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Newtek Business Services Corp (NEWT 1.47%)
Q1Â 2020 Earnings Call
May 9, 2020, 8:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, ladies and gentlemen, welcome to the Newtek Business Services Corp. Q1 2020 Earnings Conference Call. [Operator Instructions] Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.
I would now like to turn the conference over to your host, Mr. Barry Sloane, President of Newtek Business Corp. Go ahead, sir.
Barry Sloane -- President and Chief Executive Officer
Thank you very much operator, and good morning. My name is Barry Sloane, CEO, President, and Founder of Newtek Business Services Corp., stock symbol and NEWT on the NASDAQ. This morning accompany me on this call is Chris Towers, our Chief Accounting Officer and Executive Vice President.
First of all, I want to thank all of the Newtek staff that has been working remotely. 100% of our staff has been working remotely during this period of time, 24/7, particularly focused on the PPP program, as well as payroll and other important vital services to over the 20 -- estimated 27 million businesses in the United States. We don't have all of them. We are servicing many of them, helping business owners have the funds necessary to provide payroll for their employees.
We've estimated that the PPP funds that we have gotten each round numbers are guarantees from the SBA will total approximately 130,000 individual payroll checks and quite proud of that and want to thank our staff for working 24/7.
For those of you that are familiar with Newtek, you can follow along this presentation. It is archived on our website, newtekone.com in the Investor Relations section. I would also like to point everyone to forward-looking statement that exists in that presentation on slide 1.
Moving forward to slide 2 on first quarter 2020 highlights. The Company yesterday reported a net -- NII, net investment income or loss of a $0.01 a share. That is an improvement of 80% over $0.05 a share from the quarter and year prior. Our NII does not include gain on sale and a significant part of our business is originating loans and selling them for gain on sale. This improvement is valuable because it pretty much indicates that without any origination and gain on sale, or pretty close to a breakeven.
Moving down to the third bullet on slide 2, adjusted NII came in at $0.21 a share, down from $0.44 a share in the year prior. Obviously, our March, we pretty much shut down our lending operation from the standpoint of normal 7(a) business due to the coronavirus and issues of visibility, so that portion of our pipeline, we believe that was prudent without a lot of visibility do not fund, but otherwise, I do believe that we would have meet or beaten prior year's earnings as well as been able to confirm our guidance.
NAV we reported yesterday, down 4.5%, clearly at the lower end of the decline for most BDCs. We'll spend a lot of time in today's presentation discussing those valuations and we feel that they're incredibly appropriate and also conservative and stressed out.
Debt to equity ratio of 1.44% on March 31, 2020. We don't see this changing much over the next two quarters. With respect to the PPP loan business, we pretty much make the loan and almost 95% of our sales or 100% sales with no long-term balance sheet implications.
Slide 3 shows the Company's historic track record of NAV over our life, which historically has been a positive movement in NAV despite the fact that we have clearly a setback in Q1.
On slide 4 and we'll go into this a little bit deeper from a valuation perspective, particularly with 7(a) portfolio for valuation purposes. We've stressed the season portfolio of 7(a) loans at accumulated gross default at 30%, particularly given that the portfolio is seasoned, we think that's extremely conservative and we will talk about the valuation there and have played -- and have applied our historic 40% loss severity.
Sometimes it's been greater, sometimes it's been less. We've actually done several liquidations that we've talked about at or above our market valuations that we have historically done, which I think validates valuation here.
Slide 5, important focus on the gains that we've made in NII historically over the course of five years, growing the business, getting reoccurring cash flow is not involved in the reoccurring event of gains on sale. Obviously, a lot of the gains that we've accomplished in this area are based upon what I would call the normalized market environment.
Our Baby Bonds have historically been issued at great prices. Our lines of credit have come down. Tighter spreads in the securitization have been very helpful to us. And we'll talk about where our bonds are -- what our bonds are experiencing the market relative to the collateral, which we think has been enhanced by the PPP program, which we'll talk about in later slides. So, we feel pretty good that the gains that we've made in NII over the intermediate and long-term will continue to advance particularly in the next quarter.
Moving to slide 6, we chatted a little bit about the disruption in March due to the coronavirus where we pretty much made a prudent election to pause on new fundings that we had lined up for March. Obviously, at this point, the focus of the lending unit, which has been a total shift to PPP loans versus 7(a) loans. PPP loans are technically 7(a) loans but they have totally different characteristics, both in terms of balance sheet implications, margin, and lending, which we'll talk about, but I think it's important to note that we anticipate 7(a) lending activity returning. That's a different statement. I might have made about a week, 10 days ago, that's how quickly the landscape is changing relative to the concept of visibility.
I think it's important to note as of May 7th, there's $120 billion according to the SBA and availability for the 7(a) program through the end of this year, which would include normal 7(a) loans and PPP loans. There was a thought process about 10 days ago that that availability would vanish immediately and be used up by PPP.
On April the 29th, Senators Rubio and Cotton, who are ranking members of the Senate Committee on Small Business, issued a letter to the US Department of Treasury to encourage them to have a 7(a) program that is enhanced. In the original bill for the CARES Act, there was a program that had 90% guarantees, increases in loan size to $10 million and removing the credit elsewhere test.
I think it's conceivable and a good possibility that 7(a) lending will continue through the rest of this year and potentially on better terms, and 90% guarantee leaves us with less balance sheet, less equity as we're able to sell the government guaranteed piece off and potentially greater margins and greater loan size.
Moving to slide 7, company made a forecast and I'm sure we'll talk a lot about this in the Q&A, for record NII and ANII for the second quarter of 2020 based on our regular business operations and PPP lending activity. We have not put a number on that. I will state that our largest quarter ever was $0.69 in adjusted NII.
We need to get some more visibility, particularly getting through the month of May and maybe the first week in June to get our fundings in line, to be able to come out with a forecast, which will also lead into future dividend expectations as well. We feel very strong and you take a look at our pipeline and what we sort of expect the fees to be paid from the Treasury and SBA for that activity, we feel pretty good about our second quarter and visibility is starting to come back to us where things were pretty cloudy, two to three weeks ago.
For those of you that aren't familiar with PPP loans, Payroll Program Protection Act came out of CARES, relative to the Coronavirus Aid, Relief, and Economic Security Act, about $660 billion, I believe, were appropriated for PPP loans. We were authorized as one of the nation's largest PLP lenders for the first six months of the SBA's fiscal year. We're still number two to be able to make these loans to small businesses for the purposes of maintaining their payroll, primarily and as well as paying rent and utilities.
