Home Small business financing NEWTEK BUSINESS SERVICES CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS. (Form 10-Q)

NEWTEK BUSINESS SERVICES CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS. (Form 10-Q)

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Forward-looking statements

The matters discussed in this report, as well as in future oral and written
statements by management of Newtek Business Services Corp., that are
forward-looking statements are based on current management expectations that
involve substantial risks and uncertainties which could cause actual results to
differ materially from the results expressed in, or implied by, these
forward-looking statements. Forward-looking statements relate to future events
or our future financial performance. We generally identify forward-looking
statements by terminology such as "may," "will," "should," "expects," "plans,"
"anticipates," "could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential" or "continue" or the negative
of these terms or other similar expressions. Important assumptions include our
ability to originate new investments, achieve certain margins and levels of
profitability, the availability of additional capital, and the ability to
maintain certain debt to asset ratios. In light of these and other
uncertainties, including the impact of the COVID-19 pandemic, the inclusion of a
projection or forward-looking statement in this report should not be regarded as
a representation by us that our plans or objectives will be achieved. The
forward-looking statements contained in this report include statements as to:
•our future operating results;
•our business prospects and the prospects of our prospective portfolio
companies, including our and their ability to achieve our respective objectives
as a result of the ongoing COVID-19 pandemic, changes in base interest rates,
rising inflation, significant market volatility, and supply chain disruptions;
•the impact of investments that we expect to make;
•our informal relationships with third parties;
•the dependence of our future success on the general economy and its impact on
the industries in which we invest;
•our ability to access debt markets and equity markets;
•our ability to consummate the transactions contemplated by the Stock Purchase
Agreement;
•our receipt of certain Regulatory Approvals to operate as a bank holding
company and acquire NBNYC;
•our management's ability to operate as a bank holding company;
•our intended operations and structure as a bank holding company;
•our tax and accounting treatment as a C Corporation if we convert to a bank
holding company;
•the decrease in our dividend payout due to no longer operating as a BDC and RIC
if we discontinue our election as a BDC and the transaction with NBNYC is
consummated;
•our expected financings and investments;
•our regulatory structure and tax status;
•our ability to operate as a BDC and a RIC;
•the timing of the discontinuance of our election to be a BDC and our status as
a RIC;
•NSBF's ability to maintain its license and PLP status under the SBA 7(a)
program;
•NSBF's ability to sell the guaranteed portions of SBA 7(a) loans at premiums;
•the adequacy of our cash resources and working capital;
•the timing of cash flows, if any, from the operations of our portfolio
companies;
•the impact of inflation on our business prospects and the prospects of our
portfolio companies;
•the timing, form and amount of any dividend distributions;
•the impact of fluctuations in interest rates on our business including as a
result of the decommissioning of LIBOR and implementation of alternatives to
LIBOR;
•the impact of inflation, rising interest rates and the risk of recession on our
business prospects and the prospects of our portfolio companies;
•the impact of the ongoing war between Russia and Ukraine and general
uncertainty surrounding the political stability of the United States, the United
Kingdom, the European Union and China;
•the valuation of any investments in portfolio companies, particularly those
having no liquid trading market; and
•our ability to recover unrealized losses;
•NSBF's ability to issue SBA 7(a) guaranteed loans;
•the effect of legal, tax and regulatory changes, including the recently
announced Inflation Reduction Act of 2022;
•the ability of our SBA 7(a) borrowers to pay principal and interest, including
after any deferment period granted by NSBF; and
•the ability to enter into and/or maintain joint ventures or other financing
arrangements.

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The following discussion should be read in conjunction with our condensed
consolidated financial statements and related notes and other financial
information appearing elsewhere in this report. In addition to historical
information, the following discussion and other parts of this report contain
forward-looking information that involves risks and uncertainties. Our actual
results could differ materially from those anticipated by such forward-looking
information due to the factors discussed under Item 1A-"Risk Factors" of Part II
of this quarterly report on Form 10-Q and the Company's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, filed with
the SEC on May 9, 2022, and August 8, 2022, respectively, Item 1A-"Risk Factors"
of our Annual Report on Form 10-K for the year ended December 31, 2021, filed
with the SEC on March 1, 2022, and under "Forward-Looking Statements" of this
Item 2.

