Newtek Business Services Annual Report 2016

Plain-text annual report

NEWTEK BUSINESS SERVICES CORP. FORM 10-K (Annual Report) Filed 03/13/17 for the Period Ending 12/31/16 Address Telephone CIK 1981 MARCUS AVENUE SUITE 130 LAKE SUCCESS, NY 11042 212-356-9500 0001587987 Symbol NEWT Industry Sector Fiscal Year Business Support Services Industrials 12/31 http://www.edgar-online.com © Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549____________________________________________ FORM 10-K____________________________________________ x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2016¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF1934For the transition period from toCommission file number: 814-01035 ____________________________________________ NEWTEK BUSINESS SERVICES CORP. (Exact name of registrant as specified in its charter)____________________________________________ Maryland 46-3755188(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 1981 Marcus Avenue, Suite 130 Lake Success, New York 11042(Address of principal executive offices) (Zip Code)Registrant’s telephone number, including area code: (212) 356-9500 ____________________________________________ Securities Registered Pursuant to Section 12(b) of the Act: Name of Each ExchangeTitle of Each Classon Which Registered Common Stock, par value $0.02 per shareNasdaq Global Market7.50% Notes due 2022Nasdaq Global Market7.00% Notes due 2021Nasdaq Global MarketSecurities Registered Pursuant to Section 12(g) of the Act: None ____________________________________________ Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No xIndicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepast 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90days. Yes x No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files). Yes x No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (all as definedin Rule 12b-2 of the Exchange Act). Large accelerated filer ¨Accelerated filer x Non-accelerated filer ¨Smaller reporting company ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No xThe aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $156,330,000 as of the lastbusiness day of the registrant’s second fiscal quarter of 2016 , based on a closing price on that date of $12.72 on the Nasdaq Global Market. For the purposes ofcalculating this amount only, all directors and executive officers of the Registrant have been treated as affiliates.As of March 10, 2017 there were 17,217,474 shares issued and outstanding of the registrant’s Common Stock, par value $0.02 per share.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive Proxy Statement relating to the registrant’s 2017 Annual Meeting of Shareholders, to be filed with the Securities andExchange Commission within 120 days following the end of the Company’s fiscal year, are incorporated by reference in Part III of this Annual Report on Form10-K as indicated herein. Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESTABLE OF CONTENTS Item Page PART I 1.Business1 1A.Risk Factors33 1B.Unresolved Staff Comments62 2.Properties62 3.Legal Proceedings62 4.Mine Safety Disclosures62 PART II 5.Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities63 6.Selected Financial Data65 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations66 7A.Quantitative and Qualitative Disclosures About Market Risk85 8.Financial Statements and Supplementary Data85 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure85 9A.Controls and Procedures85 9B.Other Information86 PART III 10.Directors, Executive Officers and Corporate Governance86 11.Executive Compensation86 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters87 13.Certain Relationships, Related Party Transactions and Director Independence87 14.Principal Accounting Fees and Services87 PART IV 15.Exhibits and Financial Statement Schedules88 Exhibits Index88 Signatures91 Financial Statements92Table of ContentsPART IOn November 12, 2014, Newtek Business Services, Inc. merged with and into Newtek Business Services Corp., a newly-formed Maryland corporation, forthe purpose of reincorporating in Maryland (the “ Merger ” ), and thereafter filed an election to be regulated as a business development company (“BDC”) underthe Investment Company Act of 1940, as amended (the “ 1940 Act ” ) (referred to herein as the “ Conversion ” or “BDC Conversion ” ). All subsidiaries andcontrolled portfolio companies (as defined below) became the property of Newtek Business Services Corp. as part of the Merger. Except as otherwise noted, theterms “we,” “us,” “our,” “Company” and “Newtek” refer to Newtek Business Services, Inc. prior to the Conversion and its successor, Newtek Business ServicesCorp. following the Conversion.On October 22, 2014, we effectuated the 1-for-5 reverse stock split (the “Reverse Stock Split”). On November 18, 2014 we completed an offering of2,530,000 shares of our common stock at an offering price of $12.50 per share for total gross proceeds of $31,625,000. Unless otherwise indicated, the disclosuresin this annual report on Form 10-K give effect to the Conversion and Reverse Stock Split.ITEM 1. BUSINESS.We are an internally managed non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. We havealso elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code, as amended (the “Code”) for U.S. federalincome tax purposes, beginning with our 2015 tax year. We were formed to continue and expand the business of Newtek Business Services, Inc. We expect thatour investments will typically be similar to the investments we made prior to our reincorporation.As a BDC, our investment objective is to generate both current income and capital appreciation primarily through loans originated by our small business financeplatform and our equity investments in certain portfolio companies that we control.Our BusinessWe are an internally managed BDC that is a leading national non-bank lender that provides, together with our controlled portfolio companies, a wide range ofbusiness services and financial products under the Newtek® brand to the small- and medium-sized business (“SMB”) market. Newtek’s products and servicesinclude: Business Lending including U.S. Small Business Administration (“SBA”) 7(a) and 504 lending, Electronic Payment Processing, Managed TechnologySolutions (Cloud Computing), eCommerce, Accounts Receivable and Inventory Financing, The Secure Gateway, The Newtek Advantage®, personal andcommercial Insurance Services, Web Services, Data Backup, Storage and Retrieval, and Payroll and Benefits Solutions to SMB accounts nationwide across allindustries. 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 anddiversified client base across every state in the U.S. and across a variety of different industries. In addition, we have developed a financial and technology basedbusiness model that enables us and our controlled portfolio companies to acquire and process our SMB clients in a very cost effective manner. This capability issupported in large part by NewTracker®, our patented prospect management technology software which is similar to but we believe is better than the systempopularized by Salesforce.com. We believe that this technology and low cost business model distinguishes us from our competitors.We focus on serving the SMB market, which we estimate to be over 27 million businesses in the U.S. We believe that these businesses have historically beenunderserved by traditional financial institutions and typically lack the capital resources to build a competitive business and marketing infrastructure on their own.Further, in today’s economic climate, we believe SMBs have particular difficulty obtaining capital from traditional lending sources. While we do not competedirectly with alternative online lenders such as The Lending Club, Prosper.com, OnDeck Capital, Inc. and Kabbage Inc., we do provide financing solutions as analternative to traditional lending. We believe there is significant demand for such alternative financing among SMBs. Our lending solutions and our controlledportfolio companies’ outsourced business solutions help clients manage and grow their businesses and compete effectively in today’s marketplace. We obtain ourcustomers through referrals from various business partners, such as banks, insurance companies, credit unions and other affinity groups, as well as through our owndirect sales force and advertising campaigns. We source, acquire and process SMB customers in a cost effective manner without reliance on high cost sales staffand time consuming application processes.In lending, we believe we are a leading capital provider to SMBs based on our loan volume. We originate loans through a variety of sourcing channels and, througha disciplined underwriting process, seek to achieve attractive risk-weighted returns. Our multi-faceted relationships with certain borrowers allow us to closelymonitor their credit profile and take an active role in managing our investment. Further, our lending capabilities coupled with the broad outsourced businesssolutions of our controlled portfolio companies create attractive cross-selling opportunities within our client base. We believe our business model creates powerfulnetwork effects which will help drive growth and operating leverage in our business. In addition, our1See accompanying notes to these consolidated financial statementsTable of ContentsSBA loans are structured so that the government guaranteed portion can be rapidly sold, which, based on our historic ability to securitize the unguaranteed portionsand assuming the continuation of current market conditions, allows us to quickly recover our principal and earn excess capital on each loan, usually in less than ayear. We may in the future determine to retain the government guaranteed or unguaranteed portions of loans pending deployment of excess capital. From 2012through December 31, 2016 , we have consistently been the largest non-bank SBA 7(a)lender and currently are the seventh largest SBA 7(a) lender in the U.S.based on dollar lending volume.Our proprietary and patented technology platform, The Newtek Advantage®, which we make available to our controlled portfolio companies enables them toprovide clients with a real-time management solution that organizes all of a business’ critical transaction and economic, eCommerce and website traffic data on asmartphone, tablet, laptop or personal computer. This technology provides critical consumer and marketing intelligence, including data mining, and provides arange of differentiated solutions and analytical tools that may be easily customized and integrated within their clients’ existing business processes. It also providesclients with seamless connectivity to a payment and managed technology infrastructure that is secure, fully compliant and regularly updated with the latestcapabilities, services and functionalities. The platform is scalable to facilitate growth and meet the needs of new clients and consists solely of cloud-basedofferings.Newtek and its controlled portfolio companies all use NewTracker®, our patented and proprietary technology for receiving, processing and monitoring prospectivecustomers. This enables Newtek and its portfolio companies to acquire SMB customers in a cost effective manner as it is all accomplished by skilled staff usingstate of the art technology without the need for high cost sales staff or applications processors. It also permits our referral partners to have a real time window intothe back office processing of their referrals given. The software automatically pre-populates any necessary forms or applications so the processing is efficient andalso cost effective. Finally, it also identifies opportunities for the cross-sale of other Newtek branded products or services.Small Business Finance PlatformOur portfolio consists of guaranteed and unguaranteed non-affiliate loan investments that were made through our small business finance platform, comprised ofNewtek Small Business Finance, LLC (“NSBF”), a nationally licensed SBA lender. NSBF originates, sells and services SBA 7(a) loans made to qualifying SMBs,which are partially guaranteed by the SBA. The small business finance platform also includes CDS Business Services, Inc. d/b/a Newtek Business Credit Solutions(“NBC”), a controlled portfolio company, which provides receivables financing, inventory financing and health care receivables financing, and managementservices to SMBs, which may obtain $10,000 to $2,000,000 per month through the sale of their trade receivables. In addition, NBC funds SBA 504 loans whichprovide financing of fixed assets such as real estate or equipment. Small Business Lending, LLC d/b/a Newtek Small Business Lending (“SBL”), a wholly ownedportfolio company, engages in third party loan servicing for SBA and non-SBA loans. An additional wholly owned portfolio company, ADR Partners d/b/a banc-serv Partners, LLC (“BSP”), provides lending institutions with outsourced solutions for the entire SBA lending process, including credit analysis, structuring andeligibility, packaging, closing compliance and servicing.We intend to continue to expand our small business finance platform primarily by expanding senior secured lending through NSBF. NSBF is one of 14 SBAlicensed Small Business Lending Companies that provide loans nationwide under the SBA 7(a) loan program. NSBF has received Preferred Lenders Program(“PLP”) status, a designation whereby the SBA authorizes SBA lenders, based on their record with the SBA and proficiency in processing and servicing SBA-guaranteed loans, to place SBA guarantees on loans without seeking prior SBA review and approval. PLP status allows NSBF to serve its clients in an expeditedmanner since it is not required to present applications to the SBA for concurrent review and approval. We believe NSBF's SBA license, combined with NSBF'sPLP designation, provides us with a distinct competitive advantage over other SMB lenders that have not overcome these significant barriers-to-entry in ourprimary loan market. NSBF originated approximately $242,496,000 of SBA 7(a) loans during 2015 and approximately $309,147,000 during 2016. We believe thatwe will continue to be introduced to a variety of high-quality investment opportunities through our existing loan sourcing channels and our controlled portfoliocompanies’ relationships with their clients, and our status as a BDC which helps fuel the growth of our loan portfolio by providing us with better access to lower-cost capital.The SBA is an independent government agency that facilitates one of the nation’s largest sources of SMB financing by providing credit guarantees for its loanprograms. Under the SBA’s 7(a) lending program, a bank or other lender such as NSBF underwrites a loan between $50,000 and $5,000,000 for a variety ofgeneral business purposes based on the SBA’s guidelines and the SBA provides a partial guarantee on the loan. Depending on the loan size, the SBA typicallyguarantees between 75% and 90% of the principal and interest due. The recoveries and expenses on the unguaranteed portions of these loans are shared pari passubetween the SBA and the lender, which substantially reduces the loss severity on the unguaranteed portion of a loan for SBA 7(a) loan investors. SBA 7(a) loansare typically between five and 25 years in maturity, four to five years in duration and bear interest at the prime rate plus a spread from 2.25% to 2.75%. Since theguaranteed portions of SBA 7(a) loans carry2Table of Contentsthe full faith and credit of the U.S. government, lenders may, and frequently do, sell the guaranteed portion of SBA 7(a) loans in the capital markets, hold theunguaranteed portion and retain all loan servicing rights.NSBF has a dedicated capital markets team that sells the guaranteed portions of its SBA 7(a) loans and sells or securitizes the unguaranteed portions of its SBA7(a) loans. Historically, NSBF has sold the guaranteed portions of its originated SBA 7(a) loans shortly after origination and retained the unguaranteed portionsuntil accumulating sufficient loans for a securitization. Since inception, NSBF has sold SBA guaranteed portions of SBA 7(a) loans at premiums ranging from106% to 120% of par value and typically any portion of the premium that was above 110% of par value was shared equally between NSBF and the SBA. SinceDecember 2010, NSBF has maintained its securitization program for unguaranteed portions of its SBA 7(a) loans and has successfully completed sevensecuritization transactions with Standard & Poor’s AA or A ratings and attractive advance rates of approximately 70% of par value. NSBF intends to completeadditional securitizations in the future which may be on comparable although not necessarily identical terms and conditions. We may determine to retain thegovernment guaranteed or unguaranteed portions of loans, pending deployment of excess capital.NSBF’s senior lending team has focused on making smaller loans, approximately $1,000,000 or less, in order to maintain a diversified pool of loans that aredispersed both geographically and among industries, which limits NSBF’s exposure to regional and industry-specific economic downturns. Specifically, as ofDecember 31, 2016 , NSBF’s loan portfolio consisted of 1,227 loans originated across 49 states in 77 different industries as defined by the North AmericanIndustry Classification System (“NAICS”). The following charts summarize NSBF’s mix of investment concentrations by industry and geography as ofDecember 31, 2016 (in thousands):Distribution by NAICS Code DescriptionNAICS Code Description Number of Loans Aggregate Balance($) Average Balance($) Percentage ofBalanceFood Services and Drinking Places 158 $19,140 $121 8.7%Amusement, Gambling, and Recreation Industries 65 15,743 242 7.2%Ambulatory Health Care Services 70 13,068 187 5.9%Professional, Scientific, and Technical Services 68 12,090 178 5.5%Repair and Maintenance 71 12,066 170 5.5%Accommodation 38 8,617 227 3.9%Specialty Trade Contractors 57 8,311 146 3.8%Truck Transportation 30 7,469 249 3.4%Merchant Wholesalers, Durable Goods 29 6,211 214 2.8%Gasoline Stations 26 5,938 228 2.7%Other 615 111,122 181 50.6%Total 1,227 $219,775 $179 100.0%Distribution by State3Table of ContentsState Number of Loans Aggregate Balance($) Average Balance($) Percentage ofBalanceFlorida 162 $31,751 $196 14.4%New York 138 22,311 162 10.2%Connecticut 81 14,532 179 6.6%Texas 68 14,331 211 6.5%California 81 13,379 165 6.1%Georgia 56 12,314 220 5.6%New Jersey 83 12,202 147 5.6%Pennsylvania 61 9,185 151 4.2%Ohio 38 8,291 218 3.8%Illinois 32 7,879 246 3.6%Other 427 73,600 172 33.4%Total 1,227 $219,775 $179 100.0%NSBF evaluates the credit quality of its loan portfolio by employing a risk rating system that is similar to the Uniform Classification System, which is the assetclassification system adopted by the Federal Financial Institution Examinations Council. NSBF’s risk rating system is granular with multiple risk ratings in boththe Acceptable and Substandard categories. Assignment of the ratings are predicated upon numerous factors, including credit risk scores, collateral type, loan tovalue ratios, industry, financial health of the business, payment history, other internal metrics/analysis, and qualitative assessments. Risk ratings are refreshed asappropriate based upon considerations such as market conditions, loan characteristics, and portfolio trends. NSBF’s gross SBA loans by credit quality indicator areas follows:Risk RatingPortfolio Number of Loans Aggregate Balance($) Average Balance($) Percentage ofBalanceRisk Rating 1 - 4 1,142 $203,628 $178 92.7%Risk Rating 5 12 1,215 101 0.6%Risk Rating 6 65 14,490 223 6.6%Risk Rating 6/7 and 7 8 442 55 0.1%Total 1,227 $219,775 $179 100.0%The weighted average term to maturity and weighted average interest rate of NSBF’s loan portfolio as of December 31, 2016 was 16.8 years and 6.24%,respectively.Controlled Portfolio CompaniesIn addition to our debt investments in portfolio companies, either directly or through our small business finance platform, we also hold controlling interests incertain portfolio companies that, as of December 31, 2016 , represented approximately 35% of our total investment portfolio. Specifically, we hold a controllinginterest in SBL, NBC, BSP, Universal Processing Services of Wisconsin, LLC d/b/a Newtek Merchant Solutions (“NMS” or “UPSW”), Premier Payments LLCd/b/a Newtek Payment Solutions (“Premier”), CrystalTech Web Hosting, Inc. d/b/a Newtek Technology Solutions (“NTS”), PMTWorks Payroll, LLC d/b/aNewtek Payroll and Benefits Solutions (“NPS”) and Newtek Insurance Agency, LLC (“NIA”). We refer to these entities (among others), collectively, as our“controlled portfolio companies.” Our controlled portfolio companies provide us with an extensive network of business relationships that supplement our referralsources and that we believe will help us to maintain a robust pipeline of lending opportunities and expand our small business finance platform.The revenues that our controlled portfolio companies generate, after deducting operational expenses, may be distributed to us. As a BDC, our board of directors(the “Board”) will determine quarterly the fair value of our controlled portfolio companies in a similar manner as our other investments. In particular, ourinvestments in our controlled portfolio companies are valued using a valuation methodology that incorporates both the market approach (guideline public companymethod) and the income approach (discounted cash flow analysis). In following these approaches, factors that we may take into account in determining the fairvalue of our investments include, as relevant: available current market data, including relevant and applicable market4Table of Contentstrading comparables, the portfolio company’s earnings and discounted cash flows, comparisons of financial ratios of peer companies that are public, and enterprisevalues, among other factors. In addition, the Company has engaged third party valuation firms to provide valuation consulting services for the valuation of certainof our controlled portfolio companies.Newtek Merchant Solutions and Newtek Payment SolutionsOn July 23, 2015, we invested in 100% of the membership interests of Premier, one of the country’s leading electronic payment processing independent salesorganizations, which powers billions of dollars of credit card and debit card transactions on an annual basis. We anticipate that this investment will continue toexpand our controlled portfolio companies' presence in the merchant processing space.Both NMS and Premier market credit and debit card processing services, check approval services and ancillary processing equipment and software to merchantswho accept credit cards, debit cards, checks and other non-cash forms of payment. They utilize a multi-pronged sales approach of both direct and indirect sales.NMS and Premier's primary sales efforts focus on direct sales through our Your Business Solutions Company® brand. Their indirect sales channels consist ofalliance partners, principally financial institutions (banks, credit unions, insurance companies and other related businesses), and independent sales agents across theU.S. These referring organizations and associations are typically paid a percentage of the processing revenue derived from the respective merchants that theysuccessfully refer to NMS and Premier. In 2016, NMS and Premier processed merchant transactions with sales volumes of over $5.8 billion combined.NMS and Premier have a number of competitive advantages which we believe will enable them to exceed industry growth averages. These are:•They focus on non-traditional business generation: referral relationships, wholesale solicitations and financial institutions rather than independent agents;•They are a market leader in the implementation of technology in the payment processing business;•They license the rights, through one of our Capco investments (defined below), to a payment processing gateway;•They maintain their own staff of trained and skilled customer service representatives; and•They market and sell the latest in point-of-sale technology hardware, re implementing of the EMV system (Europay, MasterCard, Visa inter-operativeintegrated circuit cards) and continuous cyber-security services.NMS and Premier maintain their principal customer service and sales support offices in Milwaukee, Wisconsin and Lake Success, New York, with additionalspecialists located in Phoenix, Arizona and Brownsville, Texas. NMS' and Premier’s personnel at these locations assist merchants with initial installation ofequipment and on-going service, as well as any other special processing needs that they may have.NMS' and Premier’s development and growth are focused on selling their services to internally generated referrals, merchant referrals identified by Newtekalliance partners and by independent sales representatives. We believe NMS and Premier are different than most electronic payment processing companies whoacquire their clients primarily through independent agents. NMS and Premier believe that their business models provide them with a competitive advantage byenabling them to acquire new merchant customers at a lower cost level for third-party commissions than the industry average. NMS' and Premier’s businessmodels allows them to own the customer as well as the stream of residual payments, as opposed to models which rely more heavily on independent sales agents.Newtek Technology SolutionsNTS offers website hosting, dedicated server hosting, cloud hosting, web design and development, internet marketing, eCommerce, data storage and backup, andother related services to more than 99,000 customer accounts in 167 countries and manages over 70,000 domain names. While there are many competitors in thisspace, we believe that NTS is the only technology company with the exclusive focus on the SMB market with products tailored to the specific needs of thesebusiness customers.NTS provides a full suite of outsourced IT infrastructure services, including cloud (virtual) server instances, shared server hosting, and dedicated server hosting,under the Newtek® Technology Solutions, Newtek® Technology Services, Newtek® Web Services, Newtek Web Hosting®, and CrystalTech® brands, for whichit receives recurring monthly fees, as well as other5Table of Contentsfees such as set-up fees, consulting fees, and domain name registration fees, among others. Approximately 90% of all fees are paid in advance by credit card.NTS has recognized the continuing decline in Microsoft being utilized in the design of web sites and the market shift to Linux, Nginx and a proliferation of WordPress sites being built on non-Microsoft based platforms. This decline has caused a marked downward trend in the historical site count of NTS Microsoft hostedsites. NTS has responded by launching Linux Apache and Linux Nginx platforms within its environment and created associated control panels, service/support andbilling to participate more fully in 100% of the market as compared to the present 33% of the new web design growth represented by Microsoft. All platforms areavailable within NTS’ cloud and non-cloud environment and are fully managed offerings as compared to NTS’ competitors. In addition, Newtek has created apatented proprietary platform, Newtek Advantage®, which leverages NTS’ underlying technologies to deliver real time information and actionable businessintelligence to its existing and new customer base.NTS has a complete line of cloud based business and eCommerce packages and Cloud Spaces to streamline the decision process for business owners andaccommodate designers and developers that wish to build sites in both Microsoft and Linux environments. Included with this service offering is full customerservice with a real human interface available on a 24/7/365 basis, which we believe further distinguishes NTS from its competitors who usually offer co-locationhosting without the support needed for the SMB market customer.NTS’ cloud offerings provide for a consumption-based hosting model that allows customers to pay only for the resources they need, which not only saves themmoney compared to traditional server hosting, but also enables them to scale larger or smaller on demand.NTS currently operates five data centers in Scottsdale, Arizona, Phoenix, Arizona, Edison, New Jersey, Denver, Colorado and Slough, England.NTS delivers services not just to customers seeking hosting, but also to wholesalers, resellers, and web developers by offering a range of tools for them to build,resell, and deliver their web content. Depending on the application environment, NTS uses various versions of Microsoft Windows Server 2008 R2 throughWindows 2012 R2 as the primary operating system installed in a virtual machine server format. NTS is PCI certified, and Service Organization Control 1 (“SOC1”) audited, all of which mean that it meets the highest industry standards for data security.The datacenter facilities NTS employs to host it's technologies conforms to The Uptime Institute's 4-Tier Classification System which has become a globalstandard for 3rd -party validation of data center critical infrastructure. The Tier Classification System defines the requirements and benefits of four distinct Tierclassifications for data center infrastructure. Each Tier sets the appropriate criteria for power, cooling, maintenance, and capability to withstand a fault. Tiers isprogressive; each Tier incorporates the requirements of all the lower Tiers. NTS operates its critical infrastructure within facilities that have a minimum rating ofTier 3-Certified. NTS datacenters meet and exceed Uptime Institute Tier-3 standards in all categories which allows NTS to pursue and service, compliance-sensitive workloads from the financial services, healthcare, government and military sectors. In addition, NTS includes redundant, carrier-neutral network designfor all its communications paths, multiple locations to host services, and a built in DDOS mitigation platform into the design of its datacenter services.Throughout its affiliation with Newtek, over 70% of new NTS customers have come as a result of internal and external referrals without material expenditures byNTS for marketing or advertising. Many of NTS’ competitors are very price sensitive, offering minimal services at cut-rate pricing. While being cost competitivewith most Linux-and Windows-based web hosting services, NTS has emphasized higher quality uptime, service and support as well as multiple control panelenvironments for the designer and developer community.NTS has diversified its product offerings to SMBs under different brands, all under Newtek Technology Solutions, including Newtek Web Hosting,® Newtek WebServices, Newtek Data Storage® and Newtek Web Design and Development®. NTS focuses specifically on select markets such as restaurants, financialinstitutions, medical practices, law firms, accountants, retail and technology service providers for channel business and reselling.NTS has also launched a turnkey hosting service to meet financial institution needs for dedicated servers, hosting and/or data storage, enabling these entities tocomply with their strict regulatory requirements that demand very high security protocols and practices be in place.Newtek Insurance Agency6Table of ContentsNIA, which is licensed in 50 states, offers SMB and personal lines insurance products and services. NIA serves as a retail and wholesale brokerage insuranceagency specializing in the sale of personal, commercial and health/benefits lines insurance products to customers of all of the Newtek portfolio companies as wellas Newtek alliance partners. NIA offers insurance products from multiple insurance carriers providing a wide range of choice for its customers. NIA has formedstrategic alliances with AIG, E-Insure, Credit Union National Association, Navy Federal Credit Union, the Commercial Transportation Association of America,Pershing and others to provide agent services to SMB clients referred by them. NIA is continuing its efforts to implement programs with alliance partners to marketcommercial and personal insurance. In December 2012, NIA, working with another Newtek subsidiary, acquired a portfolio of insurance business from a healthcare insurance agency based in the New York City area. This added approximately 340 group health insurance policies that NIA is servicing and forms the basis onwhich NIA is growing this aspect of the insurance business. We also expect that recent health care legislation will increase the demand for these services amongSMBs. A major sales channel for NIA is the SMB customer base of our lending platform and the other controlled portfolio companies which allow for manyopportunities for cross sales between business lines.Newtek Payroll and Benefits SolutionsNPS offers an array of industry standard and very competitively priced payroll management, benefit, payment and tax reporting services to SMBs. These payrolland benefit solutions are marketed through all of Newtek’s available channels including the alliance partnerships and direct marketing campaigns. NPS alsobenefits by the access to the SMB customer base of the lending platform and the other controlled portfolio companies.NPS provides full service payroll and benefit solutions across all industries, processing payroll via SaaS or phone solutions. They have an established and reliableplatform that is not limited by client size, industry type or delivery interface. NPS assists clients in managing their payroll processing needs by calculating,collecting and disbursing their payroll funds, remitting payroll taxes and preparing and filing all associated tax returns. In addition, NPS offers clients a range ofancillary service offerings, including workers’ compensation insurance, time and attendance, 401(k) administration, pay cards, employee benefit plans, employeebackground screening, COBRA services, tax credit recovery, Section 125 and flexible benefits spending plans and expense management services.Certified Capital Companies (Capcos)Under state-created Capco programs, states provide a Capco with tax credits generally equal to the amount of funds the Capco raises from insurance companyinvestors. The Capcos then issue the tax credits to its investors — a process which is designed to reduce the Capco’s investors’ state tax liabilities. In exchange forreceiving the tax credits, the Capco is obligated to invest the funds raised in certain qualified business, which generally are defined by statute to include onlybusiness that meet certain criteria related to the size, location, number of employees, and other characteristics of the business. If a Capco fails to comply with theperformance requirements of each state’s different Capco program, the tax credits are subject to forfeiture.Under state law, a Capco that has invested in qualified businesses an amount equal to 100% of its initial certified capital is able to decertify (i.e., terminate itsstatus as a Capco) and no longer be subject to any state Capco regulation. Upon voluntary decertification, the programs in about half of the states require that aCapco share any distributions to its equity holders with the state sponsoring the Capco. For those states that require a share of distributions, the sharing percentagesvary, but are generally from 10% to 30%, usually on distributions above a specified internal rate of return for the equity owners of the Capco.Based on the above and that the Capcos were formed to make investments in businesses, the entities were determined to be investment companies and are thereforeconsolidated subsidiaries of Newtek.Our Capcos have historically invested in SMBs and, in addition to interest income and investment returns, have generated non-cash income from tax credits andnon-cash interest and insurance expenses in addition to cash management fees and expenses. We have de-emphasized our Capco business in favor of growing ourcontrolled portfolio companies and do not anticipate creating any new Capcos. While observing all requirements of the Capco programs and, in particular,financing qualified businesses meeting applicable state requirements as to limitations on the proportion of ownership of qualified businesses, we believe the growthof our controlled portfolio companies produces a strategic focus on providing goods and services to SMBs such as those in which our Capcos invest. We continueto invest in and lend to SMBs through our existing Capcos and intend to meet the goals of the Capco programs.As the Capcos reach 100% investment we will seek to decertify them as Capcos, liquidate their remaining assets and thereby reduce their operational costs,particularly the legal and accounting costs associated with compliance. Six of our original sixteen Capcos have reached this stage.7Table of ContentsNewtek BrandingWe have developed our branded line of products and services to offer a full service suite of business and financial solutions for the U.S. SMB market. Newtekreaches potential customers through its integrated multi-channel approach featuring direct, indirect and direct outbound solicitation efforts. Although we continueto utilize and grow our primary marketing channel of strategic alliance partners, more recently, and consistent with our BDC Conversion, we have initiated a directmarketing strategy to SMB customers through our new “go to market” brand, Your Business Solutions Company® . Through a coordinated radio and televisionadvertising campaign built around this brand, and our web presence, www.newtekone.com , we believe we are establishing ourselves as a preferred “go-to”provider for SMB financing and the services offered by our controlled portfolio companies. In addition, we supplement these efforts with extensive efforts topresent the Company as the authority on small businesses.We market services through referrals from our strategic alliance partners such as AIG, Amalgamated Bank, Credit Union National Association, E-Insure, ENTFederal Credit Union, The Hartford, Legacy Bank, Morgan Stanley Smith Barney, Navy Federal Credit Union, New York Community Bank, Lending Tree, LLC,Randolph Brooks Federal Credit Union, UBS Bank, Meineke Dealers Purchasing Cooperative and True Value Company, among others, (using our patentedNewTracker® referral management system) as well as direct referrals from our web presence, www.newtekone.com . Our NewTracker® referral system has asoftware application patent covering the systems and methods for tracking, reporting and performing processing activities and transactions in association withreferral data and related information for a variety of product and service offerings in a business-to-business environment. The NewTracker® system provides forsecurity and transparency between referring parties and has been material in our ability to obtain referrals from a wide variety of sources. This patented systemallows us and our alliance partners to review in real time the status of any referral as well as to provide real time compliance oversight by the respective alliancepartner, which we believe creates confidence among the referred business client, the referring alliance partner and us. We own the NewTracker® patent, as well asall trademarks and other patented intellectual property used by us and our controlled portfolio companies.Additional referrals are obtained from individual professionals in geographic markets that have signed up to provide referrals and earn commissions through ourBizExec and TechExec Programs. Our BizExecs and TechExecs are traditionally information technology professionals, CPAs, independent insurance agents andsales and/or marketing professionals. In addition, electronic payment processing services are marketed through independent sales agents, and web technology andeCommerce services are marketed through internet-based marketing and third-party resellers. A common thread across all business lines of our controlled portfoliocompanies relates to acquiring customers at low cost and making strategic alliances primarily where we pay fees only for successful referrals. We seek to bundleour marketing efforts through our brand, our portal, our patented NewTracker® referral system, our web presence as Your Business Solutions Company ® and oneeasy entry point of contact. We expect that this approach will allow us to continue to cross-sell the financing services of our small business finance platform tocustomers of our controlled portfolio companies and build upon our extensive deal sourcing infrastructure. The compensation which we pay for referrals isconsistent with industry practices.Senior Lending Team and Executive CommitteeThe key members of our Senior Lending Team, most of which have worked together for more than ten years each have over 25 years of experience in finance-related fields. These investment professionals have worked together to screen opportunities, underwrite new investments and manage a portfolio of investments inSMBs through two recessions, a credit crunch, the dot-com boom and bust and a historic, leverage-fueled asset valuation bubble. Each member brings acomplementary component to a team well-rounded in finance, accounting, operations, strategy, business law and executive management.Because we are internally managed by our Executive Committee, which includes Barry Sloane, Peter Downs, Jennifer C. Eddelson, Michael A. Schwartz, JohnRaven and Nilesh Joshi, under the supervision of our Board, and do not depend on a third party investment advisor, we do not pay investment advisory fees and allof our income is available to pay our operating costs and to make distributions to our shareholders. While our portfolio companies are independently managed, ourExecutive Committee also oversees our controlled portfolio companies and, to the extent that we may make additional equity investments in the future, theExecutive Committee will also have primary responsibility for the identification, screening, review and completion of such investments. We do not expect to focusour resources on investing in additional stand-alone equity investments, but may elect to do so from time to time on an opportunistic basis, if such opportunitiesarise. Messrs. Sloane and Downs have been involved together in the structuring and management of equity investments for the past ten years.Market Opportunity8Table of ContentsWe believe that the limited amount of capital and financial products available to SMBs, coupled with the desire of these companies for flexible and partnership-oriented sources of capital and other financial products, creates an attractive investment environment for us to further expand our small business finance platformand overall brand. We believe the following factors will continue to provide us with opportunities to grow and deliver attractive returns to shareholders.The SMB market represents a large, underserved market. We estimate the SMB market to include over 27 million businesses in the U.S. We believe that SMBs,most of which are privately-held, are relatively underserved by traditional capital providers such as commercial banks, finance companies, hedge funds andcollateralized loan obligation funds. Further, we believe that such companies generally possess conservative capital structures with significant enterprise valuecushions, as compared to larger companies with more financing options. While the largest originators of SBA 7(a) loans have traditionally been regional andnational banks, from 2012 through December 31, 2016, NSBF was the largest non-bank originator of SBA 7(a) loans by dollar volume and is currently the seventhlargest SBA 7(a) lender in the U.S. As a result, we believe we and our controlled portfolio companies are well positioned to provide financing to the types of SMBsthat we have historically targeted and we have the technology and infrastructure in place presently to do it cost effectively in all 50 states and across manyindustries.Recent credit market dislocation for SMBs has created an opportunity for attractive risk-weighted returns. We believe the credit crisis that began in 2007 andthe subsequent exit of traditional capital sources, such as commercial banks, finance companies, hedge funds and collateralized loan obligation funds, has resultedin an increase in opportunities for alternative funding sources such as our SMB lending platform. We believe that the reduced competition in our market and anincreased opportunity for attractive risk-weighted returns positions us well for future growth. The remaining lenders and investors in the current environment arerequiring lower amounts of senior and total leverage, increased equity commitments and more comprehensive covenant packages than was customary in the yearsleading up to the credit crisis. We do not expect a reversal of these conditions in the foreseeable future.Future refinancing activity is expected to create additional investment opportunities. A high volume of financings completed between 2005 and 2008 willmature in the coming years. We believe this supply of opportunities coupled with limited financing providers focused on SMBs will continue to offer investmentopportunities with attractive risk-weighted returns.The increased capital requirements and other regulations placed on banks may reduce lending by traditional large financial institutions and community banks. While many SMBs were previously able to raise debt financing through traditional large financial institutions, we believe this approach to financing will continueto be constrained for several years as continued implementation of U.S. and international financial reforms, such as Basel III, phase in and rules and regulations arepromulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act. We believe that these regulations will increase capital requirements andhave the effect of further limiting the capacity of traditional financial institutions to hold non-investment grade loans on their balance sheets. As a result, webelieve that many of these financial institutions have de-emphasized their service and product offerings to SMBs, which we believe will make a higher volume ofdeal flow available to us.Increased demand for comprehensive, business-critical SMB solutions . Increased competition and rapid technological innovation are creating an increasinglycompetitive business environment that requires SMBs to fundamentally change the way they manage critical business processes. This environment is characterizedby greater focus on increased quality, lower costs, faster turnaround and heightened regulatory scrutiny. To make necessary changes and adequately address theseneeds, we believe that companies are focusing on their core competencies and utilizing cost-effective outsourced solutions to improve productivity, lower costs andmanage operations more efficiently. Our controlled portfolio companies provide critical business solutions such as electronic payment processing, managed ITsolutions, personal and commercial insurance services and full-service payroll and benefit solutions, receivables financing and funding of SBA 504 loans whichprovide financing of fixed assets such as real estate or equipment. We believe that each of these market segments are underserved for SMBs and since we are ableto provide comprehensive solutions under one platform, we are well positioned to continue to realize growth from these product offerings.Competitive AdvantagesWe believe that we are well positioned to take advantage of investment opportunities in SMBs due to the following competitive advantages:Internally Managed Structure and Significant Management Resources. We are internally managed by our executive officers under the supervision of our Boardand do not depend on an external investment advisor. As a result, we do not pay investment advisory fees and all of our income is available to pay our operatingcosts, which include employing investment and portfolio management professionals, and to make distributions to our shareholders. We believe that our internallymanaged structure9Table of Contentsprovides us with a lower cost operating expense structure, when compared to other publicly traded and privately-held investment firms which are externallymanaged, and allows us the opportunity to leverage our non-interest operating expenses as we grow our investment portfolio. Our senior lending team hasdeveloped one of the largest independent loan origination and servicing platforms that focuses exclusively on SMBs.Business Model Enables Attractive Risk-Weighted Return on Investment in SBA Lending. Our loans are structured so as to permit rapid sale of the U.S.government guaranteed portions, often within weeks of origination, and the unguaranteed portions have been successfully securitized and sold, usually within ayear of origination. The return of principal and premium may result in an advantageous risk-weighted return on our original investment in each loan. We maydetermine to retain the government guaranteed or unguaranteed portions of loans pending deployment of excess capital.State of the Art Technology. Our patented NewTracker® software enables us to board a SMB customer, process the application or inquiry, assemble necessarydocuments, complete the transaction and create a daily reporting system that is sufficiently unique as to receive a U.S. patent. This system enables us to identify atransaction, similar to a merchandise barcode or the customer management system used by SalesForce.com, then process a business transaction and generateinternal reports used by management and external reports for strategic referral partners. It allows our referral partners to have digital access into our back office andfollow on a real time, 24/7 basis the processing of their referred customers. This technology has been made applicable to all of the service and product offerings wemake directly or through our controlled portfolio companies.Established Direct Origination Platform with Extensive Deal Sourcing Infrastructure. We have established a direct origination pipeline for investmentopportunities without the necessity for investment banks or brokers as well as broad marketing channels that allow for highly selective underwriting. Thecombination of our brand, our portal, our patented NewTracker® technology, and our web presence as Your Business Solutions Company® have created anextensive deal sourcing infrastructure. Although we pay fees for loan originations that are referred to us by our alliance partners, our investment team worksdirectly with the borrower to assemble and underwrite loans. We rarely invest in pre-assembled loans that are sold by investment banks or brokers. As a result, webelieve that our unique national origination platform allows us to originate attractive credits at a low cost. During 2016 we funded $309,146,000 of SBA 7(a) loans,based on the large volume of loan proposals we received in 2016. We anticipate that our principal source of investment opportunities will continue to be in thesame types of SMBs to which we currently provide financing. Our Executive Committee and Senior Lending Team will also seek to leverage their extensivenetwork of additional referral sources, including law firms, accounting firms, financial, operational and strategic consultants and financial institutions, with whomwe have completed investments. We believe our current infrastructure and expansive relationships will continue to enable us to review a significant amount of highquality, direct (or non-brokered) investment opportunities.Experienced Senior Lending Team with Proven Track Record. We believe that our Senior Lending Team is one of the leading capital providers to SMBs. OurSenior Lending Team has expertise in managing the SBA process and has managed a diverse portfolio of investments with a broad geographic and industry mix.While the primary focus of NSBF is to expand its debt financing activities in SBA 7(a) loans, our Executive Committee also has substantial experience in makingdebt and equity investments through our Capcos.Flexible, Customized Financing Solutions for Seasoned, Smaller Businesses. While NSBF's primary focus is to expand its lending by activities by providingSBA 7(a) loans to SMBs, we also seek to offer SMBs a variety of attractive financing structures, as well as cost effective and efficient business services, to meettheir capital needs through our subsidiaries and controlled portfolio companies. In particular, through our subsidiaries and controlled portfolio companies, we offerlarger loans, between $5,000,000 and $10,000,000, greater than loans available with the SBA guarantee, but with a higher interest rate to compensate for theincreased risk. Unlike many of our competitors, we believe we have the platform to provide a complete package of service and financing options for SMBs, whichallows for cross-selling opportunities and improved client retention. We expect that a large portion of our capital will be loaned to companies that need growthcapital, acquisition financing or funding to recapitalize or refinance existing debt facilities. Our lending will continue to focus on making loans to SMBs that:•have 3 to 10 years of operational history;•significant experience in management;•credit worthy owners who provide a personal guarantee for our investment;•show a strong balance sheet to collateralize our investments; and•show sufficient cash flow to be able to service the payments on our investments comfortably.10Table of ContentsAlthough we may make investments in start-up businesses, we generally seek to avoid investing in high-risk, early-stage enterprises that are only beginning todevelop their market share or build their management and operational infrastructure with limited collateral.Disciplined Underwriting Policies and Rigorous Portfolio Management . We pursue rigorous due diligence of all prospective investments originated through ourplatform. Our senior lending team has developed an extensive underwriting due diligence process, which includes a review of the operational, financial, legal andindustry performance and outlook for the prospective investment, including quantitative and qualitative stress tests, review of industry data and consultation withoutside experts regarding the creditworthiness of the borrower. These processes continue during the portfolio monitoring process, when we will conduct fieldexaminations, review all compliance certificates and covenants and regularly assess the financial and business conditions and prospects of portfolio companies. Inaddition, SBL and BSP are servicers for commercial, SBA 7(a) and other government guaranteed whose exceptional servicing capabilities with compact timelinesfor loan resolutions and dispositions has attracted various third-party portfolios to these controlled portfolio companies.Business Development Company ConversionOn October 22, 2014, we effectuated the Reverse Stock Split. In conjunction with the completion of a public offering, we merged with and into Newtek BusinessServices Corp., a newly-formed Maryland corporation, for the purpose of reincorporating in Maryland and we elected to be regulated as a BDC under the 1940 Actin the BDC Conversion. In connection with our election of RIC status beginning with our 2015 tax year, on October 1, 2015 our Board declared a special dividendof $2.69 per share which was paid partially in cash and partially in our common shares on December 31, 2015.As a BDC, we are required to meet regulatory tests, including the requirement to invest at least 70% of our gross assets in “qualifying assets.” Qualifying assetsgenerally include debt or equity securities of private or thinly traded public U.S. companies and cash, cash equivalents, U.S. government securities and high-qualitydebt investments that mature in one year or less. In addition, as a BDC, we are not be permitted to incur indebtedness unless immediately after such borrowing wehave an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our total assets). See “Regulation.”In connection with our election to be regulated as a BDC, we elected to be treated for U.S. federal income tax purposes, beginning with our 2015 tax year, andintend to qualify annually thereafter, as a RIC under Subchapter M of the Code. As a RIC, we generally will not have to pay corporate-level federal income taxeson any ordinary income or capital gains that we distribute to our shareholders. To obtain and maintain our RIC tax treatment, we must meet specified source-of-income and asset diversification requirements and distribute annually at least 90% of our ordinary income and realized net short-term capital gains in excess ofrealized net long-term capital losses, if any.InvestmentsWe engage in various investment strategies from time to time in order to achieve our overall investment objectives.Portfolio Company CharacteristicsWe have and will continue to target investments in future portfolio companies that generate both current income and capital appreciation. In each case, thefollowing criteria and guidelines are applied to the review of a potential investment however, not all criteria are met in every single investment, nor do weguarantee that all criteria will be met in the investments we will make in the future. We have and will continue to limit our investments to the SMB market.Experienced Senior Investment Teams with Meaningful Investment. We seek to invest in companies in which senior or key managers have significantcompany-or industry-level experience and have significant equity ownership. It has been our experience that these senior investment teams are more committed tothe portfolio company’s success and more likely to manage the company in a manner that protects our debt and equity investments.Significant Invested Capital. We believe that the existence of an appropriate amount of equity beneath our debt capital provides valuable support for ourinvestment. In addition, the degree to which the particular investment is a meaningful one for the portfolio company’s owners (and their ability and willingness toinvest additional equity capital as and to the extent necessary) are also important considerations.11Table of ContentsAppropriate Capital Structures. We seek to invest in portfolio companies that are appropriately capitalized. First, we examine the amount of equity that is beinginvested by the company’s equity owners to determine whether there is a sufficient capital cushion beneath our invested capital. We also analyze the amount ofleverage, and the characteristics of senior debt with lien priority over our senior subordinated debt. A key consideration is a strong balance sheet and sufficient freecash flow to service any debt we may invest.Strong Competitive Position. We invest in portfolio companies that have developed strong, defensible product or service offerings within their respective marketsegment(s). These companies should be well positioned to capitalize on organic and strategic growth opportunities, and should compete in industries with strongfundamentals and meaningful barriers to entry. We further analyze prospective portfolio investments in order to identify competitive advantages within theirindustry, which may result in superior operating margins or industry-leading growth.Customer and Supplier Diversification. We expect to invest in portfolio companies with sufficiently diverse customer and supplier bases. We believe thesecompanies will be better able to endure industry consolidation, economic contraction and increased competition than those that are not sufficiently diversified.However, we also recognize that from time to time, an attractive investment opportunity with some concentration among its customer base or supply chain willpresent itself. We believe that concentration issues can be evaluated and, in some instances (whether due to supplier or customer product or platformdiversification, the existence and quality of long-term agreements with such customers or suppliers or other select factors), mitigated, thus presenting a superiorrisk-weighted pricing scenario.Investment ObjectivesDebt InvestmentsWe target our debt investments, which are principally made through our small business finance platform under the SBA 7(a) program, to produce a coupon rate ofprime plus 2.75% which enables us to generate rapid sales of loans in the secondary market historically producing gains and with a yield on investment in excess of30%. We typically structure our debt investments with the maximum seniority and collateral along with personal guarantees from portfolio company owners, inmany 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 portfoliocompany 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. As of December 31, 2016 , substantially all of our SBA 7(a) portfolio at fair value consisted of debt investmentsthat were secured by first or second priority liens on the assets of the portfolio company.