What changed in this filing

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Item 1. Business

2026-03-10 compared with 2025-03-17 · 167 added, 240 removed, 706 unchanged (37% of the section changed)

We are a financial holding company subject to the regulation and supervision of the Federal Reserve and the Federal Reserve Bank of Atlanta that, together with our consolidated subsidiaries, provides a wide range of business and financial solutions under the Newtek ® and NewtekOne ® brands to the independent business owner (SMB) market.

Prior to January 6, 2023 and during the entirety of the 2022 fiscal year, we operated as an internally managed non-diversified closed-end management investment company that was regulated as a BDC under the 1940 Act, and was treated as a RIC under the Code for U.S.

Prior to January 6, 2023 when we acquired Newtek Bank and converted to a financial holding company, we operated as an internally managed non-diversified closed-end management investment company that was regulated as a BDC under the 1940 Act, and was treated as a RIC under the Code for U.S.

federal income tax purposes.

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Newtek Small Business Finance, LLC (NSBF);

Newtek Business Services Holdco 6, Inc.

d/b/a Newtek ALP Holdings (NALH);

Newtek Merchant Solutions, LLC (NMS) and its subsidiary Mobil Money, LLC;

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Titanium Asset Management LLC (TAM);

Newtek ALP Holdings;

Newtek Commercial Lending, Inc.

Newtek Technology Solutions, Inc.

(NTS) and POS on Cloud, LLC, d/b/a Newtek Payment Systems (POS).

As a result of commitments made to the Federal Reserve, the Company divested of NTS on January 2, 2025, by selling NTS to Paltalk, Inc.

(“Paltalk”), now known as Intelligent Protection Management Corp.

See “ NOTE 25—SUBSEQUENT EVENTS ” .

As a result of our conversion to a financial holding company, comparisons to December 31, 2022 include adjustments made to reconcile prior investment company accounting to the current financial holding company accounting requirements.

(See NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION)

and POS on Cloud, LLC, d/b/a Newtek Payment Systems (POS).

NewtekOne is a Technology Enabled Financial Holding Company Offering Business and Financials Solutions to its

Client Base of Independent Business Owners

NewTracker is our primary tool for acquiring business referrals without traditional bankers, bank branches, brokers or business development officers.

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As a result, we believe we have a strong and diversified client base across the United States and across a variety of different industries.

In addition, we have developed a financial and technology based business model that enables us to acquire and process our independent business owner clients in a cost effective manner.

In addition, we have developed a financial and technology based business model that enables us to acquire and process our independent business owner (SMB) clients in a cost effective manner.

This capability is supported in large part by NewTracker®, our patented prospect management technology software, which is similar to, but we believe better suited for our needs than, the system popularized by Salesforce.com and similar providers.

In 2003, we began instituting and developing our strategy of acquiring clients primarily through alliance-based relationships and managing customer inquiry through our patented NewTracker system.

We have hundreds of alliance partners signed up to Referral Promotion Agreements or BizExec Agreements, where the alliance partner can receive a referral fee once the referral generates an account opening, which can include but is not limited to a loan, merchant account, payroll account, insurance policy, technological solution, or bank account.

In 2003, we began instituting and developing our strategy of acquiring clients primarily through a network of alliance-based relationships and managing customer inquiry through our patented NewTracker system.

Our network includes hundreds of alliance partners who have entered into Referral Promotion Agreements or BizExec Agreements.

Under these arrangements, the alliance partners are eligible for a referral fee when their referral leads to the creation of a new account.

This account may encompass, but is not limited to, services such as loans, merchant processing accounts, payroll solutions, insurance policies or bank accounts.

Through our NewTracker platform, we have historically received hundreds of unique referrals a day from alliance partners which include large commercial banks, community banks, credit unions, trade associations, accounting firms, law firms, and small business client aggregators.

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By utilizing NewTracker, we provide complete transparency to our alliance partners who can track and view the processing of their referral through the close of the transaction, whether it is a loan, the opening of a merchant processing account or payroll account, or an insurance policy.

In addition, we leverage software with to extract, process and exchange information from borrowers and businesses in need of a business or financial solution.

In addition, we leverage software and artificial intelligence (“AI”) to extract, process and exchange information from borrowers and businesses in need of a business or financial solution.

In addition, our strategy and platform for client acquisition without the expense of bank branches, traditional bankers, brokers, or business development officers, enables Newtek Bank to operate at efficiency ratios that are typically and traditionally lower than Newtek Bank’s competitors in the banking industry.

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Additionally, through NewTracker we maintain a database of what products have been offered to potential clients even if a deal is not closed.

That information allows us to revisit that referral over the course of time and continue to solicit business targeting independent business owners as we continue to develop new best in class business and financial solutions.

We regularly contact current and prospective clients in our database through email, videos and outbound calling efforts, and we are in the early stages of a digital and social media campaign.

By connecting with clients in our database regularly and consistently, on camera and with educational videos, webinars, and podcasts, we believe we have developed an efficient way to grow our sales and marketing plan and improve Newtek ® brand awareness and recognition.

That information allows us to revisit that referral over the course of time and continue to solicit business targeting independent business owners as we continue to develop what we view as new best in class business and financial solutions.

We regularly contact current and prospective clients in our database through email, videos and outbound calling efforts.

Newtek Advantage ®

In addition, we have begun to offer the Newtek Advantage ® (patent pending), the One Dashboard for All of Your Business Needs ® , which we believe is a differentiating business tool that business owners can use in one or more areas of their core business operations.

In addition, we offer the Newtek Advantage ® (patent pending), the One Dashboard for All of Your Business Needs ® , which we believe is a differentiating business tool that business owners can use in one or more areas of their core business operations.

For example, the Newtek Advantage provides independent business owners with instant access to a team of NewtekOne business and financial solutions experts, who are available on camera 24/7/365 (with the ability to share videos, presentations, and analytical data), in the areas of Business Lending, Electronic Payment Processing, personal and commercial lines Insurance Services and Payroll and Benefits Solutions.

Moreover, the Newtek Advantage provides our independent business owner clients with analytics on their businesses, as well as transactional capabilities, including free unlimited document storage, free real-time updated traffic analytics, free real-time credit card processing and chargeback batch information for merchant solutions clients and the ability for our Newtek Payroll (PMT) clients to make payroll directly from the Newtek Advantage business portal.

In addition, we recently announced that the Newtek Advantage now integrates with Intuit QuickBooks®, providing independent business owners with a real-time snapshot into their finances.

In addition, the Newtek Advantage integrates with Intuit QuickBooks®, providing independent business owners with a real-time snapshot into their finances.

We believe the Newtek Advantage can, among other things, enable Newtek Bank to grow core business transactional deposits, and provide our existing and new clients with an “advantage” in successfully running their businesses.

We believe that our NewTracker and Newtek Advantage technological innovations supports our business strategy of being a true technology enable financial holding company, without branches, traditional bankers, brokers or business development officers.

We believe that our NewTracker and Newtek Advantage technological innovations support our business strategy of being a true technology enabled financial holding company, without branches, traditional bankers, brokers or business development officers.

We believe that our technology and business platform distinguishes us from our competitors.

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Newtek Banking, Newtek Lending, Newtek Payments, Newtek Insurance and Newtek Payroll.

In addition, since the divestiture of NTS to IPM, we offer our our clients the Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting and Web Services) provided by Intelligent Protection Management Corp.

In addition, since the divestiture of NTS to IPM, we offer our clients the Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting and Web Services) provided by Intelligent Protection Management Corp.

(IPM.com) (formerly known as NTS).

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Newtek Bank originates, services and sells SBA 7(a) loans in a similar manner to NSBF’s historic business model and originates and services SBA 504 loans, C&I loans (including ABL), and owner occupied CRE and investor CRE loans.

Prior to the Acquisition of Newtek Bank, our SBA 7(a) lending operations were conducted by NSBF, our SBA licensed non-bank lender.

The Company’s business plan prepared in connection with the Acquisition provided for all SBA 7(a) loan originations to be transitioned to Newtek Bank and for NSBF to cease originations of SBA 7(a) loans.

Prior to the Acquisition of Newtek Bank in 2023, our SBA 7(a) lending operations were conducted by NSBF, our SBA licensed non-bank lender.

Following the acquisition of Newtek Bank, all SBA 7(a) loan originations were transitioned to Newtek Bank in April 2023, and NSBF ceased originations of SBA 7(a) loans.

To that end, on April 13, 2023, the Company, NSBF and the SBA entered into an agreement to, among other things, transition NSBF’s SBA 7(a) pipeline of new loans to Newtek Bank and wind-down NSBF’s operations (the "Wind-down Agreement").

NSBF is in the process of winding-down its operations and will continue to own the SBA 7(a) loans and PPP Loans currently in its SBA loan portfolio to maturity, liquidation, charge-off or (subject to SBA’s prior written approval) sale or transfer.

Newtek Bank’s subsidiary SBL now services and liquidates NSBF’s SBA loan portfolio, including processing forgiveness and loan reviews for PPP Loans, pursuant to an SBA approved lender service provider agreement.

NSBF is in the process of winding-down its operations and will continue to own the SBA 7(a) loans currently in its loan portfolio to maturity, liquidation, charge-off or (subject to SBA’s prior written approval) sale or transfer.

Newtek Bank’s subsidiary SBL now services and liquidates NSBF’s SBA loan portfolio, including processing forgiveness, pursuant to an SBA approved lender service provider agreement.

In addition, during the wind-down process, NSBF is subject to minimum capital requirements established by the SBA, is required to continue to maintain certain amounts of restricted cash available to meet any obligations to the SBA, has restrictions on its ability to make dividends and distributions to the Company, and remains liable to the SBA for post-purchase denials and repairs on the guaranteed portions of SBA 7(a) loans previously originated and sold by NSBF.

The Company has guaranteed NSBF’s obligations to the SBA and has funded a $10.0 million account at Newtek Bank to secure these potential obligations.

In addition, Newtek Bank offers depository services and solutions.

The Company has guaranteed NSBF’s obligations to the SBA and has funded a $10.0 million account to secure these potential obligations.

Newtek Bank also offers depository services and solutions.