Executive Overview

We are a leading national non-bank lender and own and control certain portfolio
companies under the Newtek® brand (our "controlled portfolio companies," as
defined below) that provide a wide range of business and financial solutions to
SMBs. Newtek's and its portfolio companies' business and financial solutions
include: Business Lending, including origination of SBA 7(a), SBA 504, and
non-conforming (non SBA) conventional loans, as well as PPP loans in the second
and third quarters of 2020, as well as the first quarter of 2021, Electronic
Payment Processing, Managed Technology Solutions (Cloud Computing), Technology
Consulting, eCommerce, Accounts Receivable and Inventory Financing, personal and
commercial Insurance Services, Web Services, Data Backup, Storage and Retrieval,
and Payroll and Benefits Solutions to SMB accounts nationwide across all
industries. We believe that we have an established and reliable platform that is
not limited by client size, industry type, or location. As a result, we believe
we have a strong and diversified client base across every state in the United
States and across a variety of different industries. In addition, we have
developed a financial and technology enabled business model that allows us and
our controlled portfolio companies to acquire and process our SMB clients in a
very cost effective manner. This capability is supported in large part by
NewTracker®, our patented prospect management technology software, which is
similar to, but we believe better suited for our needs than, the system
popularized by Salesforce.com. We believe that this technology and business
model distinguishes us from our competitors.

On August 2, 2021, the Company entered into the Stock Purchase Agreement to
acquire all of the issued and outstanding stock of NBNYC (the Acquisition). This
Acquisition is part of a plan to reposition the Company as a bank holding
company that intends to elect financial holding company status, and is subject
to Regulatory Approvals. In connection with this plan, on June 1, 2022, the
Company held a special meeting of shareholders, at which the Company's
shareholders approved a proposal to authorize the Company's Board of Directors
to discontinue the Company's election to be regulated under the Investment
Company Act of 1940, subject to Regulatory Approvals and other conditions
described in the proxy statement filed with the SEC on May 2, 2022. Subsequent
to the approval of this proposal, which was required under the 1940 Act, the
Company may choose to discontinue its election as a BDC; however, the Company's
Board of Directors will not seek to discontinue the Company's election as a BDC
until after the Company receives the required Regulatory Approvals and after
certain of the Acquisition closing conditions are met. The final decision on the
timing of the Company's discontinuance from regulation as a BDC will be made by
the Board of Directors based on such factors deemed appropriate by the Board of
Directors, including the then current status of the Acquisition and discussions
with applicable regulatory authorities; the Company currently intends to
maintain its status as a BDC and RIC in the near term. The consideration payable
by the Company at closing of the Acquisition will be $20.0 million in cash,
subject to certain adjustments. In addition, the Stock Purchase Agreement
contemplates that, as of the closing and subject to Regulatory Approvals, NBNYC
will dividend to the NBNYC selling shareholders ("Sellers") both NBNYC's owned
property in Flushing, New York and cash in the amount equal to the excess, if
any, of NBNYC's tangible common equity as of the closing date over $20.0
million. The Stock Purchase Agreement contains certain customary representations
and warranties made by each party. The Company and the Sellers have the right to
terminate the Stock Purchase Agreement under certain circumstances, including if
the purchase has not occurred on or prior to January 3, 2023 or if the requisite
applications and Regulatory Approvals have been denied. We anticipate receiving
the required Regulatory Approvals during the fourth quarter of 2022. If the
Stock Purchase Agreement is terminated in certain circumstances specified
therein, the Company may be required to pay NBNYC a fee of $0.2 million.

Following the closing of the Acquisition, the Company intends to operate as a
bank holding company, subject to certain Regulatory Approvals. Specifically, the
Company intends to contribute certain of its wholly-owned lending portfolio
companies to NBNYC, and to provide centralized lending operations through NBNYC.
The Company intends to further develop the Company's current patented
technology, which the Company anticipates will complement its proposed banking
offerings, subject to Regulatory Approvals. The Company also intends to retain
its current board of directors and management, as supplemental by additional
personnel with banking experience. However, there can be no assurances that the
Company will close the Acquisition, receive the required Regulatory Approvals,
or that the Company will be able to successfully operate as a bank holding
company.