•First Lien Loans. Our first lien loans generally have terms of one to twenty-five years, provide for a variable interest rate, contain no prepaymentpenalties (however, the SBA will charge the borrower a prepayment fee if the loan has a maturity of 15 or more years and is prepaid during the first threeyears) and are secured by a first priority security interest in all existing and future assets of the borrower. Our first lien loans may take many forms,including revolving lines of credit, term loans and acquisition lines of credit.•Second Lien Loans. Our second lien loans generally have terms of five to twenty five years, also primarily provide for a variable interest rate, contain noprepayment penalties (however, the SBA will charge the borrower a prepayment fee if the loan has a maturity of 15 or more years and is prepaid duringthe first three years) and are secured by a second priority security interest in all existing and future assets of the borrower. We typically only take secondlien positions on additional collateral where we also have first lien positions on business assets.•Unsecured Loans. We make few unsecured investments, primarily to our controlled portfolio companies, which because of our equity ownership aredeemed to be more secure. Typically, these loans are to meet short-term funding needs and are repaid within 6 to 12 months.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 prohibitionsagainst change of control. Our debt investments have strong protections, including default penalties, information rights and, in some cases, board observation rightsand affirmative, negative and financial covenants. Debt investments in portfolio companies, including the controlled portfolio companies, have historically and areexpected to continue to comprise in excess of 95% of our overall investments in number and dollar volume.Equity Investments12Table of ContentsWhile 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 primarilyas either strategic investments to enhance the integrated operating platform or, to a lesser degree, under the Capco programs. For investments in our controlledportfolio companies, we focus more on tailoring them to the long term growth needs of the companies than to immediate return. Our objective with thesecompanies 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 burdenon these companies to enable them to grow faster than they would otherwise as another means of supporting their development and that of the integrated whole.In Capco investments, we often make debt investments in conjunction with being granted equity in the company in the same class of security as the business ownerreceives upon funding. We generally seek to structure our equity investments to provide us with minority rights provisions and event-driven put rights. We alsoseek to obtain limited registration rights in connection with these investments, which may include “piggyback” registration rights.Investment ProcessThe members of our Senior Lending Team and our Executive Committee are responsible for all aspects of our investment selection process. The discussion belowdescribes our investment procedures. The stages of our investment selection process are as follows:Loan and Deal Generation/OriginationWe believe that the combination of our brand, our portal, our patented NewTracker® technology, and our web presence as Your Business Solutions Company ® have created an extensive loan and deal sourcing infrastructure. This is maximized through long-standing and extensive relationships with industry contacts,brokers, commercial and investment bankers, entrepreneurs, services providers (such as lawyers and accountants), as well as current and former clients, portfoliocompanies and our extensive network of strategic alliance partners. We supplement our relationships by the selective use of radio and television advertising aimedprimarily at lending to the SMB market. We believe we have developed a reputation as a knowledgeable and reliable source of capital, providing value-addedadvice, prompt processing, and management and operations support to our portfolio companies.We market our loan and investment products and services, and those of our controlled portfolio companies, through referrals from our alliance partners such asAIG, Amalgamated Bank, Credit Union National Association, E-Insure, ENT Federal Credit Union, The Hartford, Legacy Bank, Morgan Stanley Smith Barney,Navy Federal Credit Union, New York Community Bank, Lending Tree, LLC, Randolph Brooks Federal Credit Union, UBS Bank, Meineke Dealers PurchasingCooperative and True Value Company, among others using our patented NewTracker® referral system as well as direct referrals from our web presence, www.newtekone.com . The patent for our NewTracker® referral system is a software application patent covering the systems and methods for tracking, reportingand performing processing activities and transactions in association with referral data and related information for a variety of product and service offerings in abusiness-to-business environment providing further for security and transparency between referring parties. This system allows us and our alliance partners toreview in real time the status of any referral as well as to provide real time compliance oversight by the respective alliance partner, which we believe createsconfidence between the referred business client, the referring alliance partner and us.Additional deal sourcing and referrals are obtained from individual professionals in geographic markets that have signed up to provide referrals and earncommissions through our BizExec and TechExec Programs. The BizExecs and TechExecs are traditionally information technology professionals, CPAs,independent insurance agents and sales and/or marketing professionals. In addition, electronic payment processing services are marketed through independent salesrepresentatives and web technology and eCommerce services are marketed through internet-based marketing and third-party resellers. A common thread across allbusiness lines of our subsidiaries and controlled portfolio companies relates to acquiring customers at low cost. We seek to bundle our marketing efforts throughour brand, our portal, our patented NewTracker® referral system, our new web presence as Your Business Solutions Company ® and one easy entry point ofcontact. We expect that this approach will allow us to continue to cross-sell the financing services of our small business finance platform to our customers andcustomers of our controlled portfolio companies, and to build upon our extensive deal sourcing infrastructure.ScreeningWe screen all potential debt or equity investment proposals that we receive for suitability and consistency with our investment criteria (see “Portfolio CompanyCharacteristics,” above). In screening potential investments, our Senior Lending Team and our Executive Committee utilize a value-oriented investmentphilosophy and commit resources to managing downside exposure. If13Table of Contentsa potential investment meets our basic investment criteria, a business service specialist or other member of our team is assigned to perform preliminary duediligence.SBA Lending ProceduresWe originate loans under the SBA 7(a) Program in accordance with our credit and underwriting policy, which incorporates by reference the SBA Rules andRegulations as they relate to the financing of such loans, including the U.S. Small Business Administration Standard Operating Procedures, Policies andProcedures for Financing (“SOP 50 10”).During the initial application process for a loan originated under the SBA 7(a) Program, a business service specialist assists and guides the applicant through theapplication process, which begins with the submission of an online form. The online loan processing system collects required information and ensures that allnecessary forms are provided to the applicant and filled out. The system conducts two early automatic screenings focused primarily on whether (i) the requestedloan is for an eligible purpose, (ii) the requested loan is for an eligible amount and (iii) the applicant is an eligible borrower. If the applicant is eligible to fill out theentire application, the online system pre-qualifies the applicant based on preset credit parameters that meet the standards of Newtek and the SBA.Once the online form and the application materials have been completed, our underwriting department (the “Underwriting Department”) becomes primarilyresponsible for reviewing and analyzing the application in order to accurately assess the level of risk being undertaken in making a loan. The UnderwritingDepartment is responsible for assuring that all information necessary to prudently analyze the risk associated with a loan application has been obtained and hasbeen analyzed. Credit files are developed and maintained with the documentation received during the application process in such a manner as to facilitate filereview during subsequent developments during the life of the loan.Required InformationFor a loan originated under the SBA 7(a) Program, the primary application document is SBA Form 1919 (Borrower Information Form) (“Form 1919”). Amongother things, Form 1919 requires identifying information about the applicant, loan request, indebtedness, the principals, current or previous government financing,and certain other disclosures.In addition to Form 1919, the following additional information is required:•an SBA Form 912 (Statement of Personal History), if question 1, 2, or 3 of Form 1919 is answered affirmatively;•an SBA Form 413 (Personal Financial Statement), for all owners of 20% or more (including the assets of the owner’s spouse and any minor children), andproposed guarantors;•business financial statements dated within 180 days prior to submission to SBA, consisting of (a) year-end balance sheets for the last three years,including detailed debt schedule, (b) year-end profit & loss (P&L) statements for the last three years, (c) reconciliation of net worth, (d) interim balancesheet, and (e) interim P&L statements;•a list of names and addresses of any subsidiaries and affiliates, including concerns in which the applicant holds a controlling interest and other concernsthat may be affiliated by stock ownership, franchise, proposed merger or otherwise with the applicant, and business financial statements meeting the samerequirements as above of such subsidiaries and affiliates;•the applicant’s original business license or certificate of doing business;•records of any loans the applicant may have applied for in the past;•signed personal and business federal income tax returns of the principals of the applicant’s business for previous three years;•personal résumés for each principal;•a brief history of the business and its challenges, including an explanation of why the SBA loan is needed and how it will help the business;•a copy of the applicant’s business lease, or note from the applicant’s landlord, giving terms of proposed lease; and14Table of Contents•if purchasing an existing business, (a) current balance sheet and P&L statement of business to be purchased, (b) previous two years federal income taxreturns of the business, (c) proposed Bill of Sale including Terms of Sale, and (d) asking price with schedule of inventory, machinery and equipment,furniture and fixtures.We view current financial information as the foundation of sound credit analysis. To that end, we verify all business income tax returns with the Internal RevenueService and generally request that financial statements be submitted on an annual basis after the loan closes. For business entities or business guarantors, werequest federal income tax returns for each fiscal year-end to meet the prior three-year submission requirement. For interim periods, we will accept management-prepared financial statements. The most recent financial information may not be more than 180 days old at the time of the approval of the loan, but we generallyrequest that the most recent financial information not be older than 90 days in order to provide time for underwriting and submission to SBA for guaranty approval.For individuals or personal guarantors, we require a personal financial statement dated within 180 days of the application (sixty days is preferred) and personalincome tax returns for the prior three years. In connection with each yearly update of business financial information, the personal financial information of eachprincipal must also be updated. Spouses are required to sign all personal financial statements in order for the Underwriting Department to verify compliance withthe SBA’s personal resource test. In addition, the Underwriting Department will ensure that there has been no adverse impact on financial condition of theapplicant or its principals since the approval of the loan. If closing does not occur within ninety days of the date on which the loan is approved, updated businessand personal financial statements must be obtained and any adverse change must be addressed before the proceeds of the loan may be disbursed. If closing does notoccur within six months of the date on which the loan is approved, the applicant is generally required to reapply for the loan.Stress TestThe standard underwriting process requires a stress test on the applicant’s interest rate to gauge the amount of increase that can be withstood by the applicant’scash flow and still provide sufficient cash to service debt. The applicant’s cash flow is tested up to a 2% increase in interest rate. If the applicant’s debt servicecoverage ratio decreases to 1:1 or less than 1:1, the loan may only be made as an exception to our Underwriting Guidelines and would require the approval of ourcredit committee.Required Site VisitNo loan will be funded without an authorized representative of Newtek first making a site visit to the business premises. We generally use a contracted vendor tomake the required site visit but may from time to time send our own employees to perform this function. Each site visit will generate a narrative of the businessproperty as well as photographs of the business property. Additional site visits will be made when a physical on-site inspection is warranted.Credit Assessment of ApplicantLoan requests are assessed primarily based upon an analysis of the character, cash flow, capital, liquidity and collateral involved in the transaction.Character: We require a personal credit report to be obtained on any principal or guarantor involved in a loan transaction. Emphasis is placed upon theimportance of individual credit histories, as this is a primary indicator of an individual’s willingness and ability to repay debt. Any material negative creditinformation must be explained in writing by the principal, and must be attached to the personal credit report in the credit file. No loan will be made where anindividual’s credit history calls into question the repayment ability of the business operation. A loan request from an applicant who has declared bankruptcy withinthe ten years preceding the loan application will require special consideration. A thorough review of the facts behind the bankruptcy and impact on creditors will beundertaken in determining whether the principal has demonstrated the necessary willingness and ability to repay debts. In addition, we will examine whether theapplicant and its principals and guarantors have abided by the laws of their community. Any situation where a serious question concerning a principal’s characterexists will be reviewed on a case-by-case basis. Unresolved character issues are grounds for declining a loan request regardless of the applicant’s financialcondition or performance.Cash Flow: We recognize that cash flow is the primary and desired source of repayment on any loan, and therefore is the primary focus of the credit decision.Any transaction in which the repayment is not reasonably assured through cash flow will be declined, regardless of other possible credit strengths. At a minimum,combined EBITDA will be used to evaluate repayment ability. Other financial analysis techniques will be employed as needed to establish the reasonableness ofrepayment. Where repayment is based on past experience, the applicant must demonstrate minimum combined cash flow coverage of 1.2 times based upon themost recent fiscal year-end financial statement. A determination of the ability to repay will not be based solely15Table of Contentsupon interim operating results. Where repayment ability is not evident from historical combined earnings (including new businesses and changes of ownership),projections will be analyzed to determine whether repayment ability is reasonably assured. For changes in ownership, monthly cash flow forecasts will be analyzedto determine adequacy to meet all of the borrower’s needs.For business acquisition applications, the applicant will be required to submit projections and support such projections by detailed assumptions made for all majorrevenue and expense categories and an explanation of how the projections will be met. Analysis must include comparisons with relevant Risk ManagementAssociation (“RMA”) industry averages. EBITDA must be reasonably forecast to exceed debt service requirements by at least 1.2 times, after accounting for theinitial phase of operations. For change of ownership applications, projections will also be measured against the actual historical financial results of the seller of thebusiness concern. Projections must demonstrate repayment ability of not less than 1.2 times.Capital: Capital is a strong traditional indicator of the financial health of a business. For going concern entities, the pro-forma leverage position, as measured bythe debt to tangible net worth ratio, may not exceed the RMA industry median or 4 to 1, whichever is greater. For change of ownership transactions, generally 25%of total project costs should be contributed as equity resulting in debt to tangible net worth ratio of 3 to 1.For a change of ownership transaction where a substantial portion of intangibles are included within the transaction, adequacy of capital will be determined basedupon an evaluation of the business value and level of injection. In determining the legitimacy of the business value, the loan underwriter must utilize two SBAapproved valuation methods, as outlined in SBA SOP 50 10. If the business value is found to be acceptable, and the equity injection into the project is within ourrequirements as outlined herein, then the capital position will be considered satisfactory.As a general rule, shareholder and affiliate loans may be added back to net worth only if such loans will be subordinated for the life of the SBA loan, with noprincipal or interest payments to be made. Financing by the seller of the business may also be considered as equity if the loan will be placed on full standby for thelife of the SBA loan. Adjustments to net worth to account for the difference between the book value and appraised value of fixed assets may be made only whensupported by a current appraisal. Appraisals on a “subject to” basis are not acceptable.Liquidity: Liquidity, as measured by the current ratio, must be in line with the RMA industry average. An assessment of the adequacy of working capital isrequired. An assessment of the liquidity of a business is essential in determining the ability to meet future obligations. Lending to cash businesses such as hotelsand restaurants requires less analysis of the liquidity of the business due to the timing of cash receipts. Industries with large receivables, payables, and inventoryaccounts require thorough review of the cash cycle of the business and evaluation of the applicant’s ability to manage these accounts. The current and quick ratiosand turnover of receivables, payables and inventory are measured against the RMA industry median in determining the adequacy of these liquidity measures.Collateral. We are required to reasonably secure each loan transaction with all worthwhile and available assets. Pursuant to SBA SOP 50 10, we may not (andwill not) decline a loan if the only weakness in the application is the value of collateral in relation to the loan amount, provided that all assets available to thebusiness and its principals have been pledged. As set forth in SBA SOP 50 10, the SBA considers a loan to be fully secured if the lender has taken a securityinterest in all available fixed assets with a combined “net book value” adjusted up to the loan amounts below. For 7(a) loans, “fixed assets” means real estate,including land and structures and machinery and equipment owned by the business. “Net book value” is defined as an asset’s original price minus depreciation andamortization.We attempt to secure each loan transaction with as much real estate and liquid asset collateral as necessary; however, all fixed assets must be evaluated. Fixedassets are evaluated on the basis of the net book value to determine the realizable value among collateral types. Valuation factors are applied as follows:•Commercial real estate — 75%•Residential real estate — 85%•Vacant land — 50%•Machinery & Equipment — 50%•Furniture & Fixtures — 10%16Table of Contents•Accounts receivable & inventory — 20%•Leasehold improvements — 5%•Certificate of Deposit — 100%•Regulated Licenses — will vary dependent upon type of license and geographic area. The liquidation rate used must be fully justified.In addition to an assessment of the criteria specified above, there are certain special industry-specific requirements that will be considered in the loan applicationdecision.Change of Ownership: The minimum equity injection required in a change of ownership transaction is generally 20% but may be lower for specific industriessuch as medical and dental practices, gas stations and convenience stores, flag hotels and “strong” non-lodging franchises.In the event of financing from the seller of the business, the applicant must inject not less than 10% of the project cost; the seller of the business may provide thebalance on a complete standby basis for the life of the SBA loan. Exceptions to the equity requirement are reviewed on a case-by-case basis.For a change of ownership transaction, the application must be accompanied by a business plan including reasonable financial projections. The financialperformance of the seller of the business must be evaluated based upon three years of corporate income tax returns and a current interim financial statement.Projections for the applicant must be in line with the historical financial performance at the business location. In cases where financial performance of the seller ofthe business is poor, a satisfactory explanation must be provided to detail the circumstances of performance. Projections for the applicant must be accompanied bydetailed assumptions and be supported by information contained in the business plan.Management should have related experience in the industry and demonstrate the ability to successfully operate the business. In the absence of satisfactory relatedexperience, an assessment of management’s experience and capabilities, given the complexity and nature of the business, will be made. In the case of a franchise,we will generally take into account the reputation of a franchisor for providing worthwhile management assistance to its franchisees.We carefully review change of ownership transactions. The loan underwriter will review the contract for sale, which will be included in the credit file. The contractfor sale must include a complete breakdown of the purchase price, which must be justified through either a third party appraisal or directly by the loan underwriterthrough an approved valuation method specified in SBA SOP 50 10. The contract of sale must evidence an arm’s length transaction (but transactions betweenrelated parties are permitted so long as they are on an arm’s-length basis) which will preserve the existence of the small business or promote its sounddevelopment. In addition, a satisfactory reason for the sale of the business must be provided. The seller of the business must provide the prior three years ofbusiness tax returns and a current interim financial statement, as applicable.Also in connection with a change of ownership transaction, the Loan Processing area of the Underwriting Department will order Uniform Commercial Codesearches on the seller of the existing business. If such a search identifies any adverse information, the Loan Processor will advise the Underwriting Manager orOperations Manager so a prudent decision may be made with respect to the application.Real Estate Transactions: Loan proceeds for the acquisition or refinancing of land or an existing building or for renovation or reconstruction of an existingbuilding must meet the following criteria:•the property must be at least 51% owner-occupied pursuant to SBA policies; and•loan proceeds may not be used to remodel or convert any rental space in the property.Loan proceeds for construction or refinancing of construction of a new building must meet the following criteria:•the property must be at least 60% owner-occupied pursuant to SBA policies; and•if the building is larger than current requirements of the applicant, projections must demonstrate that the applicant will need additional space within threeyears, and will use all of the additional space within ten years.17Table of ContentsCommercial real estate appraisals are required on all primary collateral prior to the loan closing. In general, appraisals will be required as follows:•for loans up to $100,000 — a formal opinion of value prepared by a real estate professional with knowledge of the local market area;•for loans from $100,000 to $500,000 — a limited summary appraisal completed by a state certified appraiser;•for loans from $500,000 to $1 million — a limited summary appraisal by a Member of the Appraisal Institute (“MAI”) appraiser; and•for loans over $1 million — a complete self-contained appraisal by a MAI appraiser.Environmental screenings and an environmental questionnaire are required for all commercial real estate taken as collateral.In general, environmental reports are required as follows:•for real estate valued up to $500,000 — a transaction screen including a records review;•for real estate valued in excess of $500,000 — a Phase I Environmental Report; and•for the following types of property, a Phase I Environmental Report will be required regardless of property value: gasoline service stations, car washes,dry cleaners and any other business known to be in environmentally polluting industries.In all cases for commercial real estate taken as collateral:•if further testing is recommended, the recommended level of testing will be performed prior to the loan closing; and•if the report indicates remedial action to be taken by the business, such actions must be completed prior to the loan closing and a closure letter must beprovided prior to funding.Medical Professionals: In connection with a loan application relating to the financing of a medical business, all medical licenses will be verified, with the loss ornon-renewal of license constituting grounds for denial of the application. In addition, medical professionals must provide evidence of malpractice liabilityinsurance of at least $2,000,000 or the loan amount, whichever is higher. Malpractice insurance must be maintained for the life of the loan.Franchise Lending: All franchise loan applications will be evaluated as to eligibility by accessing SBA’s Franchise Registry. If the franchise is listed in theregistry and the current franchise agreement is the same as the agreement listed in the registry, Newtek will not review the franchise agreement. However, thefranchise agreement will be reviewed for eligibility by the loan underwriter when either of the following applies: (i) the franchise is not listed on the SBA’sFranchise Registry or (ii) the franchise is on the registry, but the franchisor has not provided a “Certification of No Change on Behalf of a Registered Franchisor”or a “Certification of Changes on Behalf of a Registered Franchisor.”Credit PackageFor each loan application, the loan underwriter will prepare a credit package (the “Credit Package”). All credit and collateral issues are addressed in the CreditPackage, including but not limited to, the terms and conditions of the loan request, use of proceeds, collateral adequacy, financial condition of the applicant andbusiness, management strength, repayment ability and conditions precedent. The Underwriting Department will recommend approval, denial or modification of theloan application. The Credit Package is submitted to our credit committee for further review and final decision regarding the loan application.Other than rejections for ineligibility of the applicant, the type of business or the loan purpose, NSBF may decline a loan application for the following reasons:•after taking into consideration prior liens and considered along with other credit factors, the net value of the collateral offered as security is not sufficientto protect the interest of the U.S. Government;•lack of reasonable assurance of ability to repay loan (and other obligations) from earnings;18Table of Contents•lack of reasonable assurance that the business can be operated at a rate of profit sufficient to repay the loan (and other obligations) from earnings;•disproportion of loan requested and of debts to tangible net worth before and after the loan;•inadequate working capital after the disbursement of the loan;•the result of granting the financial assistance requested would be to replenish funds distributed to the owners, partners, or shareholders;•lack of satisfactory evidence that the funds required are not obtainable without undue hardship through utilization of personal credit or resources of theowner, partners or shareholders;•the major portion of the loan requested would be to refinance existing indebtedness presently financed through normal lending channels;•credit commensurate with applicant’s tangible net worth is already being provided on terms considered reasonable;•gross disproportion between owner’s actual investment and the loan requested;•lack of reasonable assurance that applicant will comply with the terms of the loan agreement;•unsatisfactory experience on an existing loan; or•economic or physical injury not substantiated.If a loan application is accepted, we will issue a commitment letter to the applicant. After approval, the SBA and NSBF enter into a Loan Authorization Agreementwhich sets forth the terms and conditions for the SBA’s guaranty on the loan. The closing of a loan is handled by an internal attorney, whose primary responsibilityis closing the loan in accordance with the related Loan Authorization in a manner consistent with prudent commercial loan closing procedures, to ensure that theSBA will not repudiate its guaranty due to ineligibility, noncompliance with SBA Rules and Regulations or defective documentation. Before loan proceeds aredisbursed, the closing attorney will verify the applicant’s required capital injection, ensure that proceeds are being used for a permitted purpose and ensure thatother requirements of the Loan Authorization Agreement (including, but not limited to, required insurance and lien positions and environmental considerations)and SBA Rules and Regulations (including the use of proper SBA forms) have been met.Maintenance of Credit FilesA credit file is developed on each borrowing account. Credit files, in either hard copy format or electronic copy, are maintained by the Underwriting Departmentand organized according to a specified format. The file contains all documentation necessary to show: (a) the basis of the loan, (b) purpose, compliance withpolicy, conditions, rate, terms of repayment, collateral, and (c) the authority for granting the loan. The credit file is subject to review or audit by the SBA at anytime. Upon final action being taken on a loan application, information necessary for closing and servicing will be copied and maintained, while information notconsidered necessary will be transferred to off-site storage. Once a loan has been disbursed in full, credit files containing all documentation will be transferred tothe file room or other electronic storage media and maintained under the authority of the administration staff. Any individual needing an existing credit file mustobtain it from the administration staff member having responsibility for safeguarding all credit files or access it by a prearranged electronic file process. Removalof any information from the file will compromise the credit file and is prohibited.Other, Primarily Equity InvestmentsDue Diligence and UnderwritingIn making loans or equity investments other than SBA 7(a) loans or similar conventional loans to SMBs, our Executive Committee will take a direct role inscreening potential loans or investments, in supervising the due diligence process, in the preparation of deal documentation and the completion of the transactions.The members of the Executive Committee complete due diligence and analyze the relationships among the prospective portfolio company’s business plan,operations and expected19Table of Contentsfinancial performance. Due diligence may address some or all of the following depending on the size and nature of the proposed investment:•on-site visits with management and relevant key employees;•in-depth review of historical and projected financial statements, including covenant calculation work sheets;•interviews with customers and suppliers;•management background checks;•review reports by third-party accountants, outside counsel and other industry, operational or financial experts; and/or•review material contracts.During the underwriting process, significant, ongoing attention is devoted to sensitivity analyses regarding whether a company might bear a significant “downside”case and remain profitable and in compliance with assumed financial covenants. These “downside” scenarios typically involve assumptions regarding the loss ofkey customers and/or suppliers, an economic downturn, adverse regulatory changes and other relevant stressors that we attempt to simulate in our quantitative andqualitative analyses. Further, we continually examine the effect of these scenarios on financial ratios and other metrics.Approval, Documentation and ClosingUpon the completion of the due diligence process, the Executive Committee will review the results and determine if the transaction should proceed to approval. Ifapproved by our Senior Lending Team and Executive Committee, the underwriting professionals heretofore involved proceed to documentation.As and to the extent necessary, key documentation challenges are brought before our Senior Lending Team and Executive Committee for prompt discussion andresolution. Upon the completion of satisfactory documentation and the satisfaction of closing conditions, final approval is sought from our Executive Committeebefore closing and funding.Ongoing Relationships with Portfolio CompaniesMonitoring, Managerial AssistanceWe have and will continue to monitor our portfolio companies on an ongoing basis. We monitor the financial trends of each portfolio company to determine if it ismeeting its business plan and to assess the appropriate course of action for each company. We generally require our portfolio companies to provide annual audits,quarterly unaudited financial statements with management discussion and analysis and covenant compliance certificates, and monthly unaudited financialstatements. Using these monthly financial statements, we calculate and evaluate all financial covenants and additional financial coverage ratios that might not bepart of our covenant package in the loan documents. For purposes of analyzing a portfolio company’s financial performance, we sometimes adjust their financialstatements to reflect pro-forma results in the event of a recent change of control, sale, acquisition or anticipated cost savings. Additionally, we believe that, throughour integrated marketing and sale of each service line of NSBF and our controlled portfolio companies to our controlled portfolio companies (including electronicpayment processing services through NMS and Premier, technology solutions through NTS, and payroll and benefits services through NPS) and non-affiliateportfolio companies, we have in place extensive and robust monitoring capabilities.We have several methods of evaluating and monitoring the performance and fair value of our investments, including the following:•assessment of success in adhering to each portfolio company’s business plan and compliance with covenants;•periodic and regular contact with portfolio company management to discuss financial position, requirements and accomplishments;•comparisons to our other portfolio companies in the industry, if any;•attendance at and participation in board meetings; and/or20Table of Contents•review of monthly and quarterly financial statements and financial projections for portfolio companies.As part of our valuation procedures, we risk rate all of our investments including loans. In general, our rating system uses a scale of 1 to 8, with 1 being the lowestprobability of default and principal loss. Our internal rating is not an exact system, but is used internally to estimate the probability of: (i) default on our debtsecurities and (ii) loss of our debt or investment principal, in the event of a default. In general, our internal rating system may also assist our valuation team in itsdetermination of the estimated fair value of equity securities or equity-like securities. Our internal risk rating system generally encompasses both qualitative andquantitative aspects of our portfolio companies.Our internal loan and investment risk rating system incorporates the following eight categories:21Table of ContentsRating Summary Description1 Acceptable — Highest Quality — Loans or investments that exhibit strong financial condition and repayment capacity supported by adequatefinancial information. Generally, as loans these credits are well secured by marketable collateral. These credits are current and have notdemonstrated a history of late-pay or delinquency. There are no or few credit administration weaknesses. This score represents a combination of astrong acceptable credit and adequate or better credit administration. Newly underwritten loans or investments may be rated in this category ifthey clearly possess above-average attributes in all of the above areas. In general, as investments these credits are performing within our internalexpectations, and potential risks to the applicable investment are considered to be neutral or favorable compared to any potential risks at the timeof the original investment.2 Acceptable — Average Quality — These loans or investments are supported by financial condition and repayment strengths that offsetmarginal weaknesses. Generally, as loans these credits are secured but may be less than fully secured. These loans are current or less than 30 dayspast due and may or may not have a history of late payments. They may contain non-material credit administration weaknesses or errors inverifying that do not put the guaranty at risk or cause wrong or poor credit decisions to be made. This risk rating should also be used to assign aninitial risk rating to loans or investments that are recommended for approval by underwriting. Without a performance history and/or identifiedcredit administration deficiencies, emphasis should be placed on meeting or exceeding underwriting standards collateral protection, industryexperience, and guarantor strength. It is expected that most of our underwritten loans will be of this quality.3 Acceptable — Below Average — These loans or investments are the low-end range of acceptable. Loans would be less than fully secured andprobably have a history of late pay and/or delinquency, though not severe. They contain one or more credit administration weaknesses that do notput the guaranty at risk or cause wrong or poor credit decisions to be made. This risk rating may also be used to identify new loans or investmentsthat may not meet or exceed all underwriting standards, but are approved because of offsetting strengths in other areas. These credits, while ofacceptable quality, typically do not possess the same strengths as those in the 1 or 2 categories. In general, the investment may be performingbelow internal expectations and quantitative or qualitative risks may have increased materially since the date of the investment.4 Other Assets Especially Mentioned (OAEM or Special Mention) — Strong — These loans or investments are currently protected by soundworth and cash flow or other paying capacity, but exhibit a potentially higher risk situation than acceptable credits. While there is an undue orunwarranted credit risk, it is not yet to the point of justifying a substandard classification. Generally, these loans demonstrate some delinquencyhistory and contain credit administration weaknesses. Performance may show signs of slippage, but can still be corrected. Credit does not requirea specific allowance at this point but a risk of loss is present.5 Substandard — Workout — These assets contain well defined weaknesses and are inadequately protected by the current sound worth andpaying capacity of the borrower. Generally, loan collateral protects to a significant extent. There is a possibility of loss if the deficiencies are notcorrected and secondary sources may have to be used to repay credit. Credit administration can range from very good to adequate indicating oneor more oversights, errors, or omissions which are considered significant but not seriously misleading or causing an error in the loan decision.Performance has slipped and there are well-defined weaknesses. A specific allowance is in order or risk of loss is present.6 Substandard — Liquidation — These assets contain well defined weaknesses and are inadequately protected by the current sound worth andpaying capacity of the borrower or investee. In addition, the weaknesses are so severe that resurrection of the credit is unlikely. For loans,secondary sources will have to be used for repayment. Credits in this category would be severely stressed, nonperforming, and the business maybe non-viable. There could be character and significant credit administration issues as well. A specific allowance should be established or the lackof one clearly justified.7 Doubtful — This classification contains all of the weaknesses inherent in a substandard classification but with the added characteristic that theweaknesses make collection or repayment of principal in full, on the basis of existing facts, conditions and values, highly questionable andimprobable. The probability of loss is very high, but the exact amount may not be estimable at the current point in time. Loans in this category areseverely stressed, generally non-performing and/or involve a non-viable operation. Collateral may be difficult to value because of limitedsalability, no ready and available market, or unknown location or condition of the collateral. Credit administration weaknesses can range from fewto severe and may jeopardize the credit as well as the guaranty. All such loans or investments should have a specific allowance.8 Loss — Loans or investments classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is nolonger warranted. This classification does not mean that the credit has no recovery or salvage value but, rather, it is not practical to defer writingoff this asset. It is also possible that the credit decision cannot be supported by the credit administration process. Documents and verification arelacking; analysis is poor or undocumented, there is no assurance that the loan is eligible or that a correct credit decision was made. Loss loans areloans where a loss total can be clearly estimated. Losses should be taken during the period in which they are identified.We will monitor and, when appropriate, change the investment ratings assigned to each loan or investment in our portfolio. In connection with our valuationprocess, our management will review these investment ratings on a quarterly basis, and our22Table of ContentsBoard will affirm such ratings. The investment rating of a particular investment should not, however, be deemed to be a guarantee of the investment’s futureperformance.Historically, we have provided significant operating and managerial assistance to our portfolio companies and our controlled portfolio companies. As a BDC, wewill continue to offer, and must provide upon request, managerial assistance to our portfolio companies. This assistance will typically involve, among other things,monitoring the operations and financial performance of our portfolio companies, participating in board and management meetings, consulting with and advisingofficers of portfolio companies and providing other organizational and financial assistance. We may sometimes receive fees for these services.Valuation ProceduresWe conduct the valuation of our assets, pursuant to which our net asset value shall be determined, at all times consistent with GAAP and the 1940 Act. Ourvaluation procedures are set forth in more detail below:Securities for which market quotations are readily available on an exchange shall be valued at such price as of the closing price on the day of valuation. We mayalso obtain quotes with respect to certain of our investments from pricing services or brokers or dealers in order to value assets. When doing so, we will determinewhether the quote obtained is sufficient according to GAAP to determine the fair value of the security. If determined adequate, we will use the quote obtained. Wealso employ independent third party valuation firms for certain of our investments for which there is not a readily available market value.Securities for which reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology or provides avaluation or methodology that, in the judgment of our Board, does not represent fair value, which we expect will represent a substantial majority of the investmentsin our portfolio, shall be valued as follows: (i) each portfolio company or investment is initially valued by the investment professionals responsible for the portfolioinvestment; (ii) preliminary valuation conclusions are documented and discussed with our Senior Lending Team and Executive Committee; (iii) independent third-party valuation firms engaged by, or on behalf of, the Board will conduct independent appraisals, review management’s preliminary valuations and prepareseparate preliminary valuation conclusions on a selected basis; (iv) the Board reviews the preliminary valuations of members of our Senior Lending Team andExecutive Committee and/or that of the third party valuation firm and responds to the valuation recommendation with comments, if any; and (v) the Board willdiscuss valuations and determine the fair value of each investment in our portfolio in good faith.Determination of fair value involves subjective judgments and estimates not susceptible to substantiation by auditing procedures. Accordingly, under currentauditing standards, the notes to our financial statements will refer to the uncertainty with respect to the possible effect of such valuations, and any change in suchvaluations, on our financial statements.The determination of fair value will generally be based on the following factors, as relevant:•the nature and realizable value of any collateral;•adherence to the portfolio company’s business plan and compliance with covenants;•periodic and regular contact with the portfolio company’s management to discuss financial position, requirements and accomplishments;•comparison to portfolio companies in the same industry, if any;•the portfolio company’s ability to make payments;•the portfolio company’s earnings and discounted cash flow;•the markets in which the portfolio company does business; and•comparisons to publicly traded securities.Securities for which market quotations are not readily available or for which a pricing source is not sufficient may include, but are not limited to, the following:•private placements and restricted securities that do not have an active trading market;23Table of Contents•securities whose trading has been suspended or for which market quotes are no longer available;•debt securities that have recently gone into default and for which there is no current market;•securities whose prices are stale;•securities affected by significant events; and•securities that our investment professionals believe were priced incorrectly.CompetitionWe compete for SBA 7(a) and other SMB loans with other financial institutions and various SMB lenders, as well as other sources of funding. Additionally,competition for investment opportunities has emerged among alternative investment vehicles, such as collateralized loan obligations, some of which are sponsoredby other alternative asset investors, as these entities have begun to focus on making investments in SMBs. As a result of these new entrants, competition for ourinvestment opportunities may intensify. Many of these entities have greater financial and managerial resources than we do but we believe that they invariably lackthe ability to process loans as quickly as we can and do not have the depth of our customer service capabilities. We believe we will be able to compete with theseentities primarily on the basis of our financial technology infrastructure, our experience and reputation, our deep industry knowledge and ability to providecustomized business solutions, our willingness to make smaller investments than other specialty finance companies, the breadth of our contacts, our responsive andefficient investment analysis and decision-making processes, and the investment terms we offer.We and our controlled portfolio companies compete in a large number of markets for the sale of financial and other services to SMBs. Each of our controlledportfolio companies competes not only against suppliers in its particular state or region of the country but also against suppliers operating on a national or even amulti-national scale. None of the markets in which our controlled portfolio companies compete are dominated by a small number of companies that couldmaterially alter the terms of the competition.Our electronic payment processing portfolio companies compete with entities including Heartland Payment Systems, First National Bank of Omaha andPaymentech, L.P. Our managed technology solutions portfolio company competes with 1&1, Hosting.com, Discount ASP, Maxum ASP, GoDaddy®, Yahoo!