What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2026-03-10 compared with 2025-03-17 · 83 added, 98 removed, 714 unchanged (20% of the section changed)

16 unchanged sentences

• Federal law may discourage certain acquisitions of our common stock which could have a material adverse effect on our shareholders.

• The 2023 withdrawal of the Company’s election to be regulated as a BDC resulted in a significant change in our accounting and financial reporting requirements.

• If we are deemed to be an investment company under the Investment Company Act of 194, we will not be able to be successfully execute our business strategy.

• If we are deemed to be an investment company under the Investment Company Act of 1940, we will not be able to successfully execute our business strategy.

Risks Related to the Economy

13 unchanged sentences

• We may expose ourselves to risks as we engage in hedging transactions.

• The impact of artificial intelligence on our business

• An inability to maintain adequate liquidity could jeopardize our business and financial condition.

2 unchanged sentences

As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock.

• During 2023 and 2024, we identified and remediated material weaknesses in our internal controls over financial reporting which, if not remediated, could have adversely affected our ability to report our financial condition and results of operations in a timely and accurate manner, investor confidence in our Company and, as a result the value of our common stock.

• Our business is subject to increasingly complex governance, public disclosure and accounting requirements that are costly and could adversely affect our business and financial results.

23 unchanged sentences

Risks Related to Newtek Bank

• If the credit decisioning, pricing, loss forecasting and scoring models we use contain errors, do not adequately assess risk, or are otherwise ineffective, our reputation and relationships with customers could be harmed, our market share could decline and the value of loans held on our balance sheet may be adversely affected.

• If the credit loss forecasting and scoring models we use contain errors, do not adequately assess risk, or are otherwise ineffective, our reputation and relationships with customers could be harmed, our market share could decline and the value of loans held on our balance sheet may be adversely affected.

• If collection efforts on delinquent loans are ineffective or unsuccessful, the return on investment for investors in those loans would be adversely affected and investors may not find investing through our marketplace bank desirable.

11 unchanged sentences

• Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.

Risks Related to our Outstanding Indebtedness

• We are subject to 150% asset coverage requirements due to covenants contained in certain of our outstanding debt.

Risks Related to Cybersecurity

• We could be adversely affected by information security breaches or cyber security attacks.

Risks Related to Cybersecurity, Data and Our Intellectual Property

• We and our third party IT servicer could be adversely affected by information security breaches or cyber security attacks.

• The failure in cyber-security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.

• We and our subsidiaries are subject to risks associated with “phishing” and other cyber-attack.

• The impact of cyber-attacks suffered by third parties.

• The collection, storage and use of personal data.

• Protecting our intellectual property rights, including our patents and trademarks;

• The development and our use of artificial intelligence (“AI”).

• Technological advances such as AI that may enable malicious actors to develop more advanced social engineering attacks, including targeted phishing attacks.

General Risk Factors

29 unchanged sentences

presidential administrations or one or both houses of Congress and public sentiment regarding financial institutions (which can be influenced by scandals and other incidents that involve participants in the industry).

Recent political developments, including the new U.S.

Recent political developments, including the current U.S.

presidential administration, have added additional uncertainty with respect to new laws or regulations or changes in the interpretations or enforcement of existing laws or regulations, including potential deregulation in some areas.

1 unchanged sentence

Changes in laws and regulations may increase our operating costs or reduce our revenues, limit the types of financial services and products we may offer, alter the investments we may make, affect the way we conduct our business and operations, increase our litigation and regulatory costs, and enhance the ability of others to offer more competitive financial services and products.

We continue to devote substantial time and resources to risk management, compliance, regulatory-change management, and cybersecurity and other technology initiatives, each of which—whether successful or not—also may adversely affect our ability to operate profitably or to pursue advantageous business opportunities.

For example, the federal banking agencies issued a final rule in October 2023 that largely begins to apply in January 2026 and may make it more challenging and/or costly for insured depository institutions to achieve an Outstanding or Satisfactory CRA rating.

If Newtek Bank is unable to maintain at least a “Satisfactory” CRA rating, its ability to complete the acquisition of another financial institution or open a new branch will be adversely impacted.

Newtek Bank received a rating of “Satisfactory” in its most recent CRA performance evaluation.

We are unable to predict how future legislative proposals or programs will be administered or implemented or in what form, or whether any additional or similar changes to statutes or regulations, including the interpretation or implementation thereof, will occur in the future.