If the Company obtains the required Regulatory Approvals and subsequently
discontinues its election to be treated as a BDC and converts to a bank holding
company, the Company will no longer be subject to the 1940 Act, and the Company
would lose its ability to be taxed on a pass-through basis as a RIC.
Additionally, as a bank holding company, the Company would be
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subject to regulation and supervision that may be different from its current
regulation and supervision, and would be required to comply with accounting and
financial reporting requirements that may be different from its current
reporting requirements. Moreover, converting to a bank holding company may make
it more difficult for the Company to be acquired. For information on the risks
of converting to a bank holding company, see "Item 1A. Risk Factors - Risk
Related to Converting to a Financial Holding Company" in the Company's Annual
Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on
March 1, 2022.

We consolidate the following wholly owned subsidiaries:

Newtek Small Business Finance, LLC
Newtek Asset Backed Securities, LLC
CCC Real Estate Holdings, LLC
The Whitestone Group, LLC
Wilshire DC Partners, LLC
Wilshire Holdings I, Inc.1
Wilshire Louisiana BIDCO, LLC
Wilshire Louisiana Partners II, LLC
Wilshire Louisiana Partners III, LLC
Wilshire Louisiana Partners IV, LLC
Wilshire New York Advisers II, LLC
Wilshire New York Partners III, LLC
Wilshire Partners, LLC
Exponential Business Development Co., Inc.1
Newtek Commercial Lending, Inc.1
Newtek LSP Holdco, LLC
Newtek Business Services Holdco 1, Inc.1 (surviving entity of January 2021 merger with
Newtek Business Services Holdco 2, Inc.)

Newtek Business Services Holdco 3, Inc.1
Newtek Business Services Holdco 4, Inc.1
Newtek Business Services Holdco 5, Inc.1 (formerly Banc-Serv Acquisition, Inc.)
Newtek Business Services Holdco 6, Inc.1


(1) Taxable subsidiaries

We are an internally-managed, closed-end, non-diversified investment company
that has elected to be regulated as a BDC under the 1940 Act. In addition, for
U.S. federal income tax purposes, we have elected to be treated as a RIC under
the Code beginning with our 2015 tax year. As a BDC and a RIC, we are also
subject to certain constraints, including limitations imposed by the 1940 Act
and the Code. As a result, previously consolidated subsidiaries are now recorded
as investments in controlled portfolio companies at fair value. NSBF is a
consolidated subsidiary and originates loans under the SBA's 7(a) loan program.
However, as part of our plan to reposition ourself as a bank holding company
that intends to elect financial holding company status, if we discontinue the
Company's election as a business development company under the 1940 Act, we will
no longer be subject to the investment restrictions under the 1940 Act, and no
longer qualify as a RIC under the Code. See "Item 1A. Risk Factors - Risks
Related to Converting to a Financial Holding Company" in the Company's Annual
Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on
March 1, 2022.

Our common stock is currently listed on the Nasdaq Global Market under the symbol “NEWT”.

NSBF, a nationally licensed SBA lender under the federal Section 7(a) loan
program, has been granted PLP status and originates, sells and services SBA 7(a)
loans and is authorized to place SBA guarantees on loans without seeking prior
SBA review and approval. Being a national lender with PLP status allows NSBF to
expedite the origination of loans since NSBF is not required to present
applications to the SBA for concurrent review and approval. The loss of PLP
status would adversely impact our marketing efforts and ultimately our loan
origination volume, which would negatively impact our results of operations.

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As a BDC, our investment objective is to generate both current income and
capital appreciation primarily through loans originated by our business finance
ecosystem and our equity investments in certain portfolio companies that we
control.