Newtek Bank’s commercial banking clients can take advantage of our full offerings of business and financial solutions via the Newtek Advantage business portal.

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SBA 7(a) Lending

Newtek Bank’s Lending platform, which generates a material portion of our revenues, includes loans originated under the federal Section 7(a) loan program (“SBA 7(a) Program”), i.e., SBA 7(a) loans.

Newtek Bank’s Lending platform, which generates a material portion of our revenues, includes loans originated under the SBA 7(a) Program, i.e., SBA 7(a) loans.

The SBA is an independent government agency that facilitates one of the nation’s largest sources of financing to independent business owners of SMBs by providing credit guarantees for its loan programs.

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government, lenders may, and frequently do, sell the guaranteed portion of SBA 7(a) loans (subject to certain conditions) in the capital markets, hold the unguaranteed portion and retain all loan servicing rights.

As of February 10, 2025, Newtek Bank was the largest SBA 7(a) lender in the U.S.

by dollar loan approval volume, approving over $1 billion of SBA 7(a) during the first 4.5 months of the SBA’s fiscal year 2025 according to SBA.gov statistics.

From 2012 through December 31, 2022, our subsidiary NSBF, was consistently the largest non-bank SBA 7(a) lender in the U.S.

based on dollar volume of loan approvals, and, as of December 31, 2022, was the third largest SBA 7(a) lender in the United States.

As of December 31, 2024 (the SBA’s first quarter of fiscal year 2025), Newtek Bank is the nation’s largest SBA 7(a) lender.

based on dollar volume of loan approvals.

Newtek Bank received PLP status in April 2023, a designation whereby the SBA authorizes the most experienced SBA lenders to place SBA guarantees on loans without seeking prior SBA review and approval.

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All new SBA 7(a) loan originations were transitioned to Newtek Bank in April 2023.

NewtekOne has a dedicated Senior Lending Team (as defined below) that is now supporting Newtek Bank’s origination and servicing of SBA 7(a) loans to qualifying independent business owners.

Our SBA 7(a) business model is to originate SBA 7(a) loans, sell the guaranteed portions of the SBA 7(a) loans, typically within thirty to forty-five days of origination, and retain the unguaranteed portions.

As of February 10, 2026, Newtek Bank was the third largest SBA 7(a) lender in the U.S.

by dollar loan approval volume, approving over $355 million of SBA 7(a) during the SBA’s fiscal year 2026, which began on October 1, 2025, according to SBA.gov statistics.

NewtekOne has a dedicated Senior Lending Team (as defined below) that supports Newtek Bank’s origination and servicing of SBA 7(a) loans to qualifying independent business owners.

Our SBA 7(a) business model is to originate SBA 7(a) loans, sell the guaranteed portions of the SBA 7(a) loans, typically within 180 days of origination, and retain the unguaranteed portions.

Historically, NSBF would accumulate sufficient unguaranteed portions of SBA 7(a) loans for securitization.

In a securitization, the unguaranteed portions of SBA 7(a) loans are transferred to a special purpose vehicle (a “Trust”), which in turn issues notes against the Trust’s assets in private placements.

In a securitization, the unguaranteed portions of SBA 7(a) loans are transferred to a special purpose vehicle (a “Trust”), which in turn issues and sells notes against the Trust’s assets in private placements.

The Trust’s primary source of income for repaying the securitization notes is the cash flows generated from the unguaranteed portion of SBA 7(a) loans owned by the Trust.

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In addition, Newtek Bank may determine to retain the government guaranteed portions of SBA 7(a) loans for longer periods, pending deployment of excess capital.

We believe our more than twenty years of experience as one of the largest SBA 7(a) lenders, provides us with a distinct competitive advantage over other lenders that have not overcome significant barriers-to-entry into our primary loan market.

We believe our more than twenty years of experience as one of the largest SBA 7(a) lenders provides us with a distinct competitive advantage over other lenders that have not overcome the significant barriers-to-entry into our primary loan market.

We originated $767.8 million of SBA 7(a) loans during 2025 and $943.0 million of SBA 7(a) loans during 2024.

Our 2025 SBA 7(a) loan origination volume was negatively impacted by, among other things, the U.S.

government shutdown during the fourth quarter of 2025 and recent changes to the SBA 7(a) Program.

We believe that we will continue to be introduced to a variety of high-quality lending opportunities through our existing loan sourcing channels and our subsidiaries’ relationships with their clients.

We have a dedicated capital markets team that sells the guaranteed portions of our SBA 7(a) loans shortly after origination, and we retain the unguaranteed portions.

We have a dedicated capital markets team that sells the guaranteed portions of our SBA 7(a) loans, and we retain the unguaranteed portions.

Historically, we have sold SBA guaranteed portions of SBA 7(a) loans at premiums.

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SBA 504 loans, investor commercial real estate (CRE) and C&I loans (including ABL and owner occupied CRE);

and as discussed below, ALP loans (formerly referred to as non-conforming conventional loans) originated by our non-bank lender Newtek ALP Holdings and our joint ventures;

and as discussed below, alternative lending program (“ALP”) loans (which are C&I loans with longer amortization schedules held for sale) originated by our non-bank lender Newtek ALP Holdings and our joint ventures;

and SBA 504 loans originated by Newtek ALP Holdings.

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C&I Lending, CRE Lending and ABL Lending

Newtek Bank also originates C&I loans to its commercial customers, which includes ABL loans and owner occupied CRE and investor CRE loans.

Newtek Bank also originates C&I loans to its commercial customers, which includes ABL loans;

owner occupied CRE loans and investor CRE loans.

Third Party Loan Servicing and Loan Origination Services

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In addition, SBL provides our affiliates, subsidiaries and third-parties with outsourced solutions for the entire loan origination process, including credit analysis, structuring and eligibility, packaging, closing compliance and servicing.

For example, SBL originates and services ALP and 504 loans for our Newtek ALP Holdings subsidiary and ALP loans for our joint ventures (see below).

For example, SBL originates and services ALP and 504 loans for our Newtek ALP Holdings subsidiary and has done so for our joint ventures (see below).

Deposits and Depository Services

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Following the Acquisition of Newtek Bank and its $137 million deposit portfolio, we launched our High Yield Savings and Retail CD product offerings in March and April of 2023.

Since that time, we have grown Newtek Bank’s deposit base rapidly and have offered competitive market rates using an account opening process that is straightforward with limited interaction.

In December of 2023 we launched our Business Checking product offering and were successful in growing Newtek Bank’s business banking deposit base, which helped us surpass $1 billion in deposits as of December 31, 2024.

Since that time, we have grown Newtek Bank’s deposit base rapidly and have offered competitive market rates using a digital account opening process that is straightforward with limited interaction.

In December of 2023 we launched our Business Checking product offering and were successful in growing Newtek Bank’s business banking deposit base, which helped us surpass $1.4 billion in total deposits as of December 31, 2025.

Newtek Bank has maintained strong customer acquisition and retention rates and expects to continue to drive growth in retail and business banking deposits.

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Newtek ALP Holdings

The mission of the Newtek alternative lending program (ALP) is to generally provide access to capital to independent business owners that may not have qualified under the SBA 7(a) Program due to issues of program eligibility, loan size or a loan maturity that exceeds SBA guidelines.

ALP Loans (defined below) are intended for independent business owners who prefer 10-25 year amortizing loans with no balloon payments and no loan covenants, and who are willing to provide personal guarantees, liens on business and personal assets and pay higher interest rates.

ALP loans are funding by us at origination utilizing a combination of capital contributions from our financial holding company and warehouse lines of credit from unaffiliated third party financial institutions through NBL SPV I, II and III, LLC.

ALP loans are typically sold individually or securitized after reaching a necessary size on our balance sheet.

As described below, we have sold individual loans to joint ventures to in order to free up funds to originate new ALP loans and to share in the risk and rewards of our ALP loans.

The mission of the Newtek ALP is to generally provide access to capital to independent business owners that may not have qualified under the SBA 7(a) Program due to issues of program eligibility, loan size or a loan maturity that exceeds SBA guidelines.

ALP Loans are intended for independent business owners who prefer 10-25 year amortizing loans C&I loans with no balloon payments and limited loan covenants, and who are willing to provide personal guarantees, liens on business and personal assets and pay higher interest rates.

ALP loans have been funded by the Company at origination utilizing a combination of capital contributions from our financial holding company and warehouse lines of credit from unaffiliated third party financial institutions through NBL SPV I, II and III, LLC.

ALP loans have typically been sold individually or securitized after reaching a necessary size on our balance sheet.

As described below, we have sold individual loans to joint ventures in order to free up funds to originate new ALP loans and to share in the risk and rewards of our ALP loans.

The loans are typically transferred with servicing retained.

On May 20, 2019, the Company and its joint venture partner launched Newtek Conventional Lending, LLC (NCL JV) to provide our ALP loans (formerly referred to as non-conforming conventional commercial and industrial term loans) to U.S.

On May 20, 2019, the Company and a joint venture partner launched Newtek Conventional Lending, LLC (NCL JV) to provide our ALP loans to U.S.

middle-market companies and small businesses.

NCL JV is a 50/50 joint venture between Newtek Commercial Lending, Inc.

NCL JV was a 50/50 joint venture between Newtek Commercial Lending, Inc.

(NCL) a wholly-owned subsidiary of NewtekOne, and Conventional Lending TCP Holding, LLC, a wholly-owned, indirect subsidiary of BlackRock TCP Capital Corp.

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The proceeds of the securitization were used, in part, to repay a Deutsche Bank credit facility and return capital to the NCL JV partners.

On August 5, 2022, NewtekOne launched its second joint venture to invest in ALP loans.

Newtek-TSO II Conventional Credit Partners, LP (Newtek-TSO JV).

NCL and TSO II entered into a joint venture, Newtek-TSO JV, governed by the Amended and Restated Limited Partnership Agreement for the Newtek-TSO JV.

NCL and TSO II each committed to contribute an equal share of equity funding to the Newtek-TSO JV with each having equal voting rights on all material matters.

In August 2025 the NCL Business Loan Trust 2022-1 was terminated when the Class A Noteholders were re-paid in full.

