newtek small business finance

newtek small business finance

The Impact of Newtek Small Business Finance on Entrepreneurial Success

1. Introduction to Newtek Small Business Finance

The individuals that comprise and lend from the prime lending group are small business entrepreneurs themselves. It is the aim of Newtek, the company, to provide loans and provide proper service to the borrowers who seek its underwriting skills and know-how. And, the borrowers? Most are typically entrepreneurs with whom Newtek shares a special bond—an understanding of the passion that comes with creating a business, vision of a greater good to come from the fruits of someone’s labor, the courage to do what must be done in the face of long odds, the ability to sometimes ask for help, and the strength to sometimes accept it, even when doing so seems tantamount to giving up. We used field research to collect in-depth data and a case study approach to analyze our results. The case study tested what, and how, Newtek could substantiate about its borrowers’ successes and if those successes had an impact on local economic development.

When a U.S. Small Business Administration (SBA) program is featured in the media, it is most likely because of loan fraud, government error, extreme loan losses, or criticism that secondary market sales crowd out conventional bank loans. Rarely do we see articles about the “typical” 7(a) borrower or gain insight into the impact of entrepreneurship in local communities. In planning this study, we wanted to learn more about the SBA loan applicant and user. Why does the 7(a) exist as a program? Who can benefit from it and how? And, do those benefits reach the local communities, those without which the SBA 7(a) would not and could not exist? We hope to answer these and other questions through in-depth interviews with one prime SBA lender, Newtek Small Business Finance. Newtek was chosen for several reasons. First, it is one of a few prime SBA lenders that do not disburse loan proceeds prior to the completion of the guaranty purchase process by the SBA. As a consequence, the loan is not sold on the secondary market. Second, Newtek was established as a private business owned and managed by an astute entrepreneur.

2. Key Services and Offerings for Small Businesses

Newtek Small Business Finance, Inc., a non-bank, SBA 7(a) loan origination and commercial lending company, evaluated the satisfaction and outcomes of small business loan clients who received Newtek loans and loan clients who demonstrated an interest in receiving different media products as a condition for obtaining a loan from a competing lender. Newtek found an average client satisfaction score of 4.1 out of 5 and observed entrepreneurial success among small business lending company loan customers, such as wage and employment growth, increased profits, and the retention or acquisition of a main office location related to the receipt of a loan from Newtek. Small business leaders today face the challenges of accessing borrowed capital and the need for community activities and investment opportunities. Highly satisfied prospects contribute to the creation and growth of a vibrant small business organization and the promotion of small business research and academic programs.

Small business leaders and influencers face being rejected for loans and need help. Small growing businesses often are the ones that struggle to find access to business-building funds. Like these businesses, our teams have faced rejection when our commercial banker turned us away, often after months of paperwork and exploratory conversations. Childs’ team is a new player in this space that offers an innovative lending solution. With the rise of alternative finance options, researchers from Iowa State University share new ways to find funding. Perry Childs is Executive Vice President at Newtek Small Business Finance, Inc. in Salt Lake City, Utah.

3. Success Stories and Case Studies

Investor Presentations Wealth Management Investor Relations. Our “One-Stop Shop,” relationship-based business model is a game-changer for existing and start-up companies that support worries your Industries in the Small and Middle-Market. The success stories below illustrate “Our Own Story”. Starting a business and developing it is a significant step that demands personal dedication. Well over 90 percent of all businesses that are started in the US shut their doors in the first 12 months. The majority of dissolved businesses have a number of common traits. Based on our experience, we believe strong business planning, sufficient working capital, a sound marketing program, and close attention by the principal to the business are all present in a new business jumpstart. Premier business insurance firm experiences a 28% reduction in worker’s comp costs.

Newtek is proud of its success stories and the long-term relationships we have with many of our customers. We like to think that we are a part of the first chapter in many of the stories of entrepreneurial men and women who needed guidance, tools, and funding to realize their dreams, often using only their own sweat, dedication, and financing from our company. Our loss ratios have been extremely low for the SBA program. This has been a result of active participation by the company’s management working directly with entrepreneurs in both the startup and existing business portions of the programs discussed. The utilization of well-regarded business partners and successful entrepreneurs as consultants has also contributed to the company’s success with the SBA program. Below are some success stories and case studies.

4. The Future of Small Business Finance with Newtek

So what does this mean for the future of small business finance? I believe that with the proliferation of alternative lending sources, it is quite feasible that the stodgy 7(a) SBA, SBA 504 and USDA programs, with their antiquated, conservative and borrower unfriendly regulations, will soon become a thing of the past, much like the now long gone savings & loan industry. If this upper echelon of small business finance wanted to survive and thrive, they needed to adjust regulations to be more like those private lending institutions that are willing to loan huge sums to unseasoned businesses with a risk-based structure. If the will is not there, the SBA’s small business loan programs will have limited or no place in our future economic roadmap.

In recent years, the entrepreneurial landscape has changed significantly, beginning with the surge in startup incubators, co-working and business accelerator communities across this country and culminating with the explosion of small business lending alternatives. With the proliferation of peer finance through businesses like Prosper and LendingClub, the sharing and on-demand economy made famous by companies like Uber and Airbnb as well as by the swell of FinTech powerhouses like OnDeck, Lendio, and LendingTree, we are seeing that technology is changing the way businesses not only share goods and services, but how they finance their growth.

5. Conclusion: Empowering Entrepreneurs with Newtek

Entrepreneurs, as a group, are an underappreciated economic resource. They are underappreciated because they are relatively few in number and perform tasks that are not well understood. For one thing, it is difficult to assign any clear-cut division between businesses owned and operated by entrepreneurs and businesses managed by salaried executives for whom the long-term ownership goal is far down the road map. Still, we see a nation extremely proud of the role of its entrepreneurs in creating a reasonably uniform standard of living, spread across diverse regional economies, unmatched anywhere else in the world. We especially appreciate the resourcefulness of those who succeed after multiple attempts. With that in mind, we salute companies like Newtek that are dedicated to nurturing that spirit.

Small businesses are the lifeblood of the American economy, and yet, an often overlooked statistic is that many of these thriving small businesses were founded and are still operated by previously unsuccessful entrepreneurs. Who has enabled these business owners to keep trying, despite their previous difficulties? According to responses from a survey conducted of over 3,000 Newtek customers, the overwhelming majority of Newtek customers, almost 80 percent, are serial entrepreneurs who, before finding Newtek, had closed or sold at least one business. Every economy needs its businesses filled with successful entrepreneurs who can confront risks and opportunities that lie ahead with diligence and aplomb. Over the years, small businesses have developed into the most stable engine for continued growth of the American economy.