Any such action could affect us in substantial and unpredictable ways and could have an adverse effect on our anticipated business operations.

We continue to devote substantial time and resources to risk management, compliance, regulatory-change management, cybersecurity and other technology initiatives, each of which—whether successful or not—also may adversely affect our ability to operate profitably or to pursue advantageous business opportunities.

Our inability to comply with regulatory requirements in a particular jurisdiction could have a material adverse effect on our anticipated operations in that market and on our reputation generally.

27 unchanged sentences

These provisions could delay or prevent a third party from acquiring us, despite the possible benefit to our shareholders, or otherwise adversely affect the market price of our common stock.

The 2023 withdrawal of the Company’s election to be regulated as a BDC resulted in a significant change in our accounting and financial reporting requirements.

Due to the Company’s withdrawal of its election to be regulated as a BDC on January 6, 2023, the Company is no longer subject to FASB Accounting Standards Codification Topic 946, Financial Services – Investment Companies, which resulted in a significant change in our accounting and financial reporting requirements;

for example, certain of our current subsidiaries were deemed portfolio (controlled or majority-owned) companies and were not consolidated in our financial statements prior to 2023.

However, beginning with the first quarter of 2023, we were required to consolidate the financial statements of these portfolio companies (now consolidated subsidiaries), which was a significant change in our accounting and financial reporting requirements.

As disclosed in Part II - Item 9A.

of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, these significant changes in our accounting and financial reporting requirements resulted in failures by the Company to adequately and timely identify financial reporting risks and the associated identification of key controls in connection therewith, resulting in material weaknesses in our internal controls that impacted the overall effectiveness of our internal controls over financial reporting (“ICFR”).

We have taken actions to enhance our ICFR relating to the material weaknesses identified and throughout the year ended December 31, 2024, our management executed upon its previously disclosed remediation plan (see “Item 9A.

Controls and Procedures.” and “Item 1A.

Risk Factors - Risks Related to Our Business and Structure).

Based upon testing of the design and operating effectiveness of the re-designed control environment during the year ended December 31, 2024, management found them to be operating effectively.

As a result, management has concluded that the material weaknesses in ICFR have been remediated as of December 31, 2024.

Because of its inherent limitations, management does not expect that our disclosure controls and procedures or our ICFR will prevent or detect all error and fraud.

Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

Ineffective internal controls over financial reporting could adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, investor confidence in our company and, as a result, the value of our common stock.”

If we are deemed to be an investment company under the Investment Company Act of 1940, we will not be able to successfully execute our business strategy.

Certain of our subsidiaries rely on Rule 3a-7 to exclude their securitization activities from the definition of an “investment company” under the 1940 Act.

Certain of our subsidiaries rely on Rule 3a-7 under the 1940 Act to exclude their securitization activities from their meeting the definition of an “investment company” under the 1940 Act.

Additionally, the Company has determined that, after withdrawing its election to be treated as a business development company, it is not an “investment company” because it neither holds more than 40% of its assets in “investment securities,” nor is it primarily engaged in, or holding itself out as being primarily engaged in, the business of investing, reinvesting or trading in securities.

9 unchanged sentences

These impacts can be exacerbated by failures of governments and societies to adequately respond to an emerging event or threat.

economy has been undergoing a period of change and significant uncertainty.

A number of factors have been causing this change and uncertainty, including changing inflation and interest rates, evolving government policies and changing U.S.

consumer spending patterns.

Our business is sensitive to and may be adversely impacted by uncertainty with respect to changes in the inflation and interest rate environment.

Among other things, as inflation and interest rates increase existing borrowers may negatively, thereby potentially increasing their risk of default by reducing their ability to make loan payments, which may lead to us taking additional provision for credit losses;

the rates at which we offer on our deposit products may be elevated to achieve desired levels of deposits and thereby increase our cost of funding;

and the returns our loans generate may be lower.

Uncertainty can result in or coincide with, among other things:

18 unchanged sentences

presidential election.

The outcomes of the elections are expected to result in changes in policy, which could also have adverse effects on us or the business environment in which we operate more generally.

For example, the new U.S.

The outcomes of the elections could result in changes in policy, which could have adverse effects on us or the business environment in which we operate more generally.

