Newtek Business Services sold $20.909 million single A-rated securities backed by small business loans.
In a press release issued this week, Newtek said Guggenheim Securities placed the issue with four institutional investors. The deal closed March 20.
The collateral consisted of the uninsured portion of 113 loans made under the Small Business Administration’s 7(a) program with an aggregate principal balance of $23.569 million. These loans, all of which were made by Newtek, were used to refinance debt, acquire real estate, and purchase business, machinery and equipment.
"This securitization will fully repay our outstanding senior secured warehouse line with Capital One,” Newtek Chairman, President and Chief Executive Barry Sloane said in the press release.
The deal also provided Newtek with funds for additional originations at a cost of 150 basis points less than its warehouse facility.
The securities were offered at the lesser of the Prime rate plus 145 basis points or one-month Libor plus 375 basis points, according to a presale report published by Standard & Poor's.
Newtek expects to originate and close between $150 million and $200 million of SBA 7(a) loans this year.