On August 27, 2025, NCL entered into an interest purchase agreement between NCL and TCP to acquire TCP’s 50% ownership interest in NCL JV for $15.75 million.

Since the assets acquired did not meet the definition of a business under ASC 805-10-55, the transaction was accounted for as an asset acquisition under ASC 805-50.

On September 30, 2025, NALH caused the dissolution of NCL JV.

On August 5, 2022, NewtekOne launched its second joint venture to invest in ALP loans, Newtek-TSO II Conventional Credit Partners, LP (Newtek-TSO JV).

NCL and TSO II entered into a joint venture, Newtek-TSO JV, pursuant to which NCL and TSO II each committed to contribute an equal share of equity funding to the Newtek-TSO JV and with each having equal voting rights on all material matters.

Newtek-TSO JV deployed capital with additional leverage supported by a warehouse line of credit.

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Newtek Payments

NewtekOne’s business and financial solutions ecosystem also includes its Newtek Payments businesses, which includes our subsidiaries Newtek Merchant Solutions, LLC (NMS), Mobil Money, LLC (Mobil Money, an NMS subsidiary) and POS on Cloud, LLC, d/b/a Newtek Payment Systems (POS).

NewtekOne’s business and financial solutions ecosystem also includes its Newtek Payments businesses, which includes our subsidiaries Newtek Merchant Solutions, LLC (NMS), Mobil Money, LLC (an NMS subsidiary) and POS on Cloud, LLC, d/b/a Newtek Payment Systems (POS).

NMS markets credit and debit card processing services, check approval services, ACH services, processing equipment, and software.

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NMS’ primary sales efforts focus on direct sales through our Newtek ® and Your Business Solutions Company ® brands.

Our indirect sales channels consist of alliance partners, principally financial institutions (banks, credit unions, insurance companies and other related businesses), and independent sales agents across the United States.

Our indirect sales channels consist of alliance partners and independent sales agents across the United States.

These referring organizations and associations are typically paid a percentage of the processing revenue derived from the respective merchants that they successfully refer to NMS.

In 2025, NMS processed merchant transactions with sales volumes of $5.2 billion.

We believe NMS has a number of competitive advantages which we believe will enable it to continue to effectively compete in this market.

We believe NMS has a number of competitive advantages that enables it to effectively compete in this market.

• focus on non-traditional business generation:

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• maintaining its own staff of trained and skilled customer service representatives;

• marketing and selling the latest in point-of-sale technology hardware and offers processing related cyber-security services.

NMS maintains its principal customer service and sales support offices in our Lake Success, New York office.

NMS’s personnel assist merchants with initial installation of equipment and on-going service, as well as any other special processing needs that they may have.

NMS’ development and growth is focused on selling NMS’ services to internally generated referrals, merchant referrals identified by NewtekOne alliance partners and by independent sales representatives.

We believe NMS is different than most electronic payment processing companies who acquire their clients primarily through independent sales agents.

NMS believes that its business model provides it with a competitive advantage by enabling it to acquire new merchant customers at a lower cost level for third-party commissions than the industry average.

NMS’ business model allows it to own the customer as well as the stream of residual payments, as opposed to models which rely more heavily on independent sales agents.

• marketing and selling the latest in point-of-sale technology hardware with related cyber-security features.

Mobil Money, a subsidiary of NMS, generates revenues from providing payment processing for a merchant portfolio of taxi cabs and related licensed payment processing software.

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Newtek Technology

As disclosed in subsequent events herein, on January 2, 2025 the Company completed its previously disclosed divestiture of Newtek Technology Solutions, Inc.

(NTS), its wholly-owned subsidiary that provides website hosting, dedicated server hosting, cloud hosting, web design and development, internet marketing, e-commerce, data storage, backup and disaster recovery, and other related services including consulting and implementing technology solutions for enterprise and commercial clients across the U.S.

as well as SMBs, to IPM, formerly known as Paltalk .

NewtekOne intends to continue to offer its clients the Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting and Web Services) provided by IPM on a referral fee basis.

Refer to “ NOTE 25—SUBSEQUENT EVENTS ” .

On January 2, 2025, we completed the divestiture of our wholly-owned subsidiary Newtek Technology Solutions, Inc.

(NTS) to IPM .

We intend to continue to offer our clients IPM’s technology solutions on a referral fee basis.

Refer to “ NOTE 4—INVESTMENTS ” .

Newtek Payroll, Insurance, and Other

PMTWorks Payroll, LLC d/b/a Newtek Payroll and Benefits Solutions (PMT), is a wholly-owned subsidiary which offers an array of industry standard and competitively priced payroll management, and related payment and tax reporting services to independent business owners.

PMT d/b/a Newtek Payroll and Benefits Solutions, is a wholly-owned subsidiary which offers an array of industry standard and competitively priced payroll management, and related payment and tax reporting services to independent business owners.

We are focused on PMT customers being a source for the generation of depository accounts for Newtek Bank, which we believe can provide Newtek Bank with business deposits that are not only sticky, but also would allow us to improve the client experience from being able to make payroll directly from the Newtek Advantage.

Newtek Insurance Agency (NIA), a wholly-owned subsidiary, is a retail and wholesale brokerage insurance agency licensed in all 50 states, specializing in the sale of commercial and health/benefits lines insurance products to independent business owners, as well as the sale of various personal lines of insurance.

NIA has recently experienced success in the area of technological innovation, whereby NIA is now able to provide key man life insurance on our loan products without requiring a medical exam or the client filling out lengthy applications NIA is able to accomplish this by automatically transferring data from loan applications to populate an insurance application.

NIA has experienced success in the area of technological innovation, whereby NIA provides key man life insurance on our loan products without requiring a medical exam or the client filling out lengthy applications.

NIA is able to accomplish this by automatically transferring data from loan applications to populate an insurance application.

We anticipate further automating the sale of property and casualty insurance on lending opportunities.

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TAM has two primary initiatives:

(1) telemarketing into our existing database of NewtekOne referrals for the purpose of introducing our business and financial solutions, and (2) monitoring and improving client experience and ensuring any client issues or complaints are tracked and resolved.

(1) telemarketing into our existing database of referrals for the purpose of introducing our business and financial solutions, and (2) monitoring and improving client experience and ensuring any client issues or complaints are tracked and resolved.

We are focused on growing this unit over time and improving its productivity in selling our business and financial solutions directly to our client database and creating warm referrals for our BSS in each vertical.

We require that TAM’s client success and service specialists, as well as our BSS teams in each of our businesses, appear on camera on all client interactions, either utilizing our licensed Glia technology or our phone system.

Our strategy of not using traditional bankers, brokers, business development officers or physical branches, and in their stead, using our client success and service specialists and BSS who are based in the United States and using a NewtekOne backdrop on camera to give all clients the experience with a live human being they can see and talk to 24/7/365.

Our strategy is to operate without traditional bankers, brokers, business development officers or physical branches, and in their stead, use client success and service specialists who are U.S.

based and available on camera to give our clients the opportunity to speak with a live person 24/7/365.

Newtek ® and NewtekOne ® Branding

We have developed our branded line of business and financial solutions to offer a full service suite of business and financial solutions for independent business owners in the United States.

We reach potential customers through our integrated multi-channel approach featuring direct, indirect and direct outbound solicitation efforts.

We have developed our Newtek and NewtekOne branded line of business and financial solutions to offer a full service suite for independent business owners in the United States.

We reach potential customers through our integrated multi-channel approach featuring indirect and direct outbound solicitation efforts.

We continue to utilize and grow our primary marketing channel of strategic alliance partners as well as a direct marketing strategy to independent business owner customers through our “go to market” brand, Your Business Solutions Company ® and One Solution for All Your Business Needs ® .

Through our web presence, www.newtekone.com and newtekbank.com , we believe we are establishing ourselves as a preferred “go-to” provider for independent business owner financial and business solutions offered by NewtekOne ® and its subsidiaries, including Newtek Bank ® .

We believe that our patented NewTracker ® system provides for transparency between NewtekOne and referring parties and has been material in our ability to obtain referrals from a wide variety of sources.

The NewTracker system allows us and our alliance partners to review in real time the status of any referral as well as to provide real time compliance oversight by the respective alliance partner, which we believe creates confidence among the referred business client, the referring alliance partner and us.

We own the NewTracker® patent, as well as all trademarks and other patented intellectual property used by us and our subsidiaries.

Additional referrals are obtained from individual professionals in geographic markets that have signed up to provide referrals and earn commissions through our BizExec and TechExec Programs.

In addition, we believe that the Newtek Advantage ® dashboard, which patent is pending, is designed to be a management tool for our business clientele that can make their businesses more successful and that our clients can depend on.

Market Opportunity

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While the largest originators of SBA 7(a) loans have traditionally been regional and national banks, from 2012 through 2022, our subsidiary NSBF was consistently the largest non-bank originator of SBA 7(a) loans, and ranked as the third largest SBA 7(a) lender in the United States, including banks.

Newtek Bank now ranks as the largest SBA 7(a) lender based on dollar volume of loan approvals as of December 31, 2024, which is the SBA’s first fiscal quarter.

As a result, we believe we are well positioned to continue to provide financing to the types of independent business owners that we have historically targeted and we have the technology and infrastructure in place presently to do it cost effectively in all 50 states and across many industries.

Newtek Bank now ranks as the third largest SBA 7(a) lender based on dollar volume of loan approvals.

As a result, we believe we are well positioned to continue to provide financing to the types of independent business owners that we have historically targeted and further, that we have the technology and infrastructure in place presently to do so cost effectively in all 50 states and across many industries.

Increased demand for comprehensive, business-critical SMB solutions .

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This environment is characterized by greater focus on increased quality, lower costs, faster turnaround and heightened regulatory scrutiny.

To make necessary changes and adequately address these needs, we believe that companies are focusing on their core competencies and utilizing cost-effective outsourced solutions to improve productivity, lower costs and manage operations more efficiently.

We provide critical business solutions such as electronic payment processing, personal and commercial insurance services and full-service payroll and benefit solutions, receivables financing, funding of SBA 504 loans, which provide financing of fixed assets such as real estate or equipment, and ALP loans.