For example, the current U.S.

presidential administration has imposed or increased tariffs, including on imports from China, and proposed imposing or increasing tariffs on U.S.

14 unchanged sentences

• increases in cyber risk as criminals may take advantage of the changes of business practices necessitated by a public health emergency.

If the economy is unable to substantially reopen or remain reopened after a public health emergency, and high levels of unemployment continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase.

If the economy is unable to substantially reopen or remain open after a public health emergency, and high levels of unemployment continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase.

In addition, collateral for our loans may decline in value, which could cause loan losses to increase and the net worth and liquidity of loan guarantors could decline, impairing their ability to honor commitments to us.

22 unchanged sentences

Any deterioration in the quality of our assets could result in future unrealized losses and require increased loan loss reserves and therefore negatively impact our financial condition or results of operations.

A meaningful rise in inflation during 2021 and through 2022 prompted the Federal Reserve to sharply increase the federal funds rate during 2022 and 2023 before it decreased the rate at the end of 2024.

The Federal Reserve may further raise or lower interest rates in response to economic conditions, particularly inflationary pressures and unemployment statistics.

24 unchanged sentences

made products could have a significantly negative impact on global trade and on the economic growth and prosperity of the countries involved.

In addition, these tariffs could cause significant economic damage to the specific businesses and industries being targeting with these punitive tariffs, and could in the long run result in higher consumer prices but it could also result in an increase in the cost of manufactured and imported goods.

In addition, these tariffs could cause significant economic damage to the specific businesses and industries being targeted with these punitive tariffs, and could in the long run result in higher consumer prices but it could also result in an increase in the cost of manufactured and imported goods.

Volatility in exchange rates of the major currencies, including that of China, and the price of crude oil and natural gas and of other commodity prices, among other factors, could adversely impact the financial and credit markets, including the availability of debt and equity capital.

5 unchanged sentences

Terrorist attacks, acts of war, global health emergencies or natural disasters may impact the businesses in which we invest and harm our business, operating results and financial condition.

Terrorist acts, acts of war, global health emergencies or natural disasters, including the recent Los Angeles wild fires, may disrupt our operations, as well as the operations of the businesses in which we invest.

Terrorist attacks, acts of war, global health emergencies or natural disasters, may disrupt our operations, as well as the operations of the businesses in which we invest.

Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability.

96 unchanged sentences

Legal entity liquidity is an important consideration as there are legal, regulatory, contractual and other limitations on our ability to utilize liquidity from one legal entity to satisfy the liquidity requirements of another, which could result in adverse liquidity events at either NewtekOne and/or Newtek Bank.

Applicable laws and regulations, including capital and liquidity requirements and the Operating Agreement, could restrict our ability to transfer funds between Newtek Bank and NewtekOne, which could adversely affect our cash flow and financial condition.

Applicable laws and regulations, including capital and liquidity requirements could restrict our ability to transfer funds between Newtek Bank and NewtekOne, which could adversely affect our cash flow and financial condition.

Additionally, applicable laws and regulations may restrict what NewtekOne is able to do with the liquidity it does possess, which may adversely affect our business and results of operations.

Further, pursuant to the Operating Agreement we have made certain commitments to the OCC which requires Newtek Bank to hold capital incremental to the “well capitalized” thresholds under the applicable standards, which could also impact the Company’s ability to invest in and grow assets.

Further, Newtek Bank is required to remain “well capitalized” under the applicable standards, which could impact the Company’s ability to invest in and grow assets.

From time to time, regulators may implement changes to these capital adequacy and liquidity requirements.

29 unchanged sentences

newly created series of IPM non-voting preferred stock, the Series A Non-Voting Common Equivalent Stock (the “Preferred

Refer to “Subsequent Events - Sale of NTS.” We currently anticipate retaining the Preferred Stock and our

investment in the Preferred Stock will be reflected on our balance sheet and valued on a quarterly basis in accordance with ASC

321, beginning in the first quarter of 2025.

IPM common shares have historically been thinly traded and may not be easily sold

or exchanged without a significant change in price, which can lead to volatile changes in the market price for IPM common

Volatile changes in the market price for IPM common shares could have a material impact on the value of the Preferred

Stock, up or down, as reflected on our balance sheet on a quarter to quarter basis.

Refer to NOTE 4—INVESTMENTS.

