

Collateral coverage ratio (target: 1.5x+ of unguaranteed portion)
Lien position (first vs. subordinate)
Collateral quality (AR/inventory vs. equipment vs. real estate)
Personal guarantee strength (owner FICO, net worth, liquidity)

For conventional small business loans

1. Collateral Type and Perfection

Without a government guarantee, collateral is your primary loss mitigation tool.

Asset-based (AR, inventory): Advance rates of 70-85%, but requires ongoing monitoring of borrowing base
Equipment-secured: Advance rates of 60-75% depending on equipment type and liquidity
Real estate-secured: Best collateral, but then it’s really a CRE loan
Cash flow-based (unsecured): Highest risk; personal guarantees are the primary recourse

UCC perfection is essential. Check that liens are filed correctly, first-lien positions are verified, and control agreements are in place for deposit accounts.

2. Borrower Financial Health

Key metrics to evaluate:

Metric	Target (Secured)	Target (Cash Flow)
DSCR at origination	1.20x+	1.40x+
Total debt/EBITDA	Below 4.0x	Below 3.0x
Days cash on hand	30+ days	60+ days
Revenue trend	Flat or growing	Growing

Declining revenue is the single biggest red flag in small business lending. A business with falling revenue is almost always a deteriorating credit regardless of current DSCR.

3. Owner Guarantees and Personal Creditworthiness

Personal guarantees are standard in small business lending. The owner’s personal financial strength provides a secondary recovery source.

What to evaluate:

Owner FICO (target: 680+)
Owner net worth relative to loan size
Owner liquidity (can they inject capital?)
Spousal guarantees in community property states

4. Time in Business

Default rates decline significantly with business age:

Time in Business	Typical Default Rate
0-2 years	12-20%
2-5 years	6-12%
5-10 years	4-8%
10+ years	3-5%

Illustrative pricing. See pricing disclaimer.

Portfolios concentrated in businesses under 2 years old are taking on startup risk, which requires premium pricing (25%+ APR) to compensate.

5. Underwriting Process and Data Quality

Fintech lenders often use automated underwriting based on bank transaction data. This enables faster funding but can create blind spots:

Are tax returns reviewed, or just bank statements?
Is there any manual review layer?
How are industry-specific risks assessed?
What is the exception rate on underwriting guidelines?

Speed to funding often correlates with higher defaults. Lenders that fund in 24-48 hours typically have higher loss rates than those with 1-2 week underwriting processes.

Typical structures used

Secondary market whole loan sales (SBA 7(a))

This is the dominant structure for SBA loans. The guaranteed portion is sold at a premium in a liquid secondary market.

How it works:

Originator makes an SBA 7(a) loan (say, $500K with 75% guarantee)
The $375K guaranteed portion is sold to a secondary buyer at 108% of par ($405K)
Originator books immediate gain-on-sale of $30K
Originator retains the $125K unguaranteed portion and servicing rights
If the loan defaults, the secondary buyer files for guarantee purchase from SBA

Economics for secondary buyers:

Purchase at 108 pts on $375K = $405K investment
Receive Prime + 2.75% (typical SBA rate) on declining balance
Net yield after accounting for premium amortization: ~5-7%
Credit risk: minimal (SBA guarantee)
Prepayment risk: significant (no penalty after year 3)

Major secondary market participants:

Institutional buyers (insurance companies, banks)
SBA pool securitization (GNMA-wrapped certificates)
Regional banks and credit unions

GNMA SBA pool securitization

Pools of SBA 7(a) guaranteed portions can be packaged into GNMA-guaranteed securities.

Structure:

Pool assembler aggregates guaranteed portions from multiple originators
GNMA provides timely payment guarantee on the pool certificates
Certificates trade like government securities
Very liquid secondary market

Pricing:

Priced as spread to comparable Treasury/GNMA MBS
Premium reflects SBA guarantee value
WAL typically 5-7 years (shorter than underlying loan terms due to prepayments)

Warehouse facility (conventional small business)

For non-SBA small business loans, warehouse facilities are the primary financing structure.