®,BlueHost®, iPowerWeb® and Microsoft Live among others.Our small business finance platform competes with regional and national banks and non-bank lenders. Intuit® is bundling electronic payment processing, webhosting and payroll services similar to ours in offerings that compete in the same small-to midsize-business market.In many cases, we believe that our competitors are not as able as we are to take advantage of changes in business practices due to technological developments and,for those with a larger size, are unable to offer the personalized service that many SMB owners and operators desire.While we compete with many different providers in our various businesses, we have been unable to identify any direct and comprehensive competitors that deliverthe same broad suite of services focused on the needs of the SMB market with the same marketing strategy as we do. Some of the competitive advantages of ourplatform include:•compatible products such as our e-commerce offerings that we are able to bundle to increase sales, reduce costs and reduce risks for our customers andenable us to sell two, three, or four products at the same time;•the patented NewTracker® referral system, which allows us and our portfolio companies to process new business utilizing a web-based, centralizedprocessing point and provides back end scalability, and allows our alliance partners to offer a centralized access point for their SMB clients as part of theirlarger strategic approach to marketing, thus demonstrating their focus on providing a suite of services to the SMB market in addition to their core service;•the focus on developing and marketing business solutions and financial products and services aimed at the SMB market;•scalability, which allows us to size our business solutions capabilities very quickly to meet customer and market needs;24Table of Contents•the ability to offer personalized service and competitive rates;•a strategy of multiple channel distribution, which gives us maximum exposure in the marketplace;•high quality customer service 24/7/365 across all business lines, with a focus primarily on absolute customer service and;•a telephonic interview process, as opposed to requiring handwritten or data-typing processes, which allows us to offer high levels of customer service andsatisfaction, particularly for SMB owners who do not get this service from our competitorsRevenues by Geographic AreaDuring the years ended December 31, 2016, 2015 and 2014, virtually all of our revenue was derived from customers in the United States, although our controlledportfolio company, NTS, which was a consolidated subsidiary for the period January 1, 2014 through November 11, 2014, provided pre-paid web site hostingservices to customers in approximately 162 countries.EmployeesAs of December 31, 2016 , we had a total of 137 employees.Available InformationWe are subject to the informational requirements of the Securities Exchange Commission (the “SEC”) and in accordance with those requirements file reports,proxy statements and other information with the SEC. You may read and copy the reports, proxy statements and other information that we file with the SEC underthe informational requirements of the Securities Exchange Act at the SEC’s Public Reference Room at 450 Fifth Street N.W., Washington, DC 20549. Please call1-800-SEC-0339 for information about the SEC’s Public Reference Room. The SEC also maintains a web site that contains reports, proxy and informationstatements and other information regarding registrants that file electronically with the SEC. The address of the SEC’s web site is http://www.sec.gov. Our principaloffices are located at 1981 Marcus Avenue, Suite 130, Lake Success, NY 11042 and our telephone number is (212) 356-9500. Our website may be directlyaccessed at http://www.newtekone.com . We make available through our website, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934,as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. These documents may be directly accessedat http://investor.newtekbusinessservices.com. Information contained on our website is not a part of this report.SBICWe may apply for a Small Business Investment Company, or “SBIC,” license from the SBA if we believe that it will further our investment strategy and enhanceour returns. If this application is approved, our SBIC subsidiary would be a wholly owned subsidiary and able to rely on an exclusion from the definition of“investment company” under the 1940 Act. Our SBIC subsidiary would have an investment objective substantially similar to ours and would be able to makesimilar types of investments in accordance with SBIC regulations.Regulation We have elected to be regulated as a BDC under the 1940 Act and elected to be treated, and intend to qualify annually thereafter, as a RIC under Subchapter M ofthe Code, beginning with our 2015 taxable year. As with other companies regulated by the 1940 Act, a BDC must adhere to certain substantive regulatoryrequirements. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates (including any investment advisers orsub-advisers), principal underwriters and affiliates of those affiliates or underwriters. The 1940 Act also requires that a majority of the directors of the BDC bepersons other than “interested persons,” as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of ourbusiness so as to cease to be, or to withdraw our election as, a BDC unless approved by “a majority of our outstanding voting securities” as defined in the 1940Act. A majority of the outstanding voting securities of a company is defined under the 1940 Act as the lesser of: (i) 67% or more of such company’s outstandingvoting securities present at a meeting if more than 50% of the outstanding voting securities of such company are present and represented by proxy or (ii) more than50% of the outstanding25Table of Contentsshares of such company. Our bylaws provide for the calling of a special meeting of shareholders at which such action could be considered upon written notice ofnot less than ten or more than sixty days before the date of such meeting. We may also purchase or otherwise receive warrants to purchase the common stock of our portfolio companies in connection with acquisition financing or otherinvestments. Similarly, in connection with an acquisition, we may acquire rights to require the issuers of acquired securities or their affiliates to repurchase themunder certain circumstances. As of December 31, 2016, we held no investments in publicly traded securities. As a BDC, we are generally required to meet an assetcoverage ratio, defined under the 1940 Act as the ratio of our gross assets (less all liabilities and indebtedness not represented by senior securities) to ouroutstanding senior securities, of at least 200% after each issuance of senior securities. We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our Board whoare not interested persons and, in some cases, prior approval by the SEC. For example, under the 1940 Act, absent receipt of exemptive relief from the SEC, weand our affiliates may be precluded from co-investing in private placements of securities. As a result of one or more of these situations, we may not be able toinvest as much as we otherwise would in certain investments or may not be able to liquidate a position as quickly.NSBF is licensed by the SBA as a small business lending company (“SBLC”) that originates loans through the SBA 7(a) Program. In order to operate as an SBLC,NSBF is required to maintain a minimum regulatory capital (as defined by SBA regulations) of the greater of (1) 10% of its outstanding loans receivable and otherinvestments or (2) $1.0 million. Moreover, before consenting to a securitization, NSBF and other securitizers must be considered well capitalized by the SBA. ForNSBF and other SBLC securitizers, the SBA will consider it well capitalized if it maintains a minimum unencumbered paid in capital and paid in surplus equal toat least 10 percent of its assets, excluding the guaranteed portion of 7(a) loans. In addition, an SBLC is subject to certain other regulatory restrictions. Among otherthings, SBLCs also are required to submit to the SBA for review a credit policy that demonstrates the SBLC’s compliance with the applicable regulations and theSBA’s Standard Operating Procedures for origination, servicing and liquidation of 7(a) loans; submit to the SBA for review and approval annual validation, withsupporting documentation and methodologies, demonstrating that any scoring model used by the SBLC is predictive of loan performance; obtain SBA approval forloan securitization and borrowings; and adopt and fully implement an internal control policy which provides adequate direction for effective control over andaccountability for operations, programs, and resources.Pursuant to the SBA’s regulations, the SBA is released from liability on its guaranty of a 7(a) loan and may, in its sole discretion, refuse to honor a guarantypurchase request in full or in part, or recover all or part of the funds already paid in connection with a guaranty purchase, if the lender failed to comply materiallywith a program requirement; failed to make, close, service or liquidate the loan in a prudent manner; placed the SBA at risk through improper action or inaction;failed to disclose a material fact to the SBA in a timely manner; or misrepresented a material fact to the SBA regarding the loan. In certain instances, the SBA mayrequire a specific dollar amount be deducted from the funds the SBA pays on the lender's guaranty in order to fully compensate for an actual or anticipated losscaused by the lender’s actions or omissions. Such repair does not reduce the percent of the loan guaranteed by SBA or SBA’s pro-rata share of expenses orrecoveries.The SBA also restricts the ability of an SBLC to lend money to any of its officers, directors and employees or to invest in associates thereof. The SBA alsoprohibits, without prior SBA approval, a “change of control” of an SBLC. A “change of control” is any event which would result in the transfer of the power, director indirect, to direct the management and policies of a SBLC, whether through ownership, contractual arrangements or otherwise. SBLCs are periodicallyexamined and audited by the SBA to determine compliance with SBA regulations.On July 27, 2016, at our Special Meeting of Shareholders, our shareholders approved a proposal that authorizes us to sell up to 20% of our Common Stock at aprice below the Company’s then-current net asset value, or NAV, per share, subject to certain conditions. Any decision to sell shares of our Common Stock belowthe then current NAV per share of our Common Stock, or securities to subscribe to, convert to, or purchase shares of our Common Stock, would be subject to thedetermination by our Board that such issuance is in our and our shareholders’ best interests.Qualifying AssetsUnder the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifyingassets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company's total assets. The principal categories of qualifyingassets relevant to our business are any of the following:(1)Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limitedexceptions) is an eligible portfolio company (as defined below), or from any person who is,26Table of Contentsor has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as maybe prescribed by the SEC.(2)Securities of any eligible portfolio company that we control.(3)Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or intransactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securitieswas unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.(4)Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and wealready own 60% of the outstanding equity of the eligible portfolio company.(5)Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise ofwarrants or rights relating to such securities.(6)Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment.In addition, a BDC must have been organized and have its principal place of business in the United States and must be operated for the purpose of makinginvestments in the types of securities described in (1), (2) or (3) above.An eligible portfolio company is defined in the 1940 Act as any issuer which:(a)is organized under the laws of, and has its principal place of business in, the United States;(b)is not an investment company (other than a small business investment company wholly owned by the BDC) or a company that would be an investmentcompany but for certain exclusions under the 1940 Act; and(c)satisfies any of the following:(i)does not have any class of securities that is traded on a national securities exchange or has a class of securities listed on a nationalsecurities exchange but has an aggregate market value of outstanding voting and non-voting common equity of less than $250 million;(ii)is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated person who is a director of the eligibleportfolio company; or(iii)is a small and solvent company having total assets of not more than $4 million and capital and surplus of not less than $2 million.Control, as defined by the 1940 Act, is presumed to exist where a BDC beneficially owns more than 25% of the outstanding voting securities of the portfoliocompany.We do not intend to acquire securities issued by any investment company that exceed the limits imposed by the 1940 Act. Under these limits, we generally cannotacquire more than 3% of the voting stock of any investment company (as defined in the 1940 Act), invest more than 5% of the value of our total assets in thesecurities of one such investment company or invest more than 10% of the value of our total assets in the securities of such investment companies in the aggregate.With regard to that portion of our portfolio invested in securities issued by investment companies, it should be noted that such investments might subject ourshareholders to additional expenses. None of our investment policies are fundamental and any may be changed without shareholder approval.Significant Managerial AssistanceA BDC must be operated for the purpose of making investments in the types of securities described above. However, in order to count portfolio securities asqualifying assets for the purpose of the 70% test, the BDC must either control the issuer of the securities or must offer to make available to the issuer of thesecurities (other than small and solvent companies described above) significant managerial assistance; except that, where the BDC purchases such securities inconjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial assistance. Making27Table of Contentsavailable significant managerial assistance means, among other things, any arrangement whereby the BDC, through its directors, officers or employees, offers toprovide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of aportfolio company through monitoring of portfolio company operations, selective participation in board and management meetings, consulting with and advising aportfolio company’s officers or other organizational or financial guidance.Sarbanes-Oxley Act of 2002The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) imposes a wide variety of regulatory requirements on publicly-held companies and their insiders.Many of these requirements affect us. For example:•pursuant to Rule 13a-14 of the 1934 Act, our Chief Executive Officer and Chief Accounting Officer must certify the accuracy of the consolidatedfinancial statements contained in our periodic reports;•pursuant to Item 307 of Regulation S-K, our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls andprocedures;•pursuant to Rule 13a-15 of the 1934 Act, our management must prepare a report regarding its assessment of our internal controls over financial reporting;and•pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the 1934 Act, our periodic reports must disclose whether there were significant changes in ourinternal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actionswith regard to significant deficiencies and material weaknesses.The Sarbanes-Oxley Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and theregulations promulgated thereunder. We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will takeactions necessary to ensure that we are in compliance therewith.Issuance of Additional Shares We are not generally able to issue and sell our common stock at a price below NAV. We may, however, issue and sell our common stock, at a price below thecurrent NAV of the common stock, or issue and sell warrants, options or rights to acquire such common stock, at a price below the current NAV of the commonstock if our Board determines that such sale is in our best interest and in the best interests of our shareholders, and our shareholders have approved our policy andpractice of making such sales within the preceding 12 months. At our July 27, 2016 Special Meeting of Shareholders, our shareholders approved a proposal thatauthorizes us to sell up to 20% of our Common Stock at a price below the Company’s then-current NAV per share, subject to certain conditions. From July 27,2016 to date, we have not sold shares of our Common Stock at prices below the Company’s then-current NAV per share, but we may do so in the future. In anysuch case, the price at which our securities are to be issued and sold may not be less than a price which, in the determination of our Board, closely approximates themarket value of such securities. In addition, under the 1940 Act, a BDC is subject to restrictions on the amount of warrants, options, restricted stock or rights to purchase shares of capital stockthat it may have outstanding at any time. In particular, the amount of capital stock that would result from the conversion or exercise of all outstanding warrants,options or rights to purchase capital stock cannot exceed 25% of the BDC’s total outstanding shares of capital stock. This amount is reduced to 20% of the BDC’stotal outstanding shares of capital stock if the amount of warrants, options or rights issued pursuant to an executive compensation plan would exceed 15% of theBDC’s total outstanding shares of capital stock.In April 2015, we filed a request with the SEC for exemptive relief to allow us to (i) issue restricted stock awards to our officers, employees and directors and (ii)issue stock options to our nonemployee directors. In May 2016, the SEC issued an order granting the Company’s request for exemptive relief to allow us to amendour equity compensation plan and make such grants and awards, subject to shareholder approval. In July 2016, shareholders approved the amendments to ourequity compensation plan, and certain restricted stock awards granted thereunder.Temporary InvestmentsPending investment in other types of qualifying assets, as described above, our investments may consist of cash, cash equivalents, U.S. government securities orhigh quality debt securities maturing in one year or less from the time of investment,28Table of Contentswhich we refer to, collectively, as temporary investments, so that 70% of our assets are qualifying assets. Typically, we will invest in U.S. treasury bills or inrepurchase agreements, provided that such agreements are fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchaseagreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed uponfuture date and at a price which is greater than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on theproportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our total assets constitute repurchase agreements froma single counterparty, we would not meet the diversification tests imposed on us by the Code in order to qualify as a RIC for federal income tax purposes. Thus, wedo not intend to enter into repurchase agreements with a single counterparty in excess of this limit. We will monitor the creditworthiness of the counterparties withwhich we enter into repurchase agreement transactions.Senior Securities; Coverage RatioWe are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, asdefined in the 1940 Act, is at least equal to 200% immediately after each such issuance. In addition, we may not be permitted to declare any cash dividend or otherdistribution on our outstanding common shares, or purchase any such shares, unless, at the time of such declaration or purchase, we have asset coverage of at least200% after deducting the amount of such dividend, distribution, or purchase price. We may also borrow amounts up to 5% of the value of our total assets fortemporary or emergency purposes. For a discussion of the risks associated with the resulting leverage, see “Risk Factors - Risks Related to Our Business andStructure - Because we borrow money, the potential for loss on amounts invested in us is magnified and may increase the risk of investing in us.”Code of EthicsWe have adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain transactionsby our personnel. Our code of ethics generally will not permit investments by our employees in securities that may be purchased or held by us. You may read andcopy our code of ethics at the SEC’s Public Reference Room in Washington, D.C. You may obtain information on the operation of the Public Reference Room bycalling the SEC at 1-800-SEC-0330. In addition, the code of ethics is published and available on the Company’s website at http://investor.newtekbusinessservices.com/corporate-governance.cfm and on the EDGAR database on the SEC website at www.sec.gov .Proxy Voting Policies and ProceduresWe vote proxies relating to our portfolio securities in a manner in which we believe is in the best interest of our shareholders. We review on a case-by-case basiseach proposal submitted to a shareholder vote to determine its impact on the portfolio securities held by us. Although we generally vote against proposals that mayhave a negative impact on our portfolio securities, we may vote for such a proposal if there exists compelling long-term reasons to do so.Our proxy voting decisions are made by our Senior Lending Team and our Executive Committee, which are responsible for monitoring each of our investments. Toensure that our vote is not the product of a conflict of interest, we require that: (i) anyone involved in the decision making process disclose to our chief complianceofficer any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote; and (ii) employeesinvolved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to reduce any attemptedinfluence from interested parties.Stockholders may obtain information regarding how we voted proxies with respect to our portfolio securities by making a written request for information to: ChiefCompliance Officer, 1981 Marcus Avenue, Suite 130, Lake Success, New York 11042.OtherWe will be periodically examined by the SEC for compliance with the Exchange Act and the 1940 Act.We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, asa BDC, we are prohibited from protecting any director or officer against any liability to our shareholders arising from willful misfeasance, bad faith, grossnegligence or reckless disregard of the duties involved in the conduct of such person’s office.29Table of ContentsWe have adopted and implemented written policies and procedures reasonably designed to prevent violation of the federal securities laws, review these policiesand procedures annually for their adequacy and the effectiveness of their implementation. We have designated Michael Schwartz, the Company's Chief LegalOfficer, to be our chief compliance officer, and to be responsible for administering these policies and procedures.Privacy PrinciplesWe are committed to maintaining the privacy of our shareholders and to safeguarding their non-public personal information. The following information is providedto help you understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with selectother parties.Generally, we do not receive any non-public personal information relating to our shareholders, although certain non-public personal information of ourshareholders may become available to us. We do not disclose any non-public personal information about our shareholders or former shareholders to anyone, exceptas permitted by law or as is necessary in order to service shareholder accounts (for example, to a transfer agent or third-party administrator).We will maintainphysical, electronic and procedural safeguards designed to protect the non-public personal information of our shareholders.Nasdaq Global Market RequirementsWe have adopted certain policies and procedures intended to comply with the Nasdaq Global Market’s corporate governance rules. We will continue to monitorour compliance with all future listing standards that are approved by the SEC and will take actions necessary to ensure that we are in compliance therewith.Election to be Taxed as a RICAs a BDC, we elected to be treated, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code, beginning with our 2015 taxable year. Asa RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any income that we distribute to our shareholders as dividends. To maintainour qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, toqualify for RIC tax treatment we must distribute to our shareholders, for each taxable year, at least 90% of our “investment company taxable income,” which isgenerally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses (the “Annual DistributionRequirement”).Taxation as a Regulated Investment CompanyFor any taxable year in which we:•qualify as a RIC; and•satisfy the Annual Distribution Requirement,We generally will not be subject to U.S. federal income tax on the portion of our income we distribute to our shareholders. We will be subject to U.S. federalincome tax at the regular corporate rates on any income or capital gains not distributed (or deemed distributed) to our shareholders.We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equalto the sum of (1) 98% of our net ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in thatcalendar year and (3) any income recognized, but not distributed, in preceding years and on which we paid no corporate-level income tax (the “Excise TaxAvoidance Requirement”). We generally will endeavor in each taxable year to make sufficient distributions to our shareholders to avoid any U.S. federal excise taxon our earnings.In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:•continue to qualify as a BDC under the 1940 Act at all times during each taxable year;•derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to loans of certain securities, gains fromthe sale of stock or other securities, net income from certain “qualified publicly traded partnerships,” or other income derived with respect to ourbusiness of investing in such stock or securities (the “90% Income Test”); and•diversify our holdings so that at the end of each quarter of the taxable year:30Table of Contents•at least 50% of the value of our assets consists of cash, cash equivalents, U.S. Government securities, securities of other RICs, and othersecurities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of theoutstanding voting securities of the issuer; and•no more than 25% of the value of our assets is invested in the securities, other than U.S. government securities or securities of other RICs, ofone issuer, of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same orsimilar or related trades or businesses or of certain “qualified publicly traded partnerships” (the “Diversification Tests”).Qualified earnings may exclude such income as management fees received in connection with our subsidiaries or other potential outside managed funds and certainother fees.In accordance with certain applicable Treasury regulations and private letter rulings issued by the IRS, a RIC may treat a distribution of its own stock as fulfillingits RIC distribution requirements if each shareholder may elect to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation thatthe aggregate amount of cash to be distributed to all shareholders must be at least 20% of the aggregate declared distribution. If too many shareholders elect toreceive cash, each shareholder electing to receive cash must receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event willany shareholder, electing to receive cash, receive less than 20% of his or her entire distribution in cash. If these and certain other requirements are met, for U.S.federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. Inconnection with our intended election to be treated as a RIC for tax purposes, on December 31, 2015, we paid a special dividend to distribute the earnings andprofits that we accumulated before our 2015 tax year. That dividend was paid 27% in cash and 73% in shares of our common stock. We have no current intentionof paying dividends in shares of our stock in accordance with these Treasury regulations or private letter rulings.We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated underapplicable tax rules as having original issue discount (such as debt instruments with PIK interest or, in certain cases, increasing interest rates or issued withwarrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cashrepresenting such income is received by us in the same taxable year. We may also have to include in income other amounts that we have not yet received in cash,such as PIK interest, deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation such as warrants or stock, orcertain income with respect to equity investments in foreign corporations. Because any original issue discount or other amounts accrued will be included in ourinvestment company taxable income for the year of accrual, we may be required to make a distribution to our shareholders in order to satisfy the AnnualDistribution Requirement, even though we will not have received any corresponding cash amount.Gain or loss realized by us from the sale or exchange of warrants acquired by us as well as any loss attributable to the lapse of such warrants generally will betreated as capital gain or loss. Such gain or loss generally will be long-term or short-term, depending on how long we held a particular warrant.Although we do not presently expect to do so, we are authorized to borrow funds and to sell assets in order to satisfy applicable distribution requirements.However, under the 1940 Act, we are not permitted to make distributions to our shareholders while our debt obligations and other senior securities are outstandingunless certain “asset coverage” tests are met. Moreover, our ability to dispose of assets to meet our distribution requirements may be limited by (1) the illiquidnature of our portfolio and/or (2) other requirements relating to our status as a RIC, including the Diversification Tests. If we dispose of assets in order to meet theAnnual Distribution Requirement or the Excise Tax Avoidance Requirement, we may make such dispositions at times that, from an investment standpoint, are notadvantageous. If we are prohibited from making distributions or are unable to obtain cash from other sources to make the distributions, we may fail to qualify as aRIC, which would result in us becoming subject to corporate-level federal income tax.In addition, we will be partially dependent on our subsidiaries for cash distributions to enable us to meet the RIC distribution requirements. Some of oursubsidiaries may be limited by the Small Business Investment Act of 1958, as amended and SBA regulations, from making certain distributions to us that may benecessary to maintain our status as a RIC. We may have to request a waiver of the SBA’s restrictions for our subsidiaries to make certain distributions to maintainour RIC status. We cannot assure you that the SBA will grant such waiver. If our subsidiaries are unable to obtain a waiver, compliance with the SBA regulationsmay cause us to fail to qualify as a RIC, which would result in us becoming subject to corporate-level federal income tax.The remainder of this discussion assumes that we will qualify as a RIC and will have satisfied the Annual Distribution Requirement for the year ended December31, 2016.31Table of ContentsAny transactions in options, futures contracts, constructive sales, hedging, straddle, conversion or similar transactions, and forward contracts will be subject tospecial tax rules, the effect of which may be to accelerate income to us, defer losses, cause adjustments to the holding periods of our investments, convert long-term capital gains into short-term capital gains, convert short-term capital losses into long-term capital losses or have other tax consequences. These rules couldaffect the amount, timing and character of distributions to shareholders. We do not currently intend to engage in these types of transactions.A RIC is limited in its ability to deduct expenses in excess of its “investment company taxable income.” If our expenses in a given year exceed gross taxableincome (e.g., as the result of large amounts of equity-based compensation), we would experience a net operating loss for that year. However, a RIC is not permittedto carry forward net operating losses to subsequent years. In addition, expenses can be used only to offset investment company taxable income, not net capital gain.Due to these limits on the deductibility of expenses, we may, for tax purposes, have aggregate taxable income for several years that we are required to distributeand that is taxable to our shareholders even if such income is greater than the aggregate net income we actually earned during those years. Such requireddistributions may be made from our cash assets or by liquidation of investments, if necessary. We may realize gains or losses from such liquidations. In the eventwe realize net capital gains from such transactions, you may receive a larger capital gain distribution than you would have received in the absence of suchtransactions.Investment income received from sources within foreign countries, or capital gains earned by investing in securities of foreign issuers, may be subject to foreignincome taxes withheld at the source. In this regard, withholding tax rates in countries with which the United States does not have a tax treaty are often as high as35% or more. The United States has entered into tax treaties with many foreign countries that may entitle us to a reduced rate of tax or exemption from tax on thisrelated income and gains. The effective rate of foreign tax cannot be determined at this time since the amount of our assets to be invested within various countriesis not now known. Additionally, we do not anticipate being eligible for the special election that allows a RIC to treat foreign income taxes paid by such RIC as paidby its shareholders.If we acquire stock in certain foreign corporations that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, rents,royalties or capital gain) or hold at least 50% of their total assets in investments producing such passive income (“passive foreign investment companies”), wecould be subject to federal income tax and additional interest charges on “excess distributions” received from such companies or gain from the sale of stock in suchcompanies, even if all income or gain actually received by us is timely distributed to our shareholders. We would not be able to pass through to our shareholdersany credit or deduction for such a tax. Certain elections may, if available, ameliorate these adverse tax consequences, but any such election requires us to recognizetaxable income or gain without the concurrent receipt of cash. We intend to limit and/or manage our holdings in passive foreign investment companies to minimizeour tax liability.Foreign exchange gains and losses realized by us in connection with certain transactions involving non-dollar debt securities, certain foreign currency futurescontracts, foreign currency option contracts, foreign currency forward contracts, foreign currencies, or payables or receivables denominated in a foreign currencyare subject to Code provisions that generally treat such gains and losses as ordinary income and losses and may affect the amount, timing and character ofdistributions to our shareholders. Any such transactions that are not directly related to our investment in securities (possibly including speculative currencypositions or currency derivatives not used for hedging purposes) could, under future Treasury regulations, produce income not among the types of “qualifyingincome” from which a RIC must derive at least 90% of its annual gross income.Failure to Qualify as a RIC If we fail to satisfy the Annual Distribution Requirement or fail to qualify as a RIC in any taxable year, assuming we do not qualify for or take advantage of certainremedial provisions, we will be subject to tax in that year on all of our taxable income, regardless of whether we make any distributions to our shareholders. In thatcase, all of our income will be subject to corporate-level federal income tax, reducing the amount available to be distributed to our shareholders. In contrast,assuming we qualify as a RIC, our corporate-level federal income tax liability should be substantially reduced or eliminated. See “Election to be Taxed as a RIC”above. If we are unable to maintain our status as a RIC, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deductdistributions to shareholders, nor would they be required to be made. Distributions would generally be taxable to our shareholders as ordinary distribution incomeeligible for reduced maximum tax rates to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, dividendspaid by us to corporate distributees would be eligible for the dividends received deduction. Distributions in excess of our current and accumulated earnings andprofits would be treated first as a return of capital to the extent of the shareholder’s tax basis in our common stock, and any remaining distributions would betreated as a capital gain.32Table of ContentsITEM 1A. RISK FACTORSThe following is a summary of the risk factors that we believe are most relevant to our business. These are factors that, individually or in the aggregate, we thinkcould cause our actual results to differ significantly from anticipated or historical results. If any of the following risks occur, our business, financial condition andresults of operations could be materially and adversely affected. In that case, the value of our common stock could decline and shareholders may lose all or part oftheir investment. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider the following to be acomplete discussion of all potential risks or uncertainties. We undertake no obligation to publicly update forward-looking statements, whether as a result of newinformation, future events, or otherwise, unless required by law.RISKS RELATING TO OUR BUSINESS AND STRUCTUREThroughout our 19 year history we have never operated as a BDC until we converted on November 12, 2014.Although Newtek has operated since 1998, we have limited operating history as a BDC. As a result, we can offer no assurance that we will achieve our investmentobjective and that the value of any investment in our Company will not decline substantially. As a BDC, we are subject to the regulatory requirements of the SEC,in addition to the specific regulatory requirements applicable to BDCs under the 1940 Act and RICs under the Code. Prior to our BDC Conversion, ourmanagement did not have any prior experience operating under this BDC regulatory framework, and we may incur substantial additional costs, and expendsignificant time or other resources, to do so. In addition, we may be unable to generate sufficient revenue from our operations to make or sustain distributions toour shareholders.Our investment portfolio is recorded at fair value, with our Board having final responsibility for overseeing, reviewing and approving, in good faith, itsestimate of fair value and, as a result, there is uncertainty as to the value of our portfolio investments.Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there is no readily available market value, at fair value as determinedby us, with our Board having final responsibility for overseeing, reviewing and approving, in good faith, our estimate of fair value. Typically, there is not a publicmarket for the securities of the privately held companies in which we invest. As a result, we value these securities annually and quarterly at fair value based onvarious inputs, including management, third-party valuation firms and our audit committee, and with the oversight, review and approval of our Board.The determination of fair value and consequently, the amount of unrealized gains and losses in our portfolio, are to a certain degree, subjective and dependent on avaluation process approved by our Board. Certain factors that may be considered in determining the fair value of our investments include external events, such asprivate mergers, sales and acquisitions involving comparable companies. Because such valuations, and particularly valuations of private securities and privatecompanies, are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates. Our determinations of fair value may differmaterially from the values that would have been used if a ready market for these securities existed. Due to this uncertainty, our fair value determinations may causeour net asset value on a given date to materially understate or overstate the value that we may ultimately realize on one or more of our investments. As a result,investors purchasing our common stock based on an overstated net asset value would pay a higher price than the value of our investments might warrant.Conversely, investors selling stock during a period in which the net asset value understates the value of our investments will receive a lower price for their stockthan the value of our investments might warrant.Our financial condition and results of operations will depend on our ability to manage and deploy capital effectively.Our ability to achieve our investment objective will depend on our ability to manage and deploy capital, which will depend, in turn, on our management’s ability toidentify, evaluate and monitor, and our ability to finance and invest in, companies that meet our investment criteria.Accomplishing our investment objective on a cost-effective basis will largely be a function of our management’s handling of the investment process, its ability toprovide competent, attentive and efficient services and our access to investments offering acceptable terms. In addition to monitoring the performance of ourexisting investments, our Senior Lending Team and our Executive Committee is called upon, from time to time, to provide managerial assistance to some of ourportfolio companies.These demands on their time may distract them or slow the rate of investment. Even if we are able to grow and build upon our investment operations, any failure tomanage our growth effectively could have a material adverse effect on our business, financial condition, results of operations and prospects. The results of ouroperations will depend on many factors, including the availability of opportunities for investment, readily accessible short and long-term funding alternatives in thefinancial33Table of Contentsmarkets and economic conditions. Furthermore, if we cannot successfully operate our business or implement our investment policies and strategies as describedherein, it could negatively impact our ability to pay dividends.We are dependent upon our Senior Lending Team and our Executive Committee for our future success, and if we are unable to hire and retain qualifiedpersonnel or if we lose any member of our Senior Lending Team or our Executive Committee our ability to achieve our investment objective could besignificantly harmed.We depend on our Senior Lending Team and Executive Committee as well as other key personnel for the identification, final selection, structuring, closing andmonitoring of our investments. These executive officers and employees have critical industry experience and relationships that we rely on to implement ourbusiness plan. Our future success depends on the continued service of our Senior Lending Team and our Executive Committee and the replacement of anydeparting individuals with others of comparable skills and experience. The departure of any of the members of our Senior Lending Team, our ExecutiveCommittee or a significant number of our senior personnel could have a material adverse effect on our ability to achieve our investment objective. As a result, wemay not be able to operate our business as we expect, and our ability to compete could be harmed, which could cause our operating results to suffer.We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses.We compete for investments with other financial institutions and various SMB lenders, as well as other sources of funding. Additionally, competition forinvestment opportunities has emerged among alternative investment vehicles, such as CLOs, some of which are sponsored by other alternative asset investors, asthese entities have begun to focus on making investments in SMBs. As a result of these new entrants, competition for our investment opportunities may intensify.Many of our competitors will be substantially larger and have considerably greater financial, technical and marketing resources than us. For example, somecompetitors may have a lower cost of capital and access to funding sources that will not be available to us. In addition, some of our competitors may have higherrisk tolerances or different risk assessments than we will have. These characteristics could allow our competitors to consider a wider variety of investments,establish more relationships and offer better pricing and more flexible structuring than we will be able to offer. We may lose investment opportunities if we do notmatch our competitors’ pricing, terms and structure. If we are forced to match our competitors’ pricing, terms and structure, we may not be able to achieveacceptable returns on our investments or may bear substantial risk of capital loss. Furthermore, many of our competitors will have greater experience operatingunder, or will not be subject to, the regulatory restrictions that the 1940 Act will impose on us as a BDC, or the source-of-income, asset diversification, anddistribution requirements we must satisfy to maintain our tax treatment as a RIC.If we are unable to source investments effectively, we may be unable to achieve our investment objective.Our ability to achieve our investment objective depends on our Senior Lending Team’s and our Executive Committee’s ability to identify, evaluate and invest insuitable companies that meet our investment criteria. Accomplishing this result on a cost-effective basis is largely a function of our marketing capabilities, ourmanagement of the investment process, our ability to provide efficient services and our access to financing sources on acceptable terms. In addition to monitoringthe performance of our existing investments, members of our Senior Lending Team, our Executive Committee and our other investment professionals may also becalled upon to provide managerial assistance to our portfolio companies. These demands on their time may distract them or slow the rate of investment. To grow,we need to continue to hire, train, supervise and manage new employees and to implement computer and other systems capable of effectively accommodating ourgrowth. However, we cannot provide assurance that any such employees will contribute to the success of our business or that we will implement such systemseffectively. Failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations.Our business model depends to a significant extent upon strong referral relationships, and our inability to maintain or further develop these relationships, aswell as the failure of these relationships to generate investment opportunities, could adversely affect our business.We expect that members of our Senior Lending Team and our Executive Committee will maintain their relationships with intermediaries, financial institutions,investment bankers, commercial bankers, financial advisors, attorneys, accountants, consultants, alliance partners, and other individuals within their networks, andwe will rely, to a significant extent, upon these relationships to provide us with potential investment opportunities. If our Senior Lending Team and our ExecutiveCommittee fail to maintain its existing relationships or develop new relationships with sources of investment opportunities, we may not be able to grow ourinvestment portfolio. In addition, individuals with whom members of our Senior Lending Team and our Executive Committee have relationships are not obligatedto provide us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us.34Table of ContentsAny failure on our part to maintain our status as a BDC would reduce our operating flexibility.We have elected to be regulated as a BDC under the 1940 Act. The 1940 Act imposes numerous constraints on the operations of BDCs. For example, BDCs arerequired to invest at least 70% of their gross assets in specified types of securities, primarily in private companies or thinly-traded U.S. public companies, cash,cash equivalents, U.S. government securities and other high quality debt investments that mature in one year or less. Furthermore, any failure to comply with therequirements imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against us and/or expose us to claims of private litigants. Inaddition, upon approval of a majority of our shareholders, we may elect to withdraw our status as a BDC. If we decide to withdraw our election, or if we otherwisefail to maintain our qualification, as a BDC, we may be subject to the substantially greater regulation under the 1940 Act as a closed-end investment company.Compliance with such regulations would significantly decrease our operating flexibility, and could significantly increase our costs of doing business.Regulations governing our operation as a BDC affect our ability to raise additional capital and the way in which we do so. As a BDC, the necessity of raisingadditional capital may expose us to risks, including the typical risks associated with leverage.We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “seniorsecurities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities inamounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of gross assets less all liabilities and indebtedness not represented bysenior securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may berequired to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may bedisadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common shareholders. Continuing toexpand our debt financing activities in SBA 7(a) loans will require us to raise additional capital. The failure to continue to generate such loans on a consistent basiscould have a material impact on our results of operations, and accordingly, our ability to make distributions to our shareholders.We generally may not issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, optionsor rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if our Board determines that such sale is inour best interests and in the best interests of our shareholders, and our shareholders approve such sale. In any such case, the price at which our securities are to beissued and sold may not be less than a price that, in the determination of our Board, closely approximates the market value of such securities (less any distributingcommission or discount). If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock,then the percentage ownership of our shareholders at that time will decrease, and you may experience dilution.Because we intend to distribute substantially all of our income to our shareholders to maintain our tax treatment as a RIC, we will continue to need additionalcapital to finance our growth, and regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capitaland make distributions.As a RIC, we generally are required to distribute substantially all of our ordinary income to meet the Annual Distribution Requirement and the Excise TaxAvoidance Requirement, which consequently increases the need to raise additional debt and equity capital. Furthermore, as a result of issuing senior securities, wewould also be exposed to typical risks associated with leverage, including an increased risk of loss. If we issue preferred stock, the preferred stock would rank“senior” to common stock in our capital structure, preferred shareholders would have separate voting rights on certain matters and might have other rights,preferences, or privileges more favorable than those of our common shareholders, and the issuance of preferred stock could have the effect of delaying, deferringor preventing a transaction or a change of control that might involve a premium price for holders of our common stock or otherwise be in your best interest.Because we borrow money, the potential for loss on amounts invested in us is magnified and may increase the risk of investing in us.Borrowings, also known as leverage, magnify the potential for loss on investments in our indebtedness and on invested equity capital. As we use leverage topartially finance our investments, you will experience increased risks of investing in our securities. If the value of our assets increases, then leveraging would causethe net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assetsdecreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any increasein our income in excess of interest payable on the borrowed funds would cause our net investment income to35Table of Contentsincrease more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would havehad we not borrowed. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments or other payments related to oursecurities. Leverage is generally considered a speculative investment technique.Illustration: The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net ofexpenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below:Assumed Return on Our Portfolio (1)(net of expenses) (10)%(5)%0%5%10%Corresponding net return to shareholders (2)(23.28)%(13.68)%(4.08)%5.52%15.12%(1) Assumes $401,450,000 in total assets, $176,019,000 in debt outstanding, $209,094,000 in net assets as of December 31, 2016 , and an average cost of funds of4.84%. Actual interest payments may be different.