We retain the Preferred Stock and our investment in the Preferred Stock is reflected on our balance sheet and valued on a quarterly basis in accordance with ASC 321.

IPM common shares have historically been thinly traded and may not be easily sold or exchanged without a significant change in price, which can lead to volatile changes in the market price for IPM common shares.

Volatile changes in the market price for IPM common shares could have a material impact on the value of the Preferred Stock, up or down, as reflected on our balance sheet on a quarter to quarter basis.

Also pursuant to the terms of the Agreement to sell NTS to IPM, we received the right to receive additional cash or shares of IPM in the future, provided that IPM earns certain levels of “Adjusted EBITDA” over a two to three year period following the sale (“IPM Earnout”).

We will be required to recognize an estimate of value associated with the IPM Earnout in 2025 and

remeasure it value on a recurring basis, which could positively or negatively impact our earnings and further compound the

We are required to recognize an estimate of value associated with the IPM Earnout in 2025 and

remeasure it on a recurring basis, which could positively or negatively impact our earnings and further compound the

volatility associated with the value of IPM stock referenced above.

3 unchanged sentences

earnings and capital could be negatively impacted.

Our development and use of AI presents risks that could adversely impact our business, financial condition and results of operations.

We have been and continue to incorporate AI technology in certain business processes, including our loan origination processes, and we or our third-party service providers may develop or incorporate AI in additional business processes, products or services.

The use of AI may present a number of risks and challenges, including how the legal and regulatory environment relating to AI is rapidly evolving, with new laws being adopted and regulations on the use of AI being promulgated, which could require changes to our use of AI technology.

these new laws and regulations could limit our ability to integrate AI, specifically in the areas of lending, which could raise concerns for regulators or result in litigation.

AI technology that we use or may use could result in us taking action that is inaccurate or incomplete, infringes on intellectual property rights of others or is otherwise harmful.

There can be no assurance that any products or services that utilize AI will be successful nor is there any assurance that our use of AI will improve our business or that anticipated benefits of AI will be realized.

An inability to effectively implement AI may negatively impact our business, financial condition and results of operations.

Our business may be adversely affected if our risk management framework does not effectively identify, assess and mitigate risk.

Our risk management framework seeks to appropriately balance risk and return and mitigate our risks, including risks attributable to third parties.

We have established policies intended to regularly identify and assess our risk profile, including credit risk, pricing risk, liquidity risk, strategic risk and operational risk, and then implement appropriate processes and controls to mitigate risk.

If our risk management framework does not effectively identify, assess and/or mitigate our risk profile, we could suffer unexpected losses or be adversely affected, which could have a material adverse effect on our business.

For example, assessment of our risk profile depends, in part, upon the use of forecasting models.

If these models are ineffective at predicting future losses or are otherwise inadequate, we may incur unexpected losses or otherwise be adversely affected.

In addition, the information we use may be inaccurate or incomplete, both of which may be difficult to detect and avoid.

Inaccuracies in the input data as well as issues with the quality and effectiveness of our data or parameters used in our models may further increase the risks to which we are subject.

These risks may be amplified to the extent our models utilize Artificial Intelligence, machine learning or other emerging technologies, to among other things, gather and analyze customer data.

Weaknesses or inaccuracies in the algorithms or datasets underlying our models could result in deficient or biased data outputs or other unintended consequences, including ineffective decision making or reporting errors.

There may also be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated.

Our Risk Management Framework may not effectively identify, assess, or mitigate all risks, which could adversely affect our business, financial condition, and results of operations.

We maintain an enterprise-wide risk management framework designed to identify, assess, monitor, and mitigate the various risks inherent in our business, including credit, market, liquidity, operational, compliance, and strategic risks.

Although we continuously enhance our risk management processes, policies, and systems, there can be no assurance that our framework will be effective in all market environments or against all emerging or unforeseen risks.

Our risk management framework relies on a combination of risk assessments, internal controls, reporting processes, and the judgment of management.

These elements are inherently limited and may not always accurately or fully capture the nature, severity, or likelihood of risks we face.

Risk Assessments may be based on historical data or assumptions that prove inaccurate under stress or in rapidly changing economic conditions.

Further, these assessments may be incomplete or influenced by human error.

Control processes may fail or be overridden.

In addition, our framework depends on timely and accurate information from across the organization, and incomplete, delayed, or inaccurate data can impair our ability to identify or react to risks promptly.