PPP loans are 100% federally guaranteed that differs with the normal 7(a) program, which is 75/25, which leaves us with a balance sheet of 25% of uninsured. We partnered with several large banks, Stifel Financial as well as UBS, and others total of four, this led to 100% participations in the PPP loans that we've originated, which means we originate them, fund them, routes line that are able to sell the entire acts and off and earn an administrative fee from the SBA.
This has put us in a good position, although, the margins are narrower than we get for gain on sale on the government, we don't have the balance sheet implications as well. And we're able to turn our capital. We've currently obtained SBA E-Tran loans, which is effectively the guarantee that goes on top of a loan that enables us to make the loan to the business owner. And so far we've experienced minimal amounts of fallout once we've obtained the E-Tran number for $1.1 billion worth of PPP loans.
We are still taking in applications and opportunities for PPP loans. We feel pretty good about the $1.1 billion number. And as I mentioned earlier, we estimate that we have through the $1.1 billion of expected fundings been able to provide payroll for over 130,000 employees, which we are quite proud of the fact to enable small and medium-sized business owners to pay their staff use the funds for that, and to remain in business and keep the infrastructure going.
PPP loans essentially should be thought of as a bridge for these small and medium-sized businesses to get through the quarantine period, which in most states appears to be somewhere within the six to eight week range, some states four, and then obviously, these businesses are going to need further financing, which is where additional rounds of SBA lending come into place.
The Company has done an amazing job and once again, I want to thank the staff that's been working 24/7 tirelessly in a tough job. Everybody wants their money, they want it quick. It's hard to accomplish everybody. It was like 30 people trying to get through a doorframe that can only fit two at a time. But we estimate that we will fund about two years' worth of loan production in about two months' time. If you look at the CARES Act, $660 billion worth of funding, which in a normal SBA year might be $27 million, rounded up to $30 million. So, essentially, the industry will be funding 20 years worth of production in approximately a month or two, which is pretty remarkable from a dead start.
I think it's also important to note that we have offered 100% of all of our current borrowers, a PPP loan. I do want to point out that according to SurveyMonkey, despite the funny name, it happens to be a fairly prominent survey of small to medium sized businesses, they estimated recently that only about 45% of the marketplace actually went -- applied for a PPP loan. I think that's does say a lot for the resiliency of the entrepreneurs out there owning and operating small businesses that didn't feel what they necessarily needed, but also indicates -- and we've seen a continuing, trickling pipeline coming in of people still looking for these loans and the window will be open all the way through, I believe, June 30.
Moving to slide 8, further conversations about the CARES Act, one of the important unnoticed aspects of the CARES Act in what derived the SBA and the Department of Treasury to make six months of cash, principal, and interest payments in any existing 7(a) loan in regular servicing, which we view with less than 120 days, as does the Treasury, basically effectively less than 120 days and not in liquidation. I say that from the standpoint that we've actually received $17.7 billion from the SBA and the Treasury. It came in, in the month of April to flow through our loans, pay principal and interest for a month for borrowers in regular servicing. And as a result, it left our SBA 7(a) loans that are in the accrual portfolio at 98.6% currency rate as of April 30th, 2020.
We'll get into this a little bit deeper. We also would like the market to notice what our currency rate was on December 31, 2019, what was it at the end of the first quarter? It actually improved without these payments. So, we're working very hard with our borrowers to get them positioned for what I'll call the new economy going forward. And we have a lot of faith in our borrowers and entrepreneurs that they'll be able to pull through this as we do in the in the American economy.
I think it's important to note that the $17.7 billion of P&I payments, number one, allowed us to earn a full servicing income stream. It allowed us to paydown the securitization debt, which is beneficial to our note holders. Many of our note holders bought other small business loan financings that aren't faring as well. We turbocharged the bondholders, meaning the principle that we would normally get on the equity piece is accelerated to the bondholders. So, our bondholders are typically well over collateralized. This is something that we've done historically, over the course of 10 years. Our bondholders are and will be extremely happy. And that's an important aspect to the infrastructure and the reputation that we've built up historically in this particular market.
I think it's also important to note that the P&I payments that are being made for our customers are welcome payments. They offer an economic benefit to our 20,175 borrowers and this will give them a nice respite during this 30 to 60 days of shutdown, and then they'll have four months of additional P&I payments for them to be able to recover and come out of this economy on the other side.
On slide number nine, we want to point out and we'll probably address this in a lot of the Q&A relative to 2020 dividends, we did take our guidance back to the issue of visibility. To be 100% frank with you, I can create a matrix that gives me a variety of different indications, both beyond the initial forecast, below the initial forecast, at the initial forecast. But we feel very comfortable where we are relative to being able to offer shareholders a very competitive dividend, which we've done historically.
We're extremely conservative in our forecasting. You could see that how that's benefited investors, we get to the end of the presentation with respect to performance in the stock price.
I'll also point out that we are an internally managed BDC. I'm a shareholder as well. I love my dividends and look forward to receiving them out of earnings. I think that as we look at things going forward, we're going to continue to be prudent, look for further visibility in our business model. Please understand, we've had a change in the business model from a 7(a) model which has greater margins and greater balance sheet implications to being able to make a loan and sell 100% of it. We'll certainly be open to having discussions about our dividend policy going forward, which is determined by our Board of Directors.
Moving to slide number 10, we talked about, you know, future opportunities and challenging markets. Once again, I want to compliment the management team and the staff are really being incredible in adapting and being flexible in a new business model that was basically done fairly seamlessly to A, getting everybody to work from home and in the 7(a) market, switching over to PPP loans versus traditional 7(a).
We tried to emphasize this historically, and hopefully, it's becoming more and more apparent to investors, our business model and the way that we do business post-corona, without the use of branches, without the use of brokers, without the use of BDOs and limited salesforce contact with end customers, it works. And lo and behold, everyone is sort of gravitating to this model and trying to get involved. We're very appreciative of what we've been able to do in a very short period of time and we believe that business owners want to go to direct to somebody to provide a financial or business solution in a remote location with the right software and hardware, and we're excited about that.
We think about the solutions that we have, business owners, they got to work remotely. So, IT solutions is very well situated for that to be able to get them positioned to be able to do mobile computing. Obviously, PPP loans which have come to the forefront here. One of the key core functions of the PPP loans is payroll, our Newtek Payroll and Benefits solution; we'll be able to work with these businesses immediately. Maybe be able to offer them discounts on payroll to be able to move their business over and to help them solve the problems that they're having with respect to payroll and health and benefits.
Similarly, insurance issues have come up. Many people thought they had various types of coverage which they don't. Our ability to work with companies in our portfolio and offer insurance solutions for health, P&C, extremely important, making sure they've got the right cyber coverages and are working from home.