We target our debt investments, which are principally made through our business
finance ecosystem under the SBA 7(a) program, to produce a coupon rate of prime
plus 2.25% to 3.00% which enables us to generate rapid sales of guaranteed
portions of SBA 7(a) loans in the secondary market. We typically structure our
debt investments with the maximum seniority and collateral along with personal
guarantees from portfolio company owners, in many cases collateralized by other
assets including real estate. In most cases, our debt investment will be
collateralized by a first lien on the assets of the portfolio company and a
first or second lien on assets of guarantors, in both cases primarily real
estate. All SBA loans are made with personal guarantees from any owner(s) of 20%
or more of the portfolio company's equity. The amount of new debt investments,
particularly SBA 7(a) loans that we originate, will directly impact future
investment income. In addition, future amounts of unrealized appreciation or
depreciation on our investments, as well as the amount of realized gains or
losses, will also fluctuate depending upon economic conditions and the
performance of our investment portfolio. The changes in realized gains and
losses and unrealized appreciation or depreciation could have a material impact
on our operating results.

We typically structure our debt investments to include non-financial covenants
that seek to minimize our risk of capital loss such as lien protection and
prohibitions against change of control. Our debt investments have what we
believe are strong protections, including default penalties, information rights
and, in some cases, board observation rights and affirmative, negative and
financial covenants. Debt investments in portfolio companies, including the
controlled portfolio companies, have historically and are expected to continue
to comprise the majority of our overall investments in number and dollar volume.

While the vast majority of our investments have been structured as debt, we have
in the past and expect in the future to make selective equity investments
primarily as either strategic investments to enhance the integrated operating
platform or, to a lesser degree, under the Capco programs. For investments in
our controlled portfolio companies, we focus more on tailoring them to the long
term growth needs of the companies than to return. Our objectives with these
companies is to foster the development of the businesses as a part of the
integrated operational platform of serving the SMB market, so we may reduce the
burden on these companies to enable them to grow faster than they would
otherwise and as another means of supporting their development.

We regularly engage in discussions with third parties with respect to various
potential transactions. We may acquire an investment or a portfolio of
investments or an entire company or sell a portion of our portfolio on an
opportunistic basis. We, our subsidiaries, or our affiliates may also agree to
manage certain other funds that invest in debt, equity or provide other
financing or services to companies in a variety of industries for which we may
earn management or other fees for our services. We may also invest in the equity
of these funds, along with other third parties, from which we would seek to earn
a return and/or future incentive allocations. We may enter into new joint
venture partnerships to create additional third-party capital to originate
loans. Some of these transactions could be material to our business.
Consummation of any such transaction will be subject to completion of due
diligence, finalization of key business and financial terms (including price)
and negotiation of final definitive documentation as well as a number of other
factors and conditions including, without limitation, the approval of our board
of directors and required regulatory or third-party consents and, in certain
cases, the approval of our shareholders. Accordingly, there can be no assurance
that any such transaction would be consummated. Any of these transactions or
funds may require significant management resources either during the transaction
phase or on an ongoing basis depending on the terms of the transaction.

On March 27, 2020, the CARES Act was signed into law in response to the COVID-19
pandemic and established the PPP. NSBF participated in the PPP and funded the
balance of its PPP loans in July 2021. Income earned in connection with the PPP
should not be viewed as recurring.

Economic Developments and COVID-19

We have observed and continue to observe supply chain interruptions, significant
labor and resource shortages, commodity inflation, rising interest rates,
economic sanctions as a result of the ongoing war between Russia and Ukraine and
elements of economic and financial market instability in the United States, the
United Kingdom, the European Union and China. One or more of these factors may
contribute to increased market volatility, may have long term effects in the
United States and worldwide financial markets, and may cause economic
uncertainties or deterioration in the United States and worldwide. Additionally,
in the event that the U.S. economy enters into a protracted recession, it is
possible that the results of some of the companies similar to those in which we
invest could experience deterioration, which could ultimately lead to difficulty
in meeting debt service requirements and an increase in defaults. While we are
not seeing signs of an overall, broad deterioration in our portfolio company
results at this time, there can be no assurance that the performance of certain
of our portfolio companies will not be negatively impacted by economic
conditions, which could have a negative impact on our future results.
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Contents

Over two years after COVID-19 was recognized as a pandemic by the World Health
Organization, its continued persistence in the United States and worldwide and
the magnitude of the economic impact of the outbreak continue to create an
uncertain environment in which we and our portfolio companies operate. The
preventative measures taken to contain or mitigate the spread of COVID-19 have
caused, and may in the future cause, business shutdowns, cancellations of events
and other travel disruptions. We continue to closely monitor our portfolio
companies; however, we are unable to predict the duration of any business and
supply-chain disruptions and resource shortages, the extent to which COVID-19 or
economic conditions will negatively affect our portfolio companies' operating
results or the impact that such disruptions may have on our results of
operations and financial condition.