Furthermore, new risks may emerge, and existing risks may evolve in ways that our current policies and procedures may not anticipate.

For example, technological disruptions, cybersecurity threats, changes in customer behavior, regulatory developments, or adverse economic conditions may expose limitations in our risk identification and mitigation capabilities.

If our controls, monitoring tools, or governance structures fail to detect or address such risks in a timely and effective manner, we could experience unexpected losses, operational disruptions, regulatory scrutiny, or reputational damage.

If our risk management framework does not effectively identify, assess, or mitigate the full range of risks to which we are exposed, our business, financial condition, capital and liquidity position, and results of operations could be materially and adversely affected.

Finally, our risk management framework may be deemed insufficient or inadequate by our regulators, which have in the past required, and we expect to continue to require, that we invest additional resources into remediating any deficiencies and adversely impact our ability to operate our business until such time as the revised framework is deemed sufficient and adequate by our regulators.

12 unchanged sentences

During 2023 and 2024, we identified and remediated material weaknesses in our internal controls over financial reporting which, if not remediated, could have adversely affected our ability to report our financial condition and results of operations in a timely and accurate manner, investor confidence in our Company and, as a result, the value of our common stock.

We have assessed the effectiveness of our internal controls over financial reporting based upon the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on this assessment, we concluded that we did not maintain effective internal controls over financial reporting as of December 31, 2023, as a result of the material weaknesses described in “Item 9A.

Controls and Procedures,” herein.

During 2024, we took actions to enhance our internal controls over financial reporting relating to the material weaknesses identified as of December 31, 2023, and have remediated each of the material weaknesses as set forth in “Item 9A.

Controls and Procedures.” We can give no assurance that additional material weaknesses or significant deficiencies in our internal controls over financial reporting will not be identified in the future.

During 2023 and 2024, we identified and remediated material weaknesses in certain of our internal controls over financial reporting.

We can give no assurance that additional material weaknesses or significant deficiencies in our internal controls over financial reporting will not be identified in the future.

A failure by us to timely and effectively remediate any future material weaknesses or significant deficiencies in our internal controls could prevent us from accurately and timely reporting our financial results and could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

34 unchanged sentences

There can be no guarantee that Newtek Bank will be able to maintain its SBA 7(a) lending license.

The loss Newtek Bank’s SBA 7(a) lending license would negatively impact our results of operations.

The loss of Newtek Bank’s SBA 7(a) lending license would negatively impact our results of operations.

Further, there can be no assurance that Newtek Bank will be able to maintain its status as a PLP.

2 unchanged sentences

As a result of the Acquisition, all SBA 7(a) loan originations were transitioned to Newtek Bank in April 2023, and NSBF has ceased 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 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.

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 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, has restrictions on its ability to make dividends and distributions to its parent, and remains liable to SBA for post-purchase denials and repairs, from the proceeds generated by NSBF’s SBA loan portfolio.

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

In addition, the Company has agreed to guarantee NSBF’s obligations to the SBA and has deposited $ 10.0 million at Newtek Bank to secure NSBF’s potential obligations to the SBA.

In addition, the Company has agreed to guarantee NSBF’s obligations to the SBA and has established a reserve account of $10.0 million to secure NSBF’s potential obligations to the SBA.

We have specific risks associated with our secondary market sales of the guaranteed portions of SBA loans.

1 unchanged sentence

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 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.

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 the 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.

10 unchanged sentences

If NSBF or Newtek Bank fail to comply with SBA regulations in connection with the origination, servicing, or liquidation of an SBA 7(a) loan, liability on the SBA guaranty, in whole or in part, could be transferred to NSBF or Newtek Bank.

Since we sell the guaranteed portion of substantially all of our SBA 7(a) loan portfolio, we retain credit risk on the non-guaranteed portion of the SBA loans.

Since we sell the guaranteed portion of our SBA 7(a) loan portfolio, we retain credit risk on the non-guaranteed portion of the SBA loans.

We share pro rata with the SBA in any recoveries.

7 unchanged sentences

Although the SBA 7(a) Program has been in existence since 1953, there can be no assurance that the federal government will maintain the SBA 7(a) Program or the SBA 504 loan program, or that it will continue to guarantee loans at current levels.