Typical terms:

Parameter	Secured Loans	Cash Flow Loans
Advance rate	75-85%	60-75%
Pricing	SOFR + 400-600 bps	SOFR + 600-900 bps
Revolving period	18-24 months	12-18 months
Facility size	$25M-$200M	$10M-$100M
Minimum loan size	$50K	$25K

Key structural features:

Eligibility criteria (DSCR minimums, industry exclusions, geographic limits)
Concentration limits (single obligor, single industry, single state)
Financial covenants on originator (tangible net worth, liquidity)
Borrowing base certification (monthly or more frequent)

Forward flow programs

Capital providers commit to purchase small business loans on a flow basis at pre-agreed pricing.

Best for:

Originators under $50M/year who want simplicity
Newer originators without track record for warehouse financing
Originators with variable credit criteria who need flexibility

Typical terms:

Pricing: Target yield basis (15-25% gross yield for fintech paper)
Volume commitment: Monthly minimums and maximums
Eligibility: Defined credit criteria, loan size ranges
Put-back provisions: Breaches of reps trigger repurchase

Term securitization (rare for conventional)

True term ABS for non-SBA small business loans is uncommon. Notable issuers include OnDeck and Kabbage (now American Express), but deal flow is limited.

Why it’s rare:

Limited historical performance data for most originators
High loss rates require substantial enhancement (25-40% for investment grade)
Investor base is specialized
Rating agencies apply heavy originator risk adjustments

When it works:

Originator has 5+ years of audited performance data
Default rates are consistent and predictable
Loan sizes are large enough for efficient securitization ($200K+ average)
Servicing infrastructure is robust and transferable

Asset-class-specific structural features

SBA guarantee mechanics

Guarantee Purchase Process:

Loan defaults (typically 90-120 days delinquent)
Lender liquidates collateral following SBA SOP 50-57 procedures
Lender files guarantee purchase request with SBA
SBA reviews compliance with origination and servicing SOPs
SBA pays guarantee (typically within 30-60 days if compliant)
SBA pursues recovery on the guaranteed portion; lender pursues recovery on unguaranteed portion

Timeline from default to guarantee payment: 60-120 days for compliant lenders. Longer if repair process is needed.

Guarantee Denials and Repairs:

The SBA can deny a guarantee purchase if:

Borrower eligibility was not properly verified
Use of proceeds documentation is insufficient
Collateral liquidation didn’t follow SBA procedures
Origination deficiencies can’t be cured

The “repair” process allows lenders to cure documentation deficiencies before a denial becomes final. Repair adds 60-120 days to the process.

Honor Rate Tracking:

Track the originator’s honor rate: guarantees paid / guarantees claimed. Compliant originators should be at 95%+. Below that level indicates systemic issues.

Servicing requirements

SBA Loans:

Must use SBA-approved servicer
Follow SBA SOP 50-57 for all servicing activities
Annual financial reviews required for loans above $350K
Site visits and collateral inspections for real estate-secured loans
Liquidation must follow SBA procedures or guarantee is at risk

Conventional Small Business:

Monthly financial reporting for loans above $500K
Covenant testing (DSCR, leverage, minimum revenue)
Borrowing base certification for asset-based facilities
Account control agreements for operating accounts
More intensive monitoring than consumer credit

Premium accounting for SBA loans

Guaranteed portions trade at premiums of 8-12 points above par. This premium must be amortized over the loan life.

Purchase at 110 pts: You pay $110 for $100 of principal
Effective yield: Lower than contractual rate due to premium amortization
Prepayment risk: Early payoff accelerates premium amortization, reducing realized yield

SBA loans have no prepayment penalty after 3 years. In years 1-3, penalties are limited (5%, 3%, 1% respectively for loans over 15 years). Prepayment risk is significant in falling rate environments.

Eligibility criteria (typical warehouse)

Parameter	SBA 7(a)	Conventional Secured	Conventional Cash Flow
Min loan size	$100K	$50K	$25K
Max loan size	$3M	$1M	$500K
Min guarantee %	75%	N/A	N/A
Min DSCR	Per SBA criteria	1.15x	1.25x
Max industry concentration	20%	25%	25%
Max single state	25%	30%	30%
Excluded industries	Per SBA (gambling, etc.)	Restaurants >10%, Cannabis	Restaurants, Cannabis

Rating agency treatment

SBA-guaranteed securities

GNMA-wrapped SBA pools:

Carry full faith and credit of U.S. government
No private credit rating needed
Trade as government securities
The GNMA guarantee covers timely payment of principal and interest