Moving over to payment processing, obviously, we're in a new world for payment processing. We see how well PayPal is doing for online payments. The concept that we have been able to mobilize our clients to take mobile payments, to improve their website and e-commerce platform, to be able to offer them zero cost payment processing solutions, which we have, to enable them to reduce costs, we'll talk about our PoS on cloud solution which is perfectly situated for the post-corona environment. We'll talk about that in a later slide.
I think that one important aspect relative to our current business model and analysts and trying to figure out, where's the company's leverage ratio? Where are their earnings coming from? And the fact that we have to switch from 7(a) to PPP, well, PPP will end. PPP is just a bridge and in the conversations that I've had with most institutional lenders, number one, people have thought of 7(a) in the past, they think about it differently today and a little there's been problems getting the money out, I think that the marketplace is going to gravitate to be a bigger 7(a) market. They actually heard many large financial institutions say that going forward they plan on extensively using the 7(a) market rather than putting these loans on their balance sheet.
So I think that our position as the second largest SBA 7(a) lenders for the first six months of this fiscal year, making SBA a little bit more of a household name with small and medium sized businesses. And obviously there's negative and positive connotations that go along with it. When businesses are going to need growth capital, and stabilization capital, they're going to come to this market and we're well positioned to take advantage of that in the future.
Slide number 11 is a similar slide that many of you seen in all of our presentations, but one important thing I'd like to point out, our average loan size of 180,000 on guaranteed pieces. Diversification, diversification, diversification. Many people on this call are in the financial community, they tend to be domiciled in New York. They tend to have a New York flood process in their head. New York has been much harder hit on the coronavirus and for small businesses and other states, very diversified book of business. No, geography that I believe is over 10% or 11%.
We have a limited amount of business that are in the New York area. We're diversified in geography. I think our motel portfolio is under 2%. I think that the top four states New York, Florida, Texas and California with obviously New York in the top four, but I think it's still under -- it's either, I'd say between 9% and 11% tops. I think it's important to note that our portfolio is extremely resilient to situations like this once again, because of diversification, diversification, diversification.
Moving to slide number 12. A typical slide that we have in growth and loan referrals, as many of you can see we have to change our presentation. Referrals are a little bit less relevant given the movement to PPP. Although, you've gotten 70,000 loan referrals in the past four weeks for a PPP loan, our database of customer opportunities because of this and our position on the market is extremely deep. I think it's also important to note that we've had other people that have sort of used referrals, and sort of adopted our business model.
So I've had people come to me and say, gee, cabbage, PayPal, when we owe the role on your space? We disagree. First of all, the role has been limited to a lender service provider. They do not have an SBA 7(a) license, which gives them the authority to actually make the loan and have the reps and warrants. All they've done is using technology. There's a lot more to lending than aggregating data on the front-end, and none of these entities to my knowledge actually have received the license, nor do I expect that to happen in the near future. But then again, that's up to the SBA and the Treasury.
We valued the skills that we've gotten over the last 17 years and understanding markets and understanding credits and being a stellar performer in this space and utilizing and embracing technology on the front end and in the middle part of the process to actually do credit analysis. So don't be confused in gathering data. Also, in an untested manner relative to compliance is the same as what we've done over 17 years. That's a huge, huge bridge to cross.
I'd just like to point out slide number 13. In a normal 7(a) market, these are the premiums. Very important to note and I've said this time and time again, the biggest issue in this area is prepayments in terms of pricing. Supply and demand is extremely important as well, if you have an oversupply that could be depressed. But the prepayment speeds and the prepayment speeds on these loans will -- are expected to slow dramatically.
Why are they expected to slow dramatically, not a lot of refi economic activity in conventional lending. Also, you've got a situation where obviously the economy slowed. You'll also have a situation where the principal and interest payments are now made by the government and not the borrower. So there's less of a likelihood of refined, obviously defaults will go to zero because the payments are being made. This should be constructed in general for the bond prices of these government guaranteed floaters that do trade on a premium.
Slide number 14 is a real important point. And I've authored our discussion by putting a link to a Standard & Poor's article piece of research that actually came out this week talking about default history from Standard & Poor's who's probably the leading rating agency in this space. We've historically said the defaults tend to accelerate between 18 and 40 months and then they flat.
Our portfolio is 30.6 months seasoned. We've discussed this. This is a big deal. We stress the portfolio for pricing at a 30% default rate on the season portfolio, which could be equal to a 40% to 45% default rate on a new portfolio cumulative over the life. That's a very high stressed out situation. We feel very good about how we price this, how we leave the market and where our valuations are.
I would encourage everybody to take a look at the S&P report. As somebody that's been in the small and medium sized business space, the concept of what you see on TV, or what you might feel in your own local market, for example, in New York, that's not being experienced throughout the United States.
And I think that there is a plethora of negative and economic news that basically has a view that none of these businesses are going to be able to survive. In my view, that's the furthest thing from the truth. Here's some interesting facts. On 12/31/2019, our current portfolio of loans 92.21%, in March 93%. So if the world was coming to an end and everyone was closing up and going away, and just forgetting about it, why did we have an increase in payments?
We work our portfolio. We work with these entrepreneurs. They've got everything on the line. They've got personal guarantees. They've got personal collateral pledged. They're going to work really hard to open up. But obviously, a lot of the issues here depends upon the health situation that the entire economy and country and universe are betting on. But these entrepreneurs is the last person who throw the keys in because they've got everything online personal assets, business assets for the entire family that are involved.
So I think it's important to note in the tables that we've provided, that the payments that we received in April, what the portfolio up to 98.63 current, these businesses are going to get a lot of relief for the next six months. They've also all been offered PPP loans. I think they're going to be able to be very well positioned for coming out of this economy, where in that case, we've got a tremendous amount of government stimulus that you've seen, both on the consumer level, on the banking level and on the business level.
So we're probably more optimistic than most relative to the state of the economy going forward. Do we think it's going to be a V and medium bounce back up? No. But we're not going to we're not going down the toilet right away. I think we're going to do just fine. I think it's also important to note for those people that are familiar with Newtek, all our assets are mark to the market, every single loan, whether it's an accrual or non-accrual loan, it's in our 10-K and Q. So it's all marked to the market. There's no reserves. You don't need reserves because you're marking it to the market and we believe it's done so on a fairly conservative basis. We've been doing this over the course of 17 years.
On slide number 16, and 17 and 18 not going to go too much into the news, except for the first slide. Simkar was alone that a non-investment banking research piece put out by a short seller highlighted that we have no belief that there was a value on this particular loan, which to me puts the value on his research or her research at zero, because I don't know how you could value a loan without looking into the loan file and seeing what the collaterals there. But Simkar is an interesting loan. This is a loan that we had repurchase from the SBA, repurchased from the SBA doesn't necessarily mean you're going to have a loss indicative about it.
