PROFILED cOMPaNIES
Newtek Business services Corp. Nasdaq: Newt
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ewtek’s roots were established 17 years ago in 1998 with the vision of one of the founders and present CEO, Barry Sloane, to create a business that would offer essential products and services to support an underserved market and yet the backbone of American economy; the smalland medium-sized business (“SMB”) market. Since that initial vision, Newtek has successfully grown and been rightfully awarded the title The Small Business Authority® on all small business needs with its comprehensive suite of product and service offerings including Business Lending, Electronic Payment Processing, Managed Cloud Computing, eCommerce, Accounts Receivable Financing, The Newtek Advantage™, The Secure Gateway, Insurance Services, Web Services, Data Backup, Storage and Retrieval and Payroll. The Company has been publicly traded for over 14 years since 2000, and boasts of over 100,000 business accounts across all 50 states.
CoNversioN to a BusiNess deveLoPMeNt CoMPaNy (BdC): a growth aNd iNCoMe ProPositioN To foster the continued growth of the business and the brand, Newtek embarked on a new journey on November 12, 2014 when it successfully converted to a business development company (“BDC”). As a BDC, Newtek intends to elect to be treated as a regulated
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MicroCap Review Magazine
investment company (“RIC”). As a RIC, the Company generally will not have to pay corporate-level U.S. federal income taxes on any income that is distributed to Newtek stockholders in the form of a dividend. To qualify for RIC tax treatment, Newtek is required to distribute at least 90% of its investment company taxable income to its stockholders. In a recent release, the Company announced it currently expects to pay an annual cash dividend of approximately $1.80 per share in 2015, which equates to an attractive double-digit annual yield of 12.3%(1). With this conversion to a BDC there are a few notable points that lend Newtek a competitive advantage in this space. In short, the Newtek BDC model is different than the typical BDC structure making it attractively distinct amongst its peers. Primarily, Newtek’s portfolio companies are operating companies and it holds controlling interests in certain of these companies. Specifically, either directly or through wholly-owned subsidiaries, Newtek holds controlling interests in Newtek Technology Solutions®, Small Business Lending, Inc., CDS Business Services, Inc., Newtek Merchant Solutions, Newtek Insurance Agency, LLC and Newtek Payroll Services. Additionally, contrary to the externally managed BDC structure, Newtek is an internally managed BDC, with no base or incentive fees paid to external managers. The Company is looking forward to the many opportunities expected to be available
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