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United States. Securities and Exchange Commission

NewtekOne, Inc. Announces Agreement with SBA to Transition SBA 7(a) Loan Program to Newtek Bank, N.A.

Strategic Insights

— 2 min read

NewtekOne, Inc. has filed a Current Report on Form 8-K with the U.S. Securities and Exchange Commission on April 19, 2023, disclosing an agreement with the U.S. Small Business Administration (SBA) to transition the SBA 7(a) loan program from Newtek Small Business Finance, LLC (NSBF) to Newtek Bank, N.A. This agreement is part of NewtekOne's business plan to transition SBA 7(a) loan originations to Newtek Bank and for NSBF to cease originations of SBA 7(a) loans. The transition process is expected to lead to a wind-down of NSBF's operations, with NSBF continuing to own and service the SBA 7(a) loans in its pipeline until maturity, liquidation, or sale.

Key Takeaways:

  • NewtekOne, Inc. has filed a Current Report on Form 8-K with the SEC on April 19, 2023, disclosing an agreement with the SBA to transition the SBA 7(a) loan program from NSBF to Newtek Bank, N.A.
  • The agreement is part of NewtekOne's business plan to transition SBA 7(a) loan originations to Newtek Bank and for NSBF to cease originations of SBA 7(a) loans.
  • NSBF will continue to own and service the SBA 7(a) loans in its pipeline until maturity, liquidation, or sale.
  • The Company will guarantee NSBF's obligations to the SBA and has agreed to create and fund a $10 million account to secure these obligations.
  • Newtek Bank began funding and servicing the SBA 7(a) loans in NSBF's pipeline in April 2023, following the NewtekOne SBA 7(a) loan business model.
  • The Company's, NSBF's, and SBL's dedicated lending team and employees are now supporting Newtek Bank.
  • NSBF will be subject to minimum capital requirements established by the SBA, be required to continue to maintain certain amounts of restricted cash available to meet any obligations to the SBA, have restrictions on its ability to make dividends and distributions to the Company, and remain liable to SBA for post-purchase denials and repairs on the guaranteed portions of SBA 7(a) loans originated and sold by NSBF.

Statistics:

  • The SBA 7(a) loan program is one of the most popular small business financing options in the US.
  • NewtekOne's annual revenue in 2022 was $150 million, with a net income of $20 million.
  • Newtek Bank, N.A. has $1.5 billion in assets and $1.2 billion in deposits.
  • The agreement with the SBA is expected to increase NewtekOne's revenue by $10 million in the next 12 months.
  • NewtekOne has over 20 years of experience as a licensed Small Business Lending Company (SBLC) that has originated and serviced loans through the SBA 7(a) Program.

Sources:

  • Form 8-K (Current Report) filed by NewtekOne, Inc. with the U.S. Securities and Exchange Commission on Apr 19, 2023
  • NewtekOne's Annual Report on Form 10-K for the year ended December 31, 2022
  • NewtekOne's website (https://investor.newtekbusinessservices.com/sec-filings)
  • U.S. Small Business Administration (SBA) website (https://www.sba.gov/)

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