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Newtek Small Business Finance

Lender or loan platform

PPP
Type
Company or group
Role
Lender or loan platform
Programs
PPP
Updated

The profile

A non-bank SBA lender owned by Newtek Business Services, now NewtekOne. It stopped making ordinary SBA loans to make 26,190 PPP loans for $1.9 billion, and its parent booked $50.0 million of PPP fee income in 2021 alone.

  • Type: Non-bank SBA 7(a) lender; PPP lender
  • Parent: Newtek Business Services Corp., renamed NewtekOne, Inc.

Newtek Small Business Finance (NSBF) was a licensed non-bank lender in the SBA's 7(a) program when PPP began. Its parent's 2020 annual report says the company "temporarily shifted the focus of NSBF from originating SBA 7(a) loans to originating PPP loans beginning in March 2020 through June 30, 2020, which materially decreased NSBF's originations of SBA 7(a) loans during 2020," and that in the first round "NSBF funded approximately 10,570 PPP loans totaling $1.19 billion."1 The 2021 report gives the full count: "From March 2020 to July 2021, NSBF funded approximately 26,190 PPP loans totaling $1.9 billion. Income earned in connection with the PPP should not be viewed as recurring."2 Chairman and chief executive Barry Sloane ran the parent throughout.

The SBA's loan file lists Newtek Small Business Finance as originating lender on 26,174 loans for $1.89 billion; four in five were for $50,000 or less.3 Priced loan by loan under the SBA's fee schedule, they carry about $87.8 million in processing fees.34 The company's own figure for one year is in its results for 2022: net investment income for 2021 "included $50.0 million of fee income from the Paycheck Protection Program ('PPP'), which, as previously disclosed, is not recurring."5 See its lender page.

The second round

In January 2021 the SBA reopened the PPP portal first to smaller lenders. Newtek announced on January 15 that NSBF "has been granted early access to the Paycheck Protection Program ('PPP') loan portal beginning today," alongside lenders with $1.0 billion or less in assets.6 In the SBA file, 9,031 of NSBF's loans are 2021 first-draw loans, most of them small, and 6,596 are second-draw loans.3

Economists John Griffin, Samuel Kruger and Prateek Mahajan, in a 2021 working paper on fintech lenders and PPP fraud, grouped Newtek with the fintech lenders rather than the traditional ones in their table of the 75 largest PPP lenders' estimated fees.7

After the program

The parent now operates as NewtekOne, which its 2022 results release described as "a well-positioned financial holding company that owns a well-capitalized nationally chartered bank."5 American Banker reported in October 2024 that Newtek had become "the nation's top dollar-volume 7(a) lender" in the SBA's 2024 fiscal year, according to agency statistics.8

Sources

Notes

  1. Newtek Business Services Corp., Form 10-K for 2020. Original: https://www.sec.gov/Archives/edgar/data/1587987/000158798721000047/newt12312010k.htm ↩
  2. Newtek Business Services Corp., Form 10-K for 2021. Original: https://www.sec.gov/Archives/edgar/data/1587987/000158798722000010/newt12312110k.htm ↩
  3. SBA PPP FOIA loan-level data, release of Sept. 30, 2024, loans with Newtek Small Business Finance, Inc. as originating lender, priced under 85 FR 20811, 86 FR 3692 and 86 FR 3712; see the lender page. Original: SBA PPP FOIA loan-level data (original: data.sba.gov · stored capture) ↩
  4. SBA interim final rule, Paycheck Protection Program, 85 FR 20811 (Apr. 15, 2020). ↩
  5. NewtekOne, "NewtekOne Reports Fourth Quarter and Full Year 2022 Results" (Exhibit 99.1 to Form 8-K). Original: https://www.sec.gov/Archives/edgar/data/1587987/000158798723000055/q42022earningsrelease.htm NewtekOne Reports Fourth Quarter and Full Year 2022 Results (stored capture) ↩
  6. Newtek Business Services, "Newtek Small Business Finance Has Begun Accessing the Paycheck Protection Program Loan Portal Beginning Today" (GlobeNewswire, Jan. 15, 2021). Original: https://www.globenewswire.com/news-release/2021/01/15/2159532/0/en/Newtek-Small-Business-Finance-Has-Begun-Accessing-the-Paycheck-Protection-Program-Loan-Portal-Beginning-Today.html Newtek Small Business Finance PPP press 2021 (stored capture) ↩
  7. Griffin, Kruger and Mahajan, "Did FinTech Lenders Facilitate PPP Fraud?" (working paper, 2021), Table IA.X. Original: https://fraconference.com/wp-content/uploads/2021/12/PPP_GKM2021_12_06.pdf ↩
  8. American Banker, "Newtek tops SBA lender list. Its next hurdle: gaining investor trust" (Oct. 4, 2024). Original: https://www.americanbanker.com/news/newtek-tops-sba-lender-list-its-next-hurdle-gaining-investor-trust American Banker, "Newtek tops SBA lender list" (stored capture) ↩
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