Almost 402 days past due in liquidation. It paid-off on full on 430. In addition to paying off on full, we're able to collect $450,000 of payers interest, $25,000 in late fees, $85,000 in reimbursement of legal fees. So we actually got income above the mark in excess of $500,000. I think it's important to note that once again, this company's been around 20 years a publicly traded company, been in the SBA 7 (a) business for 17 years. We have a lot of people with a lot of eyes on this all these all these assets are marked to the market with a mutual fund, eye toward that.
FOGO Data Centers also loan that paid off in full. This loan was severely past due, paid off in full. We had 100% of the loan was also repurchased. Slide number 18 Mitchell Auto Repair another situation I think the investment community in particular has just looked at like the last month and thinking it's Armageddon. Well, you know, why are people paying their loans? Well, there's value in the business. There's value in the real estate. There's value in what these businesses have done over the past three, 10, 30 years. And that's why -- when they've got their personal guarantee on it, they got their personal assets pledged, they've got their business assets pledged. They will buy these loans back from us, so we could recoup. Once again, all of our non-accrual loans mark to the market, all of our crew loans mark to the market.
Slide number 19 and 20. I won't go over there in our presentations on a regular basis, quickly, going through portfolio company review. On slide number 22, we talk about our conventional loan program. Our conventional loan program beginning in March and clearly through the second quarter has been suspended based upon lack of visibility, however, we're proud to state that our conventional loan business has done well $92 million of closed and committed we fall called non-conforming conventional loans.
Let me define non-conforming conventional loans, non-504, that's B program non-7(a), no guarantee or supportive any of any kind, totally current. So we have a situation where bars gone. I'm not paying this, they got personal guarantees on the loans, they have personal collateral, there is a lot of equity underneath the loans. I believe as of May of the 14 or 15 units, I think there's only one borrower that we know is extremely liquid that has not made their payment yet, we expect that to come in portfolios performed very well.
This portfolio was financed by our joint venture Newtek Conventional Lending and also financed on our balance sheet. But I think it's important to note, 504 funding and conventional loan funding will clearly be suspended at least through the second quarter, and did get suspended in March. So that changed some of our -- obviously our business model.
Moving to Newtek merchant solutions, we've got data in here, I don't think you can get any more transparent than having this data. And I look at this payment processing data on a regular basis, because it gives me a very good feel for what's going on in the economy to actually see the level of Visa and MasterCard, American Express transactions that are going through the portfolio. We've maintained the fair value at $115 million. We value POS on cloud in $850,000.
And moving to slide number 24, we're able to track our processing volume. So for the -- for the first quarter, it declined by about 11% over the same period in 2019. In March, the processing volume was down by 23%. Now you're starting to see the effects of business shut downs in the coronavirus. April was pretty much most businesses were shut in a retail and restaurant environment 37% decline. We believe this is the low point as dates are now beginning to open up.
The processing volume in the first six business days in May 2020 increased by 21% over the first business days in April 2020. So we're starting to come out of this. As you see states like Georgia, Pennsylvania, and many other states starting to open up their business, we think we will see a bounce back. We have one portfolio in a company called Mobil Money.
The entire portfolio is Newark cab drivers with the amount of traffic coming through Newark. Obviously, you know, we probably only had maybe 5% or 10% of the drivers on the road, because there are no planes coming in and out of it, clearly affected our valuation in this particular segment, but obviously we believe once those airports open up, that will bounce back as well. So certain segments were softer, certain segments were stronger, obviously giving you these averages.
Look, we're making an estimate that pricing will be down about 20% in May, that's just an estimate. It's a forecast, or thinking the adjusted EBITDA for the merchant solutions business, which includes payments as well as Mobil Money, maybe 10%, maybe 15%. We didn't believe that represented our rationale to take a valuation hit, but we will look at this on a quarterly -- on a quarterly basis.
We do expect the rebound and pricing business. We're going to talk about a POS on Cloud. I think it's also important to note how many of you are going to feel real comfortable walking into a store and giving them a $50 bill and getting your money back in paper currency or coins. I think that's less than less. So I think this is going to continue to increase the amount of touch and go, credit card use, and things of that nature, which I think will be very bullish for this particular space.
Moving to slide number 25, Newtek payment systems, or POS on the cloud, I think it's important to note an acquisition we did toward the tail end of last year. We plan on rolling out POS on cloud to our alliance partners in a white-label solution. Well, this is going to enable a business to do is to have their own POS, which can be white labeled for you know, credit union payment systems, bank, payment systems, investment bank payment system so you get the brand of the Alliance partner, right on the POS, point of sale system, that's what POS stands for.
Taking payment, integrating with e-commerce, well what does that mean? Well, the business is doing business online like a restaurant or retail. The data that's coming in from an e-commerce will integrate with the POS and you get one reporting mechanism. And our POS on cloud will integrate to several different accounting systems. It also integrate with whole food delivery services like Uber Eats, Grubhub, DoorDash.
As I said, it integrates with General Ledger accounting systems it will also integrate with our own payroll solution. So the data will be pushed from Time and Attendance on the POS, right into our ISO payroll to give a business owner a complete solution. In addition to that, when you're doing payroll, you look at workman's comp, you look at health insurance, one beautiful, complete solution.
When you look at some of our competitors, like Square. Square doesn't have a payroll unit and there's a lot of advantages that we have. We are not just software, we're software, combined with staff in remote locations and able to service the customer. That's what small to medium sized businesses needs. They still don't want to do everything directly with a website on site.
On slide number 26. Our technology portfolio companies, we have three of them IBM, Cloud Nine, Newtek Managed Technology Solutions we are very proud of the turnaround. In Newtek Managed Technology Solutions, we're forecasting $3.5 million to $4.5 million if EBITDA this year. That's up from $203,000 in 2019, $836,000, we're a typical company, we have to be mobile, in a finger snap, all of a sudden, 450 people are working offline, to have that storage, to have that backup, they got to be secure. They have to be able to move critical data information with VPN they want to put them on Microsoft 365. They want to be able to backup in two different locations. We can do all that.
So we're very, very optimistic about our ability to be very good in this space. And the one interesting thing about being off site, I think all of you have probably had some issues, whether it's your phone or your laptop or whatever, relative to being able to do your business. So we're going to be able to go in with it a big database of customers and be able to offer those solutions to them.