To make necessary changes and adequately address these needs, we believe that companies need to focus on their core competencies and utilize cost-effective outsourced solutions to improve productivity, lower costs and manage operations more efficiently.

We provide what we view as critical business and financial solutions such as commercial loans, electronic payment processing, personal and commercial insurance services and full-service payroll and benefit solutions.

We believe that each of these market segments are underserved for independent business owners and since we are able to provide comprehensive financial and business solutions under one (the Newtek) platform, we believe that we are well positioned to continue to realize growth from these product offerings.

Most importantly our pledge and goal is to enhance our clients’ business and through our solutions make them more successful.

Most importantly, our pledge and goal is to enhance our clients’ business through our business and financial solutions that we believe can make them more successful.

Competitive Advantages

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Senior Lending Team and Executive Officers.

We rely on our Senior Lending Team and executive officers, some of whom have worked together for more than twenty years and have decades of experience in finance-related fields.

We rely on our Senior Lending Team and executive officers, some of whom have worked together for more than twenty years and have decades of experience in related fields.

These professionals have screened opportunities, underwritten new loans and investments and managed a portfolios of SMB loans through two recessions, a credit crunch, the dot-com boom and bust, a historic, leverage-fueled asset valuation bubble, and the COVID-19 pandemic.

Each member brings a complementary component to a team well-rounded in finance, accounting, operations, strategy, business law and executive management.

Each member brings a complementary component to a team well-rounded in commercial lending, finance, accounting, operations, strategy, business law and executive management.

We are led by our executive officers under the supervision of our Board.

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Business Model Enables Attractive Risk-Adjusted Returns on Investment in SBA 7(a) Lending.

Our SBA 7(a) loans are structured so as to permit the rapid sale of the U.S.

government guaranteed portions, often within weeks of origination.

Newtek Bank has determined to retain the unguaranteed portions of SBA 7(a) loans funded through its consumer and retail deposit bases.

Selling the guaranteed portion provides Newtek Bank the ability to efficiently manage its balance sheet and returns, by reducing the funding needed for future originations and recording premiums that typically provide revenue that have more than offset the provision for credit losses on the retained unguaranteed portion.

Historically, the unguaranteed portions have been successfully securitized, with the securitization notes being sold, usually within a year of loan origination.

Our SBA 7(a) loans are structured so as to permit the sale of the U.S.

government guaranteed portions following origination.

Newtek Bank has determined to retain the unguaranteed portions of SBA 7(a) loans it funds through its consumer and retail deposit bases.

Selling the guaranteed portion provides Newtek Bank the ability to efficiently manage its balance sheet and returns, by reducing the funding needed for future originations and recording premiums that typically provide revenue that have historically more than offset the provision for credit losses on the retained unguaranteed portion.

Prior to the acquisition of Newtek Bank, we successfully securitized the unguaranteed portions of SBA 7(a) loans.

Newtek Bank may seek to securitize or otherwise finance these loans in the future.

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NewTracker® enables us to identify a transaction, similar to a merchandise barcode or the customer management system used by SalesForce.com, then process a business transaction and generate internal reports used by management and external reports for strategic referral partners.

NewTracker® allows our referral partners to have digital access into our back office and follow on a real time, 24/7 basis the processing of their referred customers.

NewTracker® has been applied to all of the business and financial solutions we offer directly or through our subsidiaries.

including instant access to a team of NewtekOne business and financial solutions experts all of NewtekOne’s business and financial solutions.

NewTracker® provides our referral partners with digital access into our back office and allows them to follow on a real time, 24/7 basis the processing of their referred customers.

NewTracker® is used Company-wide across each of the business and financial solutions we offer directly or through our subsidiaries.

In addition, the Newtek Advantage ® , the One Dashboard for All of Your Business Needs ® , provides independent business owners with, among other things, a business tool they can use in one or more areas of their core business operations, including instant access to each of our business and financial solutions and to a team of NewtekOne business and financial solutions experts.

Established Direct Origination Platform with Extensive Deal Sourcing Infrastructure.

We have established a direct loan origination pipeline for opportunities without the necessity for financial institutions or brokers as well as broad marketing channels that we believe allow for highly selective underwriting.

We believe the combination of our alliance relationships, brand, portal, patented NewTracker® technology, and brand presence as Your Business Solutions Company® have created an extensive deal sourcing infrastructure.

We have established a direct loan origination pipeline for opportunities without brokers and with broad marketing channels that we believe allow for selective underwriting.

We believe the combination of our alliance relationships, Newtek brand, lending portal, patented NewTracker® technology, and brand presence as Your Business Solutions Company® have created an extensive deal sourcing infrastructure.

Although we pay fees for loan originations that are referred to us by our alliance partners, our lending team works directly with the borrower to assemble and underwrite loans.

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As a result, we believe that our unique national origination platform allows us to originate attractive credits at a low cost.

We anticipate that our principal loan origination and other business opportunities will continue to be the same types of independent business owners to which we currently provide financing.

We anticipate that our principal loan originations and other business opportunities will continue to be the same types of independent business owners to which we currently provide financing.

Our executive officers and Senior Lending Team also seek to leverage our extensive network of additional referral sources, including law firms, accounting firms, financial, operational and strategic consultants and financial institutions, with whom we have closed opportunities.

We believe our current infrastructure and expansive relationships will continue to enable us to review a significant amount of direct (or non-brokered) business opportunities.

We believe our current infrastructure and expansive relationships will continue to provide us with direct (or non-brokered) business opportunities.

Flexible, Customized Financial Solutions for Seasoned, Independent Business Owners.

While Newtek Bank’s primary focus will be to expand its lending activities by providing a full suite of commercial loans to independent business owners, we also seek to offer independent business owners a variety of attractive financial solutions, as well as cost effective and efficient business solutions, to meet their capital needs through Newtek Bank and our nonbank subsidiaries.

In particular, we offer larger loans, between $5.0 million and $15.0 million and in some cases through our nonbank subsidiaries, greater than loans available with the SBA guarantee, but with a higher interest rate to compensate for the increased risk.

While Newtek Bank’s primary focus is to expand its lending activities by providing a full suite of commercial loans to independent business owners, we also seek to offer independent business owners a variety of attractive cost effective and efficient business and financial solutions to meet their capital needs through Newtek Bank and our nonbank subsidiaries.

In particular, we offer larger loans, between $5.0 million and $15.0 million, but with higher interest rates to compensate for the increased risk of loans that do not qualify for an SBA guarantee.

Unlike many of our competitors, we believe we have the business finance ecosystem that allows us to provide a complete package of business and financial solutions for independent business owners, which allows for cross-selling opportunities and improved client retention.

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We pursue rigorous due diligence of all prospective loans originated through our Business Lending Platform.

Our Senior Lending Team has developed what we believe to be an extensive underwriting due diligence process, which includes a review of the operational, financial, legal, industry and performance and outlook for the prospective loan, including quantitative and qualitative stress tests and review of industry data.

Our Senior Lending Team has developed what we believe to be an extensive underwriting due diligence process, which includes a review of the operational, financial, legal, industry, performance and outlook for the prospective loan, including quantitative and qualitative stress tests and review of industry data.

We acquire appraisals on CRE, residential real estate, equipment, and business valuations to assist in underwriting a loan and credit decisioning.

These processes continue during the portfolio monitoring process, when we will conduct field examinations, when appropriate, review all compliance certificates and covenants and regularly assess the financial and business conditions and prospects of our borrowers.

In addition, Newtek Bank’s subsidiary SBL, an S&P rated servicer, is a third-party servicer for commercial, SBA 7(a) and other government guaranteed loans, whose exceptional servicing capabilities with compact timelines for loan resolutions and dispositions has attracted various third-party portfolios to SBL for servicing.

These processes continue during the portfolio monitoring process, when we will conduct field examinations, when appropriate, review compliance certificates and assess the financial and business conditions and prospects of our borrowers.

In addition, Newtek Bank’s subsidiary SBL, an S&P rated servicer, is a third-party servicer for commercial loans, including SBA 7(a) and other government guaranteed loans, whose exceptional servicing capabilities with compact timelines for loan resolutions and dispositions has attracted third-party portfolios to SBL for servicing.

SBL services the loans funded by Newtek Bank, Newtek ALP Holdings, NSBF, our joint ventures and loans held in our securitization trusts, and provides loan origination and closing services to our joint ventures and affiliates.

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From November 12, 2014 to January 6, 2023, we operated as a BDC and a RIC.

As a BDC, we were required to meet certain regulatory tests, including the requirement to invest at least 70% of our gross assets in “qualifying assets.” In addition, as a BDC, we were not permitted to incur indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 150% (i.e., the amount of debt may not exceed 66 2/3% of the value of our total assets).

Additionally, as a RIC, we generally did not have to pay corporate-level U.S.

As a RIC, we generally did not have to pay corporate-level U.S.

federal income taxes on any ordinary income or capital gains that we timely distribute to our shareholders.

Although we maintained our status as a BDC and a RIC through the entirety of our 2022 fiscal and tax years, upon completing the Acquisition, we filed with the SEC Form N-54C, Notification of Withdrawal of Election to be Subject to the 1940 Act, and ceased to be a BDC.

Although we maintained our status as a BDC and a RIC through the entirety of our 2022 fiscal and tax years, upon completing the Acquisition of Newtek Bank, we filed with the SEC Form N-54C, Notification of Withdrawal of Election to be Subject to the 1940 Act, and ceased to be a BDC.

As a result, as of January 2023 we ceased to be subject to regulation as a BDC under the 1940 Act, and no longer qualified for tax treatment as a RIC under the Code.

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financial services and banking industry is highly regulated.

The bank regulatory regime is intended primarily for the protection of customers, the public, the financial system and the DIF, support of the community and economic development, rather than our stockholders or creditors.

The bank regulatory regime is intended primarily for the protection of customers, the public, the financial system and the Deposit Insurance Fund (DIF) maintained by the FDIC, and support of the community and economic development, rather than our stockholders or creditors.

The legal and regulatory regime affects virtually all aspects of our operations.

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The OCC charges fees to national banks, including Newtek Bank, in connection with its supervisory activities.

Newtek Bank’s deposits are insured by the Depositors Insurance Fund (DIF) up to applicable legal limits.