Furthermore, in an effort to support our communities during the pandemic, we participated in the PPP under the CARES Act whereby we made loans to small businesses and those loans are subject to the regulatory requirements that require forbearance of loan payments for a specified time or limit our ability to pursue all available remedies in the event of a loan default.

If the borrower under the PPP loan fails to qualify for loan forgiveness, we may be at the heightened risk of holding these loans at unfavorable interest rates as compared to the loans to customers that we would have otherwise extended credit.

If we cannot continue originating and selling government-guaranteed loans, we will generate fewer origination fees and our ability to generate gains on the sale of loans will decrease.

21 unchanged sentences

At the time, the government shutdown affected SBA 7(a) lenders’ ability to originate SBA 7(a) loans.

More recently, the government shut down in January 2018 due to a lapse in appropriations, and the SBA closed all non-disaster related programs and activities, including the SBA 7(a) program.

More recently, the government shut down in January 2018 and for 43 days from October to November 2025 (the longest shutdown in U.S.

history) due to a lapse in appropriations, and the SBA closed all non-disaster related programs and activities, including the SBA 7(a) program.

The government could again fail to fund the SBA which would affect Newtek Bank’s ability to originate government guaranteed loans and to sell the government guaranteed portions of those loans in the secondary market.

58 unchanged sentences

ADDITIONAL RISKS RELATED TO NEWTEK BANK

If the credit decisioning, pricing, loss forecasting and scoring models we use contain errors, do not adequately assess risk, or are otherwise ineffective, our reputation and relationships with customers could be harmed, our market share could decline and the value of loans held on our balance sheet may be adversely affected.

Our ability to attract clients to, and build trust in, Newtek Bank is significantly dependent on our ability to effectively evaluate a borrower’s credit profile and likelihood of default.

To conduct this evaluation, we utilize credit decisioning, pricing, loss forecasting and scoring models that assign each loan offered through our marketplace bank a grade and a corresponding interest rate.

Our models are based on algorithms that evaluate a number of factors, including behavioral data, transactional data, bank data and employment information, which may not effectively predict future loan losses.

If we are unable to effectively segment borrowers into relative risk profiles, we may be unable to offer attractive interest rates for borrowers and risk-adjusted returns for investors.

Additionally, if these models fail to adequately assess the creditworthiness of our borrowers, we may experience higher than forecasted losses.

If the credit loss forecasting and scoring models we use contain errors, do not adequately assess risk, or are otherwise ineffective, our reputation and relationships with customers could be harmed, our market share could decline and the value of loans held on our balance sheet may be adversely affected.

Our ability to attract clients and referral partners to, and build trust in, Newtek Bank is significantly dependent on our ability to effectively evaluate a borrower’s credit profile and likelihood of default.

One of the tools we use to conduct this evaluation, is a credit scoring model that assigns each loan we originate a score.

Our models are based on algorithms that evaluate a number of factors, including performance, transactional, bank and employment information, which may not effectively predict future loan losses.

If we are unable to effectively segment borrowers into relative risk profiles, this may negatively affect our ability to offer appropriate risk-adjusted returns for our investors.

Additionally, if these models fail to adequately assess the creditworthiness of our borrowers, that may contribute to higher than forecasted losses.

Furthermore, as stated above, we hold loans on our balance sheet.

We periodically assess the value of these loans and in doing so we review and incorporate a number of factors including forecasted losses.

Accordingly, if we fail to adequately assess the creditworthiness of our borrowers such that we experience higher than forecasted losses, the value of the loans held on our balance sheet may be adversely affected.

We continually refine these algorithms based on new data and changing macroeconomic conditions.

However, there is no guarantee that the credit decisioning, pricing, loss forecasting and scoring models that we use have accurately assessed the creditworthiness of our borrowers, or will be effective in assessing creditworthiness in the future.

Similarly, if any of these models contain programming or other errors, are ineffective or the data provided by borrowers or third parties is incorrect or stale, our loan pricing and approval process could be negatively affected, resulting in mispriced or misclassified loans or incorrect approvals or denials of loans.

If these errors were to occur, we may be obligated to repurchase the affected loans, investors may try to rescind their affected investments or decide not to invest in loans in the future or borrowers may seek to revise the terms of their loans or reduce the use of our marketplace bank for loans.

We periodically assess the appropriateness of the carrying value of these loans and in doing so we review and incorporate a number of factors including forecasted losses.