Slide number 27 also just talks further about what we did in our Phoenix based operation. By the way, Scottsdale is a typo. The align data center we're using is in Phoenix. But we've invested $2.4 million, new hardware, new software. We're very excited about what we plan on doing in this space for growth. This is one of our partner companies, Newtek Managed Tech Solutions.
28 talks about the opportunity in Cloud, I think it's important to note, we can Newtek can manage workloads in Amazon, Azure, Google as well as interim data center so it's not, on situation. Give it your technology, give it your hardware-software, we can improve your security, improve your mobility, and reduce your costs. Clearly, our ability to work with payroll benefits is very valuable in the current environment. A lot of people have a ton of questions they want to change their insurance. We are going to be well positioned right there.
Slide number 30 talks about the historic returns, we've been able to afford investors extremely attractive. I would suggest you take a look at our history over the five years. You know, in those five years, there wasn't a coronavirus but you can see our stock declines similar to what we have today. And we've always been able to bounce back.
Obviously, we're in an unprecedented situation, which is pandemic, with health. But, you know, as all of your credit, figure out your investment thesis going forward, at the end of the day, you basically got to invest in companies with strategies going forward vision, and management teams. And I'm proud of what Newtek is presenting today to the investment community.
Concluding on slide number 13. Note, we internally managed BDC. So we're not trying to grow just for growth itself, just to get asset management fees, our interest very much aligned with shareholders, management on 6.3% of the outstanding shares. We are not new, been around since 1998. We've lived through a while 2008-2009 and didn't get a government bailout. We don't have, we believe a lot of risk on our balance sheet. There's no CDO equity or derivatives or oil and gas exposure. We're very appreciative of the opportunity to present to you today, given what's occurred to a lot of companies in this market. We think we're well positioned to proceed and go forward.
And with that, I'd like to turn the rest of the presentation over to Chris Towers.
Chris Towers -- Executive Vice President and Chief Accounting Officer
Thank you, Barry, and good morning, everyone. You can find a summary of our first quarter 2020 results on slide 40 of the presentation, as well as the reconciliation of our adjusted net investment income or adjusted NII on slide 35.
For the first quarter of 2020, we had a net investment loss of $282,000, or $0.01 per share, as compared to a net investment loss of $1 million or $0.05 per share in the first quarter of 2019, that's an 80% improvement on a per share basis.
Adjusted NII which is defined in the slide was $4.3 million, or $0.21 per share for the first quarter of 2020, as compared to $8.3 million, or $0.44 per share for the first quarter of 2019. That's a 52% decrease on a per share basis.
Focusing on first quarter 2020 highlights, we recognized $15.8 million in total investment income, so 14.8% increase over the first quarter of 2019. Service -- servicing, interest and dividend income were the primary drivers for the increase, with interest income increasing by 7.5% resulting from a year-over-year increase in the performing loan portfolio. Servicing income increased by 11.8% to $2.7 million in the first quarter of 2020 versus $2.4 million in the same quarter last year, which is attributable to the average servicing portfolio growing from $1.1 billion to $1.3 billion.
Distributions from portfolio companies for the quarter included $3.75 million from NMS, $75,000 from IPM, $250,000 from Sidco, and $307,000 from Newtek Conventional Lending.
Total expenses increased by $1.3 million year-over-year, or 9%. Total interest expense increased by $0.4 million in the first quarter of 2020, primarily due to higher average outstanding debt balances, origination and loan processing costs from SBL increased by $450,000 primarily due to increased headcount and overall compensation levels.
Small Business Lending LLC or SBL is one of Newtek's wholly owned controlled portfolio companies and is a lender service provider that starting January 1, 2019 provides NSBF with loan origination and loan processing services.
Realized gains recognized from the sale of guaranteed portions of SBA loans sold during the first quarter totaled $5 million, as compared to $9.7 million during the same quarter in 2019. In the first quarter of 2020, we sold 67 loans for $38.1 million at an average premium of 10.9%, as compared to 117 loans sold during the first quarter of 2019 for $74.1 million at an average premium of 11.09%.
Realized losses on SBA investments for the first quarter of 2019 and 2020 were $400,000. Overall operating results for the first quarter resulted in a net decrease in net assets of $7.3 million or $0.35 per share, and we ended the quarter with NAV of $15 per share.
Now I'd turn the call back to Barry.
Barry Sloane -- President and Chief Executive Officer
Thank you, Chris. We'd like to open up the call to Q&A.
Questions and Answers:
Operator
[Operator Instructions] Your first response is from Mickey Schleien of Ladenburg. Please go ahead.
Mickey Schleien -- Ladenburg -- Analyst
Good morning, everyone. And thanks for taking the time to explain such a fluid situation. Barry, just quickly on the SBA 7(a) prices and I did look at the slide as you were talking. They were soft in March as you've shown, and I have data that shows that they were also soft in April, which is a little confusing, because these are government guaranteed and there's loan origination volumes. So you would expect the supply and demand imbalance to actually improve their pricing. So can you just describe the market dynamics and what's the outlook?
Barry Sloane -- President and Chief Executive Officer
Sure. Mickey, I appreciate the question. And I do want to add that the SBA has done an amazing job during this crisis, just phenomenal. And although, it's easy to sit in the bleachers and your question doesn't address that at all. But a lot of people think they're critical of everything. This is not the time to be critical. This is the time to be proud of what we've been able to do here. I do want to compliment the SBA on their efforts and working with us.
Now, here's a little technical issue, however, well, historically, they've contracted with an entity called Colson, which I believe that will be changing out in the very near future. Well, Colson is located in Downtown Brooklyn. So unfortunately, most of the pool assemblers, I'm saying like almost all of them had difficulty in clearing bonds, because of Colson issues and issues of having to deliver physical certificates and signatures, and that was a primary cause for there being a market dislocation in the month of March and in the month of April. I do see that shoring up.
We did a little bit of selling in April, and we're able to clear. We had some product left over from the prior quarter that we held on to. But I think from a pure valuation standpoint, these are premium bonds, they're government guaranteed and prepayment speeds aren't at 22 or 24, but they're at lower numbers, putting supply and demand side that should affect the bounce back in price.
Mickey Schleien -- Ladenburg -- Analyst
Right. I agree. Moving on to PPP and this is sort of a subsequent event discussion, and I recognize there's limitations as to what you can say. But my understanding is that, you're collecting loan administration fees, which will be at the BDC level and they range from 1% to 5% of the loan depending on its size, right? Could you describe how you expect the accounting for those fees to be? Are you going to book those fees as they're earned? Or will you capitalize them and then amortize them over the loans to your life?