Private SBA pools (without GNMA):

Can be rated by agencies
Credit analysis focuses on the unguaranteed portion only
Minimal credit risk on guaranteed portions
Enhancement requirements are low

Conventional small business ABS

Rating agency treatment for non-SBA small business loans is conservative:

Base Case Derivation:

Requires 3-5 years of audited static pool data
Agencies may adjust for portfolio composition vs. historical
Heavy weight on recent vintages
Independent macro stress overlay

Stress Multiples:

AAA: 3.5-5.0x base case losses
AA: 2.8-4.0x base case losses
A: 2.2-3.2x base case losses
BBB: 1.6-2.4x base case losses

Typical Enhancement Levels:

Rating	Secured	Cash Flow
AAA	28-38%	38-55%
AA	22-30%	30-42%
A	16-24%	22-32%
BBB	10-18%	15-24%

These are notably higher than consumer credit classes due to:

Higher loss severity (50-80% vs. 40-60% for auto)
Greater loss volatility
Smaller obligor counts (less diversification)
Originator dependency

Key Rating Agency Considerations:

Industry concentration: Heavy penalty for single-industry concentration above 20%
Geographic concentration: Regional recession stress scenarios applied
Originator dependency: Small business lending is relationship-driven; servicer failure stress
Servicing continuity: Limited backup servicer universe is a structural risk

Diligence focus areas

For SBA 7(a) loans

SBA Compliance Review:

Verify PLP status (or lack thereof)
Request historical guarantee purchase statistics: honor rate, denial rate, repair rate
Review most recent SBA examination report and any findings
Assess internal compliance monitoring processes
Review SBA authorization (Form 1050) sample

Loan File Sampling (2-5% sample):

Document	What You’re Checking
SBA Authorization (Form 1050)	Properly executed, accurate terms
Borrower eligibility	Size standard verification, citizenship/residency
Use of proceeds	Documented and SBA-compliant
UCC filings	Properly filed, first-lien position
Real estate recordings	Title policy, proper security interest
Personal guarantees	Executed by all 20%+ owners

Performance Data Requests:

Vintage analysis by origination quarter/year
Default rates stratified by loan size, industry, geography
Guarantee purchase timing and outcomes
Prepayment speed analysis by rate environment and seasoning

For conventional small business

Underwriting File Review:

Income verification documentation (tax returns, bank statements)
DSCR calculation and supporting financials
Collateral valuation methodology and documentation
UCC lien searches and filing confirmations
Personal guarantee documentation and owner financial statements

Tape Analytics:

Stratification	Why It Matters
DSCR bands	Credit risk distribution
Loan size	Concentration and servicing economics
Industry (NAICS)	Sector-specific risk
Geography	Regional exposure
Time in business	Startup vs. established risk
Collateral type	Recovery expectations

Vintage Performance Analysis:

Default curves by origination cohort
Loss severity by collateral type
Prepayment patterns
Consistency check: are recent vintages performing similarly to historical?

Originator Assessment:

Management team experience (specifically in small business lending)
Underwriting model documentation and validation
Servicing infrastructure and collections capabilities
Financial condition: runway, capitalization, profitability
Regulatory standing: state licenses, any enforcement actions

Active participants

SBA lenders (high volume)

Live Oak Bank: Largest SBA 7(a) lender by dollar volume. Strong specialization in healthcare, veterinary, and funeral services. PLP status.
Wells Fargo, JPMorgan, U.S. Bank: Major bank SBA programs with broad industry coverage.
Huntington National Bank: Significant SBA lender, particularly in Midwest markets.
Celtic Bank: SBA lender that partners with fintech platforms for origination.
Newtek Business Services: SBA lender with technology focus and BDC structure.
Byline Bank: Top 10 SBA lender with commercial banking focus.

SBA secondary market

Colson Services: Major SBA loan servicer and secondary market participant.
First National Bank of Omaha: Active secondary market buyer of SBA guaranteed portions.
GNMA: Provides wrap for SBA pool securities, enabling government-backed securitization.
Piper Sandler, Raymond James: Broker-dealers active in SBA secondary trading.