Newtek Bank’s deposits are insured by the DIF up to applicable legal limits.

As an FDIC-insured depository institution, Newtek Bank is subject under certain circumstances to supervision, regulation and examination by the FDIC.

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bank regulatory system is to ensure the safety and soundness of banking organizations.

Safety and soundness is a broad concept that includes financial, operational, compliance and reputational considerations, including matters such as capital, asset quality, quality of board and management oversight, earnings, liquidity, and sensitivity to market and interest rate risk.

As part of its commitment to maintain safety and soundness, at the time we acquired Newtek Bank, Newtek Bank entered into an Operating Agreement with the OCC (the “Operating Agreement”).

The Operating Agreement sets forth key parameters within which Newtek Bank must operate, such as with respect to its business plan, minimum capital, minimum liquidity, risk management and compliance.

Safety and soundness is a broad concept that includes financial, operational and compliance considerations, including matters such as capital, asset quality, quality of board and management oversight, earnings, liquidity and sensitivity to market and interest rate risk.

As part of its commitment to maintain safety and soundness, at the time we acquired Newtek Bank, Newtek Bank entered into an Operating Agreement with the OCC (the “Operating Agreement”), which set forth key parameters, such as with respect to its business plan, minimum capital, minimum liquidity, risk management and compliance, which then ceased in January 2026.

The banking and financial regulators have broad examination and enforcement authority.

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• terminate deposit insurance.

Engaging in unsafe or unsound practices or failing to comply with applicable laws, regulations and supervisory agreements (including the Operating Agreement) could subject us and our subsidiaries or their officers, directors and institution-affiliated parties to a broad variety of sanctions or remedies, including those described above.

Engaging in unsafe or unsound practices or failing to comply with applicable laws, regulations and supervisory agreements could subject us and our subsidiaries or their officers, directors and institution-affiliated parties to a broad variety of sanctions or remedies, including those described above.

Limits on Activities and Approval Requirements

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The Gramm-Leach-Bliley Act of 1999 authorized a bank holding company that meets specified conditions, including being “well capitalized” and “well managed,” to opt to become a “financial holding company” and thereby engage in a broader array of financial activities than previously permitted.

The Company has elected to become a financial holding company, allowing it to engage in a broader array of financial activities than bank holding companies.

The bank regulatory regime, including through the Operating Agreement, requires that we obtain prior approval of one or more regulators for various initiatives or corporate actions, including acquisitions or minority investments, the establishment of branches, certain dividends or capital distributions, and significant deviations from Newtek Bank’s previously approved business plan.

The Company elected to become a financial holding company, allowing it to engage in a broader array of financial activities than bank holding companies.

The bank regulatory regime requires that we obtain prior approval of one or more regulators for various initiatives or corporate actions, including acquisitions or minority investments, the establishment of branches, certain dividends or capital distributions, and significant deviations from Newtek Bank’s previously approved business plan.

Regulators take into account a range of factors in determining whether to grant a requested approval, including the supervisory status of the applicant and its affiliates.

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Newtek Bank’s latest rating by the OCC under the CRA is “Satisfactory”.

In October 2023, the Federal Reserve, the FDIC and the OCC issued a joint rule to modernize regulations implementing the CRA.

Under the final rules, the agencies will evaluate bank performance across the varied activities they conduct and communities in which they operate.

This includes evaluating lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, branchless banking and hybrid models.

The final rule adopts a new metrics-based approach to evaluating bank retail lending and community development financing, using benchmarks based on peer and demographic data.

The final rule also clarifies eligible CRA activities, such as affordable housing, that are focused on low- and moderate-income, underserved, native and rural communities.

Most of the requirements of the final rule take effect January 1, 2026, while the data requirements will take effect January 1, 2027.

We are continuing to evaluate the potential impact of the new rule to our business, financial condition and results of operations, which cannot be predicted at this time.

See “Item 1A.

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The regulators assess any particular institution’s capital adequacy based on numerous factors and may require a particular banking organization to maintain capital at levels higher than the generally applicable minimums.

In this regard, and unless otherwise directed by the OCC, we have made commitments for Newtek Bank to maintain a tier 1 leverage ratio of no less than 10% and a total risk-based capital ratio of 11.5% for the term of the Operating Agreement.

The Federal Deposit Insurance Act provides for a system of “prompt corrective action” (“PCA”).

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Dividends and capital distributions by Newtek Bank are also limited by the regulatory regimes.

For example, the Operating Agreement requires Newtek Bank to be in compliance with certain capital levels before paying a dividend.

Other laws and regulations generally applicable to national banks also limit the amount of dividends and capital distributions that may be made by a national bank and/or require prior approval of the OCC.

For example, relevant laws and regulations generally applicable to national banks limit the amount of dividends and capital distributions that may be made by a national bank and/or require prior approval of the OCC.

Federal Home Loan Bank System

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We are subject to various laws related to the privacy of consumer information.

For example, we and our subsidiaries are required under federal law periodically to disclose to their retail clients our policies and practices with respect to the sharing of nonpublic client information with their affiliates and others, and the confidentiality and security of that information.

For example, we and our subsidiaries are required under federal law periodically to disclose to their retail clients our policies and practices with respect to the sharing of nonpublic client information with our affiliates and others, and the confidentiality and security of that information.

In some cases, Newtek Bank must obtain a consumer’s consent before sharing information with an unaffiliated third party, and Newtek Bank must allow a consumer to opt out of Newtek Bank’s sharing of information with its affiliates for marketing and certain other purposes.

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For example, the Federal Financial Institutions Examination Council's (“FFIEC”), which is a council comprised of the primary federal banking regulators, has issued guidance and supervisory expectations for banking organizations with respect to information technology and cybersecurity.

In addition, the SEC recently enacted rules, effective as of December 18, 2023, requiring public companies to disclose material cybersecurity incidents that they experience on Form 8-K within four business days of determining that a material cybersecurity incident has occurred and to disclose on annual basis material information regarding their cybersecurity risk management, strategy and governance.

In addition, the SEC enacted rules, effective as of December 18, 2023, requiring public companies to disclose material cybersecurity incidents that they experience on Form 8-K within four business days of determining that a material cybersecurity incident has occurred and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy and governance.

Our regulators will regularly examine us for compliance with applicable laws, and adherence to industry best practices, with respect to these topics.

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SBA Oversight and Regulation of NSBF’s and Newtek Bank’s participation in the SBA 7(a) Program

NewtekOne’s subsidiaries (NSBF beginning in 2003 and Newtek Bank since 2023) have been originating loans under the SBA 7(a) Program for 22 years.

By making SBA 7(a) guaranteed loans or 504 loans, SBA lenders automatically agree to the terms, conditions, and remedies in SBA Loan Program Requirements, as promulgated or issued from time to time.

NewtekOne’s subsidiaries (NSBF from 2003 to April 2023 and Newtek Bank since April 2023) have been originating loans under the SBA 7(a) Program for 23 years.

By making SBA 7(a) guaranteed loans and SBA 504 loans, SBA lenders automatically agree to the terms, conditions, and remedies in SBA Loan Program Requirements, as promulgated or issued from time to time.

SBA Lenders further agree that a violation of SBA Loan Program Requirements constitutes default under their respective agreements with SBA.

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(i) a failure to maintain eligibility requirements for specific SBA programs and delegated authorities, including but not limited to:

SBA 7(a) Program and PLP;

the SBA 7(a) Program and PLP status;

(ii) failure to comply materially with any requirement imposed by SBA Loan Program Requirements;

or (iii) not performing underwriting, closing, disbursing, servicing, liquidation, litigation or other actions in a commercially reasonable and prudent manner for SBA 7(a) or 504 loans, respectively, as applicable.

Newtek Bank is licensed by the SBA to originate and service loans pursuant to section 7(a) of the Small Business Act (the SBA 7(a) Program).

As a result of the Acquisition, all SBA 7(a) loan originations were transitioned from NSBF to Newtek Bank in April 2023, and NSBF ceased the origination of SBA 7(a) loans, relinquished its PLP status and is winding-down its operations.

During this wind-down process, NSBF is required to continue to own the SBA 7(a) loans and PPP Loans in its SBA loan portfolio to maturity, liquidation, charge-off, or (subject to SBA’s prior written approval) sale or transfer.

NSBF is further required to continue to service and liquidate its SBA loan portfolio, including processing forgiveness and loan reviews for PPP Loans, pursuant to an SBA approved lender service provider agreement with SBL.

Newtek Bank is licensed by the SBA to originate and service loans pursuant to the SBA 7(a) Program.

Following the acquisition of Newtek Bank, in April 2023 all SBA 7(a) loan originations were transitioned from NSBF to Newtek Bank, and NSBF ceased the origination of SBA 7(a) loans, relinquished its PLP status and is winding-down its operations.

During this wind-down process, NSBF is required to continue to own the SBA 7(a) loans in its SBA loan portfolio to maturity, liquidation, charge-off, or (subject to SBA’s prior written approval) sale or transfer.

NSBF is further required to continue to service and liquidate its SBA loan portfolio pursuant to an SBA approved lender service provider agreement with SBL.

During the wind down process, NSBF is required to maintain minimum capital requirements established by the SBA, required to maintain certain amounts of restricted cash available to meet any obligations to the SBA, and has restrictions on its ability to make dividends and distributions to its parent, and will remain liable to SBA for post-purchase denials and repairs, from the proceeds generated by NSBF’s SBA loan portfolio.

The Company has guaranteed NSBF’s obligations to the SBA and has funded a $10.0 million account at Newtek Bank to secure these potential obligations.

The Company has guaranteed NSBF’s obligations to the SBA and has funded a $10.0 million account to secure these potential obligations.

Any future post-purchase denials and repairs demands on NSBF could negatively impact our results of operations.

Newtek Bank has been granted PLP status.

Newtek Bank has been granted PLP (SBA Preferred Lender Program) status.

The SBA grants PLP status to certain lenders originating SBA 7(a) loans based on achievement of certain standards in lending which are regularly monitored by the SBA.

As a Preferred Lender, Newtek Bank is authorized to place SBA guarantees on SBA 7(a) loans without seeking prior SBA review and approval.