(2) In order for us to cover our annual interest payments on indebtedness, we must achieve annuals returns on our December 31, 2016 total assets of at least 2.12%.Our ability to achieve our investment objective may depend in part on our ability to access additional leverage on favorable terms, and there can be no assurancethat such additional leverage can in fact be achieved.To the extent we borrow money to finance our investments, changes in interest rates will affect our cost of capital and net investment income.To the extent we borrow money to finance investments, our net investment income will depend, in part, upon the difference between the rate at which we borrowfunds and the rate at which we invest those funds. As a result, we can offer no assurance that a significant change in market interest rates will not have a materialadverse effect on our net investment income in the event we borrow money to finance our investments. In periods of rising interest rates, our cost of funds wouldincrease, which could reduce our net investment income. We expect that our long-term fixed-rate investments will be financed primarily with equity and/or long-term debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques may include variousinterest rate hedging activities to the extent permitted by the 1940 Act. If we do not implement these techniques properly, we could experience losses on ourhedging positions, which could be material. In addition, depending on the frequency and magnitude of rising interest rates, these interest rate increases couldnegatively impact premiums received on the sale of guaranteed SBA loans, and further, could increase prepayment speeds on outstanding SBA loans, potentiallynegatively impacting the Company’s financial results.We may experience fluctuations in our quarterly and annual results.We may experience fluctuations in our quarterly and annual operating results due to a number of factors, including our ability or inability to make investments incompanies that meet our investment criteria, the interest rate payable on the debt securities we acquire, the default rate of such securities, the level of portfoliodividend and fee income, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to whichwe encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as beingindicative of performance in future periods.Our Board may change our investment objective, operating policies and strategies without prior notice or shareholder approval, the effects of which may beadverse.Although we must obtain shareholder approval to cease to be, or withdraw our election as, a BDC, our Board has the authority to modify or waive our investmentobjective, current operating policies, investment criteria and strategies without prior notice and without shareholder approval. We cannot predict the effect anychanges to our current operating policies, investment criteria and strategies would have on our business, net asset value, operating results and value of our stock.However, the effects might be adverse, which could negatively impact our ability to make distributions and cause shareholders to lose all or part of theirinvestment.36Table of ContentsWe will be subject to corporate-level income tax if we are unable to maintain our qualification as a RIC or are unable to make the distributions required tomaintain RIC tax treatment.Although we have elected to be treated as a RIC commencing with our tax year ending December 31, 2015, no assurance can be given that we will be able tomaintain our tax treatment as a RIC in the future. To maintain our tax treatment as a RIC, we must meet certain source-of-income, asset diversification, anddistribution requirements.The income source requirement will be satisfied if we obtain at least 90% of our income for each year from dividends, interest, gains from the sale of stock orsecurities or similar sources.The asset diversification requirement will be satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year. Failure tomeet those requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of our qualification as a RIC. Because mostof our investments will be in private companies, and therefore will be relatively illiquid, any such dispositions could be made at disadvantageous prices and couldresult in substantial losses. The annual distribution requirement for a RIC will be satisfied if we distribute to our shareholders on an annual basis at least 90% ofour net ordinary income and net short-term capital gains in excess of our net long-term capital losses, if any. Because we use debt financing, we are subject tocertain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances,restrict us from making distributions necessary to satisfy the distribution requirement. If we are unable to obtain cash from other sources, we could fail to qualify asa RIC.If we fail to qualify for RIC tax treatment for any reason and remain or become subject to corporate income tax, the resulting corporate taxes could substantiallyreduce our net assets, the amount of income available for distribution and the amount of our distributions. Although we have elected to be treated as a RICcommencing with our tax year ending December 31, 2015, no assurance can be given that we will be able to maintain our tax treatment as a RIC in the future.We may not be able to pay distributions to our shareholders, our distributions may not grow over time and a portion of our distributions may be a return ofcapital.We intend to pay distributions to our shareholders out of assets legally available for distribution. We cannot assure investors that we will achieve investment resultsthat will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. Our ability to pay distributions might be adverselyaffected by, among other things, the impact of one or more of the risk factors described in this prospectus. In addition, the inability to satisfy the asset coverage testapplicable to us as a BDC can limit our ability to pay distributions. All distributions will be paid at the discretion of our Board and will depend on our earnings, ourfinancial condition, maintenance of our RIC status, compliance with applicable BDC regulations and such other factors as our Board may deem relevant from timeto time. We cannot assure investors that we will pay distributions to our shareholders in the future.When we make distributions, we will be required to determine the extent to which such distributions are paid out of current or accumulated earnings and profits.Distributions in excess of current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of an investor’s basis in ourstock and, assuming that an investor holds our stock as a capital asset, thereafter as a capital gain. Generally, a non-taxable return of capital will reduce aninvestor’s basis in our stock for federal tax purposes, which will result in higher tax liability when the stock is sold. Stockholders should read any written disclosureaccompanying a distribution carefully and should not assume that the source of any distribution is our ordinary income or gains.We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income.For U.S. federal income tax purposes, we are required to include in our taxable income certain amounts that we have not yet received in cash,such as original issuediscount, which may arise if we receive warrants in connection with the origination of a loan or possibly in other circumstances, or PIK interest. Such original issuediscount or increases in loan balances as a result of contractual PIK arrangements will be included in our taxable income before we receive any corresponding cashpayments. We also may be required to include in our taxable income certain other amounts that we will not receive in cash. Since, in certain cases, we mayrecognize taxable income before or without receiving corresponding cash payments, we may have difficulty meeting the Annual Distribution Requirementnecessary to maintain our tax treatment as a RIC. Accordingly, to satisfy our RIC distribution requirements, we may have to sell some of our investments at timesand/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities. If we are not able to obtain cashfrom other sources, we may fail to qualify for tax treatment as a RIC and thus become subject to corporate-level income tax.37Table of ContentsWe may in the future choose to pay dividends in our own stock, in which case investors may be required to pay tax in excess of the cash they receive.We may distribute taxable dividends that are payable in part in our stock. In accordance with certain applicable Treasury regulations and private letter rulingsissued by the Internal Revenue Service, a RIC may treat a distribution of its own stock as fulfilling the RIC distribution requirements if each shareholder may electto receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to allshareholders must be at least 20% of the aggregate declared distribution. If too many shareholders elect to receive cash, each shareholder electing to receive cashmust receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any shareholder, electing to receive cash, receive lessthan 20% of his or her entire distribution in cash. If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividendpaid in stock will be equal to the amount of cash that could have been received instead of stock. Taxable shareholders receiving such dividends will be required toinclude the amount of the dividends as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend)to the extent of our current and accumulated earnings and profits for United States federal income tax purposes. As a result, a U.S. shareholder may be required topay tax with respect to such dividends in excess of any cash received. If a U.S. shareholder sells the stock it receives as a dividend in order to pay this tax, the salesproceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale.Furthermore, with respect to non-U.S. shareholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portionof such dividend that is payable in stock. In addition, if a significant number of our shareholders determine to sell shares of our stock in order to pay taxes owed ondividends, it may put downward pressure on the trading price of our stock.Internal control deficiencies could impact the accuracy of our financial results or prevent the detection of fraud. As a result, shareholders could loseconfidence in our financial and other public reporting, which would harm our business and the trading price of our common stock.Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls andprocedures, are designed to prevent fraud. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting suchthat there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on atimely basis. Any failure by us to identify future deficiencies in our internal control over financial reporting in a timely manner or remediate any such deficiencies,could prevent us from accurately and timely reporting our financial results. Inferior internal controls could also cause investors to lose confidence in our reportedfinancial information, which could have a negative effect on the trading price of our common stock.We are required to disclose changes made in our internal control and procedures on a quarterly basis and our management is required to assess the effectiveness ofthese controls annually. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment mightnot. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation. Inthe event that we are unable to maintain or achieve compliance with Section 404 of the Sarbanes-Oxley Act and related rules, the market price of our commonstock may be adversely affected.Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.We and our portfolio companies will be subject to applicable local, state and federal laws and regulations, including, without limitation, federal immigration lawsand regulations. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investmentswe are permitted to make, any of which could harm us and our shareholders, potentially with retroactive effect. Additionally, any changes to the laws andregulations governing our operations relating to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or differentopportunities. Such changes could result in material differences to the strategies and plans set forth herein and may result in our investment focus shifting from theareas of expertise of our Senior Lending Team and our Executive Committee to other types of investments in which our Senior Lending Team and our ExecutiveCommittee may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on our results ofoperations and the value of your investment.38Table of ContentsNSBF, our wholly-owned subsidiary, is subject to regulation by the SBA.Our wholly-owned subsidiary, NSBF, is licensed by the SBA as an SBLC. In order to operate as an SBLC, a licensee is required to maintain a minimum regulatorycapital (as defined by SBA regulations) of the greater of (1) 10% of its outstanding loans receivable and other investments or (2) $1.0 million. Moreover, beforeconsenting to a securitization, NSBF and other securitizers must be considered well capitalized by the SBA. For NSBF and other SBLC securitizers, the SBA willconsider it well capitalized if it maintains a minimum unencumbered paid in capital and paid in surplus equal to at least 10 percent of its assets, excluding theguaranteed portion of 7(a) loans. In addition, an SBLC is subject to certain other regulatory restrictions. Among other things, SBLCs are required to: establish,adopt, and maintain a formal written capital plan; submit to the SBA for review a credit policy that demonstrates the SBLC’s compliance with the applicableregulations and the SBA’s Standard Operating Procedures for origination, servicing and liquidation of 7(a) loans; submit to the SBA for review and approvalannual validation, with supporting documentation and methodologies, demonstrating that any scoring model used by the SBLC is predictive of loan performance;obtain SBA approval for loan securitization and borrowings; and adopt and fully implement an internal control policy which provides adequate direction foreffective control over and accountability for operations, programs, and resources.We have specific risks associated with SBA loans.We have generally sold the guaranteed portion of SBA loans in the secondary market. Such sales have resulted in our earning premiums and creating a stream ofservicing income. There can be no assurance that we will be able to continue originating these loans, or that a secondary market will exist for, or that we willcontinue to realize premiums upon the sale of the guaranteed portions of the SBA 7(a) loans.If NSBF fails to comply with SBA regulations in connection with the origination, servicing, or liquidation of an SBA 7(a) loan, liability on the SBA guaranty,in whole or part, could be transferred to NSBF.Since we sell the guaranteed portion of substantially all of our SBA 7(a) loan portfolio, we retain credit risk on the non-guaranteed portion of the SBA loans. Weshare pro rata with the SBA in any recoveries. In the event of default on an SBA loan, our pursuit of remedies against a borrower is subject to SBA approval.If we fail to comply with certain of the SBA’s regulations in connection with the origination, servicing, or liquidation of an SBA 7(a) loan, the SBA may bereleased from liability on its guaranty of a 7(a) loan, and may refuse to honor a guaranty purchase request in full (referred to by SBA as a “denial”) or in part(referred to by SBA as a “repair”), or recover all or part of the funds already paid in connection with a guaranty purchase. In the event of a repair or denial, liabilityon the guaranty, in whole or part, would be transferred to NSBF. In addition, the growth in the number of loans made by NSBF, changes in SBA regulations andeconomic factors may adversely impact our current repair and denial rate.Curtailment of the government-guaranteed loan programs could adversely affect our results of operations.Although the program has been in existence since 1953, there can be no assurance that the federal government will maintain the SBA 7(a) loan program, or that itwill continue to guarantee loans at current levels. If we cannot continue originating and selling government-guaranteed loans, we will generate fewer originationfees and our ability to generate gains on the sale of loans will decrease. From time-to-time, the government agencies that guarantee these loans reach their internalbudgeted limits and cease to guarantee loans for a stated time period. In addition, these agencies may change their rules for extending loans. Also, Congress mayadopt legislation that would have the effect of discontinuing or changing the SBA’s programs. Non-governmental programs could replace government programsfor some borrowers, but the terms might not be equally acceptable. If these changes occur, the volume of loans to SMBs and industrial borrowers of the types thatnow qualify for government-guaranteed loans could decline, as could the profitability of these loans.Additionally, under current law, SBA 7(a) lenders must share equally with the SBA any SBA 7(a) loan premium in excess of 110% of the par value of such loans.Legislation pending in the U.S. Senate would, among other things, require SBA 7(a) lenders to share equally with the SBA any SBA 7(a) loan premium in excessof 108% of the par value of such loans, thereby decreasing the share of loan premium received by the SBA 7(a) lender. Such legislation also would impose a newfee of 3 basis points on the guaranteed portion of the SBA 7(a) loan. If passed in its present form, the legislation could serve to negatively impact the profitabilityof SBA 7(a) loans and our financial performance and results of operations.39Table of ContentsCurtailment of our ability to utilize the SBA 7(a) Loan Program by the Federal government could adversely affect our results of operations.We are dependent upon the federal government to maintain the SBA 7(a) Program. There can be no assurance that the program will be maintained or that loanswill continue to be guaranteed at current levels. From time-to-time the SBA has reached its internal budgeted limits and ceased to guarantee loans for a statedperiod of time. In addition, the SBA may change its rules regarding loans or Congress may adopt legislation or fail to approve a budget that would have the effectof discontinuing, reducing availability of funds for, or changing loan programs. Non-governmental programs could replace government programs for someborrowers, but the terms might not be equally acceptable. If these changes occur, the volume of loans to small businesses that now qualify for governmentguaranteed loans could decline, as could the profitability of these loans.NSBF’s failure to maintain PLP status or maintain its SBA 7(a) license could adversely affect our results of operation.NSBF has been granted PLP status and originates, sells and services small business loans and is authorized to place SBA guarantees on loans without seeking priorSBA review and approval. Being a national lender, PLP status allows NSBF to expedite loans since NSBF is not required to present applications to the SBA forconcurrent review and approval. The loss of PLP status could adversely impact our marketing efforts and ultimately loan origination volume which couldnegatively impact our results of operations.There can be no assurance that NSBF will be able to maintain its status as a PLP or that NSBF can maintain its SBA 7(a) license. If NSBF cannot continueoriginating and selling government guaranteed loans at current levels, we could experience a decrease in future servicing spreads and earned premiums andnegatively impact our results of operations.Our loans under the Section 7(a) Loan Program involve a high risk of default and such default could adversely impact our results of operations.Loans to small businesses involve a high risk of default. Such loans are generally not rated by any statistical rating organization. Small businesses usually havesmaller product lines and market shares than larger companies and therefore may be more vulnerable to competition and general economic conditions. Thesebusinesses’ success typically depends on their management talents and efforts of one person or a small group of persons whose death, disability or resignationwould adversely affect the business. Because these businesses frequently have highly leveraged capital structures, reduced cash flow resulting from economicdownturns can severely impact the businesses’ ability to meet their obligations, which could impact our results of operations. The portions of Section 7(a) loans tobe retained by the Company do not benefit directly from any SBA guarantees; in an event of default, however, the Company and the SBA typically cooperate incollateral foreclosure or other work-out efforts and share in any resulting collections.The loans we make under the Section 7(a) Loan Program face competition.There are several other non-bank lenders as well as a large number of banks that participate in the SBA Section 7(a) Loan Program. All of these participantscompete for the business of eligible borrowers. In addition, pursuant to the 1940 Act, the Company is limited as to the amount of indebtedness it may have.Accordingly, the Company may be at a competitive disadvantage with regard to other lenders or financial institutions that may be able to achieve greater leverageat a lower cost.Our business is subject to increasingly complex corporate governance, public disclosure and accounting requirements that are costly and could adverselyaffect our business and financial results.We are subject to changing rules and regulations of federal and state government as well as the stock exchange on which our common stock is listed. Theseentities, including the Public Company Accounting Oversight Board, the SEC and the Nasdaq Global Market, have issued a significant number of new andincreasingly complex requirements and regulations over the course of the last several years and continue to develop additional regulations and requirements inresponse to laws enacted by Congress. Our efforts to comply with existing requirements, or any revised or amended requirements, have resulted in, and maycontinue to result in, an increase in expenses and a diversion of management’s time from other business activities.In addition, our failure to keep pace with any such rules, or for our management to appropriately address compliance with such rules fully and in a timely manner,exposes us to an increasing risk of inadvertent non-compliance. While our management team takes reasonable efforts to ensure that the Company is in fullcompliance with all laws applicable to its operations, the increasing rate and extent of regulatory change increases the risk of a failure to comply, which may resultin our ability to operate our business in the ordinary course or may subject us to potential fines, regulatory findings or other matters that may materially impact ourbusiness.40Table of ContentsIf we cannot obtain additional capital because of either regulatory or market price constraints, we could be forced to curtail or cease our new lending andinvestment activities, our net asset value could decrease and our level of distributions and liquidity could be affected adversely.Our ability to secure additional financing and satisfy our financial obligations under indebtedness outstanding from time to time will depend upon our futureoperating performance, which is subject to the prevailing general economic and credit market conditions, including interest rate levels and the availability of creditgenerally, and financial, business and other factors, many of which are beyond our control. The prolonged continuation or worsening of current economic andcapital market conditions could have a material adverse effect on our ability to secure financing on favorable terms, if at all.If we are unable to obtain additional debt capital, then our equity investors will not benefit from the potential for increased returns on equity resulting fromleverage to the extent that our investment strategy is successful and we may be limited in our ability to make new commitments or fundings to our portfoliocompanies.Capital markets may experience periods of disruption and instability and we cannot predict when these conditions will occur. Such market conditions couldmaterially and adversely affect debt and equity capital markets in the United States and abroad, which could have a negative impact on our business, financialcondition and results of operations.As a BDC, we must maintain our ability to raise additional capital for investment purposes. Without sufficient access to the capital markets or credit markets, wemay be forced to curtail our business operations or we may not be able to pursue new business opportunities.The U.S. and global capital markets experienced extreme volatility and disruption during the economic downturn that began in mid-2007, and the U.S. economywas in a recession for several consecutive calendar quarters during the same period. In 2010, a financial crisis emerged in Europe, triggered by high budget deficitsand rising direct and contingent sovereign debt, which created concerns about the ability of certain nations to continue to service their sovereign debt obligations.Risks resulting from such debt crisis, including any austerity measures taken in exchange for the bail out of certain nations, and any future debt crisis in Europe orany similar crisis elsewhere could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in certain countries and thefinancial condition of financial institutions generally. In June 2016, the United Kingdom held a referendum in which voters approved an exit from the EuropeanUnion (“Brexit”), and, accordingly, on February 1, 2017, the U.K. Parliament voted in favor of allowing the U.K. government to begin the formal process ofBrexit. Brexit created political and economic uncertainty and instability in the global markets (including currency and credit markets), and especially in the UnitedKingdom and the European Union, and this uncertainty and instability may last indefinitely. There is continued concern about national-level support for the Euroand the accompanying coordination of fiscal and wage policy among European Economic and Monetary Union member countries. In addition, the fiscal andmonetary policies of foreign nations, such as Russia and China, may have a severe impact on the worldwide and U.S. financial markets.Additionally, as a result of the 2016 U.S. election, the Republican Party currently controls both the executive and legislative branches of government, whichincreases the likelihood that legislation may be adopted that could significantly affect the regulation of U.S. financial markets. Areas subject to potential change,amendment, or repeal include the Dodd-Frank Act and the authority of the Federal Reserve and the Financial Stability Oversight Council. The U.S. may alsopotentially withdraw from or renegotiate various trade agreements and take other actions that would change current trade policies of the U.S. We cannot predictwhich, if any, of these actions will be taken or, if taken, their effect on the financial stability of the U.S. Such actions could have a significant adverse effect on ourbusiness, financial condition and results of operations. We cannot predict the effects of these or similar events in the future on the U.S. economy and securitiesmarkets or on our investments. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, butthere can be no assurance that we will be successful in doing so.A failure or the perceived risk of a failure to raise the statutory debt limit of the U.S. could have a material adverse effect on our business, financial conditionand results of operations.Recent U.S. debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades and economic slowdowns, or a recessionin the U.S. In the future, the U.S. government may not be able to meet its debt payments unless the federal debt ceiling is raised. The federal debt limit has beensuspended since November 2, 2015, but the limit is set to be reinstated on March 15, 2017. If legislation increasing the debt ceiling is not enacted, as needed, andthe debt ceiling is reached, the U.S. federal government may stop or delay making payments on its obligations, which could negatively impact the U.S. economyand our portfolio companies. In addition, disagreement over the federal budget has caused the U.S. federal41Table of Contentsgovernment to shut down for periods of time. Continued adverse political and economic conditions could have a material adverse effect on our business, financialcondition and results of operations.We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the marketprice of our securities and our ability to make distributions to our shareholders.Our business is highly dependent on our communications and information systems. Certain of these systems are provided to us by third party service providers.Any failure or interruption of such systems, including as a result of the termination of an agreement with any such third party service provider, could cause delaysor other problems in our activities. This, in turn, could have a material adverse effect on our operating results and negatively affect the market price of oursecurities and our ability to make distributions to our shareholders.Terrorist attacks, acts of war or natural disasters may affect any market for our securities, impact the businesses in which we invest and harm our business,operating results and financial condition.Terrorist acts, acts of war or natural disasters may disrupt our operations, as well as the operations of the businesses in which we invest. Such acts have created,and continue to create, economic and political uncertainties and have contributed to global economic instability. Future terrorist activities, military or securityoperations, or natural disasters could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact thebusinesses in which we invest directly or indirectly and, in turn, could have a material adverse impact on our business, operating results and financial condition.Losses from terrorist attacks and natural disasters are generally uninsurable.We could be adversely affected by information security breaches or cyber security attacks.Our business operations and our portfolio companies’ business operations rely upon secure information technology systems for data processing, storage andreporting. Despite careful security and controls design, implementation and updating, such information technology systems could become subject to cyber-attacks.Network, system, application and data breaches could result in operational disruptions or information misappropriation, which could have a material adverse effecton our business, results of operations and financial condition.In addition, our business operations and our portfolio companies’ business operations involve the storage and transmission of Newtek, portfolio company,customer and employee proprietary information. Our businesses rely on our digital technologies, computer and email systems, software, and networks to conductoperations. Our technologies, systems and networks may become the target of criminal cyber-attacks or information security breaches that could result in theunauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information of us, our portfolio companies, or thirdparties with whom we and our portfolio companies deal, or otherwise disrupt our or our customers’ or other third parties’ business operations. It is critical to ourbusiness strategy that our facilities and infrastructure remain secure and are perceived by the marketplace to be secure. Although we employ appropriate securitytechnologies (including data encryption processes, intrusion detection systems), and conduct comprehensive risk assessments and other internal control proceduresto assure the security of our and our customers’ data, we cannot guarantee that these measures will be sufficient for this purpose. If our security measures arebreached as a result of third-party action, employee error or otherwise, and as a result our or our customers’ data becomes available to unauthorized parties, wecould incur liability and our reputation would be damaged, which could lead to the loss of current and potential customers. If we experience any breaches of ournetwork security or sabotage, we might be required to expend significant capital and other resources to detect, remedy, protect against or alleviate these and relatedproblems, and we may not be able to remedy these problems in a timely manner, or at all. Because techniques used by outsiders to obtain unauthorized networkaccess or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniquesor implement adequate preventative measures. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue tomodify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. Although we have insurance in place thatcovers such incidents, the cost of a breach or cyber-attack could well exceed any such insurance coverage.The failure in cyber-security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planningcould impair our ability to conduct business effectively.The occurrence of a disaster such as a cyber-attack, a natural catastrophe, an industrial accident, a terrorist attack or war, events unanticipated in our disasterrecovery systems, or a support failure from external providers, could have an adverse effect on our ability to conduct business and on our results of operations andfinancial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. If asignificant number of our42Table of Contentsmanagers were unavailable in the event of a disaster, our ability to effectively conduct our business could be severely compromised.We and our portfolio companies depend heavily upon computer systems to perform necessary business functions. Despite our portfolio companies implementationof a variety of security measures, our computer systems could be subject to cyber-attacks and unauthorized access, such as physical and electronic break-ins orunauthorized tampering. Like other companies, we and our portfolio companies may experience threats to our data and systems, including malware and computervirus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential,proprietary and other information processed and stored in, and transmitted through, our and our portfolio company computer systems and networks, or otherwisecause interruptions or malfunctions in our operations, which could result in damage to our and our portfolio companies’ reputation, financial losses, litigation,increased costs, regulatory penalties and/or customer dissatisfaction or loss.RISKS RELATING TO OUR INVESTMENTS GENERALLYOur investments are very risky and highly speculative.We invest primarily in senior secured term loans and select equity investments issued by companies, some of which are highly leveraged. The majority of seniorsecured loans are SBA 7(a) loans and the majority of equity investments are comprised of controlled affiliate equity investments.Senior Secured Loans . There is a risk that the collateral securing our loans, in most cases real estate, may decrease in value over time, may be difficult to sell in atimely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a result of theinability of the portfolio company to raise additional capital, and, in some circumstances, our lien could be subordinated to claims of other creditors. In addition,deterioration in a portfolio company’s financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration inthe value of the collateral for the loan. Consequently, the fact that a loan is secured does not guarantee that we will receive principal and interest paymentsaccording to the loan’s terms, or at all, or that we will be able to collect on the loan should we be forced to enforce our remedies. In some cases we may takesecond lien position on additional business or personal assets to secure further our first lien positions.Equity Investments. We occasionally invest directly in the equity securities of portfolio companies. The equity interests we receive may not appreciate in valueand, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition ofany equity interests may not be sufficient to offset any other losses we experience.In addition, investing in SMBs involves a number of significant risks, including:•these companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may beaccompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees we may have obtained inconnection with our investment;•they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them morevulnerable to competitors’ actions and market conditions, as well as general economic downturns;•they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation ortermination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us;•they generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses withproducts subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion ormaintain their competitive position;•they may have difficulty accessing the capital markets to meet future capital needs, which may limit their ability to grow or to repay their outstandingindebtedness upon maturity; and43Table of Contents•our executive officers and directors may, in the ordinary course of business, be named as defendants in litigation arising from our investments in theportfolio companies.An investment strategy focused primarily on smaller privately held companies involves a high degree of risk and presents certain challenges, including the lackof available information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greatervulnerability to economic downturns.Our portfolio consists primarily of debt and equity investments in smaller privately-owned companies. Investing in these types of companies involves a number ofsignificant risks. Typically, the debt in which we invest is not initially rated by any rating agency; however, we believe that if such investments were rated, theywould be below investment grade. Below investment grade securities, which are often referred to as “high yield” or “junk,” have predominantly speculativecharacteristics with respect to the issuer’s capacity to pay interest and repay principal. Compared to larger publicly-owned companies, these small companies maybe in a weaker financial position and experience wider variations in their operating results, which may make them more vulnerable to economic downturns.Typically, these companies need more capital to compete; however, their access to capital is limited and their cost of capital is often higher than that of theircompetitors. Our portfolio companies often face intense competition from larger companies with greater financial, technical and marketing resources and theirsuccess typically depends on the managerial talents and efforts of an individual or a small group of persons. Therefore, any loss of its key employees could affect aportfolio company’s ability to compete effectively and harm its financial condition. Further, some of these companies conduct business in regulated industries thatare susceptible to regulatory changes. These factors could impair the cash flow of our portfolio companies and result in other events, such as bankruptcy. Theseevents could limit a portfolio company’s ability to repay its obligations to us, which may have an adverse effect on the return on, or the recovery of, our investmentin these businesses. Deterioration in a borrower’s financial condition and prospects may be accompanied by deterioration in the value of the loan’s collateral.Generally, little public information exists about these companies, and we are required to rely on the ability of our Senior Lending Team and our ExecutiveCommittee to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material informationabout these companies, we may not make a fully informed investment decision, and we may lose money on our investments. Also, privately held companiesfrequently have less diverse product lines and smaller market presence than larger competitors. These factors could adversely affect our investment returns ascompared to companies investing primarily in the securities of public companies.Our investments in leveraged portfolio companies may be risky, and you could lose all or part of your investment.Investment in leveraged companies involves a number of significant risks. Leveraged companies in which we invest may have limited financial resources and maybe unable to meet their obligations under their loans and debt securities that we hold. Such developments may be accompanied by deterioration in the value of anycollateral and a reduction in the likelihood of our realizing any guarantees that we may have obtained in connection with our investment. Smaller leveragedcompanies also may have less predictable operating results and may require substantial additional capital to support their operations, finance their expansion ormaintain their competitive position.Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.Our portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or in some cases senior to, the debt in which we invest. Bytheir terms, such debt instruments may entitle the holders to receive payment of interest or principal on or before the dates on which we are entitled to receivepayments with respect to the debt instruments in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of aportfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in fullbefore we receive any distribution. After repaying such senior creditors, such portfolio company may not have sufficient remaining assets to repay its obligation tous. In the case of debt ranking equally with debt instruments in which we invest, we would have to share on an equal basis any distributions with other creditorsholding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.Second priority liens on collateral securing loans that we make to our portfolio companies may be subject to control by senior creditors with first priority liens.If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us.Certain loans that we make are secured by a second priority security interest in the same collateral pledged by a portfolio company to secure senior first lien debtowed by the portfolio company to commercial banks or other traditional lenders. Often the senior lender has procured covenants from the portfolio companyprohibiting the incurrence of additional secured debt44Table of Contentswithout the senior lender’s consent. Prior to and as a condition of permitting the portfolio company to borrow money from us secured by the same collateralpledged to the senior lender, the senior lender will require assurances that it will control the disposition of any collateral in the event of bankruptcy or other default.In many such cases, the senior lender will require us to enter into an “intercreditor agreement” prior to permitting the portfolio company to borrow from us.Typically the intercreditor agreements we will be requested to expressly subordinate our debt instruments to those held by the senior lender and further provide thatthe senior lender shall control: (1) the commencement of foreclosure or other proceedings to liquidate and collect on the collateral; (2) the nature, timing andconduct of foreclosure or other collection proceedings; (3) the amendment of any collateral document; (4) the release of the security interests in respect of anycollateral; and (5) the waiver of defaults under any security agreement. Because of the control we may cede to senior lenders under intercreditor agreements wemay enter, we may be unable to realize the proceeds of any collateral securing some of our loans.If we make subordinated investments, the obligors or the portfolio companies may not generate sufficient cash flow to service their debt obligations to us.We may make subordinated investments that rank below other obligations of the obligor in right of payment. Subordinated investments are subject to greater riskof default than senior obligations as a result of adverse changes in the financial condition of the obligor or economic conditions in general. If we make asubordinated investment in a portfolio company, the portfolio company may be highly leveraged, and its relatively high debt-to-equity ratio may create increasedrisks that its operations might not generate sufficient cash flow to service all of its debt obligations.The disposition of our investments may result in contingent liabilities.We currently expect that substantially all of our investments will involve loans and private securities. In connection with the disposition of an investment in loansand private securities, we may be required to make representations about the business and financial affairs of the portfolio company typical of those made inconnection with the sale of a business. We may also be required to indemnify the purchasers of such investment to the extent that any such representations turn outto be inaccurate or with respect to potential liabilities. These arrangements may result in contingent liabilities that ultimately result in funding obligations that wemust satisfy through our return of distributions previously made to us.There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.Even though we may have structured certain of our investments as secured loans, if one of our portfolio companies were to go bankrupt, depending on the facts andcircumstances, and based upon principles of equitable subordination as defined by existing case law, a bankruptcy court could subordinate all or a portion of ourclaim to that of other creditors and transfer any lien securing such subordinated claim to the bankruptcy estate. The principles of equitable subordination defined bycase law have generally indicated that a claim may be subordinated only if its holder is guilty of misconduct or where the senior loan is re-characterized as anequity investment and the senior lender has actually provided significant managerial assistance to the bankrupt debtor. We may also be subject to lender liabilityclaims for actions taken by us with respect to a borrower’s business or instances where we exercise control over the borrower. It is possible that we could becomesubject to a lender’s liability claim, including as a result of actions taken in rendering significant managerial assistance or actions to compel and collect paymentsfrom the borrower outside the ordinary course of business.Economic recessions could impair our portfolio companies and harm our operating results.Certain of our portfolio companies may be susceptible to an economic downturn and may be unable to repay our loans during this period. Therefore, assets maybecome non-performing and the value of our portfolio may decrease during this period. The adverse economic conditions also may decrease the value of collateralsecuring some of our loans and the value of our equity investments. A recession could lead to financial losses in our portfolio and a decrease in revenues, netincome and the value of our assets.The lack of liquidity in our investments may adversely affect our business.We generally invest in companies whose securities are not publicly traded, and whose securities will be subject to legal and other restrictions on resale or willotherwise be less liquid than publicly traded securities. There is no established trading market for the securities in which we invest. The illiquidity of theseinvestments may make it difficult for us to sell these investments when desired. In addition, if we are required to liquidate all or a portion of our portfolio quickly,we may realize significantly less than the value at which we had previously recorded these investments. As a result, we do not expect to achieve liquidity in45Table of Contentsour investments in the near-term. Further, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we havematerial non-public information regarding such portfolio company.Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments, in order to: (1)increase or maintain in whole or in part our equity ownership percentage; (2) exercise warrants, options or convertible securities that were acquired in the originalor a subsequent financing; or (3) attempt to preserve or enhance the value of our investment. We may elect not to make follow-on investments or otherwise lacksufficient funds to make those investments. We will have the discretion to make any follow-on investments, subject to the availability of capital resources. Thefailure to make follow-on investments may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or mayresult in a missed opportunity for us to increase our participation in a successful operation. Even if we have sufficient capital to make a desired follow-oninvestment, we may elect not to make a follow-on investment because we do not want to increase our concentration of risk, we prefer other opportunities, we aresubject to BDC requirements that would prevent such follow-on investments, or the follow-on investment would affect our qualification as a RIC.Our portfolio may lack diversification among portfolio companies which may subject us to a risk of significant loss if one or more of these companies defaulton its obligations under any of its debt instruments.Our portfolio holds a limited number of controlled affiliate portfolio companies. Beyond the asset diversification requirements associated with our qualification asa RIC under the Code, we do not have fixed guidelines for diversification, and our investments may be concentrated in relatively few companies. As our portfoliois less diversified than the portfolios of some larger funds, we are more susceptible to failure if a single loan fails. Similarly, the aggregate returns we realize maybe significantly adversely affected if a small number of investments perform poorly or if we need to write down the value of any one investment.We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we may invest a significant portion of our assets in a relativelysmall number of issuers, which subjects us to a risk of significant loss if any of theseissuers defaults on its obligations under any of its debt instruments or as a result of a downturn in the particular industry.We are classified as a non-diversified investment company within the meaning of the 1940 Act, and therefore we may invest a significant portion of our assets in arelatively small number of issuers in a limited number of industries. As of December 31, 2016 , our three largest investments, Newtek Merchant Solutions, NewtekTechnology Solutions and Newtek Payments Solutions equaled approximately 16%, 5% and 5%, respectively, of the fair value of our total assets. Beyond the assetdiversification requirements associated with our qualification as a RIC, we do not have fixed guidelines for diversification, and while we are not targeting anyspecific industries, relatively few industries may become significantly represented among our investments. To the extent that we assume large positions in thesecurities of a small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes inthe financial condition or the market’s assessment of the issuer, changes in fair value over time or a downturn in any particular industry. We may also be moresusceptible to any single economic or regulatory occurrence than a diversified investment company.Our portfolio may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particularindustry in which a number of our investments are concentrated.Our portfolio may be concentrated in a limited number of industries. A downturn in any particular industry in which we are invested could significantly impact theaggregate returns we realize. If an industry in which we have significant investments suffers from adverse business or economic conditions, as these industrieshave to varying degrees, a material portion of our investment portfolio could be affected adversely, which, in turn, could adversely affect our financial position andresults of operations.Because we may not hold controlling equity interests in certain of our portfolio companies, we may not be in a position to exercise control over our portfoliocompanies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments.We do not currently hold controlling equity positions in the majority of our portfolio companies where our investments are in the form of debt, particularly SBAloans. As a result, we are subject to the risk that a portfolio company may make business decisions with which we disagree, and that the management and/orshareholders of a portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity of the debt and equityinvestments that we46Table of Contentstypically hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company andmay therefore suffer a decrease in the value of our investments.Defaults by our portfolio companies will harm our operating results.A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of itsloans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet itsobligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with adefaulting portfolio company. Any extension or restructuring of our loans could adversely affect our cash flows. In addition, if one of our portfolio companies wereto go bankrupt, even though we may have structured our interest as senior debt, depending on the facts and circumstances, including the extent to which weactually provided managerial assistance to that portfolio company, a bankruptcy court might recharacterize our debt holding and subordinate all or a portion of ourclaim to that of other creditors. If any of these occur, it could materially and adversely affect our operating results and cash flows.If we and our portfolio companies are unable to protect our intellectual property rights, our business and prospects could be harmed, and if we and ourportfolio companies are required to devote significant resources to protecting their intellectual property rights, the value of our investment could be reduced.The proprietary software essential to our business and that of our controlled portfolio companies is owned by us and made available to them for their use. Ourfuture success and competitive position will depend in part upon our ability to maintain and protect proprietary technology used in our products and services. Wewill rely, in part, on patent, trade secret and trademark law to protect that technology, but competitors may misappropriate our intellectual property, and disputes asto ownership of intellectual property may arise. We may, from time to time, be required to institute litigation to enforce the patents, copyrights or other intellectualproperty rights, protect trade secrets, determine the validity and scope of the proprietary rights of others or defend against claims of infringement. Such litigationcould result in substantial costs and diversion of resources.Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.We will be subject to the risk that the investments we make in our portfolio companies may be repaid prior to maturity; most of our SBA loans do not carryprepayment penalties. When this occurs, we will generally reinvest these proceeds in temporary investments or repay outstanding debt, depending on futureinvestment in new portfolio companies. Temporary investments will typically have substantially lower yields than the debt being prepaid and we could experiencesignificant delays in reinvesting these amounts. Any future investment in a new portfolio company may also be at lower yields than the debt that was repaid. As aresult, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us. Additionally,prepayments could negatively impact our return on equity, which could result in a decline in the market price of our securities.We may not realize gains from our equity investments.Certain investments that we may make in the future include warrants or other equity securities. Investments in equity securities involve a number of significantrisks, including the risk of further dilution as a result of additional issuances, inability to access additional capital and failure to pay current distributions.Investments in preferred securities involve special risks, such as the risk of deferred distributions, credit risk, illiquidity and limited voting rights. In addition, wemay from time to time make non-control, equity investments in portfolio companies. Our goal is ultimately to realize gains upon our disposition of such equityinterests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gainsfrom our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering,which would allow us to sell the underlying equity interests. We will often seek puts or similar rights to give us the right to sell our equity securities back to theportfolio company issuer. We may be unable to exercise these puts rights for the consideration provided in our investment documents if the issuer is in financialdistress.We may expose ourselves to risks if we engage in hedging transactions.If we engage in hedging transactions, we may expose ourselves to certain risks associated with such transactions. We may utilize instruments such as forwardcontracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge47Table of Contentsagainst fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline inthe values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positionsdecline. However, such hedging can establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of suchportfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions increase. It may not bepossible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at anacceptable price. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the portfolioholdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not bepossible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of thosesecurities is likely to fluctuate as a result of factors not related to currency fluctuations.An increase in non-performing assets would reduce our income and increase our expenses.If our level of non-performing assets in our SBA lending business rises in the future, it could adversely affect our investment income and earnings. Non-performingassets are primarily loans on which borrowers are not making their required payments. Non-performing assets also include loans that have been restructured topermit the borrower to have smaller payments and real estate that has been acquired through foreclosure of unpaid loans. To the extent that our financial assets arenon-performing, we will have less cash available for lending and other activities.If the assets securing the loans that we make decrease in value, then we may lack sufficient collateral to cover losses.To attempt to mitigate credit risks, we will typically take a security interest in the available assets of our portfolio companies. There is no assurance that we willobtain or properly perfect our liens.There is a risk that the collateral securing our loans may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise andmay fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of a portfolio company to raise additionalcapital. In some circumstances, our lien could be subordinated to claims of other creditors. Consequently, the fact that a loan is secured does not guarantee that wewill receive principal and interest payments according to the loan’s terms, or that we will be able to collect on the loan should we be forced to enforce ourremedies.In addition, because we may invest in technology-related companies, a substantial portion of the assets securing our investment may be in the form of intellectualproperty, if any, inventory and equipment and, to a lesser extent, cash and accounts receivable. Intellectual property, if any, that is securing our loan could losevalue if, among other things, the company’s rights to the intellectual property are challenged or if the company’s license to the intellectual property is revoked orexpires, the technology fails to achieve its intended results or a new technology makes the intellectual property functionally obsolete. Inventory may not beadequate to secure our loan if our valuation of the inventory at the time that we made the loan was not accurate or if there is a reduction in the demand for theinventory.Similarly, any equipment securing our loan may not provide us with the anticipated security if there are changes in technology or advances in new equipment thatrender the particular equipment obsolete or of limited value, or if the company fails to adequately maintain or repair the equipment. Any one or more of thepreceding factors could materially impair our ability to recover principal in a foreclosure.We could be adversely affected by weakness in the residential housing and commercial real estate markets.Continued weakness in residential home and commercial real estate values could impair our ability to collect on defaulted SBA loans as real estate is pledged inmany of our SBA loans as part of the collateral package.RISKS RELATING TO OUR CONTROLLED PORTFOLIO COMPANIES - NEWTEK MERCHANT SOLUTIONS (NMS) AND NEWTEKPAYMENT SOLUTIONS (PREMIER PAYMENTS)We could be adversely affected if either of NMS’ two bank sponsors is terminated.Because NMS is not a bank, it is unable to belong to and directly access the Visa® and MasterCard® bankcard associations. The Visa® and MasterCard®operating regulations require NMS to be sponsored by a bank in order to process bankcard transactions. A bank sponsorship is an agreement under which afinancial institution that has a membership with MasterCard®, Visa® or American Express sponsors an independent sales organization, like NMS, that marketscredit card processing services to merchants who accept credit cards as a form of payment, gains access to the Visa®, MasterCard®, and American Express48Table of Contentsnetworks. NMS is currently sponsored by two banks. If either of the sponsorships is terminated, and NMS is not able to secure or transfer the respective merchantportfolio to a new bank sponsor or sponsors, the business, financial condition, results of operations and cash flows of the electronic payment processing businesscould be materially adversely affected. If both the sponsorships are terminated and NMS is unable to secure a bank sponsor for the merchant portfolios, it will notbe able to process bankcard transactions for the affected portfolios. Consequently, the loss of both of NMS’ sponsorships would have a material adverse effect onour business. Furthermore, NMS’ agreements with sponsoring banks gives the sponsoring banks substantial discretion in approving certain elements of its businesspractices, including its solicitation, application and qualification procedures for merchants, the terms of their agreements with merchants, the processing fees thatthey charge, their customer service levels and its use of independent sales organizations and independent sales agents. We cannot guarantee that NMS’ sponsoringbanks’ actions under these agreements would not be detrimental to us.Other service providers, some of whom are NMS’ competitors, are necessary for the conduct of NMS’ business. The termination by service providers of thesearrangements with NMS or their failure to perform these services efficiently and effectively may adversely affect NMS’ relationships with the merchants whoseaccounts it serves and may cause those merchants to terminate their processing agreements with NMS.If NMS or its processors or bank sponsors fail to adhere to the standards of the Visa ® and MasterCard ® bankcard associations, its registrations with theseassociations could be terminated and it could be required to stop providing payment processing services for Visa ® and MasterCard ® .Substantially all of the transactions NMS processes involve Visa® or MasterCard®. If NMS, its bank sponsors or its processors fail to comply with the applicablerequirements of the Visa® and MasterCard® bankcard associations, Visa® or MasterCard® could suspend or terminate its registration. The termination of NMS’registration or any changes in the Visa® or MasterCard® rules that would impair its registration could require it to stop providing payment processing services,which would have a material adverse effect on its business and could be detrimental to us.On occasion, NMS experiences increases in interchange and sponsorship fees. If it cannot pass along these increases to its merchants, its profit margins willbe reduced.NMS pays interchange fees or assessments to bankcard associations for each transaction it processes using their credit, debit and gift cards. From time to time, thebankcard associations increase the interchange fees that they charge processors and the sponsoring banks, which generally pass on such increases to NMS. Fromtime to time, the sponsoring banks increase their fees as well. If NMS is not able to pass these fee increases along to merchants through corresponding increases inits processing fees, its profit margins in this line of business will be reduced.Unauthorized disclosure of merchant or cardholder data, whether through breach of our computer systems or otherwise, could expose us to liability andbusiness losses.Through NMS, we collect and store sensitive data about merchants and cardholders, and we maintain a database of cardholder data relating to specific transactions,including payment, card numbers and cardholder addresses, in order to process the transactions and for fraud prevention and other internal processes. If anyonepenetrates our network security or otherwise misappropriates sensitive merchant or cardholder data, we could be subject to liability or business interruption. Whilewe subject these systems to periodic independent testing and review, we cannot guarantee that our systems will not be penetrated in the future. If a breach of oursystem occurs, we may be subject to liability, including claims for unauthorized purchases with misappropriated card information, impersonation or other similarfraud claims. Similar risks exist with regard to the storage and transmission of such data by our processors. In the event of any such a breach, we may also besubject to a class action lawsuit. SMBs are less prepared for the complexities of safeguarding cardholder data than their larger counterparts. In the event ofnoncompliance by a customer of card industry rules, we could face fines from payment card networks. There can be no assurance that we would be able to recoverany such fines from such customer.NMS is liable if its processing merchants refuse or cannot reimburse charge-backs resolved in favor of their customers.If a billing dispute between a merchant and a cardholder is not ultimately resolved in favor of the merchant, the disputed transaction is “charged back” to themerchant’s bank and credited to the account of the cardholder. If NMS or its processing banks are unable to collect the charge-back from the merchant’s account,or if the merchant refuses or is financially unable due to bankruptcy or other reasons to reimburse the merchant’s bank for the charge-back, NMS must bear the lossfor the amount of the refund paid to the cardholder’s bank. Most of NMS’ merchants deliver products or services when purchased, so a contingent liability forcharge-backs is unlikely to arise, and credits are issued on returned items. However, some of its merchants do not provide services until sometime after a purchase,which increases the potential for contingent liability and future charge backs.49Table of ContentsNMS and the sponsoring bank can require that merchants maintain cash reserves under its control to cover charge back liabilities but such reserves may not besufficient to cover the liability or may not even be available to them in the event of a bankruptcy or other legal action.NMS has potential liability for customer or merchant fraud.Credit card fraud occurs when a merchant’s customer uses a stolen card (or a stolen card number in a card-not-present transaction) to purchase merchandise orservices. In a traditional card-present transaction, if the merchant swipes the card, receives authorization for the transaction from the card issuing bank and verifiesthe signature on the back of the card against the paper receipt signed by the customer, the card issuing bank remains liable for any loss. In a fraudulent card-not-present transaction, even if the merchant receives authorization for the transaction, the merchant is liable for any loss arising from the transaction. Many NMScustomers are small and transact a substantial percentage of their sales over the Internet or by telephone or mail orders. Because their sales are card-not-presenttransactions, these merchants are more vulnerable to customer fraud than larger merchants, and NMS could experience charge-backs arising from cardholder fraudmore frequently with these merchants.Merchant fraud occurs when a merchant, rather than a customer, knowingly uses a stolen or counterfeit card or card number to record a false sales transaction orintentionally fails to deliver the merchandise or services sold in an otherwise valid transaction. Anytime a merchant is unable to satisfy a charge-back, NMS isultimately responsible for that charge-back unless it has required that a cash reserve be established. We cannot assure that the systems and procedures NMS hasestablished to detect and reduce the impact of merchant fraud are or will be effective. Failure to effectively manage risk and prevent fraud could increase NMScharge-back liability and adversely affect its results of operations.NMS payment processing systems may fail due to factors beyond its control, which could interrupt its business or cause it to lose business and likely increasecosts.NMS depends on the uninterrupted operations of our computer network systems, software and our processors’ data centers. Defects in these systems or damage tothem due to factors beyond its control could cause severe disruption to NMS’ business and other material adverse effects on its payment processing businesses.The electronic payment processing business is undergoing very rapid technological changes which may make it difficult or impossible for NMS or PremierPayments to compete effectively.The introduction of new technologies, primarily mobile payment capabilities, and the entry into the payment processing market of new competitors, Apple, Inc.,for example, could dramatically change the competitive environment and require significant changes and costs for NMS to remain competitive. There is noassurance that NMS or Premier will have the capability to stay competitive with such changes.NMS and others in the payment processing industry have come under increasing pressures from various regulatory agencies seeking to use the leverage of thepayment processing business to limit or modify the practices of merchants which could lead to increased costs.Various agencies, particularly the Federal Trade Commission, have within the past few years attempted to pressure merchants to discontinue or modify varioussales or other practices. As a part of the payment processing industry, processors such as NMS could experience pressure and/or litigation aimed at restrictingaccess to credit card sales by such merchants. These efforts could cause an increase in the cost to NMS of doing business or otherwise make its business lessprofitable and may subject NMS to assess penalties for not taking actions deemed sufficiently aggressive to limit such practices.Increased regulatory focus on the payments industry may result in costly new compliance burdens on NMS’ clients and on NMS itself, leading to increasedcosts and decreased payments volume and revenues.Regulation of the payments industry has increased significantly in recent years. Complying with these and other regulations increases costs and can reduce revenueopportunities. Similarly, the impact of such regulations on clients may reduce the volume of payments processed. Moreover, such regulations can limit the types ofproducts and services that are offered. Any of these occurrences can materially and adversely affect NMS’ business, prospects for future growth, financialcondition and results of operations.Examples include:50Table of Contents•Data Protection and Information Security . Aspects of NMS’ operations and business are subject to privacy and data protection regulation. NMS’financial institution clients are subject to similar requirements under the guidelines issued by the federal banking agencies. In addition, many individualstates have enacted legislation requiring consumer notification in the event of a security breach.•Anti-Money Laundering and Anti-Terrorism Financing . The U.S.A. PATRIOT Act requires NMS to maintain an anti-money laundering program.Sanctions imposed by the U.S. Treasury Office of Foreign Assets Control, or OFAC, restrict NMS from dealing with certain parties considered to beconnected with money laundering, terrorism or narcotics. NMS has controls in place designed to ensure OFAC compliance, but if those controls shouldfail, it could be subject to penalties, reputational damage and loss of business.•Money Transfer Regulations. As NMS expands its product offerings, it may become subject to money transfer regulations, increasing regulatoryoversight and costs of compliance.•Formal Investigation. If NMS is suspected of violating government statutes, such as the Federal Trade Commission Act or the Telemarketing andConsumer Fraud and Abuse Prevention Act, governmental agencies may formally investigate NMS. As a result of such a formal investigation, criminal orcivil charges could be filed against NMS and it could be required to pay significant fines or penalties in connection with such investigation or othergovernmental investigations. Any criminal or civil charges by a governmental agency, including any fines or penalties, could materially harm NMS’business, results of operations, financial position and cash flows. Currently, NMS is operating under an order for injunctive relief it voluntarily enteredinto with the Federal Trade Commission.RISKS RELATING TO OUR CONTROLLED PORTFOLIO COMPANIES - NEWTEK TECHNOLOGY SOLUTIONS (NTS)NTS operates in a highly competitive industry in which technological change can be rapid.The information technology business and its related technology involve a broad range of rapidly changing technologies. NTS equipment and the technologies onwhich it is based may not remain competitive over time, and others may develop superior technologies that render its products non-competitive, without significantadditional capital expenditures. Some of NTS’ competitors are significantly larger and have substantially greater market presence as well as greater financial,technical, operational, marketing and other resources and experience than NTS. In the event that such a competitor expends significant sales and marketingresources in one or several markets, NTS may not be able to compete successfully in such markets. We believe that competition will continue to increase, placingdownward pressure on prices. Such pressure could adversely affect NTS gross margins if it is not able to reduce its costs commensurate with such price reductions.There can be no assurances that NTS will remain competitive.NTS’ technology solutions business depends on the efficient and uninterrupted operation of its computer and communications hardware systems andinfrastructure.Despite precautions taken by NTS against possible failure of its systems, interruptions could result from natural disasters, power loss, the inability to acquire fuelfor its backup generators, telecommunications failure, terrorist attacks and similar events. NTS also leases telecommunications lines from local, regional andnational carriers whose service may be interrupted. NTS’ business, financial condition and results of operations could be harmed by any damage or failure thatinterrupts or delays its operations. There can be no assurance that NTS’ insurance will cover all of the losses or compensate NTS for the possible loss of clientsoccurring during any period that NTS is unable to provide service.NTS’ inability to maintain the integrity of its infrastructure and the privacy of confidential information would materially affect its business.The NTS infrastructure is potentially vulnerable to physical or electronic break-ins, viruses or similar problems. If its security measures are circumvented, it couldjeopardize the security of confidential information stored on NTS’ systems, misappropriate proprietary information or cause interruptions in NTS’ operations. Wemay be required to make significant additional investments and efforts to protect against or remedy security breaches. Security breaches that result in access toconfidential information could damage our reputation and expose us to a risk of loss or liability. The security services that NTS offers in connection withcustomers’ networks cannot assure complete protection from computer viruses, break-ins and other disruptive problems. The occurrence of these problems mayresult in claims against NTS or us or liability on our part. These claims,51Table of Contentsregardless of their ultimate outcome, could result in costly litigation and could harm our business and reputation and impair NTS’ ability to attract and retaincustomers.NTS could be adversely affected by information security breaches or cyber security attacks.NTS’ web and cloud services involve the storage and transmission of our customers’, employees’, and portfolio companies’ proprietary information. NTS’business relies on its digital technologies, computer and email systems, software, and networks to conduct its operations. NTS’ technologies, systems and networksmay become the target of criminal cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, lossor destruction of confidential, proprietary and other information of NTS or third parties with whom NTS deals, or otherwise disrupt our or our customers’ or otherthird parties’ business operations. It is critical to NTS’ business strategy that its facilities and infrastructure remain secure and are perceived by the marketplace tobe secure. Although NTS employs appropriate security technologies (including data encryption processes, intrusion detection systems), and conductcomprehensive risk assessments and other internal control procedures to assure the security of our customers’ data, we cannot guarantee that these measures will besufficient for this purpose. If NTS’ security measures are breached as a result of third-party action, employee error or otherwise, and as a result its customers’ databecomes available to unauthorized parties, NTS and our other portfolio companies could incur liability and its reputation would be damaged, which could lead tothe loss of current and potential customers. If NTS experiences any breaches of its network security or sabotage, NTS might be required to expend significantcapital and other resources to detect, remedy, protect against or alleviate these and related problems, and it may not be able to remedy these problems in a timelymanner, or at all. Because techniques used by outsiders to obtain unauthorized network access or to sabotage systems change frequently and generally are notrecognized until launched against a target, NTS may be unable to anticipate these techniques or implement adequate preventative measures. As cyber threatscontinue to evolve, NTS may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate andremediate any information security vulnerabilities. Although NTS has insurance in place that covers such incidents, the cost of a breach or cyber-attack could wellexceed any such insurance coverage.NTS’ business depends on Microsoft Corporation and others for the licenses to use software as well as other intellectual property in the managed technologysolutions business.NTS’ managed technology business is built on technological platforms relying on the Microsoft Windows® products and other intellectual property that NTScurrently licenses. As a result, if NTS is unable to continue to have the benefit of those licensing arrangements or if the products upon which its platform is builtbecome obsolete, its business could be materially and adversely affected.RISKS RELATING TO OUR CONTROLLED PORTFOLIO COMPANIES - NEWTEK INSURANCE AGENCY (NIA)NIA depends on third parties, particularly property and casualty insurance companies, to supply the products marketed by its agents.NIA contracts with property and casualty insurance companies typically provide that the contracts can be terminated by the supplier without cause. NIA’s inabilityto enter into satisfactory arrangements with these suppliers or the loss of these relationships for any reason would adversely affect the results of its insurancebusiness. Also, NIA’s inability to obtain these products at competitive prices could make it difficult for it to compete with larger and better capitalized providers ofsuch insurance services.If NIA fails to comply with government regulations, its insurance agency business would be adversely affected.NIA insurance agency business is subject to comprehensive regulation in the various states in which it conducts business. NIA’s success will depend in part uponits ability to satisfy these regulations and to obtain and maintain all required licenses and permits. NIA’s failure to comply with any statutes and regulations couldhave a material adverse effect on it. Furthermore, the adoption of additional statutes and regulations, changes in the interpretation and enforcement of currentstatutes and regulations could have a material adverse effect on it.NIA does not have any control over the commissions it earns on the sale of insurance products which are based on premiums and commission rates set byinsurers and the conditions prevalent in the insurance market.52Table of ContentsNIA earns commissions on the sale of insurance products. Commission rates and premiums can change based on the prevailing economic and competitive factorsthat affect insurance underwriters. In addition, the insurance industry has been characterized by periods of intense price competition due to excessive underwritingcapacity and periods of favorable premium levels due to shortages of capacity. We cannot predict the timing or extent of future changes in commission rates orpremiums or the effect any of these changes will have on the operations of NIA.RISKS RELATING TO OUR CONTROLLED PORTFOLIO COMPANIES - NEWTEK PAYROLL AND BENEFIT SOLUTIONS (NPS)Unauthorized disclosure of employee data, whether through a cyber-security breach of our computer systems or otherwise, could expose NPS to liability andbusiness losses.NPS collects and stores sensitive data about individuals in order to process the transactions and for other internal processes. If anyone penetrates its networksecurity or otherwise misappropriates sensitive individual data, NPS could be subject to liability or business interruption. NPS is subject to laws and rules issued bydifferent agencies concerning safeguarding and maintaining the confidentiality of this information. Its activities have been, and will continue to be, subject to anincreasing risk of cyber-attacks, the nature of which is continually evolving. Cyber-security risks include unauthorized access to privileged and sensitive customerinformation, including passwords and account information of NPS’ customers. While it subjects its data systems to periodic independent testing and review, NPScannot guarantee that its systems will not be penetrated in the future. Experienced computer programmers and hackers may be able to penetrate NPS’ networksecurity, and misappropriate or compromise our confidential information, create system disruptions, or cause shutdowns. As a result, NPS’ customers’ informationmay be lost, disclosed, accessed or taken without its customers’ consent. If a breach of NPS’ system occurs, it may be subject to liability, including claims forimpersonation or other similar fraud claims. In the event of any such breach, NPS may also be subject to a class action lawsuit. Any significant violations of dataprivacy could result in the loss of business, litigation and regulatory investigations and penalties that could damage NPS’ reputation, and the growth of its businesscould be adversely affected.NPS is subject to risks surrounding Automated Clearing House (“ACH”) payments.Credit risk in ACH payments arises when a party to a contract fails to deposit funds required to settle the contract. This can occur if a client of NPS suffers losses,enters into bankruptcy or defrauds NPS. In such an event, NPS could bear the financial burden of settling the customer’s contract.NPS’ systems may be subject to disruptions that could adversely affect its business and reputation.NPS’ payroll business relies heavily on its payroll, financial, accounting and other data processing systems. If any of these systems or any of the vendors whichsupply them fails to operate properly or becomes disabled even for a brief period of time, NPS could suffer financial loss, a disruption of its business, liability toclients, regulatory intervention or damage to its reputation. NPS has disaster recovery plans in place to protect its businesses against natural disasters, securitybreaches, military or terrorist actions, power or communication failures or similar events. Despite NPS’ preparations, its disaster recovery plans may not besuccessful in preventing the loss of client data, service interruptions, and disruptions to its operations or damage to its important facilities.If NPS fails to adapt its technology to meet client needs and preferences, the demand for its services may diminish.NPS operates in industries that are subject to rapid technological advances and changing client needs and preferences. In order to remain competitive andresponsive to client demands, NPS continually upgrades, enhances and expands its existing solutions and services. If NPS fails to respond successfully totechnological challenges, the demand for its services may diminish.NPS could incur unreimbursed costs or damages due to delays in processing inherent in the banking system.NPS generally determines the availability of customer (employer) funds prior to making payments to employees or taxing authorities, and such employer funds aregenerally transferred in to its accounts prior to making payments out. Due to the structure of the banking system however, there are times when NPS may makepayroll or tax payments and not immediately receive the funds to do so from the employer. There can be no assurance that the procedures NPS has in place toprevent these occurrences or mitigate the damages will be sufficient to prevent loss to its business. In addition, NPS could incur unreimbursed costs or damagesdue to delays in processing customer payrolls or payroll taxes in a timely manner.53Table of ContentsRISKS RELATING TO OUR CONTROLLED PORTFOLIO COMPANIES - NEWTEK BUSINESS CREDIT SOLUTIONS (NBC)An unexpected level of defaults in NBC’s accounts receivables, inventory or SBA 504 loan portfolios would reduce its income and increase its expenses.If NBC’s level of non-performing assets in its receivable financing, inventory financing or SBA 504 lending business rises in the future, it could adversely affectits revenue, earnings and cash flow. Non-performing assets primarily consist of receivables for which the customer has not made timely payment. In certainsituations, NBC may restructure the receivable to permit such a customer to have smaller payments over a longer period of time. Such a restructuring or non-payment by a receivables or inventory customer will result in lower revenue and less cash available for NBC’s operational activities.NBC’s reserve for credit losses may not be sufficient to cover unexpected losses.NBC’s business depends on the behavior of its customers. In addition to its credit practices and procedures, NBC maintains a reserve for credit losses on itsaccounts receivable and inventory portfolios, which it has judged to be adequate given the receivables it purchases. NBC periodically reviews its reserve foradequacy considering current economic conditions and trends, charge-off experience and levels of non-performing assets, and adjusts its reserve accordingly.However, because of recent unstable economic conditions, its reserves may prove inadequate, which could have a material adverse effect on its financial conditionand results of operations.NBC depends on outside financing to support its receivables financing and inventory business.NBC’s receivables and inventory financing business depends on outside financing to support its acquisition of receivables. Termination of the credit lines for anyreason would have a material adverse effect on its business, including but not limited to, the liquidation of its receivables portfolios to pay down the lines. If fundsfrom such sale were insufficient to completely pay down the line of credit, NBC would be responsible for any short fall.We are a guarantor on a bank line of credit held at NBC to fund receivables and inventory financing, with maximum borrowings under the line of credit of$15,000,000 as of January 30, 2017. At December 31, 2016, total principal owed by NBC was $9,847,000. NBC also entered into an additional line of credit tofund SBA 504 loans extended by NBC (the “504 Facility”). The maximum amount of the 504 Facility is up to $35,000,000, depending upon syndication. At December 31, 2016 , total principal owed by NBC was $2,311,000. The 504 Facility specifies certain events of default, pursuant to which all outstanding amountsunder the 504 Facility could become immediately due and payable. We have guaranteed NBC’s obligations under the 504 Facility. If NBC defaults on these linesof credit, we would be required to make payments under the guarantees, which could have a material adverse effect on our financial condition and results ofoperations.In addition, if NBC loses either of these lines of credit and NBC is unable to renew or replace these lines of credit, it would materially impact the business of NBCand have a material adverse effect on its financial condition and results of operations.LEGAL PROCEEDINGS - PORTFOLIO COMPANIESOur portfolio companies may, from time to time, be involved in various legal matters, including the currently pending case — Federal Trade Commission v.WV Universal Management, LLC et al., which may have an adverse effect on their operations and/or financial condition.During the quarter ended June 30, 2013, the Federal Trade Commission (the “FTC”) amended an existing complaint in the matter Federal Trade Commission v.WV Universal Management, LLC et al., in the United States District Court for the Middle District of Florida (the “Court”), to add UPSW as an additionaldefendant on one count of providing substantial assistance in violation of the Telemarketing Sales Rule. On November 18, 2014, the Court issued an Ordergranting the FTC’s motion for summary judgment against UPSW on the single count. Subsequently, the FTC filed motions for a permanent injunction andequitable monetary relief against UPSW and the other remaining defendants. Prior to the Court hearing on the motions, UPSW and the FTC reached a settlementon the FTC’s motion for a permanent injunction. On May 19, 2015, the Court entered an equitable monetary judgment against UPSW for approximately$1,735,000, which has been deposited with the Court pending the outcome of UPSW’s appeal of the judgment. The $1,735,000 was fully expensed in 2014 byUPSW.On June 14, 2016, the United States Court of Appeals for the Eleventh Circuit vacated the Court’s order awarding joint and several liability for equitable monetaryrelief in the amount of approximately $1,735,000 against UPSW, and remanded the case to the Court for findings of fact and conclusions of law as to whether andwhy UPSW should be jointly and severally liable for54Table of Contentsrestitution, and in what amount, if any. On October 18, 2016, the Court ordered that the $1,735,000 payment be returned to UPSW. On October 26, 2016, the Courtentered an equitable monetary judgment against UPSW for approximately $1,735,000. UPSW in in the process of appealing the judgment.UPSW instituted an action against a former independent sales agent in Wisconsin state court for, among other things, breach of contract. The former sales agentanswered the complaint and filed counterclaims against UPSW. The court recently granted certain aspects of defendants’ motions for summary judgment,dismissing certain of the claims asserted by UPSW. The case has been stayed pending the outcome of UPSW’s appeal of certain matters to the Wisconsin SupremeCourt. UPSW intends to vigorously pursue its claims against the former sales agent and defend the counterclaims asserted.RISKS RELATING TO OUR CAPCO BUSINESSThe Capco programs and the tax credits they provide are created by state legislation and implemented through regulation, and such laws and rules are subjectto possible action to repeal or retroactively revise the programs for political, economic or other reasons. Such an attempted repeal or revision would createsubstantial difficulty for the Capco programs and could, if ultimately successful, cause us material financial harm.The tax credits associated with the Capco programs and provided to our Capcos’ investors are to be utilized by the investors over a period of time, which istypically ten years. Much can change during such a period and it is possible that one or more states may revise or eliminate the tax credits. Any such revision orrepeal could have a material adverse economic impact on our Capcos, either directly or as a result of the Capco’s insurer’s actions. Any such final state action thatjeopardizes the tax credits could result in the provider of our Capco insurance assuming partial or full control of the particular Capco in order to minimize itsliability under the Capco insurance policies issued to our investors.Because our Capcos are subject to requirements under state law, a failure of any of them to meet these requirements could subject the Capco and ourshareholders to the loss of one or more Capcos.Despite the fact that we have met all applicable minimum requirements of the Capco programs in which we still participate, each Capco remains subject to stateregulation until it has invested 100% of its funds and otherwise remains in full legal compliance. There can be no assurance that we will continue to be able to doso. A major regulatory violation, while not fatal to our Capco business, would materially increase the cost of operating the Capcos.We know of no other publicly-held company that sponsors and operates Capcos as a part of its business. As such, there are, to our knowledge, no othercompanies against which investors may compare our Capco business and its operations, results of operations and financial and accounting structures.In the absence of any meaningful peer group comparisons for our Capco business, investors may have a difficult time understanding and judging the strength of ourbusiness. This, in turn, may have a depressing effect on the value of our stock.RISKS RELATING TO OUR SECURITIESAs of December 31, 2016 , our CEO beneficially owns approximately 7% of our common stock, and may be able to exercise significant influence over theoutcome of most shareholder actions.Because of his ownership of our stock, Barry Sloane, our Chairman, Chief Executive Officer and President, may be able to exercise significant influence overactions requiring shareholder approval, including the election of directors, the adoption of amendments to the certificate of incorporation, approval of stockincentive plans and approval of major transactions such as a merger or sale of assets. This could delay or prevent a change in control of the Company, deprive ourshareholders of an opportunity to receive a premium for their common stock as part of a change in control and have a negative effect on the market price of ourcommon stock.Our common stock price may be volatile and may decrease substantially.The trading price of our common stock may fluctuate substantially. The price of our common stock may be higher or lower depending on many factors, some ofwhich are beyond our control and may not be directly related to our operating performance. These factors include, but are not limited to, the following:55Table of Contents•price and volume fluctuations in the overall stock market from time to time;•investor demand for our stock;•significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which are not necessarily related tothe operating performance of these companies;•changes in regulatory policies or tax guidelines with respect to RICs, BDCs, or SBLCs;•failure to qualify as a RIC, or the loss of RIC status;•any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;•changes, or perceived changes, in the value of our portfolio investments;•departures of key Company personnel;•operating performance of companies comparable to us; or•general economic conditions and trends and other external factors.In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against thatcompany. Due to the potential volatility of our stock price once a market for our stock is established, we may become the target of securities litigation in the future.Securities litigation could result in substantial costs and divert management’s attention and resources from our business.Future issuances of our common stock or other securities, including preferred shares, may dilute the per share book value of our common stock or have otheradverse consequences to our common shareholders.Our Board has the authority, without the action or vote of our shareholders, to issue all or part of the approximately 185,376,056 authorized but unissued shares ofour common stock. Our business strategy relies upon investments in and acquisitions of businesses using the resources available to us, including our commonstock. Additionally, we anticipate granting additional options or restricted stock awards to our employees and directors in the future. Absent exemptive relief, aBDC generally may not issue restricted stock to its directors, officers and employees. In May 2016, the SEC issued an order granting the Company’s request forexemptive relief to allow us to amend our equity compensation plan and make such grants and awards, subject to shareholder approval. We may also issueadditional securities, through public or private offerings, in order to raise capital. Future issuances of our common stock will dilute the percentage of ownershipinterest of current shareholders and could decrease the per share book value of our common stock. In addition, option holders may exercise their options at a timewhen we would otherwise be able to obtain additional equity capital on more favorable terms. In July 2016, our shareholders approved the amendments to ourequity compensation plan, and certain restricted stock awards granted thereunder.We may also issue additional securities, through public or private offerings, in order to raise capital. Future issuances of our common stock will dilute thepercentage of ownership interest of current shareholders and could decrease the per share book value of our common stock. In addition, option holders mayexercise their options at a time when we would otherwise be able to obtain additional equity capital on more favorable terms.Pursuant to our amended and restated charter, our Board is authorized to classify any unissued shares of stock and reclassify any previously classified but unissuedshares of stock of any class or series from time to time, into one or more classes or series of stock, including preferred stock. If we issue preferred stock, thepreferred stock would rank “senior” to common stock in our capital structure, preferred shareholders would have separate voting rights on certain matters andmight have other rights, preferences, or privileges more favorable than those of our common shareholders, and the issuance of preferred stock could have the effectof delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of our common stock or otherwise be inyour best interest. We will not generally be able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our commonstock, or warrants, options or rights to acquire our common stock, at a price below the then current net asset value per share of our common stock if our Boarddetermines that such sale is in our best interests and in the best interests of our shareholders, and our shareholders approve such sale. In any such case, the price atwhich our securities are to be issued and sold may not be less than a price that, in the determination of our Board, closely approximates the market value of suchsecurities (less any distributing commission or56Table of Contentsdiscount). If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, then thepercentage ownership of our shareholders at that time will decrease, and you may experience dilution.Our shareholders may experience dilution upon the repurchase of common shares.The Company has instituted programs which allow the Company to repurchase the Company’s outstanding common shares on the open market. Under theprograms, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws andregulations. On May 11, 2016, the Company announced that its Board approved a new share repurchase program under which the Company was able to repurchaseup to 150,000 of the Company’s outstanding common shares on the open market. This program terminated on November 11, 2016. On November 21, 2016 theCompany announced that its Board approved a new share repurchase program under which the Company may repurchase up to 200,000 of the Company’soutstanding common shares on the open market. Unless extended or terminated by the Board, the Company expects the termination date for this new repurchaseprogram will be on May 21, 2017. If we were to repurchase shares at a price above net asset value, such repurchases would result in an immediate dilution toexisting common shareholders due to a reduction in our earnings and assets due to the repurchase that is greater than the reduction in total shares outstanding.During the year ended December 31, 2016, the Company repurchased and retired 70,000 common shares in open market transactions for approximately $866,000.The authorization and issuance of “blank check” preferred shares could have an anti-takeover effect detrimental to the interests of our shareholders.Our certificate of incorporation allows our Board to issue preferred shares with rights and preferences set by the Board without further shareholder approval. Theissuance of these “blank check” preferred shares could have an anti-takeover effect detrimental to the interests of our shareholders. For example, in the event of ahostile takeover attempt, it may be possible for management and the Board to impede the attempt by issuing the preferred shares, thereby diluting or impairing thevoting power of the other outstanding common shares and increasing the potential costs to acquire control of us. Our Board has the right to issue any new shares,including preferred shares, without first offering them to the holders of common shares, as they have no preemptive rights.Our business and operation could be negatively affected if we become subject to any securities litigation or shareholder activism, which could cause us to incursignificant expense, hinder execution of investment strategy and impact our stock price. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against thatcompany. Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing in the BDC space recently. While we arecurrently not subject to any securities litigation or shareholder activism, due to the potential volatility of our stock price and for a variety of other reasons, we mayin the future become the target of securities litigation or shareholder activism. Securities litigation and shareholder activism, including potential proxy contests,could result in substantial costs and divert management’s and our board of directors’ attention and resources from our business. Additionally, such securitieslitigation and shareholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with service providers and make itmore difficult to attract and retain qualified personnel. Also, we may be required to incur significant legal fees and other expenses related to any securitieslitigation and activist shareholder matters. Further, our stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risksand uncertainties of any securities litigation and shareholder activism.Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price ofour common stock.The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more difficult a change in control ofNewtek or the removal of our directors. We are subject to the Maryland Business Combination Act, subject to any applicable requirements of the 1940 Act. OurBoard has adopted a resolution exempting from the Business Combination Act any business combination between us and any other person, subject to priorapproval of such business combination by our Board, including approval by a majority of our independent directors. If the resolution exempting businesscombinations is repealed or our Board does not approve a business combination, the Business Combination Act may discourage third parties from trying to acquirecontrol of us and increase the difficulty of consummating such an offer. Our bylaws exempt from the Maryland Control Share Acquisition Act acquisitions of ourstock by any person.The SEC staff has taken the position that, under the 1940 Act, an investment company may not avail itself of the Control Share Act. As a result, we will amend ourbylaws to be subject to the Control Share Act only if the board of directors determines that57Table of Contentsit would be in our best interests and, after notification, the SEC staff does not object to our determination that our being subject to the Control Share Act does notconflict with the 1940 Act. If such conditions are met, and we amend our bylaws to repeal the exemption from the Control Share Acquisition Act, the ControlShare Acquisition Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such a transaction.We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our charter classifying our Board in threeclasses serving staggered three-year terms and authorizing our Board to classify or reclassify shares of our stock in one or more classes or series, to cause theissuance of additional shares of our stock, to amend our charter without shareholder approval and to increase or decrease the number of shares of stock that wehave authority to issue. These provisions, as well as other provisions of our charter and bylaws, may delay, defer or prevent a transaction or a change in control thatmight otherwise be in the best interests of our shareholders.Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock.All of the common stock held by our executive officers and directors, represents approximately 1,195,571 shares, or approximately 8% of our total outstandingshares as of December 31, 2016 . Such shares are generally freely tradable in the public market. Sales of substantial amounts of our common stock, or theavailability of such common stock for sale, could adversely affect the prevailing market prices for our common stock. If this occurs and continues, it could impairour ability to raise additional capital through the sale of securities should we desire to do so.If we issue preferred stock, the net asset value and market value of our common stock will likely become more volatile.We cannot assure you that the issuance of preferred stock would result in a higher yield or return to the holders of our common stock. The issuance of preferredstock would likely cause the net asset value and market value of the common stock to become more volatile. If the dividend rate on the preferred stock were toapproach the net rate of return on our investment portfolio, the benefit of leverage to the holders of the common stock would be reduced. If the dividend rate on thepreferred stock were to exceed the net rate of return on our portfolio, the leverage would result in a lower rate of return to the holders of common stock than if wehad not issued preferred stock. Any decline in the net asset value of our investments would be borne entirely by the holders of common stock. Therefore, if themarket value of our portfolio were to decline, the leverage would result in a greater decrease in net asset value to the holders of common stock than if we were notleveraged through the issuance of preferred stock. This greater net asset value decrease would also tend to cause a greater decline in the market price for thecommon stock. We might be in danger of failing to maintain the required asset coverage of the preferred stock or of losing our ratings, if any, on the preferredstock or, in an extreme case, our current investment income might not be sufficient to meet the dividend requirements on the preferred stock. To counteract such anevent, we might need to liquidate investments to fund a redemption of some or all of the preferred stock. In addition, we would pay (and the holders of commonstock would bear) all costs and expenses relating to the issuance and ongoing maintenance of the preferred stock, including higher advisory fees if our total returnexceeds the dividend rate on the preferred stock. Holders of preferred stock may have different interests than holders of common stock and may at times havedisproportionate influence over our affairs.Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share ofour common stock or issue securities to subscribe to, convert to or purchase shares of our common stock .The 1940 Act prohibits us from selling shares of our common stock at a price below the current net asset value per share of such stock, with certain exceptions.One such exception is prior shareholder approval of issuances below net asset value provided that our Board makes certain determinations. On July 27, 2016, at ourSpecial Meeting of Shareholders, our shareholders approved a proposal that authorizes us to sell up to 20% of our common stock at a price below the Company’sthen-current net asset value per share, subject to certain conditions. Any decision to sell shares of our common stock below the then current net asset value pershare of our common stock or securities to subscribe to, convert to, or purchase shares of our common stock would be subject to the determination by our Boardthat such issuance is in our and our shareholders’ best interests.58Table of ContentsIf we were to sell shares of our common stock below net asset value per share, such sales would result in an immediate dilution to the net asset value per share.This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and a proportionatelygreater decrease in a shareholder’s interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance. Inaddition, if we issue securities to subscribe to, convert to or purchase shares of common stock, the exercise or conversion of such securities would increase thenumber of outstanding shares of our common stock. Any such exercise would be dilutive on the voting power of existing shareholders, and could be dilutive withregard to dividends and our net asset value, and other economic aspects of the common stock. Because the number of shares of common stock that could be soissued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted; however, the example below illustrates the effect ofdilution to existing shareholders resulting from the sale of common stock at prices below the net asset value of such shares.RISKS RELATING TO OUR PUBLICLY-TRADED DEBTThe 7.50% Notes due 2022 (the “2022 Notes”) and the 7.00% Notes due 2021 (the “2021 Notes,” and together with the 2022 Notes, the “Notes”) are unsecuredand therefore are effectively subordinated to any secured indebtedness we have outstanding or may incur in the future.In September 2015 and April 2016, we issued $8,324,000 and $40,250,000 in aggregate principal amount of the 2022 Notes and 2021 Notes, respectively. TheNotes are not secured by any of our assets or any of the assets of our subsidiaries. As a result, the Notes are effectively subordinated to any secured indebtednesswe or our subsidiaries have outstanding or may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security). In anyliquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the existing or future securedindebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness to receive full payment of their indebtedness before theassets may be used to pay other creditors, including the holders of the Notes.The Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries.The Notes are obligations exclusively of the Company and not of any of our subsidiaries. None of our subsidiaries is a guarantor of the Notes and the Notes are notrequired to be guaranteed by any subsidiaries we may acquire or create in the future. Any assets of our subsidiaries will not be directly available to satisfy theclaims of our creditors, including holders of the Notes.Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors (including trade creditors) and holders of preferredstock, if any, of our subsidiaries will have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of theNotes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our claims would still beeffectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to ourclaims. Consequently, the Notes are structurally subordinated to all indebtedness and other liabilities (including trade payables) of any of our subsidiaries and anysubsidiaries that we may in the future acquire or establish as financing vehicles or otherwise.The indenture under which the Notes were issued contains limited protection for holders of the Notes.The indentures under which the Notes were issued offers limited protection to holders of the Notes. The terms of the indentures and the Notes do not restrict our orany of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have a materialadverse impact on your investment in the Notes. In particular, the terms of the indentures and the Notes do not place any restrictions on our or our subsidiaries’ability to:•issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal inright of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment tothe Notes, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4)securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and thereforerank structurally senior to the Notes with respect to the assets of our subsidiaries, in each case other than an incurrence of indebtedness or other obligationthat would cause a violation of Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions, whether or not wecontinue to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to us by the SEC. Currently,these provisions generally prohibit us from making additional borrowings, including through the issuance of59Table of Contentsadditional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowings;•with respect to the 2021 Notes, pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities rankingjunior in right of payment to the 2021 Notes, including subordinated indebtedness, in each case other than dividends, purchases, redemptions or paymentsthat would cause a violation of Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act as in effect immediately prior to the issuance of the2021 Notes, we will not declare any dividend (except a dividend payable in stock of the issuer), or declare any other distribution, upon a class of thecapital stock of the Company, or purchase any such capital stock, unless, in every such case, at the time of the declaration of any such dividend ordistribution, or at the time of any such purchase, the Company has an asset coverage (as defined in the 1940 Act) of at least 200% after deducting theamount of such dividend, distribution or purchase price, as the case may be, and giving effect, in each case, (i) to any exemptive relief granted to theCompany by the SEC and (ii) to any no-action relief granted by the SEC to another business development company (or to the Company if it determines toseek such similar no-action or other relief) permitting the business development company to declare any cash dividend or distribution notwithstanding theprohibition contained in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act in order to maintain such business development company’sstatus as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended;•with respect to the 2022 Notes, pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities rankingjunior in right of payment to the Notes, including subordinated indebtedness, in each case other than dividends, purchases, redemptions or payments thatwould cause a violation of Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions, giving effect to (i) anyexemptive relief granted to us by the SEC and (ii) no-action relief granted by the SEC to another BDC (or to the Company if it determines to seek suchsimilar no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act in order to maintain the BDC’s status as a RIC under Subchapter M of the Code (theseprovisions generally prohibit us from declaring any cash dividend or distribution upon any class of our capital stock, or purchasing any such capital stockif our asset coverage, as defined in the 1940 Act, is below 200% at the time of the declaration of the dividend or distribution or the purchase and afterdeducting the amount of such dividend, distribution or purchase);•sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);•enter into transactions with affiliates;•create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;•make investments; or•create restrictions on the payment of dividends or other amounts to us from our subsidiaries.In addition, the indentures does not require us to offer to purchase the Notes in connection with a change of control, asset sale or any other event.Furthermore, the terms of the indentures and the Notes do not protect holders of the Notes in the event that we experience changes (including significant adversechanges) in our financial condition, results of operations or credit ratings, as they do not require that we or our subsidiaries adhere to any financial tests or ratios orspecified levels of net worth, revenues, income, cash flow or liquidity.Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Notes may have important consequencesfor you as a holder of the Notes, including making it more difficult for us to satisfy our obligations with respect to the Notes or negatively affecting the tradingvalue of the Notes.Other debt we issue or incur in the future could contain more protections for its holders than the indentures and the Notes, including additional covenants andevents of default. The issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of the Notes.If we default on our obligations to pay other indebtedness that we may incur in the future, we may not be able to make payments on the Notes.60Table of ContentsIn the future, we may enter into agreements to incur additional indebtedness, including a secured credit facility. A default under such agreements to which we maybe a party that is not waived by the required lenders or holders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal,premium, if any, and interest on the Notes and substantially decrease the market value of the Notes. If we are unable to generate sufficient cash flow and areotherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on such future additional indebtedness, or if weotherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing such future additional indebtedness,we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect todeclare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders of other debt we may incur in the futurecould elect to terminate their commitments, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced intobankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations could proceed against the collateral securing the debt. Because anyfuture credit facilities likely will have customary cross-default provisions, if the indebtedness under any future credit facility is accelerated, we may be unable torepay or finance the amounts due.We may choose to redeem the Notes when prevailing interest rates are relatively low.On or after April 22, 2017 and September 23, 2018, we may choose to redeem the 2021 Notes and the 2022 Notes, respectively, from time to time, especially whenprevailing interest rates are lower than the interest rate on the 2021 Notes or 2022 Notes. If prevailing rates are lower at the time of redemption, you may not beable to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the Notes being redeemed. Ourredemption right also may adversely impact your ability to sell the Notes as the optional redemption date or period approaches.In addition, on November 21, 2016, the Company announced that its Board approved a repurchase program under which the Company may repurchase up to 10%,or $832,400 in aggregate principal amount, of its 7.50% Notes due 2022 and up to 10%, or $4,025,000 in aggregate principal amount, of its 7.00% Notes due 2021through open market purchases, including block purchases, in such manner as will comply with the provisions of the 1940 Act and the Exchange Act. Unlessextended or terminated by the Board, the Company expects the termination date for the repurchase plan will be on May 21, 2017.The trading market or market value of our publicly traded debt securities may fluctuateThe 2022 Notes and the 2021 Notes are new issues of debt securities listed on the Nasdaq Global Market under the symbols “NEWTZ” and “NEWTL,”respectively. Although the Notes are listed on Nasdaq, we cannot assure you that a trading market for our publicly issued debt securities will be maintained. Inaddition to our creditworthiness, many factors may materially adversely affect the trading market for, and market value of, our publicly issued debt securities.These factors include, but are not limited to, the following:•the time remaining to the maturity of these debt instruments;•the outstanding principal amount of debt securities with terms identical to these debt securities;•the ratings assigned by the national statistical rating agencies;•the general economic environment;•the supply of debt securities trading in the secondary market, if any;•the level, direction and volatility of market interest rates generally; and•market rates of interest higher or lower than rates borne by the debt securities.You should be aware that there may be a limited number of buyers when you decide to sell your securities. This too may materially adversely affect the marketvalue of the debt securities of the trading market for the debt securities.Pending legislation may allow us to incur additional leverage.As a BDC, under the 1940 Act we generally are not permitted to incur indebtedness unless immediately after such borrowing we have an asset coverage for totalborrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets). Pending legislation in the U.S. House of Representatives, ifpassed, would modify this section of the 1940 Act and61Table of Contentsincrease the amount of debt that BDCs may incur by modifying the asset coverage percentage from 200% to 150%. As a result, we may be able to incur additionalindebtedness in the future and therefore your risk of an investment in us may increase.ITEM 1B. UNRESOLVED STAFF COMMENTS.None.ITEM 2. PROPERTIES.We conduct our principal business activities in facilities leased from unrelated parties at market rates. Our headquarters are located in Lake Success, New York.Our operating subsidiaries have properties which are material to the conduct of their business as noted below. In addition, our Capcos maintain offices in each ofthe states in which they operate.Below is a list of our leased offices and space as of December 31, 2016 which are material to the conduct of our business:Location Lease expiration Purpose Approximate squarefeet 1981 Marcus Avenue Lake Success, NY 11042 April 2027 Newtek Business Services, NSBF, accounting, sales and humanresources, NY Capco offices and portfolio companies offices 36,0004 Park PlazaIrvine, CA 92614 March 2018 NSBF office - lending operations 3,3005901 Broken Sound Parkway NWBoca Raton, FL 33487 August 2018 NSBF lending operations 3,800We believe that our leased facilities are adequate to meet our current needs and that additional facilities are available to meet our development and expansion needsin existing and projected target markets.ITEM 3. LEGAL PROCEEDINGS.In the ordinary course of business, the Company and its wholly owned portfolio companies may from time to time be party to lawsuits and claims. The Companyevaluates such matters on a case by case basis and its policy is to contest vigorously any claims it believes are without compelling merit. The Company is notcurrently involved in any litigation matters. For legal proceedings involving controlled portfolio companies, refer to “Risk Factors - Legal Proceedings - PortfolioCompanies.”ITEM 4. MINE SAFETY DISCLOSURES.Not applicable.62Table of ContentsPART IIITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIES.Price Range of Common StockOur 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 areset forth below, based on the highest and lowest intraday sales price per share during that period. Price Range High Low2015 First Quarter$19.95 $14.06Second Quarter$18.85 $16.42Third Quarter$19.82 $14.66Fourth Quarter$19.18 $12.80 2016 First Quarter$14.51 $9.37Second Quarter$13.36 $11.83Third Quarter$14.44 $12.26Fourth Quarter$16.09 $13.76The last reported price for our common stock on March 9, 2017 was $16.85 per share. As of March 9, 2017 there were approximately 118 shareholders of record.Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stockwill trade at a discount from net asset value or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset valuewill decrease.Sales of Unregistered Securities During the year ended December 31, 2015 , in connection with the investment in Premier Payments LLC, we issued 130,959 restricted common shares of theCompany to Jeffrey Rubin, a related party, in a private transaction as a portion of the consideration.We did not engage in any sales of unregistered securities during the years ended December 31, 2016 or 2014.DistributionsIn order to be subject to tax as a RIC, we must distribute to our shareholders, in respect of each taxable year, dividends for U.S. federal income tax purposes of anamount generally at least equal to the Annual Distribution Requirement. Upon satisfying this requirement in respect of a taxable year, we generally will not besubject to corporate taxes on any income we distribute to our shareholders as dividends for U.S. federal income tax purposes.However, as a RIC we will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income and gains unless we make distributions treatedas dividends for U.S. federal income tax purposes in a timely manner to our shareholders in respect of each calendar year of an amount at least equal to the ExciseTax Avoidance Requirement. We will not be subject to this excise tax on any amount on which we incurred U.S. federal corporate income tax (such as the taximposed on a RIC’s retained net capital gains).63Table of ContentsDepending on the level of taxable income earned in a taxable year, we may choose to carry over taxable income in excess of current taxable year distributionstreated as dividends for U.S. federal income tax purposes from such taxable income into the next taxable year and incur a 4% excise tax on such taxable income, asrequired. The maximum amount of excess taxable income that may be carried over for distribution in the next taxable year under the Code is the total amount ofdistributions treated as dividends for U.S. federal income tax purposes paid in the following taxable year, subject to certain declaration and payment guidelines. Tothe extent we choose to carry over taxable income into the next taxable year, distributions declared and paid by us in a taxable year may differ from our taxableincome for that taxable year as such distributions may include the distribution of current taxable year taxable income, the distribution of prior taxable year taxableincome carried over into and distributed in the current taxable year, or returns of capital.We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we will beprohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited bythe terms of any of our borrowings. Our ability to make distributions will be limited by the asset coverage requirements under the 1940 Act. See “Item 1. Business— Regulation.”The following table summarizes the Company's dividend declarations and distributions during the years ended December 31, 2016 and 2015 . There were nodividend declarations or distributions for the periods November 12, 2014 through December 31, 2014 or January 1, 2014 through November 11, 2014.Record Date Payment Date Distribution DeclaredMarch 30, 2015 April 13, 2015 $0.39June 29, 2015 July 15, 2015 $0.47October 22, 2015 November 3, 2015 $0.50November 18, 2015 (1) December 31, 2015 $2.69January 7, 2016 January 19, 2016 $0.40March 22, 2016 March 31, 2016 $0.35June 20, 2016 June 30, 2016 $0.35September 20, 2016 September 30, 2016 $0.43December 15, 2016 December 30, 2016 $0.40 $5.98(1) The Special dividend was declared as a result of the Company’s RIC election for tax year 2015 and represents the distribution of 100% of the Company'saccumulated earnings and profits through December 31, 2014. Pursuant to applicable Treasury Regulation and IRS guidance, the dividend was payable up to 27%in cash and at least 73% in newly issued shares of our common stock.Our Board maintains a variable distribution policy with the objective of distributing four quarterly distributions in an amount that approximates 90 - 100% of ourtaxable quarterly income or potential annual income for a particular taxable year. In addition, at the end of our taxable year, our Board may choose to pay anadditional special distribution, or fifth distribution, so that we may distribute approximately all of our annual taxable income in the taxable year in which it wasearned, or may elect to maintain the option to spill over our excess taxable income into the following taxable year as part of any future distribution payments.Distributions in excess of our current and accumulated earnings and profits would generally be treated first as a return of capital to the extent of a shareholder’s taxbasis in our shares, and any distributions paid in excess of a shareholder’s tax basis in our shares would generally be treated as a capital gain. The determination ofthe tax attributes of our distributions is made annually as of the end of our taxable year and is generally based upon our taxable income for the full taxable year anddistributions paid for the full taxable year. Of the distributions declared during the years ended December 31, 2016 and 2015, 100% were distributions derivedfrom our current and accumulated earnings and profits. There can be no certainty to shareholders that this determination is representative of the tax attributes of the2017 distributions that we anticipate would be made to shareholders.64Table of ContentsWe maintain an “opt-out” dividend reinvestment plan for our common shareholders. As a result, if we declare a distribution, cash distributions will beautomatically reinvested in additional shares of our common stock unless the shareholder specifically “opts out” of the dividend reinvestment plan and chooses toreceive cash distributions. During 2016 and 2015, the Company issued 57,500 and 16,600 shares, respectively, of common stock to shareholders in connectionwith the dividend reinvestment plan.Securities authorized for issuance under equity compensation plans as of December 31, 2016 :Plan Category (a)Number of securities to beissued upon exercise ofoutstanding options, warrantsand rights (b)Weighted-average exerciseprice of outstanding options,warrants and rights (c)Number of securitiesremaining available forfuture issuance under equitycompensation plans(excluding securities reflectedin column (a)) Equity compensation plans approved by security holders None None 2,797,256 shares Equity compensation plans not approved by security holders None None NoneStock Performance Graph The following graph compares the return on our common stock with that of the Standard & Poor’s 500 Stock Index, the NASDAQ Composite Index, the Russell2000, and S&P Small Cap 600 for the period from December 31, 2011 through December 31, 2016. The graph assumes that, on January 1, 2012, a person invested$100 in each of our common stock, the Nasdaq Composite, S&P 500 Index, Russell 2000 and S&P Small Cap 600. The graph measures total shareholder return,which takes into account both changes in stock price and dividends. It assumes that dividends paid are invested in like securities.ITEM 6. SELECTED FINANCIAL DATA.The following selected statements of operations and balance sheet data have been derived from the audited financial statements for each of the five years endedDecember 31, 2016 . The Consolidated Financial Statements for the years ended December 31, 2016 and 2015, the period from November 12, 2014 to December31, 2014, the period from January 1, 2014 to November 11, 2014 and the year ended December 31, 2013 have been audited by RSM US LLP. The ConsolidatedFinancial Statements for65Table of Contentsthe two years ended December 31, 2012 (not separately presented herein) have been audited by CohnReznick LLP. The selected financial data set forth belowshould be read in conjunction with, and is qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”and our Consolidated Financial Statements, including the Notes thereto, available at www.sec.gov. As a Business Development Company Prior to becoming a Business DevelopmentCompany 2016 2015 November 12,2014 toDecember 31,2014 January 1, 2014to November 11,2014 2013 2012Statement of Operations Data: Investment income $30,965 $26,070 $1,976 $— $— $—Operating revenues — — — 131,847 143,593 131,130Expenses 40,225 32,255 4,305 121,036 131,319 120,570Net investment loss (9,260) (6,185) (2,523) — — —Net increase in net assets 27,305 35,736 681 — — —Net income — — — 3,208 7,151 5,557Net realized and unrealized gains (losses) 36,565 41,921 3,204 (3,668) (1,205) (1,121)Per Share Data: Net investment loss $(0.64) $(0.57) $(0.33) $— $— $—Net increase in net assets $1.88 $3.32 $0.09 $— $— $—Basic earnings per share $— $— $— $0.45 $1.07 $0.79Diluted earnings per share $— $— $— $0.45 $0.99 $0.77Dividends declared $1.53 $4.45 $— $— $— $—Balance Sheet Data (at end of period): Investments, at fair value $345,224 $266,874 $233,462 N/A $83,685 $43,951Total assets $401,450 $352,430 $301,832 N/A $198,612 $152,742Total debt $171,242 $131,761 $122,543 N/A $101,358 $61,862Total liabilities $192,356 $148,481 $135,414 N/A $121,603 $83,840Net assets/shareholders' equity $209,094 $203,949 $166,418 N/A $77,009 $68,902Common shares outstanding at end of period 14,624 14,509 10,206 N/A 7,077 7,036ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.Introduction and Certain Cautionary StatementsThe following discussion and analysis of our financial condition and results of operations is intended to assist in the understanding and assessment of significantchanges and trends related to the results of operations and financial position of the Company together with its subsidiaries. This discussion and analysis should beread in conjunction with the consolidated financial statements and the accompanying notes.The statements in this Annual Report may contain forward-looking statements relating to such matters as anticipated future financial performance, businessprospects, legislative developments and similar matters. We note that a variety of factors could cause our actual results to differ materially from the anticipatedresults expressed in the forward looking statements such as intensified competition and/or operating problems in its operating business projects and their impacton revenues and profit margins or additional factors as described under “Risk Factors” above.66Table of ContentsExecutive OverviewWe are a leading national non-bank lender and own and control certain portfolio companies under the Newtek® brand (our “controlled portfolio companies,” asdefined below) that provide a wide range of business and financial products to small- and medium-sized businesses (“SMBs”). Newtek's products and servicesinclude: Business Lending, including U.S. Small Business Administration (“SBA”) 7(a) and 504 lending, Electronic Payment Processing, Managed TechnologySolutions (Cloud Computing), eCommerce, Accounts Receivable and Inventory Financing, The Secure Gateway, The Newtek Advantage®, personal andcommercial Insurance Services, Web Services, Data Backup, Store and Retrieval and Payroll and Benefits Solutions to SMB accounts nationwide across allindustries. 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 anddiversified client base across every state in the U.S and across a variety of different industries. In addition, we have developed a financial and technology basedbusiness model that enables us and our controlled portfolio companies to acquire and process our SMB clients in a very cost effective manner. This capability issupported in large part by NewTracker®, our patented prospect management technology software, which is similar to but we believe better than the systempopularized by Salesforce.com. We believe that this technology and business model distinguishes us from our competitors. We consolidate the following wholly-owned subsidiaries: •Newtek Small Business Finance, LLC•Newtek Asset Backed Securities, LLC•The Whitestone Group, LLC•Wilshire Colorado Partners, LLC•Wilshire DC Partners, LLC•Wilshire Holdings I, Inc.•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 New York Partners IV, LLC•Wilshire New York Partners V, LLC•Wilshire Partners, LLC•CCC Real Estate Holdings, LLC•Banc-Serv Acquisition Inc.•Exponential Business Development Co., Inc.•Newtek LSP Holdco, LLC•Newtek Business Services Holdco 1, Inc.67Table of ContentsOur common shares are currently listed on the Nasdaq Global Market under the symbol “NEWT”. NSBF has been granted Preferred Lender Program (“PLP”) status and originates, sells and services SBA 7(a) small business loans and is authorized to place SBAguarantees on loans without seeking prior SBA review and approval. Being a national lender, PLP status allows NSBF to expedite the origination of loans sinceNSBF is not required to present applications to the SBA for concurrent review and approval. The loss of PLP status could adversely impact our marketing effortsand ultimately our loan origination volume which could negatively impact our results of operations. As a BDC, our investment objective is to generate both current income and capital appreciation primarily through loans originated by our small business financeplatform and our equity investments in certain portfolio companies that we control.We target our debt investments, which are principally made through our small business finance platform under the SBA 7(a) program, to produce a coupon rate ofprime plus 2.75% which enables us to generate rapid sales of loans in the secondary market. We typically structure our debt investments with the maximumseniority and collateral along with personal guarantees from portfolio company owners, in many cases collateralized by other assets including real estate. In mostcases, 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 casesprimarily real estate. All SBA loans are made with personal guarantees from any owner(s) of 20% or more of the portfolio company’s equity. 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 prohibitionsagainst change of control. Our debt investments have strong protections, including default penalties, information rights and, in some cases, board observation rightsand affirmative, negative and financial covenants. Debt investments in portfolio companies, including the controlled portfolio companies, have historically and areexpected 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 primarilyas either strategic investments to enhance the integrated operating platform or, to a lesser degree, under the Capco programs. For investments in our controlledportfolio companies, we focus more on tailoring them to the long term growth needs of the companies than to immediate return. Our objectives with thesecompanies 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 burdenon 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 oran 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 fundsthat 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 ourservices. 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 incentiveallocations. 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 andconditions including, without limitation, the approval of our board of directors and required regulatory or third party consents and, in certain cases, the approval ofour shareholders. Accordingly, there can be no assurance that any such transaction would be consummated. Any of these transactions or funds may requiresignificant management resources either during the transaction phase or on an ongoing basis depending on the terms of the transaction.In June 2016, we invested $5,400,000 in exchange for 100% of the membership interests in BSP, a new wholly owned and controlled portfolio company. BSPprovides over 350 lending institutions with outsourced solutions for the entire SBA lending process, including credit analysis, structuring and eligibility,packaging, closing compliance and servicing.Revenues 68Table of ContentsWe generate revenue in the form of interest, dividend, servicing and other fee income on debt and equity investments. Our debt investments typically have a termof 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 theoutstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of theserepayments fluctuates significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities. We receive servicing incomerelated to the guaranteed portions of SBA investments which we sell into the secondary market. These recurring fees are earned daily and recorded when earned. Inaddition, 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 arerecorded 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. Dividendincome 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. 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 investmentwithout regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments and assets that are measured atfair value as a component of the net change in unrealized appreciation (depreciation) on investments or servicing assets, as appropriate, in the consolidatedstatements of operations.ExpensesOur primary operating expenses are salaries and benefits, interest expense and other general and administrative costs, such as professional fees, marketing, loanrelated 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 operatethe Company. Loan Portfolio Asset Quality and CompositionThe following table sets forth distribution by business type of the Company’s SBA 7(a) unguaranteed loan portfolio at December 31, 2016 (in thousands):Distribution by Business Type Business Type # of Loans Balance Average Balance % of BalanceExisting Business 921 $177,430 $193 80.7%Business Acquisition 169 30,454 180 13.9%Start-Up Business 138 11,900 86 5.4%Total 1,228 $219,784 $179 100.0% The following table sets forth distribution by borrower’s credit score of the Company’s SBA 7(a) unguaranteed loan portfolio at December 31, 2016 (inthousands):Distribution by Borrower Credit Score Credit Score # of Loans Aggregate Balance Average Balance % of Balance500 to 550 17 $2,036 $120 0.9%551 to 600 38 6,748 178 3.1%601 to 650 160 32,912 206 15.0%651 to 700 344 64,923 189 29.5%701 to 750 372 67,006 180 30.5%751 to 800 250 39,600 158 18.0%801 to 850 40 4,124 103 1.9%Not available 7 2,435 348 1.1%Total 1,228 $219,784 $179 100.0%69Table of ContentsThe following table sets forth distribution by primary collateral type of the Company’s SBA 7(a) unguaranteed loan portfolio at December 31, 2016 (in thousands):Distribution by Primary Collateral Type Collateral Type # of Loans Aggregate Balance Average Balance % of BalanceCommercial Real Estate 589 $133,263 $226 60.6%Machinery and Equipment 201 37,426 186 17.0%Residential Real Estate 264 21,211 80 9.7%Other 45 13,822 307 6.3%Accounts Receivable and Inventory 80 12,075 151 5.5%Liquid Assets 15 667 44 0.3%Unsecured 23 883 38 0.4%Furniture and Fixtures 11 437 40 0.2%Total 1,228 $219,784 $179 100.0%The following table sets forth distribution by days delinquent of the Company’s SBA 7(a) unguaranteed loan portfolio at December 31, 2016 (in thousands):Distribution by Days Delinquent Delinquency Status # of Loans Aggregate Balance Average Balance % of BalanceCurrent 1,119 $199,170 $178 90.6%1 to 30 days 35 3,680 105 1.7%31 to 60 days 7 1,570 224 0.7%61 to 90 days — — — —%91 days or greater 67 15,364 229 7.0%Total 1,228 $219,784 $179 100.0%Comparison of the year ended December 31, 2016 and 2015Investment Income(in thousands)December 31, 2016 December 31, 2015 ChangeInvestment income: Interest income$11,518 $9,201 $2,317Dividend income10,573 10,218 355Servicing income6,160 4,611 1,549Other income2,714 2,040 674Total investment income$30,965 $26,070 $4,895Interest IncomeThe increase in interest income was attributable to the average outstanding performing portfolio of SBA non-affiliate investments increasing to $176,210,000 from$136,964,000 for the years ended December 31, 2016 and 2015, respectively, as well as the increase in the Prime Rate from 3.25% to 3.50% in December 2015.The increase in the average outstanding performing portfolio resulted from the origination of new SBA non-affiliate investments year over year.70Table of ContentsDividend IncomeDividend income is dependent on portfolio company earnings. Current year dividend income may not be indicative of future year dividend income.The increase in dividend income is primarily related to an increase of dividends generated from Premier of $1,135,000, an increase of $682,000 in dividendsgenerated from NTS, an increase of $348,000 in dividends generated from SBL, an increase of $210,000 in dividends generated from UPSW, and $300,000 ofdividends generated from BSP, a new wholly owned controlled portfolio company investment we made in June 2016. These increases were offset by one-timedividends of $1,080,000 and $1,162,000 received from Exponential Business Development Co., Inc. and Summit Systems and Designs, LLC, respectively in 2015,both of which are no longer operating portfolio company businesses.NSBF Servicing Portfolio and Related Servicing IncomeThe following table represents NSBF originated servicing portfolio and servicing income earned for the years ended December 31, 2016 and 2015:(in thousands):December 31, 2016 December 31, 2015 ChangeTotal NSBF originated servicing portfolio (1)$960,517 $768,588 $191,929Total servicing income earned$6,160 $4,611 $1,549(1) Of this amount, the total average NSBF originated portfolio earning servicing income was $633,126,000 and $520,794,000 for the years ended December 31,2016 and 2015, respectively.The increase in servicing income was attributable to the increase in total portfolio investments for which we earn servicing income. The portfolio earning servicingincome increased $112,332,000 year over year. The increase was a direct result of increased investments in SBA 7(a) non-affiliate investments from 2015 to 2016.Other IncomeOther income relates primarily to legal, packaging, prepayment, and late fees earned from SBA loans. The increase is related to the increase in the number of loansfunded to 402 for the year ended December 31, 2016 from 292 during the year ended December 31, 2015. This increase resulted in an increase in legal andpackaging fees earned on such loans.Expenses:(in thousands)December 31, 2016 December 31, 2015 ChangeSalaries and benefits$15,234 $12,753 $2,481Interest8,440 6,479 1,961Depreciation and amortization296 326 (30)Other general and administrative costs16,255 12,697 3,558Total expenses$40,225 $32,255 $7,970Salaries and BenefitsSalaries and benefits increased $2,481,000 primarily due to an increase in employees at NSBF performing underwriting, processing, closing and servicingfunctions as a result of the increase in annual loan originations. The increase was also attributable to $577,000 of stock based compensation expense incurredduring the year ended December 31, 2016 related to the issuance of restricted stock awards to employees. No stock based compensation expense was incurredduring the year ended December 31, 2016.Interest ExpenseThe following is a summary of interest expense by facility for the years ended December 31, 2016 and 2015:71Table of Contents(in thousands)December 31, 2016 December 31, 2015 ChangeNotes payable - Securitization Trusts$3,976 $3,810 $166Bank notes payable1,267 1,166 101Capital One term loan and line of credit (NBS)— 564 (564)Notes due 2022708 192 516Notes due 20212,181 — 2,181Notes payable - related parties260 621 (361)Notes payable in credits in lieu of cash43 80 (37)Other5 46 (41)Total interest expense$8,440 $6,479 $1,961In September 2015 and April 2016, the Company issued $8,324,000 of 7.50% Notes due 2022, and $40,250,000 of 7.00% Notes due 2021, respectively. TheCompany incurred $2,889,000 in related interest expense during the year ended December 31, 2016 on the Notes. The increase is attributed to incurring a full yearof interest expense on the Notes due 2022 and the issuance of the Notes due 2021 in 2016. Interest expense on notes payable - related parties was $260,000 and$621,000 during the years ended December 31, 2016 and 2015, respectively, and represents interest on amounts borrowed under an unsecured revolving line ofcredit extended by UPSW and NTS. The decrease is attributed to a decrease in the average outstanding balance on Notes payable - related parties during the year.In June 2014, the Company entered into a four year $20,000,000 credit agreement with Capital One consisting of a $10,000,000 term loan and a revolving line ofcredit of up to $10,000,000. The NBS Capital One term loan and line of credit were paid in full and extinguished in June 2015, and as such, no interest expensewas incurred during the year ended December 31, 2015.Other General and Administrative CostsOther general and administrative costs include professional fees, marketing, loan related costs, rent and loss on lease expense. The increase in other general andadministrative costs is primarily related to an increase in loan related costs, rent expense and loss on lease expense. Loan related costs include referral fees,servicing expenses, appraisal fees, legal fees, search fees and other collateral preservation costs. Loan related costs increase as the number of loans we originateand service increase. At December 31, 2016, our loan portfolio consisted of 1,228 SBA 7(a) loans as compared to 948 at December 31, 2015. Loan related costsincreased $1,775,000 year over year as a result of the increase in the loan portfolio. Additionally, rent expense increased as a result of the move to our LakeSuccess offices.In April 2016, the Company moved its headquarters to Lake Success, New York. As a result, the Company vacated its spaces in West Hempstead, New York andNew York, New York. The Company recorded a loss of $604,000 related to the remaining liabilities under the West Hempstead lease, offset by future rentalincome, during the year ended December 31, 2016. The Company has sublet both spaces.Net Realized Gains and Net Unrealized Appreciation and DepreciationNet realized gains or losses on investments are measured by the difference between the net proceeds from the repayment or sale and the cost basis of ourinvestments without regard to unrealized appreciation or depreciation previously recognized and includes investments charged off during the period, net ofrecoveries. Realized gains for the year ended December 31, 2016 and 2015 were $32,437,000 and $29,575,000 , respectively. Realized losses were $925,000 and$1,189,000 during the years ended December 31, 2016 and 2015, respectively. The net change in unrealized appreciation or depreciation on investments primarilyreflects the change in portfolio investment fair values during the reporting period, including the reversal of previously recorded unrealized appreciation ordepreciation when gains or losses are realized.Net Realized Gains on SBA Non-Affiliate Investments72Table of Contents Year Ended December 31, 2016 December 31, 2015(in thousands)# of DebtInvestments $ Amount # of DebtInvestments $ AmountSBA non-affiliate investments funded402 $309,147 292 $242,496SBA guaranteed non-affiliate investments sold379 $226,435 304 $211,089Realized gains recognized on sale of SBA guaranteed non-affiliate investments— $32,437 — $29,575Average sale price as a percent of principal balance (1) 111.91% 111.72%(1) Realized gains greater than 110.00% must be split 50/50 with the SBA in accordance with SBA regulations. The realized gains recognized above reflectsamounts net of split with the SBA.Net Realized Gains on Controlled InvestmentsFor the year ended December 31, 2016, realized gains on controlled investments were $108,000 and primarily represented distributions from SBL in excess of ourcost basis. For the year ended December 31, 2015, realized gains on controlled investments were $5,473,000 and represent distributions in excess of our cost basisfrom controlled affiliates. Included in the $5,473,000 is a distribution in excess of basis from UPSW and First Bankcard Alliance of Alabama, LLC of $4,892,000and $572,000, respectively. Net Unrealized Appreciation (Depreciation) on Investments(in thousands)December 31, 2016 December 31, 2015 ChangeNet unrealized appreciation (depreciation) on SBA guaranteed non-affiliate investments$1,035 $(3,215) $4,250Net unrealized appreciation on SBA unguaranteed non-affiliate investments18 1,183 (1,165)Net unrealized appreciation on controlled investments11,337 12,250 (913)Change in provision for deferred taxes on net unrealized gains on investments(5,128) (857) (4,271)Net unrealized depreciation on credits in lieu of cash and notes payable in credits in lieu ofcash(5) (7) 2Net unrealized depreciation on non-control/non-affiliate investments(43) (24) (19)Total net unrealized appreciation on investments$7,214 $9,330 $(2,116)Net unrealized appreciation (depreciation) on SBA guaranteed non-affiliate investments relates to guaranteed portions of SBA debt investments made which theCompany sells into a secondary market. Unrealized appreciation of SBA guaranteed investments represents the fair value adjustment of guaranteed portions ofloans which have not yet been sold. Unrealized depreciation represents the reversal of unrealized appreciation when the SBA 7(a) loans are sold.The decrease in net unrealized appreciation on SBA unguaranteed non-affiliate investments resulted from an increase in discount rates on performing SBAunguaranteed non-affiliate investments. The discount rate increased from 5.30% to 5.50% year over year on performing SBA unguaranteed non-affiliateinvestments.Net unrealized appreciation on controlled investments for the year ended December 31, 2016 consisted of unrealized appreciation of $10,552,000 and $4,562,000on our investments in UPSW and Premier, respectively offset by unrealized depreciation of $2,200,000, $975,000, and $175,000 on our investments in SBL, NTS,and NBC, respectively. The primary driver of the increases were increases in multiples of comparable companies and increases in revenue growth projections. Thedecrease in SBL, NTS, and NBC was based on weaker than projected financial performance. Net unrealized appreciation on controlled investmentswas $12,250,000 for the year ended December 31, 2015. This consisted primarily of $6,948,000 of unrealized appreciation on our investment in UPSW and$5,565,000 of unrealized appreciation on our investment in SBL which were offset by unrealized depreciation of approximately $966,000 on our investment inNBC. The primary driver of the increase in UPSW was better than projected financial performance and an increase in multiples of comparable companies. The73Table of Contentsprimary driver for the increase in SBL was the addition of a new third party servicing contract which provides a longer-term stable revenue stream.Provision for Deferred Taxes on Net Unrealized Appreciation of InvestmentsCertain consolidated subsidiaries of ours are subject to U.S. federal and state income taxes. These taxable subsidiaries are not consolidated with the Company forincome tax purposes, but are consolidated for GAAP purposes, and may generate income tax liabilities or assets from temporary differences in the recognition ofitems for financial reporting and income tax purposes at the subsidiaries. During the years ended December 31, 2016 and 2015 we recognized a provision fordeferred taxes on net unrealized gains of $5,128,000 and $857,000, respectively. The increase is mainly attributed to unrealized gains related to our investments inUPSW and Premier.Net Unrealized Depreciation on Servicing Assets(in thousands)December 31, 2016 December 31, 2015 ChangeNet unrealized depreciation on servicing assets$(2,269) $(1,268) $(1,001)The increase in unrealized depreciation on servicing assets is primarily related to the increase in the discount rate from 12.03% to 12.20% and an increase in thecumulative prepayment rate from 15.5% to 18.5%.Consolidated Results of Operations - Year Ended December 31, 2015 Compared to 2014The discussion of consolidated results of operations below compare the year ended December 31, 2015 to the period November 12, 2014 to December 31, 2014 (asa BDC) and the period ended November 11, 2014 (prior to the BDC Conversion). Where applicable, we have combined the two periods ended December 31, 2014for comparison to the year ended December 31, 2015 as we believe this provides the most useful comparison of our year over year results.Investment IncomeInvestment income for the year ended December 31, 2015 was $26,070,000 compared with total investment income of $1,976,000 for the period November 12,2014 to December 31, 2014 and operating revenues of $131,847,000 for the period ended November 11, 2014. As a result of the BDC Conversion, there is noelectronic payment processing revenue, web hosting and design revenue, servicing fee income from external portfolios, insurance commission revenue, and otherincome related to our payroll processing and accounts receivable financing and billing services included in the results for the year ended December 31, 2015.Interest IncomeSubstantially all interest income for the year ended December 31, 2015 and combined periods ended December 31, 2014 was derived from SBA non-affiliateinvestments/loans. Interest income derived from SBA non-affiliate investments was $8,879,000 and $6,651,000 for the year ended December 31, 2015 andcombined periods ended December 31, 2014, respectively. The increase in interest income is attributable to the average outstanding performing portfolio of SBAnon-affiliate investments/loans increasing to $136,964,000 from $104,540,000 for the year ended December 31, 2015 and combined periods ended December 31,2014, respectively. The increase in the average outstanding performing portfolio resulted from the origination of new SBA non-affiliate investments period overperiod.NSBF Servicing Portfolio and Related Servicing IncomeThe following table represents NSBF originated servicing portfolio and servicing income earned for the year ended December 31, 2015 and combined periodsended December 31, 2014: Year endedDecember 31, Combined periodsended December31, (In thousands):2015 2014 $ Change % ChangeTotal NSBF originated servicing portfolio (1)$768,588 $631,285 $137,303 22%Total servicing income earned$4,611 $3,673 $938 26%74Table of Contents(1) Of this amount, the total average NSBF originated portfolio earning servicing income was $520,794,000 and $421,001,000 for the year ended December 31,2015 and for the combined periods ended December 31, 2014, respectively.Servicing fee income from the NSBF originated portfolio increased by $938,000 for the year ended December 31, 2015 compared to the combined periods endedDecember 31, 2014. The increase was attributable to the increase in total portfolio investments for which we earn servicing income. The portfolioincreased $137,303,000 period over period. The increase was a direct result of increased investments in SBA non-affiliate investments from 2014 to 2015. Therewas no servicing fee income recognized for loans serviced for third parties for the year ended December 31, 2015. This third party servicing revenue, which waspreviously included in consolidated results, is recognized and earned by one of the Company's controlled portfolio companies, SBL. Total third party servicing feeincome earned for the period ended November 11, 2014 was $6,142,000.Dividend IncomeDividend income earned during the year ended December 31, 2015 was $10,218,000 and was earned from the following portfolio companies: Portfolio Company (in thousands) Year endedDecember 31,2015Universal Processing Services of Wisconsin, LLC $6,590CrystalTech Web Hosting, Inc. 308Small Business Lending, Inc. 348Premier Payments LLC 600Exponential Business Development Co., Inc. 1,080Secure Cybergateway Services, LLC 52First Bankcard Alliance of Alabama, LLC 78Summit Systems and Design, LLC 1,162Total Dividends $10,218No dividend income was earned during the combined periods ended December 31, 2014.Other IncomeOther income of $2,040,000 for the year ended December 31, 2015 relates primarily to legal, packaging, prepayment, and late fees earned from SBA loans. Otherincome is not comparable period over period as 2014 amounts include revenue from certain controlled portfolio companies which were consolidated subsidiariesthrough November 11, 2014.Adjusted Net Investment IncomeWe utilize adjusted net investment income as a measure of our current and future financial performance. Adjusted net investment income is a non-GAAP financialmeasure and is not intended as an alternative measure of investment income as determined in accordance with GAAP. In addition, our calculation of adjusted netinvestment income is not necessarily comparable to similar measures as calculated by other companies that do not use the same definition or implementationguidelines. The table below reconciles net investment loss to adjusted net investment income.(in thousands)Year ended December31, 2015 Period November 12,2014 to December 31,2014Net investment loss$(6,185) $(2,523)Net realized gain on non-affiliate debt investments28,386 595Adjusted net investment income (loss)$22,201 $(1,928)For the period ended November 11, 2014, the Company did not operate as a BDC and therefore did not have net investment or adjusted net investment income. Webelieve this is a useful measure as it depicts the current income generated from our75Table of Contentsinvestment activities during the period. We include net realized gains on debt investments because they are recurring income related to the sale of SBA guaranteednon-affiliate investments in the secondary market.ExpensesTotal expenses decreased from $125,341,000 to $32,255,000 for the combined periods ended December 31, 2014 to the year ended December 31, 2015 as a resultof the conversion to a BDC in November 2014. Electronic payment processing costs, salaries and benefits, depreciation and amortization, and other general andadministrative expenses related to certain subsidiaries in 2014 are not included in 2015 results. As previously discussed, certain consolidated subsidiaries in 2014are now reflected as investments in controlled portfolio companies and their results of operations are not included in 2015.Interest ExpenseInterest expense decreased by $1,412,000 for the year ended December 31, 2015 compared to the combined periods ended December 31, 2014. The following tablehighlights the components of interest expense for each period:(in thousands)Year ended December 31,2015 Combined periods endedDecember 31, 2014 ChangeSecuritization trust VIE (NSBF)$3,810 $3,081 $729Summit Partners Credit Advisors, L.P. (NBS)— 2,991 (2,991)Capital One lines of credit (NSBF)1,166 1,072 94Capital One term loan and line of credit (NBS)565 371 194Notes due 2022192 — 192Related party note621 — 621Sterling line of credit (NBC)— 292 (292)Other125 84 41Total interest expense$6,479 $7,891 $(1,412)Interest expense related to securitizations increased as a result of additional securitization transactions completed in December 2014 and September 2015. In June2014, the Company entered into a four year $20,000,000 credit agreement with Capital One, consisting of a $10,000,000 term loan and a revolving line of credit ofup to $10,000,000. The term loan was obtained to pay off the Summit Partners debt which carried a higher interest rate. The net reduction in interest expense was$2,797,000. In June 2015, the Company received $19,119,000 under an unsecured revolving line of credit extended by UPSW and NTS and incurred $621,000 ininterest expense for the year ended December 31, 2015. In addition, $192,000 of interest expense was incurred on the Notes Due 2022. For the year endedDecember 31, 2015, the Company did not incur interest expense related to the Sterling line of credit as it relates to Newtek Business Credit, a controlled portfoliocompany. Prior to the BDC Conversion, Newtek Business Credit was a consolidated subsidiary.Net Realized Gains and Net Unrealized Appreciation and DepreciationNet realized gains or losses on investments are measured by the difference between the net proceeds from the repayment or sale and the cost basis of ourinvestments without regard to unrealized appreciation or depreciation previously recognized and includes investments charged off during the period, net ofrecoveries. Realized gains for the year ended December 31, 2015 were approximately $35,047,000 offset by approximately $1,189,000 of realized losses. The netchange in unrealized appreciation or depreciation on investments primarily reflects the change in portfolio investment fair values during the reporting period,including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.Net Realized Gains on SBA Non-Affiliate Investments76Table of Contents Year ended December 31, 2015 Combined periods ended December 31,2014(In thousands)# of DebtInvestments $ Amount # of DebtInvestments $ AmountSBA non-affiliate investments originated292 $242,496 193 $202,269SBA guaranteed non-affiliate investments sold304 $211,089 163 $130,356Realized gains recognized on sale of SBA guaranteed non-affiliate investments— $29,575 — $869Premium income recognized— $— — $18,623Average sale price as a percent of principal balance (1)— 111.72% — 112.49%(1) Realized gains/premiums greater than 110.00% must be split 50/50 with the SBA in accordance with SBA regulations. The realized gains/premium incomerecognized above reflects amounts net of split with SBA.Realized gains from the sale of SBA non-affiliate investments for the year ended December 31, 2015 were $29,575,000 compared to $869,000 for the periodNovember 12, 2014 to December 31, 2014. Premium income for the period ended November 11, 2014 was $18,623,000. Realized gains are comparable topremium income. Premium income relates to income earned from the sale of SBA loans. Subsequent to the BDC Conversion, the income related to these sales arerecorded as realized gains. The increase is attributed to the increase in SBA investments sold which was partially offset by a decrease in the average sale premiumfrom 112.49% for the combined periods ended December 31, 2014 to 111.72% for the year ended December 31, 2015.Net Realized Gains on Controlled InvestmentsFor the year ended December 31, 2015, realized gains on controlled investments were $5,473,000 and represent distributions in excess of our cost basis fromcontrolled affiliates. Included in the $5,473,000 is a distribution in excess of basis from UPSW of approximately $4,892,000 and approximately $572,000 in adistribution in excess of basis from First Bankcard Alliance of Alabama, LLC.Net Unrealized Appreciation (Depreciation) on InvestmentsUnrealized appreciation on SBA guaranteed non-affiliate investments for the year ended December 31, 2015 was $7,395,000. This appreciation relates toguaranteed portions of SBA investments made for which we sold into a secondary market. Unrealized depreciation of SBA guaranteed investments was$10,610,000 which represents the reversal of the unrealized appreciation of SBA guaranteed non-affiliate investments sold during the year. Net unrealizedappreciation on SBA unguaranteed non-affiliate investments resulted from fair value adjustments on new investments. Net unrealized appreciation on controlled investments was $12,250,000 for the year ended December 31, 2015. This consisted primarily of $6,948,000 ofunrealized appreciation on our investment in UPSW and $5,565,000 of unrealized appreciation on our investment in SBL which were offset by unrealizeddepreciation of approximately $966,000 on our investment in NBC. The primary driver of the increase in UPSW was better than projected financial performanceand an increase in multiples of comparable companies. The primary driver for the increase in SBL was the addition of a new third party servicing contract whichprovides a longer-term stable revenue stream.Provision for Deferred Taxes on Unrealized Appreciation on InvestmentsCertain consolidated subsidiaries of ours are subject to U.S. federal and state income taxes. These taxable subsidiaries are not consolidated with the Company forincome tax purposes, but are consolidated for GAAP purposes, and may generate income tax liabilities or assets from temporary differences in the recognition ofitems for financial reporting and income tax purposes at the subsidiaries. For the years ended December 31, 2015 and 2014, the Company recognized a provisionfor deferred tax on unrealized gains of $857,000 and $0 for consolidated subsidiaries, respectively.Net Unrealized Depreciation on Servicing AssetsThe unrealized depreciation on servicing assets was $1,268,000 and $120,000 for the year ended December 31, 2015 and the period November 12, 2014 toDecember 31, 2014, respectively. Until November 11, 2014, servicing assets were recorded using the amortization method. As a result of the BDC Conversion,servicing assets are recorded at fair value at December 31, 2015.77Table of ContentsAmortization expense related to servicing assets was $1,366,000 for the period ended November 11, 2014 and is included in depreciation and amortization expensein the consolidated statements of operations.Liquidity and Capital ResourcesCash Flows As a Business Development Company Prior to becoming aBusiness DevelopmentCompany For the Year EndedDecember 31, For the Year EndedDecember 31, For the PeriodNovember 12 toDecember 31, For the Period January 1to November 11, 2016 2015 2014 2013Net cash (used in) provided by operating activities$(10,912) $(37,951) $(38,923) $24,553Net cash (used in) provided by investing activities(375) 302 (20) (30,016)Net cash provided by financing activities9,030 24,144 52,023 1,054Net (decrease) increase in cash and cash equivalents(2,257) (13,505) 13,080 (4,409)Cash and cash equivalents, beginning of year/period4,308 17,813 4,733 12,508Cash and cash equivalents, end of year/period$2,051 $4,308 $17,813 $8,0992016For the year ended December 31, 2016 , cash and cash equivalents decreased by $2,257,000 which was primarily the net result of $10,912,000 of cash used foroperating activities and $9,030,000 of cash provided by financing activities.During the year we used $10,912,000 of cash for our operating activities consisting primarily of (i) $309,147,000 of SBA 7(a) loan investments, (ii) a $5,400,000investment in 100% of the membership interests of banc-serv Partners, LLC, (iii) a $2,057,000 repurchase of a loan from the SBA, (iv) a non-controlled/non-affiliate debt investment of $1,020,000 in Excel WebSolutions, LLC and (v) $775,000 of additional investments in PMT. These uses were offset by (i)$258,873,000 of proceeds from the sale of SBA 7(a) investments (ii) the decrease in broker receivables which arise from the guaranteed portions of SBA 7(a) loansthat were traded but had not yet settled before period end and represent the amount of cash due from the purchasing broker; the amount varies depending on loanorigination volume and timing of sales at period end, (iii) $26,909,000 of principal payments received from affiliate and non-affiliate investments and (iv) adecrease in restricted cash of $3,187,000.Net cash provided by financing activities was $9,030,000 consisting primarily of (i) proceeds of $38,510,000, net of deferred financing costs from our offer andsale of 7.00% Notes due 2021, (ii) issuance of additional senior notes of $53,444,000 offset by (i) dividend payments of $27,300,000, (ii) principal payments of$24,379,000 related on Notes payable - Securitization Trusts, (iii) $24,000,000 of net repayments on the Capital One line of credit (iv) $4,247,000 of net principalpayments on Notes payable - related parties and (v) $866,000 of common share repurchases.2015For the year ended December 31, 2015 , we experienced a net decrease in cash and cash equivalents of $13,505,000 which is primarily the net result of$37,951,000 of cash used for operating activities and $24,144,000 provided by financing activities.During the year we used $37,951,000 of cash for our operating activities consisting primarily of (i) new portfolio investments of $262,499,000, of whichapproximately $14,030,000 was used to purchase Premier Payments LLC, $2,200,000 was used to fund a new debt investment, Titanium Asset Management LLC,and approximately $242,496,000 was used to originate SBA 7(a) loan investments, (ii) increase in broker receivable and servicing assets of $32,083,000 and$4,827,000, respectively, (iii) increase in restricted cash of $12,665,000. The foregoing uses of cash were partially offset by (i) proceeds from the sale ofinvestments of $240,663,000 (ii) principal received from portfolio company investments of $21,638,000 and (iii) distributions from portfolio companies deemedreturn of investment or capital gains of $9,218,000. In addition, financing activities provided cash of $24,144,000, consisting primarily of (i) net proceeds from apublic offering of common stock of $35,290,000, (ii) proceeds from a public bond offering of $8,324,000, (iii) net borrowings from a related party of $5,647,000,(iv) issuance of78Table of Contentsadditional senior notes of $32,029,000 partially offset by (i) cash dividends paid of $24,306,000 and (ii) total principal payments on debt of $33,916,000.Capital ResourcesAs of December 31, 2016 , we had $2,051,000 of cash and cash equivalents, $16,916,000 available under our Capital One facilities and $17,719,000 availableunder our related party revolving line of credit. As of December 31, 2016 , our net asset value totaled $209,094,000 or $14.30 per share.Public OfferingsOn January 25, 2017 we completed a public offering of 2,250,000 shares of common stock at a public offering price of $15.25 per share. We also sold anadditional 337,500 shares of common stock at a public offering price of $15.25 per share pursuant to the underwriter's full exercise of the over-allotment option.Proceeds, net of offering costs and expenses were $37,326,000.In April 2016, the Company and