Accordingly, if we fail to adequately assess the creditworthiness of our borrowers such that we experience higher than forecasted losses, the carrying value of the loans held on our balance sheet may be adversely affected.

We continually refine these algorithms and assessments based on new data and changing macroeconomic conditions and engage independent third party partners to test and assess their effectiveness.

However, there is no guarantee that the credit scoring models that we use have and will continue to accurately assist in the assessment of the creditworthiness of our borrowers, or will be effective in assessing creditworthiness in the future.

Similarly, if any of these models contain programming or other errors that are outside of the representations and warranties of our scoring model provider, are ineffective or the data provided by borrowers or third parties is incorrect or stale, our approval process could be negatively affected, resulting in misclassified loans or incorrect approvals or denials of loans.

If collection efforts on delinquent loans are ineffective or unsuccessful, the return on investment for investors in those loans would be adversely affected and investors may not find investing through our marketplace bank desirable.

32 unchanged sentences

Our business strategy relies in part upon the originations of loans using the resources available to us, including our common stock.

Additionally, we anticipate granting additional options or restricted stock awards to our employees and directors in the future pursuant to the 2023 Stock Incentive Plan, which has reserved a maximum of 3,000,000 shares of common stock for issuance to our employees and directors, and 2,420,966 shares of common stock remain available for issuance as of December 31, 2024.

Additionally, we anticipate granting additional options or restricted stock awards to our employees and directors in the future pursuant to the Company’s 2023 Stock Incentive Plan, which has reserved a maximum of 3,000,000 shares of common stock for issuance to our employees and directors, and 2,439,344 shares of common stock remain available for issuance as of December 31, 2025.

We may also issue additional securities, through public or private offerings, in order to raise capital.

17 unchanged sentences

Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.

The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more difficult a change in control of Newtek or the removal of our directors.

The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more difficult a change in control of the Company or the removal of our directors.

We are subject to the Maryland Business Combination Act.

5 unchanged sentences

These provisions, as well as other provisions of our charter and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our shareholders.

RISKS RELATED TO OUR OUTSTANDING INDEBTEDNESS

We are subject to 150% asset coverage requirements due to covenants contained in certain of our outstanding debt.

Certain of our outstanding debt include covenants requiring us to comply with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a) of the 1940 Act (or any successor provisions), to comply with (regardless of whether we are subject to) the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) of the 1940 Act as modified by Section 61(a) of the 1940 Act and to provide financial information to the holders of the Notes and the Trustee if we should no longer be subject to the reporting requirements under the Exchange Act.

As a result, we are subject to 150% asset coverage requirements under the 1940 Act even though we are not regulated as a BDC.

Under these requirements we are only permitted to issue multiple classes of indebtedness and one class of shares senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance.

The ratio of our total assets (less total liabilities other than indebtedness represented by senior securities) to our total indebtedness represented by senior securities plus preferred stock, if any, must be at least 150%.

RISKS RELATED TO CYBERSECURITY

We could be adversely affected by information security breaches or cyber security attacks.

We and our third party IT servicer could be adversely affected by information security breaches or cyber security attacks.

Our business operations and our subsidiaries’ business operations rely upon secure information technology systems for data processing, storage and reporting.

43 unchanged sentences

If we fail to comply with the relevant laws and regulations, we could suffer financial losses, a disruption of our businesses, liability to investors, regulatory intervention or reputational damage.

We and our service providers continue to be impacted by the increase in remote work.

Policies of extended periods of remote working, whether by us or by our service providers, could strain technology resources, introduce operational risks and otherwise heighten the risks described above.

We have adopted a remote working environment for a majority of our employees.

Policies regarding remote working, whether by us or by our service providers, can introduce operational risks and otherwise heighten the risks described above.

Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts.

Accordingly, the risks described above are heightened under current conditions.

Accordingly, the risks described above may be heightened under our remote working environment.

We and our subsidiaries are subject to risks associated with “phishing” and other cyber-attack.

33 unchanged sentences

federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S.

Treasury Department.Significant changes to the existing U.S.

Treasury Department.

Significant changes to the existing U.S.

tax rules have been enacted in recent years, and there are a number of proposals in Congress that would similarly modify the existing U.S.

26 unchanged sentences

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 1A. Risk Factors