Designated PLP lenders are delegated the authority to process, close, service, and liquidate most SBA guaranteed loans without prior SBA review.

PLP lenders are authorized to make SBA guaranteed loans, subject only to a brief eligibility review and assignment of a loan number by SBA.

In addition, PLP lenders are expected to handle servicing and liquidation of all of their SBA loans with limited involvement of SBA.

As a PLP lender, Newtek Bank has delegated authority to place SBA guarantees on SBA 7(a) loans subject only to a brief eligibility review and assignment of a loan number by SBA) and process, close, service, and liquidate most SBA guaranteed loans without seeking prior SBA review and approval.

An SBA lender’s PLP status is renewed by the SBA on an annual basis, or more frequently at the SBA’s discretion.

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The SBA secondary market consists of the sale of certificates, representing either a fractional undivided interest in some or all of the guaranteed portion of an individual SBA 7(a) guaranteed loan or a fractional undivided interest in a pool consisting of the SBA guaranteed portions of a number of SBA 7(a) guaranteed loans.

For example, when a lender such as Newtek Bank sells the guaranteed portion of a SBA 7(a) loan in the secondary market, the lender must perform all necessary servicing and liquidation actions for such loan even after SBA has purchased the guaranteed portion of such loan from a purchaser of a guaranteed portion, i.e., a registered holder.

In the event that SBA purchases a guaranteed portion of such a loan from the registered holder, the lender must provide SBA with a loan status report within 15 business days of such purchase.

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Newtek Bank’s failure to provide sufficient documentation may constitute a material failure to comply with SBA Loan Program Requirements, and may lead to initiation of an action for recovery from Newtek Bank of all or some of the moneys SBA paid to a registered holder on a guarantee.

SBA will also evaluate Newtek Bank’s continued participation in the secondary market and may restrict further sale of guaranteed portions into the secondary market until SBA determines that Newtek Bank has provided sufficient documentation for purchases or demonstrates compliance with any requirement imposed by SBA Loan Program Requirements.

SBA will also evaluate Newtek Bank’s continued participation in the secondary market and may restrict sales of guaranteed portions into the secondary market until SBA determines that Newtek Bank has provided sufficient documentation for purchases or demonstrates compliance with any requirement imposed by SBA Loan Program Requirements.

Pursuant to the SBA’s regulations, the SBA is released from liability on its guaranty of an SBA 7(a) loan and may, in its sole discretion, refuse to honor a guaranty purchase request in full or in part, or recover all or part of the funds already paid in connection with a guaranty purchase, if the lender failed to comply materially with an SBA Loan Program Requirement;

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In addition, changes in SBA regulations and economic factors may adversely impact Newtek Bank’s or NSBF’s repair and denial rates.

In connection with NSBF’s 2018 examination by the SBA, NSBF entered into a voluntary agreement with the SBA pursuant to NSBF’s commitment to operate under the SBA Loan Program Requirements.

Consistent with the terms of the agreement, NSBF has established a segregated restricted cash account in the amount of $10 million to account for potential post-purchase repairs and denials of guaranteed portions of SBA 7(a) loans, and agreed to take certain actions to, among other things, demonstrate the sufficiency of NSBF’s liquidity.

Pursuant to agreement with the SBA, NSBF has established a segregated restricted cash account at Newtek Bank in the amount of $10 million to account for potential post-purchase repairs and denials of guaranteed portions of SBA 7(a) loans, and agreed to take certain actions to, among other things, demonstrate the sufficiency of NSBF’s liquidity.

On March 30, 2023, the CFPB finalized a rule under Section 1071 of the Dodd-Frank Act requiring lenders to collect and report data regarding small business lending activity.

We are evaluating the impact of this new rule.

The rule was scheduled to take effect on August 29, 2023, and would have required compliance by October 1, 2024, April 1, 2025, or January 1, 2026, depending on the number of covered small business loans that a covered lender originates.

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We believe that concentration issues can be evaluated and, in some instances (whether due to supplier or customer product or platform diversification, the existence and quality of long-term agreements with such customers or suppliers or other select factors), mitigated, thus presenting a superior risk-weighted pricing scenario.

We target our loans made through our business finance ecosystem under the SBA 7(a) program, to produce generally, a coupon rate of prime plus 3.0% to 6.50% which enables us to generate rapid sales of the guaranteed portions of SBA 7(a) loans in the secondary market, which have historically produced gains and a yield on investment.

We target our loans made through our business finance ecosystem under the SBA 7(a) program, to produce generally, a coupon rate of prime plus 3.00% to 6.50% which enables us to generate sales of the guaranteed portions of SBA 7(a) loans in the secondary market, which have historically produced gains and a yield on investment.

Collateral and Sources of Repayment.

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Our loans are typically structured to have strong protections, including default penalties, information rights and, in some cases, affirmative, negative and financial covenants.

In addition to loans originated under the SBA 7(a) program.

our Newtek Lending Platform includes the following loan products originated by Newtek Bank:

In addition to loans originated under the SBA 7(a) program, our Newtek Lending Platform includes the following loan products originated by Newtek Bank:

SBA 504 loans, C&I loans (including ABL and owner occupied CRE and investor CRE).

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Equity Investments to Expand or Enhance the NewtekOne Business and Financial Solutions Ecosystem

While the vast majority of our lending opportunities have been structured as loans, we have in the past and expect in the future to make selective equity investments primarily as either strategic investments to enhance the integrated operating platform or, to a lesser degree, under our Certified Capital Company (“Capco”) programs (see below).

Historically, for investments in our subsidiaries, we focused more on tailoring them to the long-term growth needs of the companies than to immediate return.

Our objective with these companies was to foster the development of the businesses as a part of the integrated operational platform of serving the independent business owner market, so we may have sought to reduce the burden on these companies to enable them to grow faster than they would otherwise as another means of supporting their development and that of the integrated whole.

Under state-created Capco programs, states provide a Capco with tax credits generally equal to the amount of funds the Capco raises from insurance company investors.

The Capcos then issue the tax credits to its investors — a process which is designed to reduce the Capco’s investors’ state tax liabilities.

In exchange for receiving the tax credits, the Capco is obligated to invest the funds raised in certain qualified businesses, which generally are defined by statute to include only businesses that meet certain criteria.

If a Capco fails to comply with the performance requirements of each state’s different Capco program, the tax credits are subject to forfeiture.

Under state law, a Capco that has invested in qualified businesses an amount equal to 100% of its initial certified capital is able to decertify (i.e., terminate its status as a Capco) and no longer be subject to any state Capco regulation.

While the vast majority of our lending opportunities have been structured as loans, we have in the past and may in the future, make selective equity investments primarily as either strategic investments to enhance the integrated operating platform or, to a lesser degree, under our Certified Capital Company (“Capco”) programs (see below).

Historically, for investments in our subsidiaries, we focused more on tailoring them to the long-term growth needs of the subsidiaries, rather than to immediate return.

Our objective with these subsidiaries was to foster the development of the businesses as a part of the integrated operational platform of serving the independent business owner market, so we may have sought to reduce the burden on these companies to enable them to grow faster than they would otherwise as another means of supporting their development and that of the integrated whole.

Under state-created Capco programs, states have provided a Capco with tax credits generally equal to the amount of funds the Capco raises from insurance company investors.

The Capcos would then issue the tax credits to its investors — a process which was designed to reduce the Capco’s investors’ state tax liabilities.

In exchange for receiving the tax credits, the Capco is then obligated to invest the funds raised in certain qualified businesses, which generally are defined by statute to include only businesses that meet certain criteria.

If a Capco fails to comply with the performance requirements of each state’s different Capco program, the tax credits can be subject to forfeiture.

Under state laws, a Capco that has invested in qualified businesses in an amount equal to 100% of its initial certified capital, is able to decertify (i.e., terminate its status as a Capco) and no longer be subject to any state Capco regulation.

Our Capcos have historically invested in SMBs.

We have de-emphasized our Capco business and do not anticipate creating any new Capcos.

As the Capcos reach 100% investment we will seek to decertify them as Capcos, liquidate their remaining assets and thereby reduce their operational costs, particularly the legal and accounting costs associated with compliance.

Thirteen of our original eighteen Capcos have reached this stage and been de-certified and liquidated.

As our Capcos reach 100% investment, we seek to decertify them as Capcos, liquidate their remaining assets and thereby reduce their operational costs, particularly the legal and accounting costs associated with compliance.

Twelve of our original seventeen Capcos have reached this stage and been de-certified and liquidated.

See “RISKS RELATED TO OUR CAPCO BUSINESS.”

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Loan and Deal Generation/Origination

We believe that the combination of our brand, our portal, our patented NewTracker® technology, and our web presence as Your Business Solutions Company ® have created an extensive loan and deal sourcing infrastructure.

This is maximized through long-standing and extensive relationships with industry contacts, commercial and investment bankers, entrepreneurs, services providers (such as lawyers and accountants), as well as current and former clients and our extensive network of strategic alliance partners.

We believe that the combination of our Newtek and NewtekOne brands, our lending portal, our patented NewTracker® technology, and our web presence as Your Business Solutions Company ® have created an extensive loan and deal sourcing infrastructure.

This is maximized through long-standing and extensive relationships with our referral partners, including industry contacts, commercial and investment bankers, entrepreneurs, services providers (such as lawyers and accountants), as well as current and former clients and our extensive network of strategic alliance partners.

We supplement our relationships by the selective use of advertising aimed primarily at lending to the SMB market.

We believe we have developed a reputation as a knowledgeable and reliable source of capital, providing value-added advice, prompt processing, and management and operations support to our clients.

We market our business and financial solutions through referrals from our alliance partners such as Stifel Bank, Credit Union National Association, ENT Federal Credit Union, Legacy Bank, Morgan Stanley Smith Barney, Flagstar Bank, Raymond James, Randolph Brooks Federal Credit Union, UBS, Meineke Dealers Purchasing Cooperative, Regions Bank, Hartford Insurance, Bank United, US Century Bank, Anderson Capital Advisors, Transworld Business Advisors, Army Navy Federal Credit Union, Teachers Federal Credit Union, Aamco, 1800 Accountants, Henry Schein, Stearns Bank, California Coast Credit Union, and True Value Company, among others using our patented NewTracker® referral system as well as direct referrals from our web presence, www.newtekone.com .

