Newtek Business Services plans to launch a securitization deal of SBA Small Business Loans that will be led managed by Guggenheim Securities, LLC.
The securitization is expected to close at the end of Septement and will be backed by $24 million of non-guaranteed portions of small business loans.
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. The notes are expected to receive an investment grade rating from Standard and Poor's.
The liquidity created by the securitization of the 25% unguaranteed portion provides Newtek with long term financing to grow its SBA lending business. The Company said it anticipates approximately $70mm of 7(a) loan fundings to small businesses this year.
"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," said the company in a press release.