NewtekOne Says Its Borrowers Pay From Newtek Bank, and It Reserves 8.1% Against Its Unguaranteed SBA Balances
NewtekOne, the Boca Raton holding company that owns Newtek Bank and says it ranked first among SBA 7(a) lenders by loan count and second by dollars in the SBA's 2026 fiscal year, requires its borrowers to make their loan payments from a Newtek Bank account, chief executive Barry Sloane said on the company's third-quarter call, according to The Motley Fool's transcript.1 2 A merchant that keeps its operating account at another bank can carry one of those loans without the payment appearing on the statements it sends a funder.
The reserve sits on the same SBA book. The provision for credit losses doubled to $15.4 million from $7.7 million a year earlier, and the allowance rose to $57.1 million from $45.2 million at the end of 2025.1 Chief financial officer Frank DeMaria said $51 million of it sits on the unguaranteed SBA book, "8.1% of the SBA unguaranteed balances," and almost 90% of the bank's allowance.2 That implies about $630 million of unguaranteed 7(a) balances by our arithmetic.
These are merchant-sized borrowers. In the SBA's loan-level data for its 2026 fiscal year through June 30, Newtek Bank's 2,823 7(a) approvals that were not cancelled had a median of $150,000; 93% were $500,000 or less, 97% ran about 10 years, and the median starting rate was 9.75%.3 The file runs through June 30, so the newest loans may not be in it yet. At each loan's starting rate and term, the median monthly payment works out to about $1,960, and the middle half of the loans to about $750 to $3,900, by our arithmetic. That is the size of debit to look for when the payment does show up. NewtekOne's larger non-SBA term loan, called C&I LA, averages $4 million to $5 million, and $82.3 million of it was nonperforming at September 30 on a fair value basis.4
Bottom line for funders: make the gap a rule your system can apply. An all-assets or accounts filing from a bank lender, plus no matching payment on the statements you hold, sends the file to manual review and a request for statements from every account in the merchant's name. NewtekOne is the example; any lender that collects from its own bank creates the same gap.
The limits: the results are unaudited and preliminary until the 10-Q, and the release does not disclose charge-offs. The 8.1% is a reserve for expected losses over the life of the loans, not a loss rate. The payment requirement comes from the call, not a filing. The payment figures assume level payments at each loan's starting rate; many 7(a) loans carry variable rates. The watch list below comes from NewtekOne's filings; which of those names appears on a given merchant's filing is what that merchant's own search shows.
What Alternative Business Lenders Need to Know
What does the 8.1% reserve say about small-business credit?
That the lender that says it makes the most 7(a) loans is setting aside more against the part it keeps. NewtekOne carries the unguaranteed portion of each 7(a) loan at its own risk, and that reserve is most of the $57.1 million allowance.2 1 Asked about small-business stress generally, Sloane said higher rates and "fairly stubborn inflation for a window of 4 or 5 years" have been difficult on "older vintage loans" and that "there has been stress on the historic portfolio."2 Realized losses elsewhere point the same way: Live Oak, which we covered on October 27, reported annualized third-quarter net charge-offs of 1.00%, up from 0.80% the quarter before.5 6 In our view, the stress sits in businesses that borrowed two to five years ago at lower rates, and those are the businesses most likely to be on a funder's desk now with a 7(a) payment already coming out of cash flow.
How do you check a merchant's 7(a) loan before you price?
Look it up. The SBA publishes loan-level 7(a) data, updated quarterly, with the borrower's name, the lender, the approval date, the amount, the term, the starting rate and the loan's status.3 Search it by the merchant's legal name. The approval date gives you the vintage Sloane says is under stress, the amount, rate and term give you the payment to look for on the statements, and the lender's name tells you whose filing to expect on the UCC search. If the payment is not on the statements you hold, the rule above applies.
Why might the Newtek payment not show on the statements you see?
Because it comes out of a different bank. Sloane described a "closed-loop customer funnel" and said borrowers "are required to make payments from Newtek Bank account in lending."2 The company also says roughly 62% of its business lending clients have opened a business deposit account since it acquired the bank in early 2023, so the requirement may not reach every older loan.1 A merchant can keep the Newtek account for the loan alone and send you statements from its main bank, where the only trace is a recurring transfer out. Treat any recurring transfer to another account in the merchant's own name as possible debt service until you have that account's statements.