Common stock price range

Our common stock is traded on the Nasdaq Global Market under the symbol "NEWT."
High and low prices for the common stock over the previous two years are set
forth below, based on the highest and lowest intraday sales price per share
during that period.

                                                                                                Premium of High          Premium of Low Sales
                                               Price Range                     NAV1           Sales Price to NAV2           Price to NAV2
                                        High                  Low
2020

Third Quarter                          $20.50               $16.73            $15.41                  33%                         9%
Fourth Quarter                         $19.82               $16.24            $15.70                  26%                         3%

2021
First Quarter                          $28.63               $18.77            $16.28                  76%                        15%
Second Quarter                         $38.78               $26.41            $16.38                  137%                       61%
Third Quarter                          $36.41               $24.07            $16.23                  124%                       48%
Fourth Quarter                         $32.38               $25.63            $16.72                  94%                        53%

2022
First Quarter                          $28.70               $24.00            $16.49                  74%                        46%
Second Quarter                         $27.18               $17.65            $16.31                  67%                         8%
Third Quarter                          $23.11               $15.65            $16.04                  44%                        (2)%


(1) Net asset value per share is determined as of the last day in the relevant
quarter and therefore may not reflect the net asset value per share on the date
of the high and low sales prices. The values reflect net asset value per share
and are based on outstanding shares at the end of each period.

(2) Calculated as the respective higher or lower selling price divided by the net asset value and subtracting 1.

Revenues

We generate revenue in the form of interest, dividend, servicing and other fee
income on debt and equity investments. Our debt investments typically have terms
of 10 to 25 years and bear interest at prime plus a margin. In some instances,
we receive payments on our debt investments based on scheduled amortization of
the outstanding balances. In addition, we receive repayments of some of our debt
investments prior to their scheduled maturity date. The frequency or volume of
these repayments fluctuates significantly from period to period. Our portfolio
activity also reflects the proceeds of sales of securities. We receive servicing
income related to the guaranteed portions of SBA investments which we originate
and sell into the secondary market. These recurring fees are earned daily and
recorded when earned. In addition, we may generate revenue in the form of
packaging, prepayment, legal and late fees. We record such fees related to loans
as other income. Dividends are recorded as dividend income on an accrual basis
to the extent that such amounts are payable by the portfolio company and are
expected to be collected. Dividend income is recorded at the time dividends are
declared. Distributions of earnings from portfolio companies are evaluated to
determine if the distribution is income, return of capital or realized gain. In
addition, under
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the PPP that began in the second quarter of 2020 and concluded during the third
quarter of 2021, the SBA reimbursed the Company for originating loans and such
SBA reimbursements are included as interest income on PPP loans. Income earned
in connection with the PPP should not be viewed as recurring. NSBF funded the
balance of its PPP loans by the end of July 2021. NSBF has redeployed resources
used to generate PPP loans to the origination of SBA 7(a) loans.
We recognize realized gains or losses on investments based on the difference
between the net proceeds from the disposition and the cost basis of the
investment without regard to unrealized gains or losses previously recognized.
We record current period changes in fair value of investments and assets that
are measured at fair value as a component of the net change in unrealized
appreciation (depreciation) on investments or servicing assets, as appropriate,
in the consolidated statements of operations.

Expenses

Our primary operating expenses are salaries and benefits, interest expense,
origination and servicing and other general and administrative costs, such as
professional fees, marketing, referral fees, servicing costs and rent. Since we
are an internally-managed BDC with no outside adviser or management company, the
BDC incurs all the related costs to operate the Company.

Warranties

The Company is a guarantor on the Receivable and Inventory Facility at NBC.
Maximum borrowings under the Receivable and Inventory Facility are $12.0 million
and will be reduced until the facility matures in May 2023. At September 30,
2022, total principal owed by NBC was $10.3 million. In addition, the Company
deposited $0.75 million to collateralize the guarantee. At September 30, 2022,
the Company determined that it is not probable that payments would be required
to be made under the guarantee.