U.S. Bank, N.A. (the “Trustee”), entered into the Second Supplemental Indenture (the “Second Supplemental Indenture”) to theBase Indenture between the Company and the Trustee, relating to the Company’s issuance, offer and sale of $35,000,000 aggregate principal amount of 7.00%Notes due 2021 (the “2021 Notes”). The Company granted an overallotment option of up to $5,250,000 in aggregate principal amount of the 2021 Notes. The saleof the 2021 Notes generated proceeds of approximately $33,750,000, net of underwriter's fees and expenses. In May 2016, the underwriters exercised their optionto purchase $5,250,000 in aggregate principal amount of notes for an additional $5,066,000 in net proceeds. The 2021 Notes are the Company’s direct unsecuredobligations and rank: (i) pari passu with the Company’s other outstanding and future unsecured indebtedness; (ii) senior to any of the Company’s futureindebtedness that expressly provides it is subordinated to the 2021 Notes; (iii) effectively subordinated to all the Company’s existing and future securedindebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assetssecuring such indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries.The 2021 Notes will mature on March 31, 2021 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or afterApril 22, 2017, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for thethen-current quarterly interest period accrued to but not including the date fixed for redemption. The 2021 Notes bear interest at a rate of 7.00% per year payablequarterly on March 31, June 30, September 30, and December 31 of each year, commencing on June 30, 2016, and trade on the Nasdaq Global Market under thetrading symbol “NEWTL.”The Base Indenture, as supplemented by the Second Supplemental Indenture, contains certain covenants including covenants requiring the Company to complywith (regardless of whether it is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a)(1) of the1940 Act, to comply with (regardless of whether it is subject to) the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) of the 1940 Act as modified by Section 61(a)(1) of the 1940 Act as in effect immediately prior to the issuance of the 2021 Notes, and to provide financialinformation to the holders of the 2021 Notes and the Trustee if the Company should no longer be subject to the reporting requirements under the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”). These covenants are subject to important limitations and exceptions that are described in the BaseIndenture, as supplemented by the First Supplemental Indenture. The Base Indenture provides for customary events of default and further provides that the Trusteeor the holders of 25% in aggregate principal amount of the outstanding 2021 Notes may declare such 2021 Notes immediately due and payable upon theoccurrence of any event of default after expiration of any applicable grace period. At December 31, 2016, the Company is in compliance with all covenants relatedto the 2021 Notes.On October 15, 2015 we completed a public offering of 2,000,000 shares of our common stock at a public offering price of $16.50 per share. We also sold anadditional 300,000 shares of common stock at a public offering price of $16.50 per share pursuant to the underwriter's full exercise of the over-allotment option.Proceeds, net of offering costs and expenses were $35,290,000.In September 2015, the Company and the Trustee entered into the Base Indenture and the First Supplemental Indenture relating to the Company's issuance, offer,and sale of $8,324,000, including the underwriter's partial exercise of their over-allotment option, in aggregate principal amount of the 7.50% Notes due 2022 (the“2022 Notes”). The sale of the 2022 Notes generated proceeds of approximately $7,747,000, net of underwriter's fees and expenses. The 2022 Notes are theCompany’s direct unsecured obligations and rank: (i) pari passu with the Company’s other outstanding and future unsecured indebtedness;79Table of Contents(ii) senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2022 Notes; (iii) effectively subordinated to all theCompany’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to theextent of the value of the assets securing such indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other obligations of anyof the Company’s subsidiaries.The 2022 Notes will mature on September 30, 2022 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or afterSeptember 23, 2018, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable forthe then-current quarterly interest period accrued to but not including the date fixed for redemption. The 2022 Notes bear interest at a rate of 7.50% per yearpayable quarterly on March 31, June 30, September 30, and December 31 of each year, commencing on December 31, 2015, and trade on the Nasdaq GlobalMarket under the trading symbol “NEWTZ.”The Base Indenture, as supplemented by the First Supplemental Indenture, contains certain covenants including covenants requiring the Company to comply with(regardless of whether it is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a)(1) of the 1940Act, to comply with the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) of the 1940 Act as modified by Section61 (a)(1) of the 1940 Act, and to provide financial information to the holders of the 2022 Notes and the Trustee if the Company should no longer be subject to thereporting requirements under the Exchange Act. These covenants are subject to important limitations and exceptions that are described in the Base Indenture, assupplemented by the Second Supplemental Indenture. The Base Indenture provides for customary events of default and further provides that the Trustee or theholders of 25% in aggregate principal amount of the outstanding 2022 Notes may declare such 2022 Notes immediately due and payable upon the occurrence ofany event of default after expiration of any applicable grace period. At December 31, 2016 , the Company is in compliance with all covenants related to the 2022Notes.On November 18, 2014 we completed a public offering of 2,200,000 shares of our common stock at a public offering price of $12.50 per share. We also sold anadditional 330,000 shares of common stock at a public offering price of $12.50 per share pursuant to the underwriter's full exercise of the over-allotment option.Proceeds, net of offering costs and expenses were $27,883,000.Capital One FacilitiesNSBF has a $50,000,000 million credit facility with Capital One. The facility provides for a 55% advance rate on the non-guaranteed portions of the SBA 7(a)loans it originates, and a 90% advance rate on the guaranteed portions of SBA 7(a) loans it originates. The interest rate on the portion of the facility, collateralizedby the government guaranteed portion of SBA 7(a) loans, is set at Prime plus 1.00%, and there is a quarterly facility fee equal to 0.25% on the unused portion ofthe revolving credit calculated as of the end of each calendar quarter. The interest rate on the portion of the facility, collateralized by the non-guaranteed portion ofSBA 7(a) loans, is set at Prime plus 1.875%, and there is a quarterly facility fee equal to 0.25% on the unused portion of the revolving credit calculated as of theend of each calendar quarter. In June 2015, we amended the existing facility to eliminate the fixed charge coverage ratio in exchange for a debt service ratio, newEBITDA minimums, the elimination of restrictions on the our ability to pay dividends to shareholders, as well as the release of the guarantees of our formersubsidiaries (now treated as portfolio companies). In addition, the amendment extended the date on which the facility will convert to a term loan from May 16,2016 to May 16, 2017 and extended the maturity date of the facility to May 16, 2019. NSBF and Capital One have entered into a letter of intent to increase thefacility to $75,000,000 with a reduction in the interest rates, subject to SBA approval. At December 31, 2016 and 2015 , we had $5,100,000 and $29,100,000outstanding under the lines of credit. At December 31, 2016 , we were in full compliance with all applicable loan covenants.Related Party Notes PayableIn June 2015, we entered into an unsecured revolving line of credit agreement with UPSW and NTS. Maximum borrowings under the line of credit are$38,000,000. The outstanding balance bears interest at a rate equal to (a) the greater of LIBOR or 50 basis points plus (b) 7% or at a rate equal to (y) the greater ofthe Prime Rate or 3.5%, plus (z) 6%. At December 31, 2016 , the line of credit bears interest at a rate of 7.67%. The revolving line of credit has a maturity date ofJune 21, 2019. The outstanding borrowings at December 31, 2016 were $1,400,000 .Securitization TransactionsSince 2010, NSBF has engaged in securitizations of the unguaranteed portions of its SBA 7(a) loans. In the securitization, it uses a special purpose entity (the“Trust”) which is considered a variable interest entity. Applying the consolidation80Table of Contentsrequirements for VIEs under the accounting rules in ASC Topic 860, Transfers and Servicing, and ASC Topic 810, Consolidation, which became effectiveJanuary 1, 2010, the Company determined that as the primary beneficiary of the securitization vehicle, based on its power to direct activities through its role asservicer for the Trust and its obligation to absorb losses and right to receive benefits, it needed to consolidate the Trusts. NSBF therefore consolidated the entityusing the carrying amounts of the Trust’s assets and liabilities. NSBF reflects the assets in SBA Unguaranteed Non-Affiliate Investments and reflects theassociated financing in Notes Payable - Securitization Trusts.In December 2014, we completed a securitization transaction which resulted in the transfer of $36,000,000 of unguaranteed portions of SBA loans and anadditional $7,500,000 in loans which were issued subsequent to the transaction, to the Newtek Small Business Loan Trust 2014-1 (the “2014 Trust”). The 2014Trust in turn issued securitization notes for the par amount of $31,700,000 against the assets in a private placement. The notes received an “A” rating by S&P, andthe final maturity date of the notes is April 2040.In September 2015, NSBF issued additional unguaranteed SBA 7(a) loan-backed notes as part of an upsizing of the Newtek Small Business Loan Trust, Series2010-1. Note principal amounts of the original and exchanged notes were approximately $8,771,000 with additional notes which totaled approximately$32,028,000 as part of the upsizing. The initial aggregate amount of the senior notes issued by the Trust was approximately $40,800,000 on the closing date. Thenotes are collateralized by approximately $46,458,000 of SBA 7(a) unguaranteed portions and include a prefunded amount of $14,679,000 to be originated andtransferred subsequently to the trust. The notes retained their AA rating under S&P, and the final maturity of the amended notes is February 25, 2041.In November 2016, NSBF completed a securitization which resulted in the transfer of $56,073,000 of unguaranteed portions of SBA loans to the Newtek SmallBusiness Loan Trust, Series 2016-1 (the “2016-1 Trust”). The 2016-1 Trust in turn issued securitization notes for the par amount of $53,444,000, consisting of$43,632,000 Class A notes and $9,812,000 of Class B notes, against the assets in a private placement. The Class A and Class B notes received an “A” and “BBB+”rating by S&P, respectively, and the final maturity date of the notes is February 2042.Tabular Disclosure of Contractual ObligationsThe following table represents our obligations and commitments as of December 31, 2016 for future cash payments under debt, lease and employment agreements(in thousands): Payments due by periodContractual ObligationsTotal Less than 1 year 1-3 years 3-5 years More than 5 yearsBank notes payable$5,100 $5,100 $— $— $—Securitization notes payable120,945 — — — 120,945Notes due 20228,324 — — — 8,324Notes due 202140,250 — — 40,250 —Note payable - related party1,400 — 1,400 — —Operating leases (1)13,951 2,006 3,059 2,274 6,612Employment agreements281 281 — — —Total contractual obligations$190,251 $7,387 $4,459 $42,524 $135,881(1) Minimum payments have not been reduced by minimum sublease rentals of $935,000 due in the future under non-cancelable subleases.Critical Accounting Policies and EstimatesThe preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during theperiods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.Fair Value MeasurementsWe value investments for which market quotations are readily available at their market quotations. However, a readily available market value is not expected toexist for many of the investments in our portfolio, and we value these portfolio investments at81Table of Contentsfair value as determined in good faith by our Board under our valuation policy and process. We may seek pricing information with respect to certain of ourinvestments from pricing services or brokers or dealers in order to value such investments. We also employ independent third party valuation firms for certain ofour investments for which there is not a readily available market value. The application of our valuation methods may include comparisons of the portfolio companies to peer companies that are public, the enterprise value of a portfoliocompany, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings, discounted cash flow, the markets inwhich the portfolio company does business and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equitysale occurs, we will consider the pricing indicated by the external event to corroborate the private equity valuation. Due to the inherent uncertainty of determiningthe fair value of investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that wouldhave been used had a readily available market value existed for such investments and may differ materially from values that may ultimately be received or settled.Our Board is ultimately and solely responsible for determining, in good faith, the fair value of investments that are not publicly traded, whose market prices are notreadily available on a quarterly basis or any other situation where portfolio investments require a fair value determination.Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date (an exit price). ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into threelevels for disclosure purposes. The Company carries all investments at fair value. Additionally, the Company carries its credits in lieu of cash, notes payable incredits in lieu of cash, and servicing assets at fair value. The fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identicalassets or liabilities and gives the lowest priority to unobservable inputs (Level 3). An asset or liability’s classification within the fair value hierarchy is based on thelowest level of the significant input to its valuation. The levels of the fair value hierarchy are as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivativecontracts that are traded in an active exchange market, as well as certain U.S. Treasury, other U.S. Government and agency mortgage-backed debtsecurities that are highly liquid and are actively traded in over-the-counter markets. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, orother inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivativecontracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from orcorroborated by observable market data. This category generally includes certain U.S. Government and agency mortgage-backed debt securities,corporate debt securities, derivative contracts and residential mortgage loans held-for-sale. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similartechniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This categorygenerally includes certain private equity investments, retained residual interests in securitizations, residential mortgage servicing rights, and highlystructured or long-term derivative contracts.Valuation of InvestmentsLevel 1 investments are valued using quoted market prices. Level 2 investments are valued using market consensus prices that are corroborated by observablemarket data and quoted market prices for similar assets and liabilities. Level 3 investments are valued at fair value as determined in good faith by the Board, basedon input of management, the audit committee and independent valuation firms that have been engaged at the direction of the Board to assist in the valuation ofcertain portfolio investments without a readily available market quotation at least once during a trailing twelve-month period under a valuation policy and aconsistently applied valuation process.82Table of ContentsWhen determining fair value of Level 3 debt and equity investments, the Company may take into account the following factors, where relevant: the enterprisevalue of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discountedcash flows, the markets in which the portfolio company does business, comparisons to publicly traded securities, and changes in the interest rate environment andthe credit markets generally that may affect the price at which similar investments may be made and other relevant factors. The primary method for determiningenterprise value uses a multiple analysis whereby appropriate multiples are applied to the portfolio company’s net income before net interest expense, income taxexpense, depreciation and amortization (“EBITDA”) or revenue. The enterprise value analysis is performed to determine the value of equity investments and todetermine if debt investments are credit impaired. If debt investments are credit impaired, the Company will use the enterprise value analysis or a liquidation basisanalysis to determine fair value. For debt investments that are not determined to be credit impaired, the Company uses a market interest rate yield analysis todetermine fair value. In addition, for certain debt investments, the Company may base its valuation on quotes provided by an independent third party broker. Due to the inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair value of theinvestments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from thevalues that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions or otherwise are less liquid thanpublicly traded instruments. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, the Company may realize significantlyless than the value at which such investment had previously been recorded. The Company’s investments are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impactedby the volatility and liquidity in the markets in which the investments are traded.Income Recognition Interest on loan investments is accrued and included in income based on contractual rates applied to principal amounts outstanding. Interest income is determinedusing a method that results in a level rate of return on principal amounts outstanding. When a loan becomes 90 days or more past due, or if we otherwise do notexpect to receive interest and principal repayments, the loan is placed on non-accrual status and the recognition of interest income is discontinued. Interestpayments received on loans that are on non-accrual status are treated as reductions of principal until the principal is repaid. We receive servicing income related to the guaranteed portions of SBA loan investments which we sell into the secondary market. These recurring fees are earneddaily and recorded when earned. Servicing income is earned for the full term of the loan or until the loan is repaid.We receive a variety of fees from borrowers in the ordinary course of conducting our business, including packaging fees, legal fees, late fees and prepayment fees.All other income is recorded when earned. Dividend income is recorded at the time dividends are declared. Distributions of earnings from a portfolio companies are evaluated to determine if the distributionis income, return of capital or realized gain.Income Taxes Deferred tax assets and liabilities are computed based upon the differences between the financial statement and income tax basis of assets and liabilities using theenacted tax rates in effect for the year in which those temporary differences are expected to be realized or settled. If available evidence suggests that it is morelikely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to theamount that is more likely than not to be realized. The Company’s U.S. federal and state income tax returns prior to fiscal year 2013 are generally closed, and management continually evaluates expiring statutes oflimitations, audits, proposed settlements, changes in tax law and new authoritative rulings. 83Table of ContentsDecember 31, 2016 and 2015 , no U.S. federal excise taxes were due.The Company’s Taxable Subsidiaries accrue income taxes payable based on the applicable corporate rates on the unrealized gains generated by the investmentsheld by the Taxable Subsidiaries. Such deferred tax liabilities were $5,983,000 and $857,000 at December 31, 2016 and 2015 , respectively and are recorded asdeferred tax liabilities on the consolidated statements of assets and liabilities. The change in deferred tax liabilities is included as a component of net realized andunrealized gains in the consolidated statements of operations.New Accounting StandardsIn November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues TaskForce),” which require that the statement of cash flow explain the change during the period in the total of cash, cash equivalents, and amounts generally describedas restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash andcash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU is effective for annualreporting periods beginning after December 15, 2017, and interim periods within those periods. Early adoption is permitted. The Company is currently evaluatingthe impact this ASU will have on its consolidated financial statements and disclosures.In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” which is intended to simplify several aspects ofthe accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, andclassification on the statement of cash flows. The ASU is effective for annual reporting periods beginning after December 15, 2016, and interim periods withinthose periods. Early application is permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements anddisclosures.In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases,” which amends various aspects of existing accountingguidance for leases, including the recognition of a right of use asset and a lease liability for leases with a duration of greater than one year. The ASU is effective forannual reporting periods beginning after December 15, 2018, and interim periods within those periods. Early adoption is permitted. The Company has notcompleted its review of the new guidance; however, the Company anticipates that upon adoption of the standard it will recognize additional assets andcorresponding liabilities related to leases on its consolidated statements of assets and liabilities.In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets andFinancial Liabilities”, which, among other things, requires an entity to present separately in other comprehensive income the portion of the total change in the fairvalue of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance withthe fair value option for financial instruments. Additionally, the ASU changes the disclosure requirements for financial instruments. This ASU is effective forannual reporting periods beginning after December 15, 2017, and interim periods within those periods, and early adoption is permitted for certain provisions. TheCompany is currently evaluating the impact this ASU will have on its consolidated financial statements and disclosures.Subsequent EventsThe Company has evaluated subsequent events through the time of filing these consolidated financial statements with the SEC.Off Balance Sheet Arrangements84Table of ContentsNone.Impact of InflationThe impact of inflation and changing prices on our results of operations is not material.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.We consider the principal types of risk in our investing activities to be fluctuations in interest rates and loan portfolio valuations and the availability of thesecondary market for our SBA loans held for sale. Risk management systems and procedures are designed to identify and analyze our risks, to set appropriatepolicies and limits and to continually monitor these risks and limits by means of reliable administrative and information systems and other policies and programs.NSBF primarily lends at an interest rate of prime, which resets on a quarterly basis, plus a fixed margin. The Capital One warehouse lines, securitization notes andrelated party debt are on a prime plus a fixed factor basis. As a result the Company believes it has matched its cost of funds to its interest income in its financingactivities. However, because of the differential between the amount lent and the smaller amount financed a significant change in market interest rates will have amaterial effect on our income. In periods of sharply rising interest rates, our cost of funds will increase at a slower rate than the interest income earned on the loanswe have made; this should improve our net investment income, holding all other factors constant. However, a reduction in interest rates, as has occurred since2008, has and will result in the Company experiencing a reduction in investment income; that is interest income will decline more quickly than interest expenseresulting in a net reduction of benefit to investment income.NSBF depends on the availability of secondary market purchasers for the guaranteed portions of SBA loans and the premium received on such sales to support itslending operations. At this time the secondary market for the guaranteed portions of SBA loans is robust but during the 2008 and 2009 financial crisis theCompany had difficulty selling its loans for a premium; although not expected at this time, if such conditions did recur, NSBF would most likely cease making newloans and could experience a substantial reduction in profitability.We do not have significant exposure to changing interest rates on invested cash which was approximately $22,931,000 at December 31, 2016 . We do not purchaseor hold derivative financial instruments for trading purposes. All of our transactions are conducted in U.S. dollars and we do not have any foreign currency orforeign exchange risk. We do not trade commodities or have any commodity price risk.We believe that we have placed our demand deposits, cash investments and their equivalents with high credit-quality financial institutions. The Company investscash not held in interest free checking accounts or bank money market accounts mainly in U.S. Treasury only money market instruments or funds and otherinvestment-grade securities. As of December 31, 2016 , cash deposits in excess of Federal Deposit Insurance Corporation (“FDIC”) and Securities InvestorProtection Corporation (“SIPC”) insurance totaled approximately $ 10,689,000 .ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.Our consolidated financial statements and related notes begin on Page F-1, which are included in this Annual Report on Form 10-K.ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.None.ITEM 9A. CONTROLS AND PROCEDURES.(a) Evaluation of Disclosure Controls and ProceduresAs of December 31, 2016 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Accounting Officer, evaluated theeffectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, ourmanagement, including our Chief Executive Officer85Table of Contentsand Chief Accounting Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required tobe disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and thatsuch information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Accounting Officer, as appropriate, toallow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls andprocedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and managementnecessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.(b) Management’s Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of theeffectiveness of internal control over financial reporting as of December 31, 2016 . Internal control over financial reporting is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenanceof records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a materialeffect on the financial statements.Management performed an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016 based upon criteriain Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on ourassessment, management determined that the Company’s internal control over financial reporting was effective as of December 31, 2016 based on the criteria inInternal Control — Integrated Framework (2013) issued by COSO.(c) Attestation Report of the Registered Public Accounting Firm.RSM US LLP, our independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company’s internal control overfinancial reporting as of December 31, 2016 , as stated in its report, which is included under “Item 8. Consolidated Financial Statements and Supplementary Data”of this annual report on Form 10-K.(d) Changes in Internal Control over Financial Reporting.There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) that occurredduring our most recently completed fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financialreporting.ITEM 9B. OTHER INFORMATION.None.PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.The information required by Item 10 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2017 Annual Meeting ofShareholders, to be filed with the Securities and Exchange Commission not later than 120 days following the end of our fiscal year.ITEM 11. EXECUTIVE COMPENSATION86Table of ContentsThe information required by Item 11 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2017 Annual Meeting ofShareholders, to be filed with the Securities and Exchange Commission not later than 120 days following the end of our fiscal year.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe information required by Item 12 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2017 Annual Meeting ofShareholders, to be filed with the Securities and Exchange Commission not later than 120 days following the end of our fiscal year.ITEM 13. CERTAIN RELATIONSHIPS, RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCEThe information required by Item 13 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2017 Annual Meeting ofShareholders, to be filed with the Securities and Exchange Commission not later than 120 days following the end of our fiscal year.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required by Item 14 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2017 Annual Meeting ofShareholders, to be filed with the Securities and Exchange Commission not later than 120 days following the end of our fiscal year.87Table of ContentsPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.(a)(1) Financial Statements.(a)(2) Exhibits.The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Securities and ExchangeCommission.Number Description 1.1 Form of Underwriting Agreement (Previously filed in connection with Pre-Effective Amendment No. 3 to the Registrant’s RegistrationStatement on Form N-2 (File No. 333-191499) filed on November 3, 2014, and incorporated by reference herein). 3.1 Amended and Restated Articles of Incorporation of Newtek Business Services Corp. (Previously filed in connection with Pre-EffectiveAmendment No. 3 to the Registrant’s Registration Statement on Form N-2 (File No. 333-191499) filed on November 3, 2014, and incorporatedby reference herein). 3.2 Bylaws of Newtek Business Services Corp. (Incorporated by reference to Exhibit 99.2 to Registrant’s Registration Statement on Form N-14(File No. 333-195998), filed September 24, 2014). 4.1 Form of Common Stock Certificate (Incorporated by reference to Exhibit 99.5 to Registrant’s Registration Statement on Form N-14 (File No.333-195998), filed September 24, 2014). 10.1 Form of Dividend Reinvestment Plan (Previously filed in connection with Pre-Effective Amendment No. 3 to the Registrant’s RegistrationStatement on Form N-2 (File No. 333-191499) filed on November 3, 2014, and incorporated by reference herein). 10.2 Employment Agreement with Barry Sloane, dated March 1, 2016 (Incorporated by reference to Exhibit 10.1 to Newtek Business ServicesCorp.'s Current Report on Form 8-K (File No. 814-01035), filed March 23, 2016). 10.3 Employment Agreement with Jennifer C. Eddelson, dated March 1, 2016 (Incorporated by reference to Exhibit 10.2 to Newtek BusinessServices Corp.'s Current Report on Form 8-K (File No. 814-01035), filed March 23, 2016). 10.4 Employment Agreement with Michael A. Schwartz, dated March 1, 2016 (Incorporated by reference to Exhibit 10.3 to Newtek BusinessServices Corp.'s Current Report on Form 8-K (File No. 814-01035), filed March 23, 2016). 10.8.2 Guaranty of Payment and Performance, dated as of April 30, 2010, between Newtek Business Services, Inc. and Capital One Bank, N.A.(Incorporated herein by reference to Exhibit 10.16.2 to Newtek Business Services, Inc.’s Current Report on Form 8-K (File No. 001-16123),filed May 5, 2010). 10.9 Newtek Business Services Corp. 2014 Stock Incentive Plan (Incorporated herein by reference to Exhibit 8.6 to Registrant’s RegistrationStatement on Form N-14 (File No. 333-195998), filed September 24, 2014). 10.10.1 Loan and Security Agreement, dated as of December 15, 2010, between Newtek Small Business Finance, Inc. and Capital One Bank, N.A.(Incorporated herein by reference to Exhibit 10.18.1 to Newtek Business Services, Inc.’s Current Report on Form 8-K (File No. 001-16123),filed December 20, 2010, as amended on March 2, 2011). 10.10.2 Guaranty Agreement, dated as of December 15, 2010, between Newtek Business Services, Inc. and Capital One Bank, N.A. (Incorporated hereinby reference to Exhibit 10.18.2 to Newtek Business Services, Inc.’s Current Report on Form 8-K (File No. 001-16123), filed December 20,2010, as amended on March 2, 2011). 10.10.3 Amended and Restated Loan and Security Agreement, dated as of June 16, 2011, by and between Newtek Small Business Finance, Inc. andCapital One, N.A. (Incorporated herein by reference to Exhibit 10.8.3 to Newtek Business Services, Inc.’s Current Report on Form 8-K (FileNo. 001-16123), filed June 21, 2011). 10.10.4 Amended and Restated Guaranty of Payment and Performance, dated as of June 16, 2011, by and between Newtek Business Services, Inc., andCapital One, N.A. (Incorporated herein by reference to Exhibit 10.8.4 to Newtek Business Services, Inc.’s Current Report on Form 8-K (FileNo. 001-16123), filed June 21, 2011). 88Table of Contents10.10.5 Amendment to Loan Documents, dated October 6, 2011, by and among Newtek Small Business Finance, Inc., Capital One Bank, N.A. and eachof the guarantors listed on the signature pages thereto (Incorporated herein by reference to Exhibit 10.8.5 to Newtek Business Services, Inc.’sCurrent Report on Form 8-K (File No. 001-16123), filed October 11, 2011). 10.10.6 Amended and Restated Loan and Security Agreement, dated as of July 16, 2013, by and between Newtek Small Business Finance, Inc. andCapital One, National Association (Incorporated herein by reference to Exhibit 10.1 to Newtek Business Services, Inc.’s Current Report onForm 8-K (File No. 001-16123), filed July 19, 2013). 10.10.7 Guaranty and Security Agreement Letter Amendment, dated as of July 16, 2013, by and between Capital One, National Association and NewtekBusiness Services, Inc. (Incorporated herein by reference to Exhibit 10.2 to Newtek Business Services, Inc.’s Current Report on Form 8-K (FileNo. 001-16123), filed July 19, 2013). 10.10.8 Amended and Restated Loan and Security Agreement, dated as of October 29, 2014, by and between Newtek Small Business Finance, Inc. andCapital One, National Association (Incorporated herein by reference to Exhibit 10.1 to Newtek Business Services, Inc.’s Current Report onForm 8-K (File No. 001-16123), filed October 30, 2014).10.10.9 First Amendment to Loan Documents, dated June 18, 2015, by and among Capital One, North America, Newtek Small Business Finance, LLC,Newtek Business Services Corp. and the other guarantors party thereto (Incorporated by reference to Exhibit 10.1 to Newtek Business ServicesCorp.'s Current Report on Form 8-K (File No. 814-01035), filed June 24, 2015. 10.10.10 Amended and Restated Guaranty of Payment and Performance, dated as of June 18, 2015, by and between Capital One, National Associationand Newtek Business Services Corp. (Incorporated by reference to Exhibit 10.2 to Newtek Business Services Corp.'s Current Report on Form 8-K (File No. 814-01035), filed June 24, 2015. 10.10.11 Guaranty and Security Agreement Letter Agreement, dated as of October 29, 2014, by and between Capital One, National Association andNewtek Business Services, Inc. (Incorporated herein by reference to Exhibit 10.2 to Newtek Business Services, Inc.’s Current Report on Form8-K (File No. 001-16123), filed October 30, 2014). 10.11.1 Newtek Small Business Loan Trust Class A Notes, dated December 22, 2010 (Incorporated herein by reference to Exhibit 10.19.1 to NewtekBusiness Services, Inc.’s Current Report on Form 8-K (File No. 001-16123), filed December 23, 2010). 10.11.2 Amended Newtek Small Business Loan Trust Class A Notes, dated December 29, 2011 (Incorporated herein by reference to Exhibit 10.19.2 toNewtek Business Services, Inc.’s Current Report on Form 8-K (File No. 001-16123), filed January 5, 2012). 10.11.3 Additional Newtek Small Business Loan Trust Class A Notes, dated December 29, 2011 (Incorporated herein by reference to Exhibit 10.19.3 toNewtek Business Services, Inc.’s Current Report on Form 8-K (File No. 001-16123), filed January 5, 2012). 10.12.1 Loan and Security Agreement, dated as of February 28, 2011, by and between CDS Business Services, Inc. and Sterling National Bank(Incorporated herein by reference to Exhibit 10.10.1 to Newtek Business Services, Inc.’s Current Report on Form 8-K (File No. 001-16123),filed March 3, 2011). 10.12.2 Guaranty, dated as of February 28, 2011, by and between Newtek Business Services, Inc. and Sterling National Bank (Incorporated herein byreference to Exhibit 10.10.2 to Newtek Business Services, Inc.’s Current Report on Form 8-K (File No. 001-16123), filed March 3, 2011). 10.12.3 Amendment No. 1, dated December 5, 2012, to Loan and Security Agreement, dated as of February 28, 2011, by and between CDS BusinessServices, Inc. and Sterling National Bank (Incorporated herein by reference to Exhibit 10.9.3 to Newtek Business Services, Inc.’s CurrentReport on Form 8-K (File No. 001-16123), filed December 11, 2012). 10.13 Credit Agreement by and between Newtek Business Services, Inc. and Capital One, National Association, dated as of June 26, 2014(Incorporated herein by reference to Exhibit 10.1 to Newtek Business Services, Inc.’s Current Report on Form 8-K (File No. 001-16123), filedJuly 1, 2014). 10.14 Form of Custodian Agreement (Previously filed in connection with Pre-Effective Amendment No. 3 to the Registrant’s Registration Statementon Form N-2 (File No. 333-191499), filed on November 3, 2014, and incorporated by reference herein). 10.15 Newtek Small Business Loan Trust 2014-1 Class A Notes, dated December 3, 2014 (Incorporated herein by reference to Exhibit 10.1 toRegistrant’s Current Report on Form 8-K (File No. 814-01035), filed on December 5, 2014). 89Table of Contents10.16 Amended and restated Form of Custody Agreement dated as of October 30, 2015 by and between Newtek Business Services Corp. and U.S.Bank National Association (Incorporated herein by reference to Exhibit 99.1 to Newtek Business Services Corp.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (File No. 814-01035) filed on November 5, 2015. 10.17 Membership Purchase Agreement, dated July 23, 2015, by and among Newtek Business Services Corp., Newtek Business Services Holdco1,Inc., Premier Payments LLC and Jeffrey Rubin (Incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K(File No. 814-01035), filed on July 29, 2015). 11 Computation of Per Share Earnings (included in the notes to the consolidated financial statements in this report)14.1 Code of Ethics (Previously filed in connection with Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2(File No. 333-191499) filed on November 3, 2014, and incorporated by reference herein). 21.1 Subsidiaries of the Registrant filed herewith. 31.1 Certification by Principal Executive Officer required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, filed herewith. 31.2 Certification by Principal Financial Officer required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, filed herewith. 32.1 Certification by Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002 filed herewith. 32.2 Certification by Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002 filed herewith. 99.1 Financial Statements of Universal Processing Services of Wisconsin, LLC as of and for the year ended December 31, 2016 (audited) (filedherewith). 99.2 Financial Statements of Universal Processing Services of Wisconsin, LLC and Subsidiary as of and for the year ended December 31, 2015(audited) (filed herewith). 99.3 Financial Statements of Universal Processing Services of Wisconsin, LLC and Subsidiary as of December 31, 2014 and for the periodNovember 12, 2014 to December 31, 2014 (unaudited) (filed herewith).90Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized. NEWTEK BUSINESS SERVICES CORP. Date: March 13, 2017By:/ S / B ARRY S LOANE Barry Sloane Chairman and Chief Executive Officer(Principal Executive Officer) Date: March 13, 2017By:/ S / J ENNIFER E DDELSON Jennifer Eddelson Chief Accounting Officer(Principal Financial Officer and Principal Accounting Officer)In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the datesindicated.SignatureTitleDate / S / B ARRY S LOANEChairman of the Board, President and Chief Executive Officer (PrincipalExecutive Officer)March 13, 2017Barry Sloane / S / J ENNIFER E DDELSONChief Accounting Officer (Principal Financial Officer and PrincipalAccounting Officer)March 13, 2017Jennifer Eddelson /S/ RICHARD SALUTEDirectorMarch 13, 2017Richard Salute / S / S ALVATORE M ULIA DirectorMarch 13, 2017Salvatore Mulia / S / S AMUEL K IRSCHNERDirectorMarch 13, 2017Samuel Kirschner /S/ PETER DOWNSDirectorMarch 13, 2017Peter Downs91Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESINDEX TO CONSOLIDATED FINANCIAL STATEMENTSTable of Contents PAGE NO. Report of Independent Registered Public Accounting FirmF-1 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial ReportingF-2 Consolidated Statements of Assets and Liabilities as of December 31, 2016 and 2015F-3 Consolidated Statements of Operations for the years ended December 31, 2016 and 2015 and the periods November 12, 2014 to December 31,2014 and January 1, 2014 to November 11, 2014F-4 Consolidated Statements of Changes in Net Assets/Stockholders' Equity for the years ended December 31, 2016 and 2015, the period fromNovember 12, 2014 to December 31, 2014 and the period from January 1, 2014 to November 11, 2014F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2016 and 2015 and the periods from November 12, 2014 to December31, 2014 and January 1, 2014 to November 11, 2014F-9 Consolidated Schedules of Investments as of December 31, 2016 and 2015F-12 Notes to Consolidated Financial StatementsF-13392Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and StockholdersNewtek Business Services Corp. and SubsidiariesWe have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Newtek BusinessServices Corp. and Subsidiaries (the Company) as of December 31, 2016 and 2015, and the related consolidated statements of operations, changes in netassets/stockholders’ equity, and cash flows for the years ended December 31, 2016, and December 31, 2015, the period from November 12, 2014 to December 31,2014, and the period from January 1, 2014 to November 11, 2014. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned asof December 31, 2016 and 2015, by correspondence with the borrowers or by other appropriate auditing procedures where replies from the borrowers were notreceived and by other appropriate auditing procedures with respect to controlled investments. Our audits also involved performing such other procedures as weconsidered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Newtek Business ServicesCorp. and Subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for the years ended December 31, 2016, and2015, the period from November 12, 2014 to December 31, 2014, and the period from January 1, 2014 to November 11, 2014, in conformity with U.S. generallyaccepted accounting principles.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Newtek Business Services Corp. andSubsidiaries’ internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework issued bythe Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 13, 2017 expressed an unqualified opinion on theeffectiveness of Newtek Business Services Corp. and Subsidiaries’ internal control over financial reporting./s/ RSM US LLPNew York, New YorkMarch 13, 2017F-1Table of ContentsReport of Independent Registered Public Accounting Firm on Internal Control Over Financial ReportingT o the Board of Directors and StockholdersNewtek Business Services Corp. and SubsidiariesWe have audited Newtek Business Services Corp. and Subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2016, based oncriteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. TheCompany’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to expressan opinion on the Company's internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.In our opinion, Newtek Business Services Corp. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as ofDecember 31, 2016, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission in 2013.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of assetsand liabilities, including the consolidated schedules of investments, of Newtek Business Services Corp. and Subsidiaries as of December 31, 2016 and 2015, andthe related consolidated statements of operations, changes in net assets/stockholders’ equity, and cash flows for the years ended December 31, 2016 and 2015, theperiod from November 12, 2014 to December 31, 2014 and the period from January 1, 2014 to November 11, 2014 , and our report dated March 13, 2017expressed an unqualified opinion./s/ RSM US LLPNew York, New YorkMarch 13, 2017F-2Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES(In Thousands, except for Per Share Data) December 31, 2016 2015ASSETS Investments, at fair value SBA unguaranteed non-affiliate investments (cost of $219,784 and $166,752, respectively; includes $197,927 and$146,463, respectively, related to securitization trusts)$211,471 $158,355SBA guaranteed non-affiliate investments (cost of $10,262 and $2,069, respectively)11,512 2,284Controlled investments (cost of $41,001 and $35,781, respectively)121,302 104,376Non-control/non-affiliate investments (cost of $904 and $1,847, respectively)904 1,824Investments in money market funds (cost of $35 and $35, respectively)35 35Total investments at fair value345,224 266,874Cash and cash equivalents2,051 4,308Restricted cash20,845 22,869Broker receivable2,402 32,083Due from related parties3,748 3,056Servicing assets, at fair value16,246 13,042Credits in lieu of cash, at fair value— 860Other assets10,934 9,338Total assets$401,450 $352,430LIABILITIES AND NET ASSETS Liabilities: Bank notes payable$5,100 $29,100Notes due 2022 (Note 8)7,853 7,770Notes due 2021 (Note 8)38,767 —Notes payable – Securitization trusts (Note 8)118,122 89,244Dividends payable— 5,802Note payable - related parties1,400 5,647Due to related parties1,227 256Notes payable in credits in lieu of cash, at fair value— 860Deferred tax liabilities5,983 857Accounts payable, accrued expenses and other liabilities13,904 8,945Total liabilities192,356 148,481Commitments and contingencies (Note 9) Net Assets: Preferred stock (par value $0.02 per share; authorized 1,000 shares, no shares issued and outstanding)— —Common stock (par value $0.02 per share; authorized 200,000 shares, 14,624 and 14,509 issued and outstanding,respectively)293 290Additional paid-in capital188,472 189,031Undistributed net investment income8,092 4,437Net unrealized appreciation, net of deferred taxes13,008 8,062Net realized (losses) gains(771) 2,129Total net assets209,094 203,949Total liabilities and net assets$401,450 $352,430Net asset value per common share$14.30 $14.06See accompanying notes to these consolidated financial statements.F-3Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(In Thousands, except for Per Share Data) As a Business Development Company Prior to becoming aBusiness DevelopmentCompany Year endedDecember 31, 2016 Year endedDecember 31, 2015 November 12,2014 toDecember 31,2014 January 1, 2014 toNovember 11, 2014Investment income: From non-affiliate investments: Interest income$11,158 $8,924 $1,076 $—Servicing income6,160 4,611 562 —Other income2,714 1,929 270 —Total investment income from non-affiliate investments20,032 15,464 1,908 —From controlled investments: Interest income360 277 27 —Dividend income10,573 10,218 37 —Other income— 111 4 —Total investment income from controlled investments10,933 10,606 68 —Total investment income30,965 26,070 1,976 —Operating revenues: Electronic payment processing$— $— $— $79,527Web hosting and design— — — 13,730Premium income— — — 18,623Interest income— — — 5,663Servicing fee income – NSBF portfolio— — — 3,111Servicing fee income – external portfolios— — — 6,142Income from tax credits— — — 48Insurance commissions— — — 1,480Other income— — — 3,523Total operating revenues— — — 131,847Net change in fair value of: SBA loans— — — (3,663)Credits in lieu of cash and notes payable in credits in lieu of cash— — — (5)Total net change in fair value— — — (3,668)Expenses: Electronic payment processing costs— — — 67,011Salaries and benefits15,234 12,753 1,458 23,373Interest8,440 6,479 568 7,323Depreciation and amortization296 326 43 3,140Goodwill impairment— — — 1,706Provision for loan losses— — — (53)Other general and administrative costs16,255 12,697 2,236 18,536Total expenses40,225 32,255 4,305 121,036F-4Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(In Thousands, except for Per Share Data) As a Business Development Company Prior to becoming aBusiness DevelopmentCompany Year endedDecember 31, 2016 Year endedDecember 31, 2015 November 12,2014 toDecember 31,2014 January 1, 2014 toNovember 11, 2014Net investment loss before income tax(9,260) (6,185) (2,329) —Provision for income tax - post BDC— — 194 —Net investment loss(9,260) (6,185) (2,523) —Net realized and unrealized gains (losses): Net realized gains on non-affiliate investments31,512 28,386 595 —Net realized gains on controlled investments108 5,473 — —Net unrealized (depreciation) appreciation on SBA guaranteed non-affiliate investments1,035 (3,215) 3,007 —Net unrealized appreciation (depreciation) on SBA unguaranteed non-affiliate investments18 1,183 (274) —Net unrealized appreciation on controlled investments11,337 12,250 — —Provision for deferred taxes on unrealized appreciation oninvestments(5,128) (857) — —Net unrealized depreciation on non-control/non-affiliate investments(43) (24) — —Net unrealized depreciation on servicing assets(2,269) (1,268) (120) —Net unrealized depreciation on credits in lieu of cash and notespayable in credits in lieu of cash(5) (7) (4) —Net realized and unrealized gains36,565 41,921 3,204 —Income before income taxes— — — 7,143Net increase in net assets$27,305 $35,736 $681 $—Provision for income taxes— — — 3,935Net income— — — 3,208Net loss attributable to non-controlling interests— — — 85Net income attributable to Newtek Business Services Corp.