Which names belong on a lien watch list?
NewtekOne's filings name the entities to flag. Its 10-K names the Newtek Small Business Loan Trust, Series 2021-1, 2022-1 and 2023-1, and the NALP Business Loan Trust 2024-1 and 2025-1, the last two backed by loans originated by Newtek ALP Holdings.7 NALP Business Loan Trust 2026-1 followed in January; the company views these ALP loans as longer amortizing C&I loans.8 Sloane said the C&I LA loans are now made out of Newtek Bank, National Association, and that they are put into securitizations.2 The SBA data lists the lender on 7(a) loans approved since fiscal 2023 as Newtek Bank, National Association, and on loans approved from fiscal 2020 through 2023 as Newtek Small Business Finance, Inc.3 A filing may name the lender of record or, after an assignment, a trust or its trustee, so put all of these names on the list your team flags automatically. C&I LA loans also carry personal guarantees and liens on business and, where applicable, personal assets.4 A UCC search shows liens on business assets; a lien on the owner's real estate is recorded in county land records instead.
Why can NewtekOne hold loans a non-bank funder has to sell?
Deposits. Sloane's arithmetic: a 7(a) loan at prime plus 3 earns about a 10% coupon against a cost of funds of "3.6% or 3.65%," about 640 basis points of spread. "So you could sell it for a gain on sale or you could hold it for a 4- or 5-year duration. And over the course of time, you'll probably do better holding it."2 Deposits more than doubled from a year earlier, up $1.3 billion to $2.5 billion, mostly from consumers, and net gains on loan sales fell to $32,000 in the quarter from $9.6 million a year earlier.1 A non-bank lender cannot fund a five-year hold that way. In our view, that means a deposit-funded bank can take the strongest small-business borrowers on price, and more of the merchants who reach a funder are ones a bank passed on or is already collecting from.
What to watch
The 10-Q, for nonaccruals by book and charge-offs. On the call Sloane put nonaccruals at 3.9% excluding government guarantees without saying which loans the figure covers.2
The fourth-quarter provision, against the third quarter's $15.4 million.1
The January 2027 C&I LA securitization, planned at about $350 million to $400 million of collateral, and whether C&I LA nonperformers keep rising: the slides show $82.3 million at fair value against $907 million of principal, and an analyst put the prior quarter at $46 million on a basis the call did not state.1 4 2
Our Opinion
The 7(a) book, not the $82.3 million, is the number for a merchant funder. In our view, a $150,000 median 7(a) loan is the size of business that applies for an advance, and the lender that says it ranks first by 7(a) loan count is reserving 8.1% against its own share of those loans while saying older vintages are under stress.3 2 When one of those borrowers comes to you, the payment on that loan may not be on the statements you underwrite.
In our view, a merchant with a bank term loan and a strong score asking for an advance is telling you something about its cash. A business that qualified for 10-year money at bank pricing usually goes back to that lender first. One that comes to you may have been declined for more, may be behind on the loan, or may need money faster than the bank moves. Ask which before you price, and ask for the current statement on the bank loan to see which it is.
If your scoring treats an existing bank term loan as a sign of strength, add three checks before it does: whether a filing from that lender covers the receivables you are buying, whether its payment shows on the statements you hold, and why a bank borrower needs an advance now.
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Headlines You Don’t Want to Miss
Equipment finance new business volume was $11.8 billion in September, the third-highest month in the Equipment Leasing and Finance Association's survey, the group said on October 27.9 Banks booked $5.5 billion, down 8.0% from August; captives $4.0 billion, up 9.3%; and independents $2.1 billion, down 3.7%.9 The approval rate rose 2.4 points to 77.7%, its largest monthly gain since October 2023, and independents' approval rate rose 5.9 points.9 Delinquencies fell to 1.6%, but the small-ticket loss rate rose 0.11 points to 0.76%.9 ELFA's acting chief executive, James Cress, said "the path of interest rates remains highly uncertain."10
Why it matters: independents approved more of their applications while their volume fell and captives grew. In our view, that may mean looser underwriting or a different applicant mix; the survey does not say which. If you buy or co-fund small-ticket equipment paper from an independent, ask for its September approval rate against its own trailing average and watch its 30-day delinquencies into year end.
