Capital One Increases Newtek Financing to $50 Million
Newtek Business Services announced its lending subsidiary, Newtek Small Business Finance, received approval and documentation from Capital One to increase its existing $27 million revolving credit facility to $50 million.
The form of the amended documentation for the additional financing is subject to regulatory approval, and will bring the Company’s total financing through Capital One to $70 million on a company-wide basis. The $70 million consists of a $10 million term loan and up to $60 million in revolving lines of credit.
The company announced in July of this year that it entered into a $20 million credit agreement with Capital One, which consists of a $10 million term loan and a $10 million revolving credit facility, both of which have four-year terms. The term loan was used to refinance the company’s existing $10 million of mezzanine debt from a group of investors led by Summit Partners Credit Advisors. Due to the extinguishment of the mezzanine debt, the company incurred a one-time non-cash charge of approximately $1.9 million in the second quarter of 2014, which represented the total remaining deferred financing costs attributable to the Summit debt, and the remaining unamortized debt discount. The refinance of the mezzanine debt will reduce the company’s interest expense by more than $1 million annually, for a total of approximately $4.2 million over the remaining term of the retired Summit loan. The additional $10 million revolving credit facility will be used by the company for general corporate purposes.
Barry Sloane, chairman, president and CEO, commented, “We are very pleased to announce the Capital One approval of an additional $23 million for our revolving credit facility which, upon regulatory approval, brings our total available revolving financing to $50 million for our lending business. This additional financing will give us both increased capability and flexibility to grow our loan originations and issue larger, more cost-effective asset-backed securitizations. Our ability to increase our total financing with Capital One by $43 million since July and, as a result, substantially lower our interest expense, is just one example of our strategic initiatives to increase our top- and bottom-line growth.”
Newtek Business Services provides business services and financial products.