Barry Sloane -- President and Chief Executive Officer
Important question. First item, we've sold 100% of the loan in the form of participation certificate to third parties. And the fees are earned for the purpose of putting the loan together and putting it on our license. So and obviously, it's early, so I'll put the qualifier on it that auditors haven't signed off on this, but in our conversations internally, these fees will be earned upon the funding date.
They'll be paid in cash by the SBA, that's still to be determined, but the law indicated fairly expeditious manner in which those cash fees will be paid. And they'll be -- those fees should be earned in the current quarter. But I think it's important to note, I think some people wonder where we're selling these at. They're all sold at par. And -- they're all sold at par. So basically, we're trying to come up with some kind of an income model, you can figure it's one, three or five.
Mickey Schleien -- Ladenburg -- Analyst
Right, right. And so there are parties out there interested in holding this 1% paper. I mean, it's a little surprising.
Barry Sloane -- President and Chief Executive Officer
It's done.
Mickey Schleien -- Ladenburg -- Analyst
Okay. Barry, since PPP doesn't require -- based on what you just said, it doesn't require use of your capital. And meanwhile, your legacy loan programs are sort of on hiatus at least for now. What's the outlook for Newtek's balance sheet leverage for the balance of the year?
Barry Sloane -- President and Chief Executive Officer
So, yes, Mickey you're asking the questions that really are valuable to investors and have created sort of a lack of visibility that we really haven't been able to address up until this point. We're not getting a lot of visibility, but we're giving what we can. When we originate the PPP loan, we fund it, and then we sell it expeditiously. So that there's, I'll say, virtually no balance sheet.
We've got currently four different funding partners. The funding partners have availability beyond what we've got PPP numbers for. So you can imagine that they're fairly deep. I've got one funding partner that's fairly small, that will keep us with maybe a $5 million or $10 million balance sheet at the end of it, but practically all of our funding partners are buying 100%.
Mickey Schleien -- Ladenburg -- Analyst
Okay. And these are folks that are, I guess, they're just looking at this given the guarantees, these are almost like money market investments for them, right?
Barry Sloane -- President and Chief Executive Officer
Well, look, a financial institution can pledge this at the Federal Reserve for 35 basis points. So, and they can also put it on their books at zero risk based capital with unlimited leverage. So, when you think about this, Mickey, and this is once again, looking at the company and all of a sudden, this program gets thrust on us where it may have a 4% rate on Friday, a 50 basis point rate on Tuesday, and back to a 1% rate on Thursday, where I mean, the way that the United States reacted in this crisis, I think financially, although it's been heavily criticized, has been just terrific.
And once again, I want to compliment the Senate, the House, the administration, the SBA and the Treasury. So, profit from what you see on TV is everything is bad. It's not accurate. Not everything is bad. There's a lot of good things going on out there, we'll come out of this.
Mickey Schleien -- Ladenburg -- Analyst
For what it's worth, I've stopped watching the TV very, but maybe you can, could you at least give us a blended average between the one and a weighted average between the one on the finding? There's a big difference between 1% fee and a 5% fee -- borrowers my sense, it's probably closer to the 5% than to the one.
Barry Sloane -- President and Chief Executive Officer
Well, look, let me comment on this because I want to be careful relative to forecasting and what's going to fund and what's not going to fund. So, as of this date, we funded or closed, which I think also is a great number, about $650 million to $670 million, worth the $1.1 billion so we've been working at lightspeed. The SBA statistics indicate that round two, the average loan was at the lower end of the wrong and that would be in the 5% bucket. I think you could indicate that round one was closer to the bigger loans from an average.
I mean, look at this point and I really prefer to wait until June. You could come up with different averages and forecasts and ranges. But we would just prefer to wait until that amount has been funded, that we've been reimbursed from the SBA with cash in the bank, and we could then move on from there.
The one thing that has come to fruition is we got up to 17 point -- $17 million plus payment from the Treasury for our portfolio, which makes us very happy in our portfolio of 98.6% current, so that's one act that's passed through and round trip. This will happen too. This will happen as well.
Mickey Schleien -- Ladenburg -- Analyst
All right, I understand and I appreciate your time, Barry. Thank you.
Barry Sloane -- President and Chief Executive Officer
Thank you, Mickey.
Operator
Thank you. Your next response is from Luke Wooten of KBW. Go ahead, please.
Luke Wooten -- KBW -- Analyst
Hey, good morning, Barry.
Barry Sloane -- President and Chief Executive Officer
Luke, how are you doing?
Luke Wooten -- KBW -- Analyst
Doing all right. So just kind of following up on, on what you were saying. I mean, just because of the obviously ins and outs of the PDP program, just want to reiterate what you said, The 100% of the loan that you guys are originating are being sold the, like you said, 5 million to 10 million of the smaller partners that you're partnering with, right?
Barry Sloane -- President and Chief Executive Officer
Yeah, so the balance sheet won't grow in this activity by more than $5 million or $10 million. Plus, we've also sold governments that we have in the line so our leverage might actually go down.
Luke Wooten -- KBW -- Analyst
Okay, got you.
Barry Sloane -- President and Chief Executive Officer
Holding everything else constant.
Luke Wooten -- KBW -- Analyst
And then actually just on the kind of just the housekeeping question, but on the referral volume for exclusively 7(a) loans in 1Q, do you have that number on hand? Or is it kind of mixed in with a PDP? So it's hard to delineate between the two.
Barry Sloane -- President and Chief Executive Officer
Could you repeat that again? I'm sorry -- no whole volume?
Luke Wooten -- KBW -- Analyst
Yeah.
Barry Sloane -- President and Chief Executive Officer
It's -- Luke I would say, I would say that what we've historically done over the course of four or five years relative to referral volume growing. I mean the data wouldn't be useful. In other words, because if people came in and said they were looking for a $10 million, normal 7(a) loan, we just, we stored it, so we did -- it just -- it's just not useful right now. I can't tell you that from a modeling standpoint, the SBA business is now a very common name and work. There are a lot of business owners that didn't know about. Newtek has also become more prominent in the space with a variety of different new referral partners.
I would say, in order to be frank with you, we've dropped a couple of balls, but not many. And we've made a lot of new friends. So, I think that we're going to probably suspend the whole referral volume number for another quarter and then we'll pick it back up. But I'm confident that our numbers are great. And it's going to grow. It's not real relevant. I would say those $70,000 are primarily driven to PPP.
Luke Wooten -- KBW -- Analyst
PPP. Got you. Okay. That's what I thought. I just wanted to make sure. And then just you had a second point on that, is you're expecting the 7(a) to pick up more toward the back half of the year, correct. So kind of two half 2020 event rather than anything in the next quarter, or even maybe a little bit in 3Q, right because of the PPP?