Conventional small business lenders

OnDeck Capital: One of the largest fintech small business lenders. Has completed term securitization. Acquired by Enova.
Kabbage (American Express): Automated small business lines of credit. Acquired by AMEX in 2020.
Funding Circle: UK-based with U.S. operations. Peer-to-peer model for small business loans.
BlueVine: Lines of credit and term loans, bank charter obtained in 2020.
Fundbox: AI-driven working capital and credit lines.
Credibly: Small business loans and merchant cash advances.

Capital providers (warehouse and forward flow)

Ares Management: Active in small business and specialty finance warehouse facilities.
Victory Park Capital: Long track record in fintech and small business lending.
Waterfall Asset Management: Active in consumer and small business credit.
Monroe Capital, Horizon Technology Finance: BDC structures with small business exposure.
i80 Group: Fintech-focused credit provider.
Community Investment Management (CIM): Near-prime and small business with impact orientation.

Insurance capital

Insurance buyers of SBA paper focus on GNMA-wrapped SBA pool certificates, which offer:

Government backing
Spread over comparable government securities
Duration matching for liability portfolios

Direct purchase of unguaranteed portions is limited; the credit risk doesn’t fit most insurance mandates.

Law firms

SBA lender counsel: Windels Marx, Buchalter, Polsinelli
Securitization counsel: Chapman and Cutler, Mayer Brown
Capital provider counsel: Dechert, Latham & Watkins, Katten

Red flags and off-market characteristics

SBA-specific red flags

Guarantee honor rate below 95%: Indicates systemic origination or documentation deficiencies. A 90% honor rate means 10% of your expected guarantee payments won’t materialize.
Unresolved SBA exam findings: The SBA conducts periodic examinations of PLP lenders. Outstanding findings without remediation plans are a serious concern.
Heavy concentration in SBA Express (50% guarantee): Lower guarantee coverage means more exposure on defaults. A portfolio that is 60%+ Express has a very different risk profile than standard 7(a).
No retention of unguaranteed portion: If the originator sells 100% of loans with no skin in the game, alignment is poor.
Portfolio average age above 5 years: Older SBA portfolios face prepayment and refinancing headwinds. Borrowers with improved credit will refinance into better terms.
Guarantee purchase processing above 90 days average: Indicates documentation issues or SBA relationship problems.

Conventional small business red flags

Default rate above 10% in first 12 months: Early defaults indicate underwriting problems, not economic stress. The loans were bad from origination.
Average loan size below $50K: Servicing costs are too high relative to the loan. A $30K loan with $100/month servicing cost doesn’t work economically.
Time in business below 2 years for majority of portfolio: You’re financing startups, which have structurally higher failure rates. Price must reflect this (25%+ APR minimum).
Single industry concentration above 30%: Correlated default risk. Particularly concerning for restaurants (15%+ structural failure rate) and retail.
Automated underwriting with no manual review layer: Black box risk. The model will fail at some point, and you won’t know why.
Originator financial distress: Service continuity risk is elevated in small business lending. Few backup servicers can handle specialty small business portfolios.

Structural red flags

No backup servicer identified: Small business servicing is specialized. Transferring a portfolio to a new servicer takes 90-180 days and can spike defaults during transition.
Personal guarantees waived or not documented: Your primary recovery mechanism on unsecured loans is the personal guarantee. If it’s not documented, it’s not enforceable.
UCC filings not perfected: Lien position is everything in secured lending. Unperfected liens mean you may not be first in line during liquidation.
Geographic concentration above 40%: Regional economic exposure. A portfolio concentrated in oil-dependent markets (Texas, Oklahoma) will see correlated defaults when oil prices collapse.
Prepayment penalty structures that are overly punitive: May indicate adverse selection. Borrowers who accept harsh prepayment terms may have limited alternatives.

Originator-level red flags

Volume growth above 50% year-over-year: Aggressive growth almost always precedes credit deterioration. The originator is likely loosening standards to hit volume targets.
Key person departure: Small business lending is relationship-driven. CEO or Chief Credit Officer departure is a significant event.
Single capital provider dependency: If the originator has only one warehouse line, refinancing risk is elevated. Diversified funding is healthier.
Recent regulatory action: State licensing issues, CFPB actions, or class action litigation are all concerning.
No audited financials (for originators above $50M/year): Raises questions about financial controls and transparency.

Important: The combination of rapid volume growth + declining average loan size + increasing time-in-business requirements waiver is the classic pre-deterioration pattern. When you see two of these together, investigate the third.