The Company is a guarantor on the NBL Capital One Facility, NBL Deutsche Bank
Facility and NBL One Florida Bank Facility. Maximum borrowings under the NBL
Capital One Facility are $75.0 million with an accordion feature to increase
maximum borrowings to $150.0 million. The lenders' commitments terminate in
November 2022, with all amounts due under the NBL Capital One Facility maturing
in November 2023. Maximum borrowings under the NBL Deutsche Bank facility $100.0
million with a maturity date in March 2023. Maximum borrowings under the NBL One
Florida Bank facility are $20.0 million with a maturity date in September 2024.
At September 30, 2022, total principal owed by NBL under these facilities was
$37.1 million. At September 30, 2022, the Company determined that it is not
probable that payments would be required to be made under these guarantees.

The Company is a guarantor on the Webster Facility, a term loan facility between
NMS with Webster Bank with an aggregate principal amount up to $50.0 million.
The Webster Facility matures in November 2023. At September 30, 2022, total
principal outstanding was $21.9 million. At September 30, 2022, the Company
determined that it is not probable that payments would be required to be made
under the guarantee.

The Company’s Non-Conforming Conventional Commercial Loan Program

NCL: We established a 50/50 joint venture, NCL, between Newtek Commercial
Lending, Inc., a wholly-owned subsidiary of Newtek, and Conventional Lending TCP
Holding, LLC, a wholly-owned, indirect subsidiary of BlackRock TCP Capital
Corp. (Nasdaq:TCPC). NCL provided non-conforming conventional commercial and
industrial term loans to U.S. middle-market companies and small businesses. NCL
ceased funding new loans during 2020. On January 28, 2022, NCL closed a
conventional commercial loan securitization with the sale of $56.3 million Class
A Notes, NCL Business Loan Trust 2022-1, Business Loan-Backed Notes, Series
2022-1, secured by a segregated asset pool consisting primarily of NCL's
portfolio of conventional commercial business loans, including loans secured by
liens on commercial or residential mortgaged properties, originated by NCL and
NBL. The Notes were rated "A" (sf) by DBRS Morningstar. The Notes were priced at
a yield of 3.209%. The proceeds of the securitization were used, in part, to
repay the Deutsche Bank credit facility and return capital to the NCL partners.
Refer to NOTE 3-INVESTMENTS for selected financial information and a schedule of
investments of NCL as of September 30, 2022.

Newtek-TSO JV: On August 5, 2022, Newtek Commercial Lending, Inc. and TSO II
Booster Aggregator, L.P. ("TSO II") entered into a joint venture, Newtek-TSO JV,
governed by the Amended and Restated Limited Partnership Agreement for the
Newtek-TSO JV. Newtek Commercial Lending, Inc. and TSO II each committed to
contribute an equal share of equity funding to the Newtek-TSO JV and each will
have equal voting rights on all material matters. The Newtek-TSO JV intends to
deploy capital over the course of time with additional leverage supported by a
warehouse line of credit. The intended purpose of the Newtek-TSO JV will be to
invest in non-conforming conventional commercial and industrial term loans made
to middle-market companies as well as small businesses. It is anticipated that
Newtek-TSO JV will begin making investments during the fourth
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quarter of 2022.

Unfunded Commitments

At September 30, 2022, the Company had $15.3 million of unfunded commitments in
connection with its SBA 7(a) non-affiliate investments related to portions of
loans originated which are partially funded. The Company will fund these
commitments from the same sources it uses to fund its other investment
commitments.

Quality and composition of loan portfolio assets

The following tables set forth distributions of the cost basis of the Company's
SBA 7(a) loan portfolio at September 30, 2022 and December 31, 2021,
respectively, in thousands. The tables include loans in which NSBF owns 100% as
a result of NSBF originating the loan and subsequently repurchasing the
guaranteed portion from the SBA. The total of 100% NSBF-owned loans at September
30, 2022 and December 31, 2021 is $11.8 million and $18.5 million, respectively.