Barry Sloane -- President and Chief Executive Officer
I think it's also important to note that the second quarter in the first half is usually weaker than the second half. So, I think that, if you can put any kind of a typical number in the second half that you're trying to forecast, we've decided not to do this. So I mean, you guys can do and again, investors want to get a feel for it, but just to go out into the third and fourth quarter, but I mean, if you put any kind of 7(a) volume in there with any kind of pricing, and actually salvage is a year that in most cases, particularly in BDC world or in financials is just in the toilet.
Luke Wooten -- KBW -- Analyst
Yeah, got you. Okay. And then, kind of switching over to the payment or the principal and interest payments from the SBA, on the current accrual portfolio, I think, on that slide, I think it's 15, you kind of list that there's 15 loans that are either a little bit past due or further and so we should expect that less or subtracting out -- I think it's the 80,000 that will be transferred to liquidation. The rest should be funded with P&I payments from the SBA. So that would be another just under $5 million?
Barry Sloane -- President and Chief Executive Officer
Number goes higher...
Luke Wooten -- KBW -- Analyst
Yeah. Got you -- $5 million balance within P&I is obviously lower. Okay. And then lastly, on that portfolio, I mean, coming out of this, we're kind of -- I mean, I think the question has to remain what the demand for businesses and borrowers has been since those borrowers have gone back to work, I mean, obviously, just trying to get through a normalized loss rate on some of these following the six months payments from the SBA.
So, I know you gave the slide that saying that 30% cumulative, butchering this the cumulative gross default at 30% with a 40% loss severity, which should imply roughly 12% cumulative loss rates on the portfolio. Can you just speak more to that coming out of this event? And what kind of business demand has been for borrowers?
Barry Sloane -- President and Chief Executive Officer
Well, first thing in addressing valuation, I think that is I'll use the word fair. And I think particularly when you pose it against the literature that we put out, that shows these curves really flattening based upon seasoning. And I think that for those of you that really aren't immersed in dealing with small businesses and entrepreneurs, they are an extremely resilient class.
They are going to come in every day. They are going to make their payroll and unlike a lot of consumers that are in many cases, living paycheck to paycheck, the small medium sized business operator in my opinion can survive a month or two or three of zero.
Now, when I say that, I'm not talking about 100% of the pie, but a pretty big percentage of them. And I think that's, that's what we're seeing. Now, relative to loan demand coming out of this, a lot of them have built up net worth. They've got 401(k)s, they got retirement plans, and they believe in themselves, they believe in their business, they're going to tap into those additional resources to give them whatever equity is required to bridge this and to be able to borrow, if need be from the next SBA program that comes out and we do have a lot of people today.
We've seen that and we're holding these situations, but there is clearly a pent up demand for capital. And this is a classic downturn from the standpoint that you will lose weaker entities, there's no question that you will lose weaker entities and the entities that are around they're going to do better because they have got less competition. So there's going to be loan demand. I believe there'll be loan demand.
Luke Wooten -- KBW -- Analyst
Okay, got you. Yeah, I was kind of just looking for adding a few and the anecdotal references from the businesses themselves in terms of kind of consumer demand for their products or anything like that just in terms of their ongoing kind of cash flows?
Barry Sloane -- President and Chief Executive Officer
It's a little early, well with respect to cash flows. The interesting thing, Luke and we showed this, we pulled in a lot of cash in March from businesses that wanted to get closer to current. So, they could benefit from being in regular servicing and that was very beneficial. We did very few deferments in the month of March. A lot of people did them immediately. We tell people make your payment, so you can still have a deferment down the road if you need, because you can't get unlimited deferments in the SBA program, I think you're allowed one.
Luke Wooten -- KBW -- Analyst
Got you.
Barry Sloane -- President and Chief Executive Officer
So, I did like 10 or 15 that I could recall and they were all short-term just to get people -- get the people current. But for the most part, these business owners, they've got savings, they've got -- they're not going paycheck-to-paycheck. Now when I say that, I'm not talking about 100%, I'm talking about 80%, 85% maybe 90%, but they've got valuable businesses and infrastructure and some of them have got marginal restaurants or marginal coffee shops or marginal and they're going to go out. There's going to be -- there's going to be businesses that shut, I don't think it's one, I don't think it's three in 10 or four in 10.
Luke Wooten -- KBW -- Analyst
Okay. Got you. That's super helpful. And then this one last one really quick, just kind of on with the actual individual loan that you highlighted the non-accrual loans to paid off on slide 16 to 18. In the interest that's recovered from those recognize in the interest income or is it like should we expect that to be kind of an interest recovery because I mean, just given the size, it looks like it would be roughly like 8% to 10% of the interest income that you guys receive on a quarterly basis. So just want to kind of see if we should look at that as kind of one-time, if we look at loan yields or overall interest yields coming in on to 2Q?
Barry Sloane -- President and Chief Executive Officer
I think the one good question is, these loans are now cash current, we should have a much higher interest income that comes off of that existing portfolio. Portfolio will shrink a little bit, I still think we'll probably have 8% type prepayment speeds, but a lot of the portfolio got that cash infusion, which will be the full interest coupon as well as servicing.
Luke Wooten -- KBW -- Analyst
Okay. Got you and that's all. Thank you.
Barry Sloane -- President and Chief Executive Officer
Thank you.
Operator
Thank you. Your next response is from Robert Dodd of Raymond James. Please go ahead.
Robert Dodd -- Raymond James -- Analyst
Hi, guys. As lot going on obviously, first one, if we can go to the dividend momentarily and then I've got some other questions. I mean, is it the current intent obviously, in the presentation you talked about, there are annual distribution requirements.
But is the current intent to pay a cash dividend during the second quarter, just delaying when you declare it because of lack of visibility? Or is it more the intent right now to pay out kind of more in the second half as everything works out and maybe you skip the normal dividends that you would have already declared for the second quarter?
Barry Sloane -- President and Chief Executive Officer
Robert, number one, the Board's going to determine that. I am a Board member and we kind of get more visibility as every day that goes on. I think that, we clearly have got investors that look forward to receiving some cash payment on a quarterly basis.
Given that we think that the second quarter could be a very big quarter and normally, we pretty much -- we kind of keep that dividend very close to what NII is, right that's the store. But this, whatever it was historic almost goes out the window now. I think that from our perspective, if you would ask me that question a couple of weeks ago, maybe my leverage was going up, I might have had a different answer than I have today. I think that we're going to; I don't have a specific answer for you today because the Board determines that.
