Daily News: January 5, 2012

Newtek Completes Second Small Business Loan Securitization


Newtek Business Services announced that it has completed the securitization and sale of an additional $20.5 million of non-guaranteed portions of U.S. SBA small business loans. This was accomplished by amendment to the securitization of $23 million in such loans that closed in December of 2010.

The sale of the additional trust notes was handled by Guggenheim Securities, which advised Newtek. Newtek has been active in small business lending and, with this increase, it will have completed the securitization of approximately $43.5 million of non-guaranteed portions of SBA small business loans within the past 12 months. Newtek is also proud to announce that Standard and Poor’s has rated the securitization trust Notes as AA based on the collateral in the entire, upsized pool.

Newtek’s subsidiary, Newtek Small Business Finance, Inc., is active in making U.S. Small Business Administration (SBA) 7(a) loans, and during the first 9 months of 2011 was the largest non-bank lender making such small business loans by loan volume.

Newtek typically retains the unguaranteed portion of the SBA loans and incurs related warehouse financing costs. With this sale of the unguaranteed portions, Newtek was able to realize an additional $14 million in gross proceeds, which will be used principally for making new loans and paying down Newtek’s existing line of credit with Capital One. Guggenheim Securities played a key role in helping Newtek structure and market the securities.

Barry Sloane, chairman, president and CEO of Newtek Business Services said, “Completion of these two transactions within 12 months, particularly in light of the otherwise weak and uncertain market for securitized structured asset backed securities, validates our SBA lending strategy and also will enable us to originate an anticipated 25-30% more loans by loan dollar volume in 2012. We have closed in excess of $100 million of small business loans under this program in 2011, which was anticipated in our previously announced guidance. Based on the SBA rule of thumb, we estimate that our 2011 lending created or stabilized approximately 1800 jobs nationally.

“In addition, our SBA loan-servicing portfolio continues to grow in part due to our lending and reached $430 million at December 31, 2011 – up from $280 million at the end of the previous year. We are well positioned to grow this business significantly in 2012 and 2013…”