The patent for our NewTracker® referral system is a software application patent covering the systems and methods for tracking, reporting and performing processing activities and transactions in association with referral data and related information for a variety of product and service offerings in a business-to-business environment providing further for security and transparency between referring parties.

We market our business and financial solutions through referrals from our alliance partners such as Credit Union National Association, ENT Federal Credit Union, Morgan Stanley Smith Barney, Flagstar Bank, Raymond James, Randolph Brooks Federal Credit Union, UBS, Meineke Dealers Purchasing Cooperative, Regions Bank, Hartford Insurance, Bank United, Figure Technology Solutions, US Century Bank, Anderson Capital Advisors, Transworld Business Advisors, Army Navy Federal Credit Union, Teachers Federal Credit Union, Aamco, 1800 Accountants, Henry Schein, Stearns Bank, California Coast Credit Union, and True Value Company, among others using our patented NewTracker® referral system as well as direct referrals from our web presence, www.newtekone.com and newtekbank.com .

The patent for our NewTracker® referral system is a software application patent covering the systems and methods for tracking, reporting and performing processing activities and transactions in association with referral data and related information for a variety of product and service offerings in a business-to-business environment providing for security and transparency between referring parties.

NewTracker® allows us and our alliance partners to review in real time the status of any referral as well as to provide real time compliance oversight by the respective alliance partner, which we believe creates confidence between the referred business client, the referring alliance partner and us.

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The BizExecs and TechExecs are traditionally information technology professionals, CPAs, independent insurance agents and sales and/or marketing professionals.

In addition, electronic payment processing services are marketed through independent sales representatives and web technology, and eCommerce services are marketed through internet-based marketing and third-party resellers.

A common thread across all business lines of our subsidiaries and subsidiaries relates to acquiring customers at low cost.

In addition, electronic payment processing services are marketed through independent sales representatives.

A common thread across all of our business lines relates to acquiring customers at low cost.

We seek to bundle our marketing efforts through our brand, our portal, NewTracker®, our web presence as Your Business Solutions Company ® and one easy entry point of contact.

We expect that this approach will allow us to continue to cross-sell the business and financial solutions of our subsidiaries and subsidiaries to our customers and customers of our subsidiaries, and to build upon our extensive deal sourcing infrastructure.

We expect that this approach will allow us to continue to cross-sell our business and financial solutions to our customers, and to build upon our extensive deal sourcing infrastructure.

We screen all potential loan opportunities that we receive for suitability and consistency with our underwriting criteria.

See “Lending Opportunity Characteristics,” above.

In screening potential loan opportunities, our Senior Lending Team and our executive officers utilize a value-oriented lending philosophy and commit resources to managing downside exposure.

In screening potential loan opportunities, we utilize a value-oriented lending philosophy and commit resources to managing downside exposure.

If a potential lending opportunity meets our basic underwriting criteria, a business service specialist or other member of our team is assigned to perform preliminary due diligence.

SBA Lending Procedures

Newtek Bank originates (and prior to January 6, 2023, for 20 years NSBF originated) loans under the SBA 7(a) Program (authorized by section 7(a) of the Small Business Act, 15 U.S.C.

636(a)), in accordance with our credit and underwriting policy, which incorporates by reference the applicable regulations and the SBA Standard Operating Procedures, Lender and Development Company Loan Program (collectively, “SBA Loan Program Requirements”) as they relate to the financing and servicing of such loans.

Newtek Bank originates (and prior to April 2023, for 20 years NSBF originated) loans under the SBA 7(a) Program, in accordance with our credit and underwriting policy, which incorporates by reference the applicable regulations and the SBA Standard Operating Procedures, Lender and Development Company Loan Program (collectively, “SBA Loan Program Requirements”) as they relate to the financing and servicing of such loans.

Following the Acquisition, NBSF continues to service its current portfolio of SBA 7(a) loans via a lender service provider agreement with SBL, and new SBA 7(a) loan originations are being made by Newtek Bank.

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See “Risk Factors - Risks Related to SBA Lending - There can be no guarantee that Newtek Bank and NSBF will be able to maintain their SBA 7(a) lending licenses.”

During the initial application process for a loan originated under the SBA 7(a) Program, a NewtekOne business service specialist (BSS) assists and guides the applicant through the application process, beginning with the submission of an online form through our customized loan portal.

During the initial application process for a loan originated under the SBA 7(a) Program, a business services specialist (BSS) assists and guides the applicant through the application process, beginning with the submission of an online form through our customized loan portal.

The online loan processing system collects required information and ensures that all necessary forms are provided to the applicant and filled out.

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Among other things, Form 1919 requires identifying information about the applicant, loan request, indebtedness, principals, beneficial owners, current and/or previous government financing, and certain other certifications used to determine the applicant’s eligibility.

For loans submitted using a Lender’s delegated authority, the Lender may now accept the eligibility information provided by the applicant as true when submitting a loan to SBA for validation using the newly implemented Risk Mitigation Framework.

In addition to Form 1919, the following additional information is required in order for our Underwriting Department to have the necessary information to make a decision on the loan application:

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Fixed assets are evaluated on the basis of the net book value to determine the realizable value among collateral types.

Valuation factors are applied as follows:

• Residential real estate — 85%

• Vacant land — 50%

• Machinery & Equipment — 50%

• Furniture & Fixtures — 10%

• Accounts receivable & inventory —10%

• Leasehold improvements — 5%

• Certificate of Deposit — 100%

• Regulated Licenses — will vary dependent upon type of license and geographic area.

The liquidation rate used must be fully justified.

In addition to an assessment of the criteria specified above, there are certain special industry-specific requirements that will be considered in the loan application decision.

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Once the code is cleared and SBA has issued an SBA loan number, we may continue processing the loan.

The closing of a loan is handled by SBL’s closing and legal department, consisting of loan closer, in-house attorneys and paralegals, whose primary responsibility is to close the loan in accordance with prudent lending standards and in compliance with SBA requirements thereby seeking to preserve SBA’s guaranty of repayment.

The closing of a loan is handled by SBL’s closing and legal department, consisting of loan closers, in-house attorneys and paralegals, whose primary responsibility is to close the loan in accordance with prudent lending standards and in compliance with SBA requirements thereby seeking to preserve SBA’s guaranty of repayment.

Before loan proceeds are disbursed, the closing staff will review all required documentation (including but not limited to entity documentation, proof of insurance and licensing, environmental reports and appraisals), and will verify the applicant’s required capital injection, ensure that loan proceeds are being used as authorized and obtain required lien positions.

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Sales of Guaranteed Portions of SBA 7(a) Loans in the Secondary Market

We have a dedicated capital markets team that sells the guaranteed portions of Newtek Bank’s SBA 7(a) loans shortly after origination and Newtek Bank retains the unguaranteed portions, Historically, NSBF sold SBA guaranteed portions of SBA 7(a) loans at premiums.

We have a dedicated capital markets team that sells the guaranteed portions of Newtek Bank’s SBA 7(a) loans after origination and Newtek Bank retains the unguaranteed portions, Historically, we have sold SBA guaranteed portions of SBA 7(a) loans at premiums.

Any portion of the premium that is above 110% of par value is shared equally with the SBA.

However, there is no guarantee that Newtek Bank will be able to continue to earn premiums on future sales of the guaranteed portions of SBA 7(a) loans or will be able to maintain PLP status.

However, there is no guarantee that we will be able to continue to earn premiums on future sales of the guaranteed portions of SBA 7(a) loans or that Newtek Bank will be able to maintain PLP status.

See “Item 1A.

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We compete for SBA 7(a) and other SMB commercial loans with other financial institutions and various nonbank lenders, as well as other sources of funding.

Additionally, competition for investment opportunities has emerged among alternative investment vehicles, such as collateralized loan obligations, some of which are sponsored by other alternative asset investors, as these entities have begun to focus on making investments in SMBs.

Additionally, competition has emerged among alternative investment vehicles, such as collateralized loan obligations, some of which are sponsored by other alternative asset investors, as these entities have begun to focus on making investments in SMBs.

As a result of these new entrants, competition for our lending opportunities may intensify.

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We compete not only against suppliers in its particular state or region of the country, but also against suppliers operating on a national or even a multi-national scale.

None of the markets in which we compete are dominated by a small number of companies that could materially alter the terms of the competition.

Our electronic payment processing subsidiaries compete with entities including Fiserv, Global Payments, Worldpay, Elavon, and Paymentech, L.P.

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banks raising rates offered on deposits, which tended to increase weighted average deposit rates.

To the extent that competition for deposits remains elevated relative to historical norms or increases from levels observed in 2023, we believe that our deposit costs could increase.

To the extent that competition for deposits remains elevated relative to historical norms, we believe that our deposit costs could increase.

Deposit costs are based on multiple factors that impact businesses and consumers and can diverge from observed market indices (e.g.

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We believe that some of the competitive advantages of our platform include:

• compatible products such as our e-commerce offerings that we are able to bundle to increase sales, reduce costs and reduce risks for our customers and enable us to sell two, three, or four products at the same time;

• our patented NewTracker ® referral system, which allows us to process new business utilizing a web-based, centralized processing point and provides back end scalability, and allows our alliance partners to offer a centralized access point for their independent business owner clients as part of their larger strategic approach to marketing, thus demonstrating their focus on providing a suite of services to this market in addition to their core service;

• our focus on developing and marketing business solutions and financial products and services aimed at the independent business owner market;

• scalability, which allows us to size our business solutions capabilities very quickly to meet customer and market needs;

• our focus on developing and marketing business and financial solutions and services aimed at the independent business owner market;

• scalability, which allows us to size our solutions’ capabilities quickly to meet customer and market needs;

• the ability to offer personalized service and competitive rates;

• a strategy of multiple channel distribution, which gives us maximum exposure in the marketplace;

• high quality customer service 24/7/365 across all business lines, with a focus primarily on absolute customer service and;

• a telephonic and video interview process, as opposed to requiring handwritten or data-typing processes, which allows us to offer high levels of customer service and satisfaction, particularly for independent business owner who do not get this service from our competitors.

