SBA titan NewtekOne expands its alternative loan portfolio
By John Reosti
NewtekOne in Boca Raton, Florida, is leaning into a loan program it believes may one day surpass its indus- try-leading Small Business Administration 7(a) lending operation in size.
Known for its SBA-lending prowess, Newtek, the holding company for the $1.25 billion-asset New- tek Bank, began making non-SBA loans in 2019. Small-business borrowers are attracted to the long du- rations — up to 25 years without balloon payments — Newtek offers through its Alternative Loan Program, but macroeconomic issues have hamstrung its develop- ment, CEO Barry Sloane told American Banker.
“In 2019, we had to slow this down for COVID. Then in 2023, we had to slow it down due to the banking cri- sis and availability of capital,” Sloane said. And while the company is grappling with higher-for-longer inter- est rates and inflation currently, the pace of business is strong enough for Newtek to depress the accelerator.
“The independent business owner has been chal- lenged, particularly with rates being higher ... but we’re still finding good credits and there’s plenty of business to be done,” Sloane said.
Last week, Newtek announced a $70 million increase to the Deutsche Bank revolving credit facility it uses to fund the alternative loan program, taking it to $170 mil- lion. Full-year originations, which totaled $250 million in 2024, are expected to surpass $400 million and may reach $500 million. “The performance that we’ve got has been very strong,” Sloane said.
“We’re very thankful that Deutsche Bank had a lot of confidence in our organization and thought this is something that we could do,” Sloane added. “They re- ally jumped into this business early on.”
As with its SBA production, Newtek makes its alter- native loans with an eye toward selling them. It’s com- pleted three securitizations since 2021, the most recent one a $184 million transaction that closed in April.
NewtekOne in Boca Raton, Florida, plans to expand its portfolio of non-SBA alternative loans buoyed by a larger revolving loan facility from Deutsche Bank.
Newtek Bank
According to Sloane, the alternative loan programfits established businesses that are on the verge ofoutgrowing their SBA eligibility but don’t yet qual-ify for conventional bank funding. For them, longerduration financing offers a means to control expensesand grow revenue.
“When you give a borrower a longer-term ability torepay the principal, you’re basically giving them eq-uity, because you’re allowing them to retain the cashflows in the business longer, which they can plowback into other things.
”The alternative loan program’s expansion is partof a wider growth trend at Newtek, which expects tomake 2,700 loans of all types in 2025, up from 2,400last year. SBA 7(a) loans, Newtek’s biggest businessline, is also enjoying significant growth, with lendingvolume in the agency’s 2025 fiscal year on pace tosurpass fiscal 2024 by a wide margin.
Deposits, too, are growing, with Sloane forecastingthat the number of depositors Newtek serves wouldsurpass 17,000 in 2025. “When we took the bank over,we were dealing with a couple hundred,” he said. De-posits totaled $1 billion on March 31, up from $513million a year earlier.
Newtek was founded as a nonbank business develop-ment company. It acquired the $208 million-asset Na-tional Bank of New York City in January 2023. Thoughaccess to lower-cost deposit funding has spurredgrowth, investors have responded unenthusiastically.Newtek shares are down about 17% year to date.
In a recent research note, Tim Switzer, who coversNewtek for Keefe Bruyette & Woods, wrote that thecompany’s business plan, pairing extensive involve-ment in SBA 7(a) lending with a growing portfolio ofnonconforming commercial-and-industrial loans “re-mains a bit complex,” overshadowing what he termed“a fairly robust growth outlook.”
“While the early returns have been notable, thereis still uncertainty surrounding Newtek’s outlook,”Switzer wrote.
For his part, Sloane said investors have been slowto warm to Newtek’s business model, which empha-sizes loan sales and securitization over steady, recur-ring noninterest income. “We make loans and we sellthem,” Sloane said. “That’s a bit of an anomaly in thebanking business. Most banks make loans and holdthem forever.
”Even so, Sloane has no regrets about the decisionto adopt a bank charter. “We’re pleased operationallyhow things are going,” he said.
Barry Sloane
Newtek Bank
“When you give a borrower a longer-term ability torepay the principal, you’re basically giving them eq-uity, because you’re allowing them to retain the cashflows in the business longer, which they can plowback into other things.
”The alternative loan program’s expansion is partof a wider growth trend at Newtek, which expects tomake 2,700 loans of all types in 2025, up from 2,400last year. SBA 7(a) loans, Newtek’s biggest businessline, is also enjoying significant growth, with lendingvolume in the agency’s 2025 fiscal year on pace tosurpass fiscal 2024 by a wide margin.
Deposits, too, are growing, with Sloane forecastingthat the number of depositors Newtek serves wouldsurpass 17,000 in 2025. “When we took the bank over,we were dealing with a couple hundred,” he said. De-posits totaled $1 billion on March 31, up from $513million a year earlier.
Newtek was founded as a nonbank business develop-ment company. It acquired the $208 million-asset Na-tional Bank of New York City in January 2023. Thoughaccess to lower-cost deposit funding has spurredgrowth, investors have responded unenthusiastically.Newtek shares are down about 17% year to date.
In a recent research note, Tim Switzer, who coversNewtek for Keefe Bruyette & Woods, wrote that thecompany’s business plan, pairing extensive involve-ment in SBA 7(a) lending with a growing portfolio ofnonconforming commercial-and-industrial loans “re-mains a bit complex,” overshadowing what he termed“a fairly robust growth outlook.”
“While the early returns have been notable, thereis still uncertainty surrounding Newtek’s outlook,”Switzer wrote.
For his part, Sloane said investors have been slowto warm to Newtek’s business model, which empha-sizes loan sales and securitization over steady, recur-ring noninterest income. “We make loans and we sellthem,” Sloane said. “That’s a bit of an anomaly in thebanking business. Most banks make loans and holdthem forever.
”Even so, Sloane has no regrets about the decisionto adopt a bank charter. “We’re pleased operationallyhow things are going,” he said.
Barry Sloane
Newtek Bank
Posted with permission from the June 23, 2025 issue of American Banker ® www.americanbanker.com. Copyright 2025. All rights reserved.
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