The House passed the Bankruptcy Threshold Adjustment Act, H.R. 7730, by voice vote on September 16, and the Senate passed it without amendment on September 28.11 The latest action on the congressional record is dated October 14, and as of October 29 the record shows no presentment to the President or signature.11 The bill would permanently restore the Subchapter V debt limit to $7.5 million, according to Epiq and the American Bankruptcy Institute.12 The current ceiling is $3,424,000, and the new limits would apply only to cases filed on or after the date the bill becomes law, the law firm Gibbs Giden said; the limit counts noncontingent, liquidated secured and unsecured debts, but not debts owed to affiliates or insiders.13 Small businesses filed 2,442 Subchapter V elections in the first nine months of 2026, up 46% from a year earlier, Epiq AACER said.12 We covered the Senate's passage of its own version of the bill, S. 3977, on August 11.14
Why it matters: Subchapter V is the faster, cheaper small-business reorganization, and a merchant that files can restructure what it owes its funders under a court-approved plan. In our view, a $7.5 million ceiling would bring more merchants with several positions within reach. Merchants rarely hand you a debt schedule, so make a rough estimate from the recurring debits on the statements, use the UCC filings to find lenders the statements do not show, and flag accounts that land between about $3.4 million and $7.5 million.
When Valley National's $340 million purchase of Bluevine closes early in 2027, Bluevine founder Eyal Lifshitz will run Valley's small-business arm, including the bank's legacy small-business clients, Banking Dive reported on October 28.15 Valley chief operating officer Russ Barrett said the right structure is "one segment with one very clear leader."15 Roughly 180 Bluevine research-and-development employees and engineers will join Valley, which says Bluevine will grow Valley's small-business customer base 20-fold.15 Bluevine brings $2.1 billion of deposits and 175,000 active small-business clients.15 We covered the deal terms on September 29.16
Why it matters: in our view, Bluevine's borrowers will sit inside a bank's credit box after the close, and the strongest will get bank pricing. When a Bluevine borrower applies to you in 2027, ask whether Valley declined or repriced it and for what product, and pull the statements from the Valley account: a borrower whose bank also holds its deposits is the same payment-visibility case as NewtekOne's.
Sources
1 NewtekOne, Inc. | Reports 3Q26 basic and diluted EPS of $0.34, Form 8-K Exhibit 99.1 (Oct. 28, 2026)
2 The Motley Fool | Newtek (NEWT) Q3 2026 earnings call transcript (Oct. 28, 2026)
3 U.S. Small Business Administration | 7(a) and 504 FOIA loan-level data, FY2020 to present, as of June 30, 2026
4 NewtekOne, Inc. | Third quarter 2026 earnings release deck, slides 22 and 23 (Oct. 28, 2026)
5 Live Oak Bancshares | Third quarter 2026 results, Form 8-K Exhibit 99.1 (Oct. 21, 2026)
6 Beyond Banks | SBA bridge lender founder gets 15 years (Oct. 27, 2026)
7 NewtekOne, Inc. | Form 10-K for the year ended Dec. 31, 2025 (filed March 10, 2026)
8 NewtekOne, Inc. | Closes ALP loan securitization, NALP Business Loan Trust 2026-1, Form 8-K (Jan. 21, 2026)
9 Equipment Leasing and Finance Association | CapEx Finance Index September 2026: New deal volumes headed for record year (Oct. 27, 2026)
10 MonitorDaily | ELFA's CapEx Finance Index: New deal volumes headed for record year (Oct. 2026)
11 Congress.gov | H.R. 7730, Bankruptcy Threshold Adjustment Act, all actions (latest action Oct. 14, 2026)
12 Epiq | Small business Subchapter V elections increase 46% compared to last year (Oct. 8, 2026)
13 Gibbs Giden | The $7.5 million Subchapter V limit is back for good (Oct. 6, 2026)
14 Beyond Banks | Senate passes bill lifting Sub V cap to $7.5M (Aug. 11, 2026)
15 Banking Dive | Bluevine, Valley Bank execs talk integration approach (Oct. 28, 2026)
16 Beyond Banks | Valley buys Bluevine for its deposits (Sept. 29, 2026)
