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Newtek Anticipates Securitizing SBA Small Business Loans and Receiving a Standard & Poor's AA Rated Security

/ Source: GlobeNewswire

NEW YORK, Sept. 13, 2010 (GLOBE NEWSWIRE) -- Newtek Business Services, Inc. (Nasdaq:NEWT), The Small Business Authority, has announced that it has signed an agreement with Guggenheim Securities, LLC for advisory and investment banking services in connection with Newtek's financing of up to $24 million of non-guaranteed portions of SBA small business loans. This financing transaction structured as a securitization is expected to close in late September, early October subject to SBA approval amongst other items.

Newtek's subsidiary, Newtek Small Business Finance, Inc., is active in making U.S. Small Business Administration (SBA) 7(a) loans, and is one of the very few non-bank lenders currently making small business loans. Newtek typically retains the unguaranteed portion of those loans and, with the assistance of Guggenheim Securities, will be able to securitize those portions, realizing approximately $16 million in net proceeds for making new loans and paying down debt with Capital One Bank. Guggenheim Securities will play a key role in helping Newtek to structure and market the securities which are anticipated to receive an investment grade rating from one Standard and Poor's.

"Newtek is pleased and excited to have retained Guggenheim Securities, LLC as an advisor and placement agent for its small business loans securitization," remarked Barry Sloane, Chairman, President and Chief Executive Officer of Newtek Business Services. "Credit markets have been severely damaged by the easy securitization and sale of poorly underwritten assets so we are thankful for putting together a transaction that will enable us to reenergize the market at a time when liquidity in well underwritten loans to small business is badly needed.

"We believe that working with Guggenheim Securities will greatly enhance our ability to get this important job done and gain the additional liquidity for immediate use and generate additional loans to more good, solid small businesses throughout the country," added Sloane.

Newtek has separately announced its anticipated repositioning of its funding relationship with Capital One Bank.  That additional credit facility, in conjunction with the securitization proceeds, will give Newtek the confidence and financing to accelerate its loan growth in 7(a) SBA Government guaranteed lending, In an SBA Loan, currently the 75% guaranteed portion of the loan can be sold into the secondary market at premium in excess of 10%.  The liquidity created by the securitization of the 25% unguaranteed portion provides Newtek with long term financing to grow its SBA lending business. This is much better than using the Company's internal cash resources to support lending which was necessary over the last 12 months.  The Company anticipates approximately $70mm of 7(a) loan fundings to small businesses this year, apart from any other lending programs we have.  In 2011, the combination of the securitization and the new Capital One Bank financing could enable us to originate in excess of $100 million of loans and dramatically improve our lending segment profitability over 2009 and 2010 levels.

About Newtek Business Services, Inc.

Newtek Business Services, Inc.,, is a direct distributor of a wide range of business services and financial products to the small- and medium-sized business market under the NewtekTM brand. Since 1999, Newtek has helped small- and medium-sized business owners realize their potential by providing them with the essential tools needed to manage and grow their businesses and to compete effectively in today's marketplace. Newtek provides one or more of its services to over 100,000 business accounts and has positioned the NewtekTM brand as a one-stop-shop provider of such business services. According to the U.S. Small Business Administration, there are over 29.6 million small businesses in the United States, which in total represent 99.7% of all employer firms.

Newtek's business service lines include:

  • eCommerce, electronic solutions to accept non-cash payments, including credit and debit cards, check conversion, remote deposit capture, ACH processing, and electronic gift and loyalty card programs.
  • : Full-service web host which offers eCommerce solutions, shared and dedicated web hosting and related services including domain registration and online shopping cart tools.
  • : a suite of services that enable small businesses to get up and running on-line quickly and cost effectively, with integrated web design, payment processing and shopping cart services.
  • Broad array of lending products including SBA 7(a) and SBA 504 loans. 
  • Commercial and personal lines of insurance, including health and employee benefits in all 50 states, working with over 40 insurance carriers.
  • : Customized web design and development services.
  • : Fast, secure, off-site data backup, storage and retrieval designed to meet the specific regulatory and compliance needs of any business.
  • : Receivable purchasing and financing services.
  • Complete payroll management and processing services. 

For more information, please visit .

About Guggenheim Partners, LLC

Guggenheim Partners, LLC is a diversified financial services firm with more than $100 billion in assets under supervision. The firm's businesses include investment management, investment advisory, insurance, investment banking and capital markets services. The firm is headquartered in Chicago and New York with a global network of offices throughout the United States, Europe and Asia. For more information, please visit .

Note Regarding Forward Looking Statements

Statements in this press release including statements regarding Newtek's beliefs, expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and other conditions which could cause Newtek's actual results to differ from management's current expectations are contained in Newtek's filings with the Securities and Exchange Commission and available through .

CONTACT: Newtek Business Services Inc. 1440 Broadway, 17th Floor New York, NY 10018 Rubenstein Public Relations Adam Mazur (212) 843-8073