Newtek Business Loans: 2023 Review
Janet Schaaf is a freelance writer, editor and proofreader who considers reader advocacy to be her calling. After taking a few roads less traveled, Janet completed a bachelor’s degree in English Literature from the University of Missouri-Kansas City, with English Department Honors. She has been correcting grammar and checking facts since she could string a sentence together. For the past three years, Janet has focused on making personal finance topics understandable and relatable. Loan terms and credit card agreements can look overwhelming, but understanding what you’re agreeing to is paramount in grasping the impact debt can have on your life.
Pros and cons of Newtek
| Pros | Cons |
|---|---|
Large maximum loan amounts Wide range of repayment options May be able to find customized finance solutions by combining different products together | Few details on rates or eligibility requirements Must provide two to three years of tax returns Very little information on fees associated with any products |
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Newtek small business loans review
Newtek is a financial company offering small business loan products, including a variety of term loans and credit lines. It funds businesses in all 50 states and is regularly among the U.S. Small Business Administration’s largest lenders by dollar amount.
Who is Newtek for?
- Established businesses. You must be a U.S.-based, for-profit business that can provide at least two years of tax returns.
- Small businesses looking for large loan amounts. Term loans can reach up to $15,000,000 while lines of credit can go up to $5,000,000.
- Borrowers who want hands-on assistance. Business owners can work with a lending specialist to help with the application process.
Newtek small business financing at a glance
| Product | Loan amounts | Repayment term | Estimated APR range | Fees |
|---|---|---|---|---|
| Term loans | $1,000-$15,000,000 | 60 to 300 months | Not disclosed | Limited or no repayment penalties |
| Lines of credit | $50,000 to $5,000,000 | 12 months, renewable | Not disclosed | Not disclosed |
Term loans
Term loans provide financial assistance to businesses that need a lump sum of cash upfront and can be paid back over time. Newtek small business finance offers both short-term business loans and long-term business loans that range from $1,000 to $15,000,000 with payback terms of 60 to 300 months. The lender states there are “limited” or no repayment fees with this type of loan but it’s unclear whether there are any other fees associated with the product.
SBA 7(a) loans
Newtek’s website doesn’t necessarily advertise that it offers SBA loans, the SBA itself reports that Newtek as an SBA lender, frequently listing it among the largest SBA lenders in recent fiscal years. In fact, Newtek’s term loans as advertised have many similarities to SBA 7(a) loans. Both have high maximum loan amounts in the millions and comparable repayment term lengths, both reaching up to 300 months. Small business owners interested in learning more about Newtek’s SBA 7(a) offerings should contact the company.
Lines of credit
While borrowers receive a lump sum from a term loan, a business line of credit provides funds only to be withdrawn when needed. As a revolving form of funding, interest is only charged on the amount used as opposed to the entire lump sum. Newtek offers two types of lines of credit, secured either by accounts receivable or inventory financing. Both have lines that start at $50,000 and can reach up to $5,000,000. One key difference between the two forms is the advance rate – the percent of the collateral’s value that the lender is willing to offer you in funding.
Accounts receivable
Newtek offers an 85% advance rate for credit lines with accounts receivable as collateral. This means that if you have $100,000 worth of invoices that you want to put up to back your credit line, Newtek may extend you a credit line up to $85,000 for a 12-month, renewable term. Newtek considers invoices due 30, 60 or 90 days out.
Inventory
With this option, the credit line is secured by your inventory. The advance rate for inventory-secured lines of credit is only 50% of the collateral’s value, much lower than accounts receivable. This means that with $100,000 in inventory backing your credit line, the maximum you’d qualify for could be $50,000. Newtek doesn’t provide too much detail on how its inventory financing option works but states that “most non-perishable inventory” would qualify. This would also be a 12-month, renewable term.
Newtek borrower requirements
| Minimum annual revenue | Not disclosed |
| Minimum time in business | 2 to 3 years |
| Minimum credit score | Not disclosed |
Newtek’s website does not provide too much information on its eligibility requirements for its business loan products. Small businesses must operate for profit, be based in the United States and must make enough earnings to repay their loan. Borrowers will need to contact Newtek to determine the credit score requirements and necessary annual revenue to qualify.
Newtek’s website states they lend to certain industries, such as wholesaling, retailing and special trade construction, but does not specify any industries they do not work with.
Required documents
While Newtek’s website also lacks information on required documents for its loan requirements, it does state all businesses must show two to three years of their tax returns to apply for one of its products.
Alternatives to Newtek
| Newtek | Funding Circle | TD Bank | |
|---|---|---|---|
| Minimum credit score | Not disclosed |
| None |
| Loan products offered |
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|
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| Time to funding | Not disclosed | 3 business days | Not disclosed |
| Starting APR | Not disclosed |
| Not disclosed |
| Maximum loan size |
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| Minimum annual revenue | Not disclosed |
| less than $15,000,000 (term loans and lines of credit) |
Newtek vs. Funding Circle
Similar to Newtek, Funding Circle also offers products that include term loans, lines of credit and SBA 7(a) loans. A major difference between the two is Funding Circle’s transparency on its website, providing more details on credit score requirements, starting APR and minimum annual revenue needed to qualify. The maximum loan size for term loans and lines of credit is less than Newtek’s offerings, so Funding Circle might be better suited for business owners looking for smaller borrowing amounts or faster funding timelines.
Newtek vs. TD Bank
In addition to offering term loans, lines of credit and SBA 7(a) loans, TD Bank also provides SBA 504/CDC loans and commercial real estate loans, giving more options to the borrower. While TD Bank doesn’t publish a minimum credit score or many other eligibility requirements needed to qualify for its loan products, it does offer an online application for loans under $250,000, potentially offering a quicker funding and review process.