• high quality customer service 24/7/365 across all business lines, with a focus primarily on customer service;

• the Newtek Advantage ® (patent pending), which provides our independent business owner clients with analytics on their businesses, as well as transactional capabilities, including free unlimited document storage, free real-time updated traffic analytics, free real-time credit card processing and chargeback batch information for merchant solutions clients and the ability for our Newtek Payroll clients to make payroll directly from the Newtek Advantage business portal;

Human Capital including Senior Lending Team and Executive Officers

The long-term success of our Company depends on our people.

Our long-term success depends on our people.

Our team comprises experienced lending professionals, executive officers and treasury, finance, risk management, administrative support and human resources professionals.

The key members of our senior lending team (“Senior Lending Team”), many of whom have worked together for more than ten years, have over 25 years of experience in finance-related fields.

These professionals have worked together to screen opportunities, underwrite new loans and manage a portfolio of loans made to independent business owner through two recessions, a credit crunch, the dot-com boom and bust, a leverage-fueled asset valuation bubble, and the COVID-19 pandemic.

The key members of our Senior Lending Team, many of whom have worked together for more than ten years, have over 25 years of experience in the businesses in which we operate.

These professionals have worked together to screen opportunities, underwrite new loans and manage a portfolio of loans made to independent business owners through two recessions, a credit crunch, the dot-com boom and bust, a leverage-fueled asset valuation bubble, and the COVID-19 pandemic.

Each member brings a complementary component to a team well-rounded in lending, finance, accounting, operations, strategy, business law and executive management.

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We do not expect to focus our resources on investing in additional stand-alone equity investments, but may elect to do so from time to time on an opportunistic basis, if such opportunities arise.

Our CEO and Chief Lending Officer, Messrs.

Sloane and Downs, have been involved together in the structuring and management of loans and equity investments for the past 20 years.

Our CEO and the President of Newtek Bank, Messrs.

Sloane and Downs, respectively, have been involved together in the structuring and management of loans and equity investments for over 20 years.

The retention of our Senior Lending Team and executive officers is material to the management of our business.

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We are committed to recruiting, motivating and developing a diversity of talent and to creating an inclusive community where all individuals are welcomed, valued, respected, and heard.

In order to support a culture of learning, we provide many training opportunities for our employees to continue to build their skills and increase their effectiveness as members of a team, including offering a variety of external and internal classes and training sessions as well as hands-on learning and one-on-one mentorship.

In order to support a culture of learning, we provide many training opportunities for our employees to continue to build their skills and increase their effectiveness as members of a team, including offering access to a variety of classes and training sessions as well as hands-on learning and one-on-one mentorship.

We continue to encourage dialogue between managers and employees.

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Our no retaliation policy prohibits retaliation against those who report activities believed in good faith to be a violation of any law, rule, regulation or internal policy.

We maintain and ensure compliance of all directors, officers and employees to our Code of Business Conduct and Ethics (the “Code of Ethics”) which is acknowledged in writing on joining and annually by all our employees, as a continued condition of employment.

Our Code of Ethics establishes applicable policies, guidelines, and procedures that promote ethical practices and conduct by the Company and all its employees, officers, and directors.

Our Code of Ethics can be found on our website at https:/investor.newtekbusinessservices.com/corporate-governance .

We aim to provide a safe environment at work.

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Code of Ethics

We have adopted a code of ethics pursuant to Section 5610 of the Nasdaq Corporate Governance Requirements that establishes procedures for personal investments and restricts certain transactions by our personnel.

Our code of ethics generally does not permit investments by our employees in securities that may be purchased or held by us.

We maintain and ensure compliance of all directors, officers and employees to our Code of Business Conduct and Ethics (the “Code of Ethics”) which is acknowledged in writing upon joining the Company and annually by all our employees, as a continued condition of employment.

Our Code of Ethics establishes applicable policies, guidelines, and procedures that promote ethical practices and conduct by the Company and all its employees, officers, and directors.

The Code of Ethics, which complies with Section 5610 of the Nasdaq Corporate Governance Requirements, establishes procedures for personal investments and restricts certain transactions by our personnel.

The code of ethics is published and available on the Company’s website at https://investor.newtekbusinessservices.com/corporate-governance, is attached as an exhibit and is available on the EDGAR Database on the SEC’s Internet site at www.sec.gov .

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We will continue to monitor our compliance with all future listing standards that are approved by the SEC and will take actions necessary to ensure that we are in compliance therewith.

SBA Regulation of SBA 7(a) Lenders

Newtek Bank is licensed by the SBA to make loans under the SBA 7(a) Program and our wholly-owned subsidiary, NSBF, is licensed by the SBA as an SBLC that originated loans through the SBA 7(a) Program.

NSBF is currently winding down its operations and is no longer originating new SBA 7(a) loans, but remains subject to SBA regulation during its wind-down process.

(See Wind-down Agreement below.)

The SBA generally reduces risks to lenders by guaranteeing major portions of qualified loans made to small businesses.

This enables lenders to provide financing to small businesses when funding may otherwise be unavailable or not available on reasonable terms.

Under the SBA 7(a) Program, the SBA typically guarantees 75% of qualified loans over $150,000.

The eligibility requirements of the SBA 7(a) Program vary by the industry of the borrower and affiliates and other factors.

The SBA grants PLP status to certain lenders originating SBA 7(a) loans based on achievement of certain standards in lending, which are regularly monitored by the SBA.

Newtek Bank has been granted national PLP status and originates, sells and services SBA 7(a) loans.

As a Preferred Lender, Newtek Bank is authorized to place SBA guarantees on SBA 7(a) loans without seeking prior SBA review and approval.

Designated PLP lenders are delegated the authority to process, close, service, and liquidate most SBA guaranteed loans without prior SBA review.

PLP lenders are authorized to make SBA guaranteed loans, subject only to a brief eligibility review and assignment of a loan number by SBA.

In addition, they are expected to handle servicing and liquidation of all of their SBA loans with limited involvement of SBA.

If Newtek Bank were to lose PLP status, it would have a material adverse impact on its ability to originate loans at current levels.

See “Item 1A.

Risk Factors - Risks Related to SBA Lending - There can be no guarantee that Newtek Bank will be able to maintain its SBA 7(a) lending license and PLP status.”

Pursuant to the SBA’s regulations, the SBA is released from liability on its guaranty of a SBA 7(a) loan and may, in its sole discretion, refuse to honor a guaranty purchase request in full or in part, or recover from the lender all or part of the funds already paid in connection with a guaranty purchase, if the lender failed to comply materially with an SBA Loan Program Requirement;

failed to make, close, service or liquidate the loan in a prudent manner;

placed the SBA at risk through improper action or inaction;

failed to disclose a material fact to the SBA in a timely manner;

or misrepresented a material fact to the SBA regarding the loan.

In certain instances, the SBA may refuse to honor a guaranty purchase request in full (referred to by the SBA as a “denial”) or in part (referred to by the SBA as a “repair”), or recover all or part of the funds already paid in connection with a guaranty purchase.

In the event of a repair or denial, liability on the guaranty, in whole or part, would be transferred to NSBF or Newtek Bank.

In addition, the growth in the number of loans made by Newtek Bank, changes in SBA regulations and economic factors may adversely impact our current repair and denial rates.

See “Item 1A.

Risk Factors - Risks Related to SBA Lending - We have specific risks associated with our secondary market sales of the guaranteed portions of SBA loans.”

On April 13, 2023, the Company, NSBF and the SBA entered into the Wind-down Agreement, pursuant to which NSBF has been winding-down its operations and NSBF’s SBA 7(a) pipeline of new loans were transitioned to Newtek Bank.

During this wind-down process, NSBF continues to own the SBA 7(a) loans and PPP Loans currently in its SBA loan portfolio to maturity, liquidation, charge-off or (subject to SBA’s prior written approval) sale or transfer.

SBL is servicing and liquidating NSBF’s SBA loan portfolio pursuant to an SBA approved lender service provider agreement.

The Company has guaranteed certain of NSBF’s obligations to the SBA.

Taxation as a Financial Holding Company

Prior to our conversion on January 6, 2023 to a financial holding company from a BDC, for any taxable year in which we qualified as a RIC and satisfied the Annual Distribution Requirement, we generally were not be subject to U.S.

federal income tax on the portion of our income we distributed to our stockholders.

In order to comply with these requirements, we maintained a dividend policy of making quarterly distributions in an amount that approximated 90 - 100% of the Company's annual taxable income.

Beginning with 2023, the Company and its subsidiaries no longer qualify as a RIC and files a consolidated U.S.

Beginning with 2023, the Company and its subsidiaries no longer qualify as a RIC and file a consolidated U.S.

federal income tax return.

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Taxable income is generally calculated under applicable sections of the Internal Revenue Code of 1986, as amended (the “Code”), including Sections 581 through 597 that apply specifically to financial institutions.

Some modifications are required by state law and the 2017 tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act").

Among other things, the Tax Act (i) established a new, flat corporate federal statutory income tax rate of 21%, (ii) eliminates the corporate alternative minimum tax and allowed the use of any such carryforwards to offset regular tax liability for any taxable year, (iii) limited the deduction for net interest expense incurred by U.S.

corporations, (iv) allowed businesses to immediately expense, for tax purposes, the cost of new investments in certain qualified depreciable assets, (v) eliminated or reduced certain deductions related to meals and entertainment expenses, (vi) modified the limitation on excessive employee remuneration to eliminate the exception for performance-based compensation and clarified the definition of a covered employee and (vii) limited the deductibility of deposit insurance premiums.

Some modifications are required by state law and the One Big Beautiful Bill Act ("OBBBA") that was enacted in the U.S on July 4, 2025.

The OBBBA includes significant tax related provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The legislation has multiple effective dates, with certain provisions effective in the Company's fiscal year 2025 and others to be implemented through 2027.

There can be no assurance as to the actual effective income tax rates impacting the amounts and timing of cash flows and the amounts of income tax expense recorded by the Company, because such rates will be dependent upon the nature and amount of future income and expenses as well as actual investments generating investment tax credits and transactions with discrete tax effects.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business