I think that we're going to try to get investors some regular cash flow they can count on, but I am I am hopeful and I say this I am hopeful that investors come away with owning Newtek this year and saying, well, given the coronavirus, they paid me a pretty good dividend, their portfolio held up and this turned out given that this is a tough space to be in financials, small, medium sized business, this worked out pretty well.
So we're going to be judicious, I'll probably have more clarity on that beginning of June, like to understand from the SBA for example, when we're going to receive that payment. So I feel really uncomfortable. So yeah, we're going to make a cash payment and I don't, I didn't get the cashback from the government yet. So, as you can see, I'm being very careful about that. But we feel very strongly about the model, the earnings and what we're doing. I think investors will wind up being pretty happy with our cash dividend performance as well as how well our portfolio held up. And that's important to note, we're partners with the government.
Robert Dodd -- Raymond James -- Analyst
Got it. I really appreciate that color. I mean you used to mention it again, like a bit if I'd asked you two weeks ago, you're given a different answer in your prepared comments you talked about, you do expect the SBA market to come back now in the second half of the year. But if you actually that two, three weeks ago, you might not have said that. So obviously things are moving really fast. But what have you see over those two weeks? What is it that's changed your confidence level so much more in the interest, this question about the fact that the traditional program can come back in a second half?
Barry Sloane -- President and Chief Executive Officer
I love that question. Two weeks ago, everybody believed the money would run out in 10 minutes. There's no money. The whole 310 billion in the second would be gone, which means you need legislation to appropriate new 7(a) money, right? Well, lo and behold, the money is still out there, there is $120 billion left, that could be used for 7(a) through the end of this year and then it will most likely get relegislated. I've also seen the Rubio, Cardin letter. You hear things from Pelosi and other politicians, this program is a bipartisan program.
The administration is talking about growth and going forward and another round of stimulus, which I believe and hope the SBA would be part of it. Important to note, the Rubio Bill was part of the original CARES Act that portion of it that would have gone to 90% with $10 million limits and the availability to not have credit elsewhere. That got pulled because I think what the administration wanted to do, is they want to do bridging first, to bridge everybody, get paychecks out there, get money to consumers, do the PPP and then go with stimulus after the fact.
So, number one, the availability under the 7(a) program. Two, what I'm hearing from Washington. Three, loan demand from businesses that indicates to me that we'll get back into a normalized environment. I want to tell you something else, we really covered a lot in my payments sector looking at the first six or seven business days of May versus April and you could see it's, as people -- as things are opening up, people are going out and they're getting out of their house and they're starting to spend. So those are the things that give me the confidence that there will be a 7(a) business at some point in time in the rest of the year.
Robert Dodd -- Raymond James -- Analyst
Sloane, I really appreciate the color. Thank you, bye.
Barry Sloane -- President and Chief Executive Officer
Thank you.
Operator
Thank you. Your next response is from Scott Sullivan of Raymond James. Please go ahead.
Scott Sullivan -- Raymond James -- Analyst
Thanks for taking my call. One comment and two questions, real quick. We all know this was really kind of a DEFCON situation. So, personally, I had tip [indecipherable] and both sides of Congress to come together on this, what I think was a very elegant bill.
And also really huge congratulations to you and your staff, your team for helping such an important and vital component of the U.S. economy and you guys should obviously in my opinion, be very proud. So, first question is, what's your goal for your staff this next quarter?
Barry Sloane -- President and Chief Executive Officer
That's a good question, Scott. Because they're working real hard, the clients appreciate them, we appreciate them. We've got to keep them going, keep them in their seat, keep them hydrated, keep -- just keep them going at a very high pace to get the money out then deal with the concept of loan forgiveness on these loans. In addition to that, the payroll staff, payments staff, tech staff, insurance staff are also going to be helping out on the program and working with businesses to get their payroll cost down to get better health insurance policies, to get other insurance policies that they need to improve their technology for working from remotely and from home. So we have goals that are well beyond what is sitting right in the face.
And the one thing that was very constructive about this crisis, which is destructive across the Board was I think our staff realized that the business owners out there, they're just like them and these are people that really need them, they needed their help, they needed them to process their paperwork and to get money in their hands for payroll. That was a very positive thing that was hard to get across the people that our staff helps businesses every single day.
That's what we do, we help people and getting the staff to recognize it was frankly easy during this pandemic. So those are the primary goals for the quarter and then this too will end most likely by June and we'll shift back into what we normally do, which is helping businesses, but albeit at a different pace.
Scott Sullivan -- Raymond James -- Analyst
Great. Appreciate that. Last question with a large number of new customers, obviously been introduced to and are helping now. What kind of cross pollinization, do you think you could see and so targeted brush on this in the last response? What kind of lift could you see for your other small business offerings?
Barry Sloane -- President and Chief Executive Officer
I've told my staff I think this is kind of a once in a lifetime opportunity where businesses now that are in many cases, not fully functional, not fully operational, not really focused on revenue growth to really focus in on the expense, to focus on having the best solution and to get them to make changes.
This is a once in a lifetime opportunity for a business owner that can sit there and look that I have the best technology. Can I work remotely? Can they work remotely securely? Are they storing? Do they have hot backup? Are they using the right payment processing solution? Should they go to a zero cost model? Should they improve their website? I mean, we impressed upon restaurants, for example, to take e-commerce. Well, a lot of them hadn't. I don't want to spend $1,000 or $2,000 on a new website, that would have been the best investment they ever made. To be able to order online and have curbside pickup, they would have been able to stay in businesses. The business that done if curbside pickup, they really got hurt. They really got hurt.
Scott Sullivan -- Raymond James -- Analyst
Absolutely. Great. Thank you so much and congrats.
Barry Sloane -- President and Chief Executive Officer
Thank you, Scott.
Operator
Thank you. I'm sure no further questions in the queue. I will turn the conference back over to Barry Sloane.
Barry Sloane -- President and Chief Executive Officer
Thank you very much and look we appreciate the opportunity to present to everybody, I once again want to thank all the Newtek associates, I want to thank the small business administration, all aspects of government, investors that have hung in there with us. And we look forward to giving further guidance. The important aspect is to a really tough time and a tough segment of the market in the economy. I think, we're very well-positioned going forward and we look forward to providing the types of returns that the community has become accustomed to with investing in Newtek. Thank you all.
Operator
[Operator Closing Remarks]
Duration: 74 minutes
Call participants:
Barry Sloane -- President and Chief Executive Officer
Chris Towers -- Executive Vice President and Chief Accounting Officer
Mickey Schleien -- Ladenburg -- Analyst
Luke Wooten -- KBW -- Analyst
Robert Dodd -- Raymond James -- Analyst
Scott Sullivan -- Raymond James -- Analyst