Breakdown by type of business

From September 30, 2022

          Business Type             # of Loans        Balance       Average 

Balance % of balance

    Existing Business                2,655          $ 404,591      $           152             80.5  %
    Business Acquisition               377             68,662                  207             13.7  %
    Start-Up Business                  314             29,147                   96              5.8  %
    Total                            3,346          $ 502,400      $           150            100.0  %


    As of December 31, 2021
          Business Type             # of Loans        Balance       Average

Balance % of balance

    Existing Business                2,162          $ 349,999      $           162             81.1  %
    Business Acquisition               333             59,794                  207             13.8  %
    Start-Up Business                  266             22,176                   96              5.1  %
    Total                            2,761          $ 431,970      $           156            100.0  %

Breakdown by borrower’s credit score

       September 30, 2022
           Credit Score          # of Loans        Balance       Average Balance      % of Balance
       500 to 550                    11          $   3,060      $           278              0.6  %
       551 to 600                    55             13,825                  251              2.8  %
       601 to 650                   285             55,539                  195             11.1  %
       651 to 700                   869            137,158                  158             27.3  %
       701 to 750                 1,188            170,497                  144             33.9  %
       751 to 800                   822            110,135                  134             21.9  %
       801 to 850                   114             12,141                  106              2.4  %

       Not available                  2                 44                   22              0.0  %
       Total                      3,346          $ 502,400      $           150            100.0  %


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       December 31, 2021
           Credit Score          # of Loans        Balance       Average Balance      % of Balance
       500 to 550                    15          $   3,562      $           237              0.8  %
       551 to 600                    59             15,322                  260              3.6  %
       601 to 650                   299             59,139                  198             13.7  %
       651 to 700                   754            118,150                  157             27.4  %
       701 to 750                   914            140,720                  154             32.6  %
       751 to 800                   632             85,479                  135             19.8  %
       801 to 850                    86              9,548                  111              2.2  %
       Not available                  2                 49                   25              0.0  %
       Total                      2,761          $ 431,970      $           179            100.0  %

Breakdown by type of primary guarantee

September 30, 2022

         Collateral Type               # of Loans        Balance       Average Balance      % of Balance
Commercial Real Estate                  1,048          $ 224,586      $           214             44.8  %
Machinery and Equipment                   482             85,054                  176             16.9  %
Residential Real Estate                   965             81,898                   85             16.3  %
Accts Receivable and Inventory            420             75,769                  180             15.1  %
Other                                     100             26,313                  263              5.2  %
Unsecured                                 282              5,718                   20              1.1  %
Furniture and Fixtures                     36              2,210                   61              0.4  %
Liquid Assets                              13                851                   65              0.2  %
Total                                   3,346          $ 502,400      $           150            100.0  %


December 31, 2021
           Collateral Type                     # of Loans             Balance            Average Balance              % of Balance
Commercial Real Estate                           1,016             $   228,381          $           225                          53.0  %
Machinery and Equipment                            430                  73,433                      171                          17.0  %
Accounts Receivable and Inventory                  312                  50,692                      162                          11.7  %
Residential Real Estate                            707                  47,240                       67                          10.9  %
Other                                               93                  26,509                      285                           6.1  %
Unsecured                                          161                   2,984                       19                           0.7  %
Furniture and Fixtures                              28                   1,797                       64                           0.4  %
Liquid Assets                                       14                     936                       67                           0.2  %
Total                                            2,761             $   431,970          $           156                         100.0  %


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Contents

Breakdown by days late

     September 30, 2022
       Delinquency Status         # of Loans        Balance       Average Balance      % of Balance

     Accrual
        Current                    3,098          $ 431,347      $           139             85.8  %
        31 to 60 days                 42             12,195                    -              2.4  %
        61 to 90 days                  -                  -                    -                -  %
        91 days or greater             -                  -                    -                -  %
     Non-accrual                     206             58,858                  286             11.8  %
     Total                         3,346          $ 502,400      $           150            100.0  %


     December 31, 2021
       Delinquency Status         # of Loans        Balance       Average Balance      % of Balance
     Accrual
        Current                    2,512            365,198      $           145             84.6  %
        31 to 60 days                 59             12,646                  214              2.9  %
        61 to 90 days                  -                  -                    -                -  %
        91 days or greater             -                  -                    -                -  %
     Non-accrual                     190             54,126                  285             12.5  %
     Total                         2,761          $ 431,970      $           156            100.0  %

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