Nonbank financial firm Newtek Business Services, which lends to small businesses, has assumed the servicing of a portfolio of loans originated by Aurora Bank.
The loan portfolio comprises all SBA 7(a) loans in a securitization trust established in 2006, the company said in a press release yesterday. Currently they are made up of 64 loans with an outstanding balance of $30.4 million. SBA 7(a) loans are 75% backed by a U.S. government guarantee and 25% is uninsured.
The transaction has received the approvals of the Small Business Administration and of U.S. Bank as securitization trustee.
"Creating recurring revenue from servicing small balance commercial loans, and supporting our lending platform, is consistent with our goal of being the premier service provider to small- and medium-sized businesses nationwide," said Barry Sloane, chairman and CEO of Newtek.
Sloane said that his firm is trying to expand its business to credit unions, community banks, hedge funds and other investors who find it hard to service nationwide pools of small balance commercial loans.
This is the second small balance commercial loan securitization where Newtek is the servicer of record on a transaction rated by Standard and Poor's.
In January, Newtek completed the securitization and sale of $20.5 million of the unguaranteed portion of the 7(a) program loans in January. The deal added on to the $23 million deal Newtek closed in December 2010.