$— $— $— $3,293Weighted average common shares outstanding: Basic— — — 7,315Diluted— — — 7,315Basic income per share$— $— $— $0.45Diluted income per share$— $— $— $0.45Net increase in net assets per share$1.88 $3.32 $0.09 $—Net investment loss per share$(0.64) $(0.57) $(0.33) $—Dividends and distributions declared per share$1.53 $4.45 $— $—Weighted average shares outstanding14,541 10,770 7,620 —See accompanying notes to these consolidated financial statements.F-5Table of Contents NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS/STOCKHOLDERS’ EQUITY(In Thousands) Number ofShares of Common Stock CommonStock AdditionalPaid-inCapital RetainedEarnings Numberof Shares ofTreasuryStock TreasuryStock Non-controllingInterest AccumulatedNet InvestmentLoss Net UnrealizedAppreciation Net RealizedGains TotalBalance atDecember 31,20137,382 $148 $61,939 $14,536 306 $(1,279) $1,665 $— $— — $77,009Issuance ofrestricted stock146 3 (3) — (53) — — — — — —Grant ofrestricted stockawards— — 865 — — — — — — — 865Issuance oftreasury shares10 — 70 — — 60 — — — — 130Exercise ofstock options45 1 259 — (9) (161) — — — — 99Warrantexercise155 3 (973) — (182) 970 — — — — —Shares withheldin lieu ofpayroll taxes— — (1,290) — — — — — — — (1,290)Tax benefitfromexercise/vestingof share basedawards— — 563 — — — — — — — 563Shareretirement(62) (1) (409) — (62) 410 — — — — —Distribution ofnon-controllinginterest— — — — — — (33) — — — (33)Net income— — — 3,293 — — (85) — — — 3,208Balance atNovember 11,20147,676 $154 61,021 $17,829 — $— $1,547 $— $— $— $80,551Election tobusinessdevelopmentcompany (Note2)— — 76,679 (17,829) — — (1,547) — — — 57,303Issuance ofcommon stock,net of offeringcosts (Note 11)2,530 51 27,832 — — — — — — — 27,883Net increase innet assets— — — — — — — (2,523) 2,609 595 681Balance atDecember 31,201410,206 $205 $165,532 $— — $— $— $(2,523) $2,609 $595 $166,418F-6Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS(In Thousands) Year endedDecember 31, 2016 Year endedDecember 31, 2015Increase in net assets: Net investment loss$(9,260) $(6,185)Net realized gain on investments31,620 33,859Net change in unrealized appreciation on investments12,347 10,194Change in provision for deferred taxes on unrealized gains on investments(5,128) (857)Net change in unrealized depreciation on servicing assets(2,269) (1,268)Net change in unrealized depreciation on credits in lieu of cash and notes payable in credits in lieu of cash(5) (7)Net increase in net assets27,305 35,736Distributions to shareholders: Distributions to shareholders from net realized gains (Note 12)(22,163) (20,912)Special dividend (Note 12)— (9,195)Total distributions to shareholders(22,163) (30,107)Capital share transactions: Issuance of common stock under dividend reinvestment plan665 288Stock compensation578 —Repurchase of common stock under share repurchase plan(866) —Issuance of common stock in connection with acquisition of Premier Payments LLC— 2,472Issuance of common stock in connection with legal settlement— 215Issuance of common stock, net of offering costs (Note 11)— 35,290Net increase in net assets from capital share transactions377 38,265Other transactions: Consolidation of The Texas Whitestone Group, LLC and CCC Real Estate Holdings, LLC— (33)Consolidation of Exponential Business Development Co., Inc. (Note 2)(376) —Adjustment for 2014 offering costs— 17Return of dividends related to common stock issued in connection with litigation settlement2 —Reversal of deferred tax asset— (2,870)Distribution to members of Exponential of New York, LLC— (2,677)Out of period adjustment related to BDC Conversion (Note 2)— (800)F-7Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS(In Thousands) Year endedDecember 31, 2016 Year endedDecember 31, 2015Net decrease in net assets from other transactions(374) (6,363)Total increase in net assets5,145 37,531Net assets at beginning of year203,949 166,418Net assets at end of year$209,094 $203,949Common shares outstanding at end of period14,624 14,509Capital share activity: Shares issued under dividend reinvestment plan58 17Shares issued under Equity Incentive Plan127 —Shares repurchase under share repurchase plan(70) —Shares issued in connection with acquisition of Premier Payments LLC— 131Shares issued in connection with legal settlement— 11Shares issued in connection with public offering— 2,300Shares issued in connection with special dividend— 1,844Net increase in capital share activity115 4,303See accompanying notes to these consolidated financial statements.F-8Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands) As a Business Development Company Prior tobecoming aBusinessDevelopmentCompany December 31, 2016 December 31,2015 November 12,2014 toDecember 31,2014 January 1, 2014to November 11,2014Cash flows from operating activities: Net increase in net assets/net income$27,305 $35,736 $681 $3,208Adjustments to reconcile net increase in net assets/net income to net cash(used in) provided by operating activities: Amortization of deferred financing costs and debt discount related to debtrefinancing— — — 1,905Fair value adjustments on SBA loans— — — 3,663Net unrealized appreciation on controlled investments(11,337) (12,250) — —Net unrealized (appreciation) depreciation on non-affiliate investments(1,010) 2,056 (2,733) —Net unrealized depreciation on servicing assets2,269 1,268 120 —Realized gains on controlled investments(108) (5,473) — —Realized gains on non-affiliate investments(32,437) (29,573) — —Realized losses on non-affiliate investments925 1,189 — —Loss on lease604 — — —Amortization of deferred financing costs1,327 1,318 332 1,127Deferred income taxes5,128 857 16 328Depreciation and amortization296 326 43 3,140Purchase of loan from SBA(2,057) (703) — —Funding of controlled investments(8,595) (17,100) (2,400) —Funding of non-control/non-affiliate investment(1,020) (2,200) — —Funding of guaranteed non-affiliate SBA loans(234,908) (185,443) (30,914) —Proceeds from sale of non-affiliate SBA loans258,873 240,663 6,421 —Funding of unguaranteed non-affiliate SBA loans(74,239) (57,053) (8,570) —Distributions received from investments in excess of basis108 5,473 — —Principal received from non-control/non-affiliate investment751 353 — —Return of investment from controlled investments535 3,746 — —Principal received from controlled investments4,052 1,200 — —Principal received on SBA loans22,106 20,086 1,305 —Goodwill impairment— — — 1,706Provision for loan losses— — — (53)Provision for doubtful accounts— — — 559Other, net781 (188) (12) 810Changes in operating assets and liabilities: Investment in money market funds— 2,965 (3,000) —Originations of SBA loans held for sale— — — (123,284)Proceeds from sale of SBA loans held for sale— — — 123,935F-9Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands) As a Business Development Company Prior to becominga BusinessDevelopmentCompany December 31, 2016 December 31,2015 November 12,2014 toDecember 31,2014 January 1, 2014 toNovember 11, 2014Broker receivable29,681 (32,083) 6,718 6,889Due to/from related parties(158) (2,477) 829 —Accounts receivable(14) 100 1,441 (873)Prepaid expenses, accrued interest receivable and other assets(191) 5,013 (4,425) 4,607Accounts payable, accrued expenses and other liabilities2,708 1,725 (5,698) 3,480Change in restricted cash3,187 (12,655) 1,061 (3,498)Capitalized servicing asset(5,474) (4,827) (138) (3,096)Net cash (used in) provided by operating activities(10,912) (37,951) (38,923) 24,553Cash flows from investing activities: Investments in qualified businesses— — — (214)Purchase of fixed assets and customer accounts(375) (105) (20) (1,369)Proceeds from sale of intangible asset— 407 — —SBA loans originated for investment, net— — — (39,786)Payments received on SBA loans— — — 10,853Proceeds from sale of loan held for investment— — — 500Net cash (used in) provided by investing activities(375) 302 (20) (30,016)Cash flows from financing activities: Net borrowings on bank lines of credit(24,000) (4,756) (1,091) 8,435Proceeds from common shares sold, net of offering costs— 35,290 29,728 —Proceeds from term loan— — — 10,000Net borrowing from related party(4,247) 5,647 — —Repurchase of common stock under share repurchase plan(866) — — —Payments on bank note payable— (9,167) (417) (11,007)Proceeds from Notes due 2022— 8,324 — —Proceeds from Notes due 202140,250 — — —Payments on senior notes(24,379) (19,993) (2,070) (10,527)Issuance of senior notes53,444 32,029 31,679 —Dividends paid(27,300) (15,111) — —Special dividend paid— (9,195) — —Change in restricted cash related to securitization(1,163) 5,175 (4,935) 6,441Additions to deferred financing costs(2,695) (1,409) (869) (860)Exponential of New York, LLC distributions to members— (2,673) — —Proceeds from exercise of stock options— — — 15F-10Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands) As a Business Development Company Prior tobecoming aBusinessDevelopmentCompany December 31, 2016 December 31,2015 November 12,2014 toDecember 31,2014 January 1, 2014to November 11,2014Payments on behalf of employees for payroll tax liability exchangedfor shares in connection with early vesting— — — (1,207)Other, net(14) (17) (2) (236)Net cash provided by financing activities9,030 24,144 52,023 1,054Net (decrease) increase in cash and cash equivalents(2,257) (13,505) 13,080 (4,409)Cash and cash equivalents—beginning of year/period$4,308 $17,813 $4,733 $12,508Cash and cash equivalents—end of year/period$2,051 $4,308 $17,813 $8,099Supplemental disclosure of cash flow activities: Cash paid for interest$6,687 $4,617 $638 $3,970Cash paid for taxes$— $— $— $6,187Non-cash investing and financing activities: Reduction of credits in lieu of cash and notes payable in credits in lieu ofcash balances due to delivery of tax credits to Certified Investors$869 $1,394 $174 $1,287Fixed assets acquired from tenant improvement allowance$1,288 $— $— $—Foreclosed real estate acquired$447 $1,130 $— $136Dividends declared but not paid during the year$— $5,802 $— $—Reversal of deferred tax asset$— $2,870 $— $—Issuance of common shares in connection with investment in PremierPayments LLC$— $2,472 $— $—Issuance of common shares in connection with legal settlement$— $215 $— $—Issuance of common shares under dividend reinvestment plan$665 $288 $— $—Out of period adjustment in connection with BDC Conversion$— $800 $— $—See accompanying notes to these consolidated financial statements.F-11Table of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssetsPerforming SBA UnguaranteedInvestments (1) Fort Smith Wings Inc. dba Wing Stop Food Services andDrinking Places Term Loan Prime plus2.75% 12/28/2026 $19.5 $19.5 $17.4 0.01%Sand Hill Associates, Ltd. dba CharlieO's Tavern on the Point Food Services andDrinking Places Term Loan Prime plus2.75% 12/27/2041 419.9 419.9 409.7 0.20%Joshua L. Baker Insurance Carriersand Related Activities Term Loan Prime plus2.75% 12/23/2026 15.8 15.8 13.4 0.01%Jacliff Investments Inc. dbaInternational health Technologies Publishing Industries(except Internet) Term Loan Prime plus2.75% 12/23/2026 125.0 125.0 106.7 0.05%New Image Building Services, Inc. Administrative andSupport Services Term Loan Prime plus2.75% 12/21/2026 43.8 43.8 38.7 0.02%Chestnut Street Associates, LLC andMetropolitan Solutions, Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/19/2041 275.0 275.0 261.1 0.12%Means Enterprises LLC dba FastFrameFrisco Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 12/16/2026 22.5 22.5 19.5 0.01%New Chicago Wholesale Bakery, Inc. Food Manufacturing Term Loan Prime plus2.75% 12/15/2041 452.8 452.8 443.6 0.21%Soon Im. Chin dba Stan C-Store Gasoline Stations Term Loan Prime plus2.75% 12/15/2041 212.5 212.5 216.6 0.10%Sempco, Inc. MiscellaneousManufacturing Term Loan Prime plus2.75% 12/15/2041 42.0 42.0 43.6 0.02%Allied Welding Inc. Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 12/15/2041 750.0 750.0 727.9 0.35%Ericon, Inc. dba Quik Pik Gasoline Stations Term Loan Prime plus2.75% 12/15/2041 332.2 332.2 328.4 0.16%White Hawk Inc. Truck Transportation Term Loan Prime plus2.75% 12/15/2026 1,097.8 1,097.8 937.2 0.45%Elita 7, LLC Nursing andResidential CareFacilities Term Loan Prime plus2.75% 12/15/2041 712.5 712.5 716.0 0.34%Techni-Pro Institute LLC Educational Services Term Loan Prime plus2.75% 12/15/2026 190.0 190.0 166.9 0.08%HMG Strategy, LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/14/2026 50.0 50.0 42.7 0.02%Cardinal Homes Inc. and Bret ABerneche Wood ProductManufacturing Term Loan Prime plus2.75% 12/14/2041 121.3 121.3 125.3 0.06%Trison Enterprises Inc.dba Lee'sAutomotive Repair andMaintenance Term Loan Prime plus2.75% 12/14/2041 407.5 407.5 406.2 0.19%AGG Management Team LLC dbaChevron Gasoline Stations Term Loan Prime plus2.75% 12/14/2041 $287.5 $287.5 $298.3 0.14%F-12See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssetsCardinal Homes Inc,.Alouette HoldingsInc. Wood ProductManufacturing Term Loan Prime plus2.75% 12/14/2026 $1,071.3 $1,071.3 $1,074.5 0.51%D and E Hardware Co. and D and EPump Sales and Service Building Material andGarden Equipmentand Supplies Dealers Term Loan Prime plus2.75% 12/14/2041 $528.6 $528.6 $518.6 0.25%Wayfarer Bicycle LLC Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 12/13/2041 $92.5 $92.5 $88.9 0.04%Success Advertising Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/13/2041 $466.5 $466.5 $476.4 0.23%Roast Beef Levittown LLC dba Arby's Food Services andDrinking Places Term Loan Prime plus2.75% 12/13/2026 $465.0 $54.6 $55.0 0.03%Queen Express LLC Gasoline Stations Term Loan Prime plus2.75% 12/13/2041 $187.5 $187.5 $191.6 0.09%Mack Team Enterprises Inc.dba TheUPS Store #6815 Couriers andMessengers Term Loan Prime plus2.75% 12/9/2026 $20.4 $20.4 $18.2 0.01%Recycling Revolution,LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 12/9/2041 $92.2 $92.2 $90.4 0.04%Myndshft Technologies LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/9/2026 $775.0 $775.0 $731.8 0.35%^New Life Hospital LLC Hospitals Term Loan Prime plus2.75% 12/8/2041 $1,195.5 $1,195.5 $1,240.3 0.59%Imagine By Carleen Inc. Personal and LaundryServices Term Loan Prime plus2.75% 12/8/2041 $52.5 $52.5 $53.3 0.03%Hanson's Greeks LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/8/2026 $11.3 $11.3 $11.3 0.01%Yachting Solutions LLC Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 12/7/2029 $71.3 $71.3 $67.4 0.03%T & B Boots, Inc. dba Takken's Shoes Clothing and ClothingAccessories Stores Term Loan Prime plus2.75% 12/7/2026 $100.0 $100.0 $93.0 0.04%Lan Doctors, Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/7/2026 $237.5 $237.5 $230.8 0.11%^The Lake Shore Hospitality Inc dbaDowagiac Baymont Inn & Suites Accommodation Term Loan Prime plus2.75% 12/5/2041 $352.5 $352.5 $358.5 0.17%Lilo Holdings LLC Food Services andDrinking Places Term Loan Prime plus2.75% 12/5/2026 $15.9 $15.9 $14.3 0.01% Transmission Solutions Group, Inc.and Calhoun Satellite Communications Telecommunications Term Loan Prime plus2.75% 12/2/2041 $141.3 $141.3 $130.2 0.06%F-13See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssetsCalhoun Satellite Communications,Inc. Telecommunications Term Loan Prime plus2.75% 12/2/2026 $192.5 $192.5 $171.7 0.08%Noso Development LLC Construction ofBuildings Term Loan Prime plus2.75% 12/1/2026 $75.0 $75.0 $64.0 0.03%^Ericon, Inc. Gasoline Stations Term Loan Prime plus2.75% 12/1/2041 $726.1 $726.1 $717.8 0.34%^Pebble Wood Lane, LLC and GoodSam's Assisted Living Resiidence,LLC Nursing andResidential CareFacilities Term Loan Prime plus2.75% 11/30/2041 $67.5 $67.5 $70.0 0.03%Sharaz Shah DBA Thomas Jewelers Clothing and ClothingAccessories Stores Term Loan Prime plus2.75% 11/30/2026 $8.1 $8.1 $6.9 —%Choe Trading Group, Inc.dba RapidPrinters of Monterey Printing and RelatedSupport Activities Term Loan Prime plus2.75% 11/30/2026 $22.5 $22.5 $21.9 0.01%Studio Find It Georgia, Inc. Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 11/30/2026 $7.5 $7.5 $6.5 —%^Quick Ship, LLC Couriers andMessengers Term Loan Prime plus2.75% 11/30/2026 $10.5 $10.5 $9.0 —%B4 Fitness LLC dba The Zoo HealthClub Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 11/30/2026 $22.5 $22.5 $20.0 0.01%Imaginarium Foods LLC, Food Services andDrinking Places Term Loan Prime plus2.75% 2/28/2042 $376.7 $124.4 $129.2 0.06%RD Management, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 11/30/2026 $213.8 $213.8 $184.7 0.09%^Usman Jalil, LLC dba Food Mart Gasoline Stations Term Loan Prime plus2.75% 11/29/2041 $233.3 $233.3 $223.3 0.11%Honor Mansion, Inc. Accommodation Term Loan Prime plus2.75% 11/29/2026 $87.5 $87.5 $88.1 0.04%Access Staffing, LLC Administrative andSupport Services Term Loan Prime plus2.75% 11/29/2026 $1,125.0 $1,125.0 $960.4 0.46%WPN Recycling Company LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 11/23/2026 $22.5 $22.5 $22.7 0.01%Hafa Adai Signs and Graphics LLC dbaFastsigns of Auburn -#281901 Administrative andSupport Services Term Loan Prime plus2.75% 11/23/2026 $60.0 $60.0 $51.9 0.02%CRK Mens, LLC dba Spiff for Men Personal and LaundryServices Term Loan Prime plus2.75% 11/23/2026 $106.3 $106.3 $92.5 0.04%Merchant Coterie, Inc. MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 11/23/2026 $125.0 $125.0 $106.7 0.05%6E Technologies LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 11/22/2026 $175.0 $175.0 $160.2 0.08%F-14See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssetsBroms Asset Management LLC Securities,CommodityContracts, and OtherFinancial Investmentsand Related Activities Term Loan Prime plus2.75% 11/22/2026 $125.0 $125.0 $106.7 0.05%Rognes Corp dba RTS Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 11/22/2026 $389.3 $389.3 $354.1 0.17%Bouquet Restaurant LLC Food Services andDrinking Places Term Loan Prime plus2.75% 11/22/2041 $125.0 $125.0 $124.9 0.06%^J.B.K Truck Trailer and Bus Inc Repair andMaintenance Term Loan Prime plus2.75% 11/22/2041 $435.0 $435.0 $427.8 0.20%Skaggs RV Outlet LLC Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 11/21/2026 $100.0 $100.0 $100.7 0.05%Catherine Christine Morin dba Purr-Fect Pets Personal and LaundryServices Term Loan Prime plus2.75% 11/17/2026 $18.8 $18.8 $16.0 0.01%Stratmar Systems Inc dba StratmarRetail Services Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 11/16/2026 $68.5 $68.5 $69.0 0.03%Hoosier Health Plus, LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 11/15/2026 $125.0 $125.0 $116.8 0.06%^J. A. Kohlhepp Sons, Inc. dbaKohlhepp's True Value Building Material andGarden Equipmentand Supplies Dealers Term Loan Prime plus2.75% 11/10/2041 $446.0 $446.0 $450.1 0.22%Hackensack Steel Corporation andLuzerne Ironworks Inc Specialty TradeContractors Term Loan Prime plus2.75% 11/10/2026 $239.2 $239.2 $238.8 0.11%^Panther Ironworks and RiggingSolutions LLC Specialty TradeContractors Term Loan Prime plus2.75% 11/10/2026 $151.3 $151.3 $138.0 0.07%^J. A. Kohlhepp Sons, Inc. dbaKohlhepp's True Value Building Material andGarden Equipmentand Supplies Dealers Term Loan Prime plus2.75% 11/10/2026 $188.8 $188.8 $184.8 0.09%^Bovill Creative,LLC Real Estate Term Loan Prime plus2.75% 11/9/2041 $281.2 $281.1 $291.7 0.14%^Big Apple Entertainment PartnersLLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 11/9/2026 $175.0 $175.0 $149.4 0.07%^Dyer Properties, LLC and BayviewPharmacy, Inc. Health and PersonalCare Stores Term Loan Prime plus2.75% 11/9/2041 $240.3 $240.3 $234.1 0.11%^Rich's Food Stores LLC dba Hwy 55of Wallace Food Services andDrinking Places Term Loan Prime plus2.75% 11/9/2026 $43.8 $43.8 $40.5 0.02%MIK LLC dba Firehouse Subs Food Services andDrinking Places Term Loan Prime plus2.75% 11/9/2026 $200.0 $163.3 $141.6 0.07%Surgarloaf Concepts LLC dba FatBiscuit Food Services andDrinking Places Term Loan Prime plus2.75% 11/8/2026 $168.8 $95.9 $96.6 0.05%F-15See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Fine Line Interiors, Inc. Repair andMaintenance Term Loan Prime plus2.75% 11/4/2041 $87.5 $87.5 $90.8 0.04%^Pig-Sty BBQ, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 11/3/2026 $71.3 $71.3 $71.8 0.03%131 Miles LLC and Ohm ShubhLaxmi, LLC. dba Mr Hero Food Services andDrinking Places Term Loan Prime plus2.75% 11/3/2041 $127.5 $35.8 $37.2 0.02%^Veracruz Shabo, LLC, WaterfallsQuick Lube LLC Repair andMaintenance Term Loan Prime plus2.75% 11/1/2041 $118.8 $118.8 $119.6 0.06%Glocecol LLC Administrative andSupport Services Term Loan Prime plus2.75% 11/1/2026 $75.0 $75.0 $75.5 0.04%Middlesex Auto Sales Corp Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 10/31/2041 $125.0 $47.5 $49.3 0.02%^Bloomquist Communications Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 10/31/2026 $60.0 $59.6 $50.9 0.02%^Moolchan Enterprises LLC dbaStaying Green Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 10/31/2026 $18.2 $18.0 $16.9 0.01%^Woodstock Enterprises Corp dba TrueScent Candle Company MiscellaneousManufacturing Term Loan Prime plus2.75% 10/31/2041 $88.8 $88.6 $85.2 0.04%^Patina Investment, Inc and Ram &Sons, Inc. Repair andMaintenance Term Loan Prime plus2.75% 10/27/2041 $175.0 $174.8 $181.3 0.09%Elite Structures Inc Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 10/27/2029 $225.0 $225.0 $217.4 0.10%^FibAire Communications, LLC Telecommunications Term Loan Prime plus2.75% 10/27/2026 $107.5 $106.8 $97.6 0.05%^Bonita Stone LLC and CastoneCreations Inc Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 10/25/2041 $264.4 $264.0 $259.4 0.12%^Empire Processor Services Inc. andVerrazano Wholesale Dist., Inc. Nonstore Retailers Term Loan Prime plus2.75% 10/25/2026 $131.3 $130.5 $131.4 0.06%Blakeslee Arpaia Chapman Inc andChapman Construction Services LLC Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 10/24/2026 $425.0 $422.4 $416.6 0.20%Eco Vehicle Systems LLC TransportationEquipmentManufacturing Term Loan Prime plus2.75% 10/21/2026 $955.5 $949.8 $940.4 0.45%Worldwide Estate, Inc. dba WashingtonHeights Manor Nursing andResidential CareFacilities Term Loan Prime plus2.75% 10/21/2041 $225.0 $155.8 $161.6 0.08%^Gold Wind Logistics LLC Truck Transportation Term Loan Prime plus2.75% 10/20/2041 $175.0 $175.0 $181.6 0.09%^Speaker City, Inc. dba Rollin Thunder Electronics andAppliance Stores Term Loan Prime plus2.75% 10/14/2041 $125.0 $124.8 $125.3 0.06%^Maine Service Corp MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 10/13/2026 $206.3 $204.3 $190.3 0.09%F-16See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Justin Partlow Insurance Carriersand Related Activities Term Loan Prime plus2.75% 10/13/2026 $19.5 $19.4 $16.5 0.01%^Reliable Recovery Services LLC Support Activities forTransportation Term Loan Prime plus2.75% 10/7/2026 $112.5 $111.8 $101.4 0.05%^Ailky Corporation Building Material andGarden Equipmentand Supplies Dealers Term Loan Prime plus2.75% 10/3/2026 $250.0 $248.5 $217.5 0.10%^Wyspen Corporation dba CharlestownAce Building Material andGarden Equipmentand Supplies Dealers Term Loan Prime plus2.75% 10/3/2026 $36.0 $35.8 $30.5 0.01%^JJA Transportation Management Inc. Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 9/30/2026 $52.5 $51.9 $44.3 0.02%^MegaPhase, LLC Computer andElectronic ProductManufacturing Term Loan Prime plus2.75% 9/30/2026 $150.0 $148.2 $141.8 0.07%^Seaway LLC and Reklaw LLC dbaAllure Lounge Food Services andDrinking Places Term Loan Prime plus2.75% 9/30/2041 $137.5 $137.1 $142.2 0.07%^Adelworth Bus Corp. Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 9/30/2041 $242.8 $242.1 $236.6 0.11%Adelwerth Bus Corporation,Transportation Leasing Corp. Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 9/30/2029 $654.0 $648.5 $619.6 0.30%^Las Casuelas Del Este Inc. Food Services andDrinking Places Term Loan Prime plus2.75% 9/29/2041 $800.0 $799.4 $811.3 0.39%^Thunderdome Racing Inc. Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/29/2026 $19.1 $18.8 $18.4 0.01%Vision Automotive LLC dba VisionChrysler Jeep Dodge Ram of Defiance Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 9/29/2029 $671.5 $665.8 $619.7 0.30%Paragon Fabricators Inc, Paragon FieldServices, Inc and Paragon Global Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 9/28/2026 $648.0 $640.1 $586.2 0.28%^Paragon Global, LLC and ParagonFabricators Inc and Paragon FieldService Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 9/28/2041 $405.8 $404.6 $382.3 0.18%^Graphics,Type and Color EnterprisesInc dba Clubflyers.com and GTC Med Printing and RelatedSupport Activities Term Loan Prime plus2.75% 9/28/2041 $850.0 $847.6 $879.0 0.42%^Beadon Inc Food and BeverageStores Term Loan Prime plus2.75% 9/28/2026 $22.5 $22.2 $22.0 0.01%^CD Game Exchange Inc. MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/28/2026 $22.5 $22.2 $19.0 0.01%^CNC Precision Machine, Inc. Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 9/28/2041 $1,250.0 $1,246.5 $1,230.6 0.59%F-17See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Kyle M Walker DDS,PC Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/27/2026 $217.8 $215.1 $189.0 0.09%^Luna Nueva LLC dba Bio Builders Specialty TradeContractors Term Loan Prime plus2.75% 9/27/2026 $15.0 $14.8 $13.0 0.01%Reynolds Fence & Guardrail Inc. Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 9/27/2026 $629.6 $621.9 $596.4 0.29%^Luv 2 Play Nor Call, LLC dba Luv 2Play Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/27/2026 $52.5 $51.9 $46.3 0.02%^Sarah S Olelewe MD Inc Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/26/2041 $292.4 $292.2 $289.2 0.14%^TPFC,LLC dbaThe Picture FrameCompany Miscellaneous StoreRetailers Term Loan Prime plus2.75% 9/26/2041 $58.8 $58.6 $58.1 0.03%^Ridge Road Equestrian LLC dbaRicochet Ridge Ranch Support Activities forAgriculture andForestry Term Loan Prime plus2.75% 9/26/2026 $9.0 $8.9 $8.7 —%^PeopleBest Inc. Administrative andSupport Services Term Loan Prime plus2.75% 9/26/2026 $15.0 $14.8 $12.6 0.01%^Mr. Mulch, Inc Building Material andGarden Equipmentand Supplies Dealers Term Loan Prime plus2.75% 9/23/2041 $405.8 $404.6 $375.8 0.18%^B4 Fitness LLC dba The Zoo HealthClub Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/23/2026 $87.5 $86.4 $76.8 0.04%^InformationTelevision Network Inc Motion Picture andSound RecordingIndustries Term Loan Prime plus2.75% 9/22/2041 $836.8 $835.6 $856.4 0.41%^Kids at Heart,LLC dba Monster MiniGolf Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/22/2026 $22.5 $22.3 $19.3 0.01%^GRA Financial Services Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/22/2026 $12.0 $11.9 $10.1 —%^Wrecking Crew Media LLC Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 9/21/2026 $50.0 $49.4 $42.1 0.02%^Cuppiecakes LLC Food Services andDrinking Places Term Loan Prime plus2.75% 9/21/2041 $22.5 $22.4 $22.1 0.01%^Benoit's Towing and Recovery LLC Support Activities forTransportation Term Loan Prime plus2.75% 9/20/2026 $12.0 $11.9 $10.3 —%^Consulting Solutions Inc. and MarkLuciani Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/20/2026 $22.5 $22.3 $20.8 0.01%^Brittany Burns LLC dba DreamsCome True Personal and LaundryServices Term Loan Prime plus2.75% 9/19/2026 $12.9 $12.7 $12.8 0.01%F-18See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Eyncon LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/16/2041 $50.0 $49.9 $49.8 0.02%^Tresa S.Parris dba Wagging TailsGrooming Personal and LaundryServices Term Loan Prime plus2.75% 9/16/2026 $8.0 $7.9 $6.8 —%^The Merrin Group LLC Food Services andDrinking Places Term Loan Prime plus2.75% 9/15/2026 $175.0 $172.9 $164.8 0.08%^Rich's Food Stores LLC dba Hwy 55of Wallace Food Services andDrinking Places Term Loan Prime plus2.75% 9/14/2026 $145.5 $143.7 $133.2 0.06%^Atlantic Alarm Systems and ServicesLLC Administrative andSupport Services Term Loan Prime plus2.75% 9/14/2026 $15.5 $15.3 $13.4 0.01%^Metropet Dog Center, Inc Personal and LaundryServices Term Loan Prime plus2.75% 9/13/2041 $109.3 $108.9 $109.2 0.05%^Marquis Cattle Company Animal Productionand Aquaculture Term Loan Prime plus2.75% 9/13/2026 $50.0 $49.7 $50.1 0.02%^Bingham Enterprises, Inc and FullBelli Deli and Sausage Company Food Services andDrinking Places Term Loan Prime plus2.75% 9/12/2041 $82.5 $82.3 $79.6 0.04%^Artisan Infrastructure Holdings, LLC Data Processing,Hosting, and RelatedServices Term Loan Prime plus2.75% 9/7/2026 $125.0 $123.5 $105.4 0.05%^SRA Mechanicial Inc Specialty TradeContractors Term Loan Prime plus2.75% 9/6/2041 $43.8 $43.6 $45.0 0.02%^Sandia Enterprises Inc dba MassageEnvy Spa Personal and LaundryServices Term Loan Prime plus2.75% 9/6/2026 $62.5 $61.7 $52.7 0.03%^Animal Intrusion Prevention SystemsHolding Company, LLC Administrative andSupport Services Term Loan Prime plus2.75% 8/30/2026 $125.0 $123.0 $107.7 0.05%^Suncrest Stone Products LLC Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 8/29/2026 $586.8 $576.0 $514.8 0.25%^Clark Realty LLC Real Estate Term Loan Prime plus2.75% 8/29/2041 $237.5 $236.5 $225.0 0.11%^Raem Corporation dba DrycleanExpress Personal and LaundryServices Term Loan Prime plus2.75% 8/29/2041 $72.5 $72.2 $73.9 0.04%^Suncrest Stone Products LLC Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 8/29/2041 $649.6 $646.9 $596.9 0.29%^TAGR Inc dba Miami Grill 137andJohn Nakis Food Services andDrinking Places Term Loan Prime plus2.75% 8/26/2026 $106.8 $104.8 $91.7 0.04%^Warren Dale Warrington dba CustomPaint and Body Repair andMaintenance Term Loan Prime plus2.75% 8/26/2041 $101.3 $100.8 $101.6 0.05%^Albert Basse Associates Inc Printing and RelatedSupport Activities Term Loan Prime plus2.75% 8/25/2026 $62.5 $61.4 $61.1 0.03%^Dean Technology Inc Electrical Equipment,Appliance, andComponentManufacturing Term Loan Prime plus2.75% 8/25/2041 $387.1 $385.5 $396.3 0.19%F-19See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Rosmel Pools Inc Repair andMaintenance Term Loan Prime plus2.75% 8/25/2026 $22.5 $22.1 $19.3 0.01%^Avery Management Inc. dbaWhetstone Upholstery Repair andMaintenance Term Loan Prime plus2.75% 8/25/2026 $10.7 $10.5 $8.9 —%^TR Companies LLC dba True ValueRental and Liberty Rental 4 U Rental and LeasingServices Term Loan Prime plus2.75% 8/25/2026 $90.0 $88.4 $75.4 0.04%^Tabadesa Associates Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/25/2026 $22.5 $22.1 $18.8 0.01%Sambella Holdings, LLC and StrikeZone Entertainment Center LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/24/2041 $500.0 $366.5 $380.2 0.18%^Tim's Tire & Automotive Center, LLC Support Activities forTransportation Term Loan Prime plus2.75% 8/16/2026 $816.6 $797.7 $721.6 0.35%^Luv 2 Play Temecula, LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 8/15/2026 $60.0 $58.9 $50.3 0.02%Bear Creek Entertainment LLC dbaThe Woods at Bear Creek Accommodation Term Loan Prime plus2.75% 8/12/2041 $437.5 $279.1 $284.3 0.14%^2 Cool Beans LLC dba Menchies'sFrozen Yogurt Food Services andDrinking Places Term Loan Prime plus2.75% 8/11/2026 $82.5 $81.0 $69.1 0.03%^Grayson O Company MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 8/10/2041 $625.0 $622.4 $639.7 0.31%^Charal Investments LLC dba OrangeTheory Fitness Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 8/10/2026 $87.5 $85.9 $73.3 0.04%^PCNKC Inc dba Plato's Closet Miscellaneous StoreRetailers Term Loan Prime plus2.75% 8/10/2026 $18.8 $18.5 $16.2 0.01%^Paul Belanger dba Paul BelangerLandscaping Administrative andSupport Services Term Loan Prime plus2.75% 8/9/2026 $15.0 $14.7 $12.6 0.01%^R Performance LLC dba PerformanceAutomotive of San Diego Repair andMaintenance Term Loan Prime plus2.75% 7/29/2026 $15.0 $14.6 $12.8 0.01%^The Hungry Rhino LLC Real Estate Term Loan Prime plus2.75% 7/29/2041 $76.3 $75.8 $74.9 0.04%^Nicolette Reiser dba Comfort &Balance Personal and LaundryServices Term Loan Prime plus2.75% 7/29/2041 $75.0 $74.6 $75.1 0.04%^USA General Investment LLC dbaBraniff Paint and Body Shop Repair andMaintenance Term Loan Prime plus2.75% 7/29/2026 $22.5 $21.9 $19.3 0.01%^Little Tree Huggers Child Care LLC Social Assistance Term Loan Prime plus2.75% 7/29/2041 $140.0 $139.2 $143.9 0.07%^303 Tower Drive LLC Repair andMaintenance Term Loan Prime plus2.75% 7/29/2041 $400.3 $398.0 $403.4 0.19%F-20See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^KJCKD Inc dba Camelot Print &Copy Centers/Copy A Second Administrative andSupport Services Term Loan Prime plus2.75% 7/28/2041 $587.0 $583.7 $578.9 0.28%^Big Apple Entertainment PartnersLLC dba Ripley's Believe It or Not Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 7/28/2026 $300.0 $292.6 $249.7 0.12%^676 Club LP dba The Green DoorTavern/The Drifter Food Services andDrinking Places Term Loan Prime plus2.75% 7/28/2041 $670.0 $665.0 $679.9 0.33%^MacIver Corporation dba DivisionCamera Rental and LeasingServices Term Loan Prime plus2.75% 7/28/2026 $1,250.0 $1,219.3 $1,143.1 0.55%^J And G Group Services LLC andUnited Vending of Florida Inc MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 7/28/2026 $31.5 $30.8 $27.5 0.01%^Intrepid Trinity LLC Nonstore Retailers Term Loan Prime plus2.75% 7/28/2041 $62.5 $62.1 $62.4 0.03%^Apple Tree NC Inc dba WilliamsFarm & Garden Center Building Material andGarden Equipmentand Supplies Dealers Term Loan Prime plus2.75% 7/28/2041 $337.0 $335.1 $327.8 0.16%^Kidtastic LLC dba The Little Gym ofAudubon Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 7/27/2026 $53.8 $52.8 $45.0 0.02%^GF Libations Inc dba MinutemanPress Printing and RelatedSupport Activities Term Loan Prime plus2.75% 7/27/2041 $40.5 $39.5 $34.9 0.02%^EPEC Juice LLC dba Jamba Juice Food Services andDrinking Places Term Loan Prime plus2.75% 7/27/2026 $82.5 $81.5 $69.5 0.03%^Pinco Pizza LLC dba Jet's Pizza Food Services andDrinking Places Term Loan Prime plus2.75% 7/27/2026 $72.9 $72.0 $70.4 0.03%^Peckett's Inc Crop Production Term Loan Prime plus2.75% 7/27/2041 225.0 224.7 233.0 0.11%^JAG Unit 1, LLC dba Arooga's GrilleHouse and Sports Bar Food Services andDrinking Places Term Loan Prime plus2.75% 7/27/2026 125.0 121.9 104.1 0.05%^The Grasso Companies, LLC andGrasso Pavement Maintenance, LLC Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 7/26/2026 91.0 88.9 80.9 0.04%^Gino Italian American Deli and MeatMarket Inc Food and BeverageStores Term Loan Prime plus2.75% 7/25/2041 536.8 534.2 525.0 0.25%^My Sainath Inc dba Motel 6 Accommodation Term Loan Prime plus2.75% 7/22/2041 305.4 303.7 308.6 0.15%^Robert G Larson State Farm Insurance Insurance Carriersand Related Activities Term Loan Prime plus2.75% 7/22/2026 22.5 21.9 18.7 0.01%^J and D Resources LLC dba AquaScience Specialty TradeContractors Term Loan Prime plus2.75% 7/19/2026 130.5 127.3 109.7 0.05%^Robert P Daniels dba Ginger andFriend's Peppermint Village Gift Shop Miscellaneous StoreRetailers Term Loan Prime plus2.75% 7/18/2026 15.8 15.4 13.1 0.01%F-21See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssetsFranklin Firm LLC dba Luv 2 Play Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 7/15/2041 173.3 172.9 171.6 0.08%^Billingsworks LLC dba SpoonShine Cafe Food Services andDrinking Places Term Loan Prime plus2.75% 7/15/2026 9.7 9.4 9.5 —%^Be Beautiful LLC Personal and LaundryServices Term Loan Prime plus2.75% 7/14/2041 66.5 66.1 67.2 0.03%^Takeuchi Commercial CleaningServices, LLC dba We Clean SanDiego Administrative andSupport Services Term Loan Prime plus2.75% 7/13/2026 46.3 45.1 38.5 0.02%^Jacob Rugs LLC dba Rugs Outlet Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 7/13/2026 65.6 64.0 64.5 0.03%^RM Hawkins LLC dba Pure WaterTech West Nonstore Retailers Term Loan Prime plus2.75% 7/7/2026 50.0 48.9 46.5 0.02%^Dino Smiles Children's CosmeticDentistry Ambulatory HealthCare Services Term Loan Prime plus2.75% 7/7/2026 14.3 13.9 12.2 0.01%Nevey's LLC dba Stark Food III Food and BeverageStores Term Loan Prime plus2.75% 6/30/2041 293.9 246.6 254.5 0.12%^P L H Pharmaco Inc dba FarmaciaSan Jose Health and PersonalCare Stores Term Loan Prime plus2.75% 6/30/2026 175.0 169.7 165.5 0.08%^Soregard Inc Furniture and RelatedProductManufacturing Term Loan Prime plus2.75% 6/30/2041 278.8 276.8 260.2 0.12%^Martin Inventory Management LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 6/30/2026 105.8 102.5 102.8 0.05%^Desert Tacos LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2026 98.8 98.3 91.3 0.04%^VMA Technologies LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/30/2026 22.5 21.8 18.4 0.01%^Corning Lumber Company Inc andFrank R Close and Son Inc Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 6/30/2029 195.5 191.3 193.4 0.09%^Castone Creations Inc Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 6/29/2026 87.5 84.8 74.7 0.04%^WGI, LLC dba Williams Grant Inn Accommodation Term Loan Prime plus2.75% 6/29/2041 131.3 130.3 128.8 0.06%^O.D.S. Inc dba Four Seasons Health& Racquet and Step 'N' Motion, Inc Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/29/2026 140.0 135.7 117.5 0.06%^KWG Industries, LLC dba Peterson& Marsh Metal Industries Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 6/29/2041 304.5 302.8 303.9 0.15%^Ninsa LLC Specialty TradeContractors Term Loan Prime plus2.75% 6/29/2041 112.5 111.7 115.5 0.06%F-22See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^E & P Holdings 1 LLC and Evans& Paul LLC Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 6/28/2026 125.0 121.4 105.9 0.05%^MaidPro Marin dba MaidPro Administrative andSupport Services Term Loan Prime plus2.75% 6/28/2026 17.6 17.0 14.3 0.01%^Edge Pest Control LLC Administrative andSupport Services Term Loan Prime plus2.75% 6/27/2026 750.0 726.9 612.0 0.29%^All Printing Solutions, Inc. dbaPryntcomm Printing and RelatedSupport Activities Term Loan Prime plus2.75% 6/27/2041 545.6 542.4 513.8 0.25%^Island Time Investments, LLC dbaSwantown Inn Bed & Breakfast Accommodation Term Loan Prime plus2.75% 6/24/2041 101.3 100.5 103.9 0.05%^Jumbomarkets Inc dba RinesJumbomarkets Food and BeverageStores Term Loan Prime plus2.75% 6/24/2026 50.0 48.5 40.8 0.02%^Yellow Cab Company ofKissimmee Inc Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 6/24/2041 56.8 56.4 53.2 0.03%^El Basha Inc dba RPM West SanFernando Valley Real Estate Term Loan Prime plus2.75% 6/24/2026 22.5 20.8 17.5 0.01%^Long Island Comedy LLC dbaGovernors and New York Comedy,LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/23/2041 187.5 186.2 184.4 0.09%^Visual Advantage LLC dba SignsNow Perryberg Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/23/2041 91.3 90.6 88.7 0.04%Shooting Sports Academy LLC andJetaa LLC dba Shooting SportsAcademy Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/23/2041 375.0 375.0 370.9 0.18%^SNS of Central Alabama, LLC dbaSteak N Shake Food Services andDrinking Places Term Loan Prime plus2.75% 6/21/2026 57.5 55.7 50.2 0.02%^Italian Heritage Tile and Stone Inc Specialty TradeContractors Term Loan Prime plus2.75% 6/20/2026 62.5 60.6 51.0 0.02%^Evergreen Investment & PropertyManagement LLC ,Universal KidneyCenter Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/20/2041 1,250.0 1,243.2 1,261.1 0.60%^Bagelicious, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/17/2026 54.6 52.9 44.8 0.02%^T and B Boots Inc dba Takken'sShoes Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 6/17/2026 225.0 218.4 217.4 0.10%^NKJ Lusby Donuts LLC Food and BeverageStores Term Loan Prime plus2.75% 6/16/2026 22.5 21.8 18.4 0.01%^Winegirl Wines LLC Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 6/16/2026 11.3 10.9 10.9 0.01%^Blue Eagle Transport Inc,Greeneagle Transport Inc Couriers andMessengers Term Loan Prime plus2.75% 6/16/2026 583.0 560.1 471.5 0.23%F-23See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Jai-Alexia Consulting, Inc. Couriers andMessengers Term Loan Prime plus2.75% 6/15/2026 11.8 11.5 9.6 —%^Pumpkin Patch Child Care ofSouthington, LLC and GiuseppePugliares Social Assistance Term Loan Prime plus2% 6/15/2041 515.3 511.2 484.8 0.23%^Strag Industries LLC dba MeinekeCar Care Center 841 Repair andMaintenance Term Loan Prime plus2.75% 6/15/2026 15.0 14.5 13.3 0.01%^Luv 2 Play AZ LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/10/2026 62.5 60.6 58.5 0.03%^Refoleen Inc dba Spice and TeaExchange Food and BeverageStores Term Loan Prime plus2.75% 6/10/2026 85.0 83.9 70.7 0.03%^VBGB Uptown, LLC dba VBGBBeer Hall & Garden Food Services andDrinking Places Term Loan Prime plus2.75% 6/8/2026 84.0 81.4 68.5 0.03%^ScimTech Industries Inc dba ArcherAerospace Computer andElectronic ProductManufacturing Term Loan Prime plus2.75% 6/6/2026 12.0 11.6 9.8 —%^Larry H. Patterson and RainbowMovers, Inc Truck Transportation Term Loan Prime plus2.75% 6/6/2026 22.5 21.8 18.5 0.01%^Solvit Inc and Solvit North Inc Specialty TradeContractors Term Loan Prime plus2.75% 6/3/2026 250.0 242.3 214.7 0.10%^AP5 LLC dba Krauser's Food Store Food and BeverageStores Term Loan Prime plus2.75% 6/2/2041 242.5 240.8 239.1 0.11%^ATI Jet Inc Air Transportation Term Loan Prime plus2.75% 5/31/2026 518.8 499.9 441.7 0.21%^Farmer Boy Diner Inc dba FarmerBoy Diner & Restaurant Food Services andDrinking Places Term Loan Prime plus2.75% 5/31/2026 50.0 48.1 48.3 0.02%Angelo Faia dba AVF Construction Construction ofBuildings Term Loan Prime plus2.75% 5/27/2041 100.0 98.7 97.3 0.05%^Premier Athletic Center of Ohio, Inc Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 5/27/2026 87.5 84.3 84.6 0.04%^MNM Printing and MarketingSolutions LLC dba AlphaGraphics ofSaint Louis Printing and RelatedSupport Activities Term Loan Prime plus2.75% 5/27/2026 18.8 18.1 15.2 0.01%^Mersada Holdings LLC Nonstore Retailers Term Loan Prime plus2.75% 5/26/2026 337.5 325.0 326.1 0.16%^Jack Frost Firewood Inc. and DavidDubinsky Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 5/26/2041 206.3 204.5 200.1 0.10%^Southwest Division Inc Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 5/26/2026 8.3 7.9 7.1 —%^International Kitchen Supply LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 5/25/2026 186.8 179.8 160.3 0.08%F-24See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^PennyLion LLC dba Creamistry Food Services andDrinking Places Term Loan Prime plus2.75% 5/25/2026 81.0 81.0 70.1 0.03%^Groth Lumber Co. Inc. dba TrueValue Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 5/25/2026 22.5 21.7 21.7 0.01%^Island Life Graphics Inc dbaFASTSIGNS #576 MiscellaneousManufacturing Term Loan Prime plus2.75% 5/24/2026 22.5 21.7 18.5 0.01%^Powerspec Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 5/24/2026 87.5 84.3 71.0 0.03%^Horseshoe Barbecue, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 5/23/2029 15.0 14.2 14.4 0.01%^Pro Auto Repair LLC Repair andMaintenance Term Loan Prime plus2.75% 5/20/2026 7.5 7.2 6.9 —%^Elderfriend Inc dba GrannyNannies dba GN Live Scan Social Assistance Term Loan Prime plus2.75% 5/20/2026 12.8 12.3 10.3 —%^CM Lab Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 5/20/2026 172.6 169.5 156.1 0.07%^National Air Cargo Holdings Inc Air Transportation Term Loan Prime plus2.75% 5/20/2026 1,250.0 1,205.2 1,174.9 0.56%^J&A Laundromat Inc. Personal andLaundry Services Term Loan Prime plus2.75% 5/18/2026 67.5 65.0 56.3 0.03%^HBA LLC dba Palmetto Twist-Vista Repair andMaintenance Term Loan Prime plus2.75% 5/18/2026 22.5 21.7 18.7 0.01%^Dedicated Incorporated Administrative andSupport Services Term Loan Prime plus2.75% 5/18/2041 46.5 46.1 45.9 0.02%^Studio Find It Georgia Inc Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 5/13/2026 22.5 21.7 18.9 0.01%^FJN Catering Inc Food Services andDrinking Places Term Loan Prime plus2.75% 5/13/2041 262.5 260.7 266.9 0.13%^LED Lighting Enterprises LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 5/13/2026 22.5 21.7 18.8 0.01%^J. Harris Trucking, LLC Truck Transportation Term Loan Prime plus2.75% 5/13/2026 60.0 41.6 37.4 0.02%^Luv 2 Play OC Inc Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 5/12/2026 62.5 62.5 52.6 0.03%^Pumpkin Patch Inc and ChristineFeliciano and Antonio Feliciano Social Assistance Term Loan Prime plus2.75% 5/12/2041 132.5 131.4 129.1 0.06%^The Delon Group LLC dba I LoveJuice Bar Food Services andDrinking Places Term Loan Prime plus2.75% 5/12/2026 55.0 53.0 44.6 0.02%F-25See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Sabir Inc. dba Bear Diner Food Services andDrinking Places Term Loan Prime plus2.75% 5/11/2041 123.8 122.9 124.1 0.06%^Gator D'Lites LLC dba D'LitesEmporium Food and BeverageStores Term Loan Prime plus2.75% 5/5/2026 22.5 21.7 18.2 0.01%^Warner Home Comfort, LLC dbaSmith Piping Specialty TradeContractors Term Loan Prime plus2.75% 4/29/2041 82.5 81.7 80.4 0.04%^Keller, Fishback & Jackson LLP Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 4/29/2026 131.8 125.1 125.5 0.06%^Marc S. Rosenberg P.C. dbaMammuth and Rosenberg Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 4/29/2026 22.5 21.5 18.1 0.01%^May-Craft Fiberglass Products Inc TransportationEquipmentManufacturing Term Loan Prime plus2.75% 4/29/2041 247.5 245.0 253.3 0.12%^Alpha Omega Trucking LLC Truck Transportation Term Loan Prime plus2.75% 4/29/2041 175.8 174.7 180.6 0.09%^Scoler LLC dba Gold's Gym Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 4/29/2026 262.5 251.1 222.2 0.11%^Loriet LLC MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 4/29/2026 7.5 7.2 6.1 —%^La Nopalera Mexicano 2, Inc. Food Services andDrinking Places Term Loan Prime plus2.75% 4/29/2026 125.5 123.0 123.5 0.06%^Euro Car Miami LLC Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 4/29/2026 62.5 59.9 60.1 0.03%^Hard Exercise Works Winter ParkLLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 4/29/2026 40.8 39.0 32.8 0.02%^Empowerschool LLC and EmpowerAutism Academy, LLC Social Assistance Term Loan Prime plus2.75% 4/29/2041 151.9 150.4 155.2 0.07%^Inner Beauty Salon and Suite LLC Personal and LaundryServices Term Loan Prime plus2.75% 4/28/2041 65.0 64.4 65.8 0.03%^Atlantic Restaurant Associates LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 4/28/2041 262.5 259.9 263.0 0.13%^Costume World Inc Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 4/28/2041 1,250.0 1,239.6 1,281.2 0.61%^Pecos Inn LLC dba Econo Lodge Accommodation Term Loan Prime plus2.75% 4/28/2041 677.5 670.8 678.0 0.32%^North American ManufacturingCompany Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 4/28/2026 160.0 153.1 153.6 0.07%^Shepherd Appraisal Services LLCdba Property Damage Appraisers ofOklahoma Real Estate Term Loan Prime plus2.75% 4/28/2026 9.0 8.6 7.2 —%F-26See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Knowledge First Inc dba MagicYears of Learning Social Assistance Term Loan Prime plus2.75% 4/27/2026 80.0 76.5 71.8 0.03%^Green Country Filter ManufacturingLLC MiscellaneousManufacturing Term Loan Prime plus2.75% 4/27/2026 84.3 80.6 69.8 0.03%^Accent Comfort Services, LLC Specialty TradeContractors Term Loan Prime plus2.75% 4/26/2026 90.0 86.1 72.5 0.03%^Homecare Casa Rhoda 123 Inc Ambulatory HealthCare Services Term Loan Prime plus2% 4/26/2041 675.0 667.4 642.3 0.31%^McIntosh Trail ManagementServices Organization Inc Ambulatory HealthCare Services Term Loan Prime plus2.75% 4/22/2041 425.0 420.8 434.9 0.21%^Automotive Core Recycling, LLCand 828 Old Colony Road, LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 4/22/2041 250.0 247.5 234.1 0.11%^AAA Mill Direct, Inc. dba CarpetMill Outlets Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 4/21/2026 7.9 7.5 7.6 —%^Jande Graphics LLC dba FastSigns#103201 Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 4/21/2026 56.0 53.6 45.1 0.02%^Miguel Fernando Borda, P.A. dbaBGR Dental Ambulatory HealthCare Services Term Loan Prime plus2.75% 4/15/2026 22.5 21.5 18.7 0.01%^LE & JS dba Laredo Mercado YCarniceria Food and BeverageStores Term Loan Prime plus2.75% 4/13/2026 20.0 19.1 16.1 0.01%^Sushiya Inc Food Services andDrinking Places Term Loan Prime plus2.75% 4/12/2026 87.5 83.8 73.6 0.04%^Sierra Foothill Cremation & FuneralService, Inc. Personal andLaundry Services Term Loan Prime plus2.75% 4/7/2026 53.0 50.8 42.8 0.02%^Waterfalls Quick Lube LLC andVeracruz Shabo LLC Repair andMaintenance Term Loan Prime plus2.75% 4/6/2041 271.3 269.3 270.3 0.13%^KNS Early Learning Academy LLC Social Assistance Term Loan Prime plus2.75% 4/6/2041 51.0 50.5 49.4 0.02%^Duke's Cleaners Inc Personal andLaundry Services Term Loan Prime plus2.75% 3/31/2026 47.0 44.7 41.0 0.02%^Cameo Carter, MD A ProfessionalCorporation Ambulatory HealthCare Services Term Loan Prime plus2.75% 3/31/2026 75.0 71.3 60.0 0.03%^Farhad Brothers LLC dba Lulu'sPizzeria & Family Restaurant Food Services andDrinking Places Term Loan Prime plus2.75% 3/31/2026 66.8 59.6 50.1 0.02%^Christian Soderquist dba SoderquistPlumbing and Heating LLC Specialty TradeContractors Term Loan Prime plus2.75% 3/31/2041 56.8 56.1 57.7 0.03%^Vehicle Safety Supply LLC Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 3/31/2026 22.5 21.4 18.0 0.01%^Men of Steel Enterprises LLC andVogelbacher Properties LLC Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 3/31/2041 393.5 389.0 362.2 0.17%F-27See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Gill Express Inc and Blue SpeedLLC Repair andMaintenance Term Loan Prime plus2.75% 3/31/2041 518.0 512.1 505.3 0.24%^Dana A. Farley dba IndependentCabinets Furniture and RelatedProductManufacturing Term Loan Prime plus2.75% 3/31/2041 67.5 66.7 68.9 0.03%^NOSO Development, LLC Construction ofBuildings Term Loan Prime plus2.75% 3/30/2026 187.5 178.2 149.9 0.07%^Wyldewood Cellars, Inc. Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 3/30/2041 986.8 985.8 936.7 0.45%^Gordon Rogers and Heidi Rogersdba Stone House Motor Inn Accommodation Term Loan Prime plus2.75% 3/30/2026 22.5 21.6 21.7 0.01%^Beale Street Blues Company-WestPalm Beach, LLC Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 3/30/2026 93.8 89.1 77.1 0.04%^Tom Sawyer Country RestaurantLLC and AM 3208 LLC Food Services andDrinking Places Term Loan Prime plus2.75% 3/30/2041 257.5 254.6 258.5 0.12%^MTS Car Service LLC Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 3/30/2026 10.5 10.0 8.4 —%^Atlantis of Daytona LLC and PierreMamane and Eva Mamane Clothing andClothing AccessoriesStores Term Loan Prime plus2% 3/29/2041 525.0 513.5 505.1 0.24%^Barrocas Gym LLC dba SnapFitness Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 3/29/2026 22.5 21.1 19.1 0.01%^Vinmar Inc. dba Locanda Portofino Food Services andDrinking Places Term Loan Prime plus2.75% 3/29/2026 81.3 77.2 65.0 0.03%^Lust for Life Footwear, LLC Leather and AlliedProductManufacturing Term Loan Prime plus2.75% 3/29/2026 375.0 356.4 299.9 0.14%^Marathon Engineering Corporation MiscellaneousManufacturing Term Loan Prime plus2.75% 3/28/2041 45.0 44.5 44.7 0.02%^PHCDC1 LLC dba Quarter + Gloryand Public House Collective, Corp. Food Services andDrinking Places Term Loan Prime plus2.75% 3/28/2026 50.0 47.5 42.5 0.02%^ReNew Interior Surface CleaningLLC dba Randy's Carpet Care andUpholstery Administrative andSupport Services Term Loan Prime plus2.75% 3/28/2026 12.4 11.8 11.5 0.01%^RCB Enterprises, Inc. Administrative andSupport Services Term Loan Prime plus2.75% 3/25/2026 56.3 53.5 45.0 0.02%^Revolution Physical Therapy LLCdba Apex Network Physical Therapy Ambulatory HealthCare Services Term Loan Prime plus2.75% 3/25/2026 22.5 21.6 18.7 0.01%^Excel RP Inc MachineryManufacturing Term Loan Prime plus2.75% 3/25/2026 125.0 118.8 106.7 0.05%^Lowgap Grocery & Grill LLC General MerchandiseStores Term Loan Prime plus2.75% 3/24/2041 167.5 165.6 171.1 0.08%F-28See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^ActKnowledge, Inc. Personal andLaundry Services Term Loan Prime plus2.75% 3/24/2026 125.0 118.8 119.1 0.06%^International Construction Inc Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 3/24/2041 50.0 49.5 48.4 0.02%^Flooring Liquidators Inc andPremier Flooring Yonkers Inc andFlooring Specialty TradeContractors Term Loan Prime plus2.75% 3/24/2026 50.0 47.5 46.2 0.02%^Acton Hardware LLC and MarkAllgood & Jamie Allgood Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 3/24/2041 498.6 492.9 472.6 0.23%^The Youth Fountain LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 3/23/2026 47.5 45.2 38.0 0.02%^Magnation Corporation and MishaFamily Trust MerchantWholesalers,Durable Goods Term Loan Prime plus2.75% 3/22/2041 101.3 100.4 103.7 0.05%^growth.period LLC and PotomacRecruiting LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/21/2026 156.3 148.5 124.9 0.06%^Precious Care LLC and PreciousCare Management LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 3/21/2026 557.5 529.8 449.0 0.21%^Media Capital Partners, Inc Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 3/21/2026 22.5 21.4 18.0 0.01%^Pro Tech Technology LLC Support Activitiesfor Transportation Term Loan Prime plus2.75% 3/18/2026 7.5 7.1 6.0 —%^Taylors Zinn Enterprises Inc dbaEons Auto Care Inc Repair andMaintenance Term Loan Prime plus2.75% 3/18/2041 80.8 79.8 81.5 0.04%^ERT Group Inc and Curt's ToolsInspection Inc Support Activitiesfor Mining Term Loan Prime plus2.75% 3/18/2041 1,250.0 1,237.6 1,216.3 0.58%^Kekoa Enterprises Inc dbaSignarama Sandy Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/18/2026 49.5 47.0 39.6 0.02%^Mariam Diner Inc dba CountryKitchen Restaurant Food Services andDrinking Places Term Loan Prime plus2.75% 3/18/2026 52.5 49.9 42.0 0.02%^Brian T Rice dba BD Logging Forestry andLogging Term Loan Prime plus2.75% 3/17/2026 15.8 15.0 13.5 0.01%^Auto and Property InsuranceSolutions Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 3/16/2026 16.4 15.4 12.9 0.01%^Demand Printing Solutions Inc. Printing and RelatedSupport Activities Term Loan Prime plus2.75% 3/16/2026 21.8 20.7 19.5 0.01%^LAN Doctors Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/16/2026 55.0 52.3 52.4 0.03%F-29See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Evergreen Pallet LLC andEvergreen Recycle LLC Wood ProductManufacturing Term Loan Prime plus2.75% 3/16/2026 1,039.3 988.2 882.4 0.42%^K Soles Corp dba Max Collections MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 3/16/2026 22.5 21.4 18.0 0.01%^R & D Enterprises Inc dba My PoolMan Administrative andSupport Services Term Loan Prime plus2.75% 3/15/2026 50.0 47.5 40.0 0.02%^HEWZ, LLC dba Hard ExerciseWorks Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 3/14/2026 22.5 21.4 18.0 0.01%^Mustafa Inc and Raouf PropertiesLLC Food and BeverageStores Term Loan Prime plus2.75% 3/14/2041 75.0 74.1 75.4 0.04%^Country Paint and Hardware Inc Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 3/11/2026 87.4 83.0 71.5 0.03%^Wilban LLC Food Services andDrinking Places Term Loan Prime plus2.75% 3/11/2026 105.0 100.2 94.8 0.05%^ABCs & 123s Infant and Child CareCenter LP Social Assistance Term Loan Prime plus2.75% 3/11/2026 11.3 10.7 9.0 —%^Accuair Control Systems LLC dbaAccuair Suspension TransportationEquipmentManufacturing Term Loan Prime plus2.75% 3/11/2026 150.0 142.6 122.8 0.06%^Dupre Capital LLC dba Fastsigns MiscellaneousManufacturing Term Loan Prime plus2.75% 3/11/2026 58.4 55.5 46.7 0.02%^Magill Truck Line LLC and Jeff J.Ralls Truck Transportation Term Loan Prime plus2.75% 3/11/2029 210.8 203.6 183.0 0.09%^Fayette Computer ConsultingCompany Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/10/2026 22.5 21.4 18.9 0.01%^State Painting & Decorating Co.,Inc. Specialty TradeContractors Term Loan Prime plus2.75% 3/10/2026 103.8 98.6 83.0 0.04%^B.P.T.M. of NV LLC and AgentisBros., LLC Repair andMaintenance Term Loan Prime plus2.75% 3/9/2041 525.0 519.0 513.8 0.25%^Step Up Academy of the Arts LLC Educational Services Term Loan Prime plus2.75% 3/9/2026 8.0 7.6 6.4 —%^A & A Auto Care LLC Repair andMaintenance Term Loan Prime plus2.75% 3/9/2026 12.2 11.5 11.0 0.01%^Faith Summit Supply Inc dbaSummit Supply and Summit TrueValue Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 3/9/2026 22.5 21.4 19.4 0.01%^Swerve Salon LLC Personal andLaundry Services Term Loan Prime plus2.75% 3/8/2026 79.0 75.1 63.2 0.03%^J & W Hardwood Flooring Inc Specialty TradeContractors Term Loan Prime plus2.75% 3/7/2026 7.5 7.1 6.0 —%F-30See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Labmates LLC and POV HoldingsLLC Miscellaneous StoreRetailers Term Loan Prime plus2.75% 3/4/2041 109.3 108.0 111.6 0.05%^Hueston and Company CPA LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/4/2026 8.3 7.7 6.7 —%^Almost Home Daycare LLC Social Assistance Term Loan Prime plus2.75% 3/3/2026 50.0 47.5 46.3 0.02%^Miles of Smiles Inc Food Services andDrinking Places Term Loan Prime plus2.75% 3/2/2026 93.5 90.5 77.9 0.04%^Johnson & Dugan InsuranceServices Corp Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 2/28/2026 62.5 59.0 49.7 0.02%^Living Essentials HVAC Corp Specialty TradeContractors Term Loan Prime plus2.75% 2/28/2026 15.0 14.2 12.1 0.01%^Consulting Solutions, Inc. and MarkLuciani Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 2/28/2026 11.3 10.6 10.4 —%^Doxa Deo Inc dba Luv 2 Play Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 2/28/2026 105.0 103.5 90.3 0.04%^The River Beas, LLC dba Subwayand Punam Singh Food Services andDrinking Places Term Loan Prime plus2.75% 2/28/2041 135.9 134.1 136.7 0.07%^Drug Detection Laboratories, Inc.and Minh Tran Ambulatory HealthCare Services Term Loan Prime plus2.75% 2/28/2026 19.8 18.7 16.0 0.01%^Powerpits CS1, LLC dba Pita Pit Food Services andDrinking Places Term Loan Prime plus2.75% 2/28/2026 18.8 17.7 15.8 0.01%^Blackstones Hairdressing LLC Personal andLaundry Services Term Loan Prime plus2.75% 2/23/2026 52.0 49.4 42.0 0.02%^Aaradhya LLC dba Market SquareLaundry Personal andLaundry Services Term Loan Prime plus2.75% 2/23/2026 80.0 75.5 63.5 0.03%^R-No-Landscaping LLC Personal andLaundry Services Term Loan Prime plus2.75% 2/19/2026 8.3 7.8 6.7 —%^BER Enterprise 332 Inc dba EdibleArrangements Food and BeverageStores Term Loan Prime plus2.75% 2/19/2026 22.5 21.3 18.1 0.01%^R & K Contracting Inc Specialty TradeContractors Term Loan Prime plus2.75% 2/18/2026 15.8 15.0 14.5 0.01%^Pacific Coast Medical Group LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 2/17/2026 245.0 231.3 231.9 0.11%^B for Blonde, LLC dba Blo BlowDry Bar Personal andLaundry Services Term Loan Prime plus2.75% 2/12/2026 62.0 59.3 50.0 0.02%^Gilmore Heights Dental Holdings,LTD and Chas Rob LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 2/12/2029 310.3 298.6 272.7 0.13%F-31See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Ei3 Corporation Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 2/12/2026 326.9 308.6 309.5 0.15%^Jersey Shore Marina & Boat Sales,Inc. Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 2/12/2041 625.0 617.7 638.2 0.31%^Base USA, Inc. Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 2/2/2026 50.0 47.2 47.4 0.02%^Nowatzke Service Center Inc dbaNowatzke Truck and Trailer Repair andMaintenance Term Loan Prime plus2.75% 1/29/2026 105.0 98.6 98.9 0.05%^Zouk Ltd dba Palma Food Services andDrinking Places Term Loan Prime plus2.75% 1/29/2026 22.5 21.1 21.2 0.01%^Tammy Lavertue Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 1/28/2026 11.3 10.5 10.2 —%^SuzyQue's LLC dba SuzyQue's Food Services andDrinking Places Term Loan Prime plus2.75% 1/28/2026 22.5 21.2 21.2 0.01%^Wildflour Bakery & Cafe LLC Social Assistance Term Loan Prime plus2.75% 1/28/2026 62.5 58.6 57.2 0.03%^New Image Building Services, Inc. Administrative andSupport Services Term Loan Prime plus2.75% 1/19/2026 83.1 78.0 69.1 0.03%^Oak Tree Storage LLC Other InformationServices Term Loan Prime plus2.75% 1/19/2026 78.8 73.8 63.4 0.03%^Gendron Funeral and CremationServices, Inc. Personal andLaundry Services Term Loan Prime plus2.75% 1/11/2041 112.5 109.4 113.0 0.05%^Dolarian Realty LLC and OV'sRestaurant Inc Food Services andDrinking Places Term Loan Prime plus2.75% 1/5/2041 67.8 66.9 69.1 0.03%^Lemonberry Food Stores Inc dbaLemonberry Frozen Yogurt Food and BeverageStores Term Loan Prime plus2.75% 12/29/2025 112.5 104.8 91.8 0.04%^MCF Forte LLC Food Services andDrinking Places Term Loan Prime plus2.75% 12/29/2025 18.8 17.5 14.9 0.01%^Panditos LLC dba White LotusHome MiscellaneousManufacturing Term Loan Prime plus2.75% 12/28/2025 15.9 14.8 12.5 0.01%^Bright Dialysis LLC and Ft PierceKidney Care LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/28/2025 1,250.0 1,164.4 982.9 0.47%^V2 Tango LLC dba Palette 22 Food Services andDrinking Places Term Loan Prime plus2.75% 12/23/2025 250.0 232.9 202.5 0.10%^Ridge Road Equestrian LLC dbaRicochet Ridge Ranch Inc Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/23/2040 102.5 100.8 100.7 0.05%F-32See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^800 on the Trax LLC and Matrix ZLLC Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 12/23/2040 240.0 237.2 235.1 0.11%^Optima Health Care Inc Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/23/2025 62.5 58.2 58.4 0.03%^B&B Organics LLC Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 12/22/2040 375.0 368.9 381.0 0.18%^Joyce Outdoor Advertising ChicagoLLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/22/2040 300.0 297.0 292.6 0.14%^The LAX Shop Inc Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 12/22/2025 125.0 91.4 91.6 0.04%^Premier Athletic Center of OhioInc. and Gates Investments andWade Gates Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/22/2028 882.0 840.0 848.3 0.41%^Hattingh Incorporated dbaProsthetic Care Facility Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/21/2025 18.0 16.8 14.9 0.01%^G.W. Fitness Centers, LLC and J.G.Fitness LLC and NP Gym LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/18/2040 1,025.0 1,008.3 1,041.3 0.50%^Trip Consultants U.S.A. Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/18/2025 175.0 163.0 137.1 0.07%^Jay Kevin Gremillion dba DinoSmiles Children's Cosmetic Dentistry Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/18/2025 73.0 69.8 60.5 0.03%^Accent Tag and Label Inc Printing and RelatedSupport Activities Term Loan Prime plus2.75% 12/18/2040 665.8 652.2 649.1 0.31%^Abbondanza Market LLC dbaHampton Falls Village Market Food and BeverageStores Term Loan Prime plus2.75% 12/18/2025 73.8 62.7 54.7 0.03%^Capital Scrap Metal LLC MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/18/2025 36.0 33.5 28.7 0.01%^Labmates LLC Miscellaneous StoreRetailers Term Loan Prime plus2.75% 12/18/2040 162.5 159.9 165.1 0.08%^Sourceco Limited LiabilityCompany MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/17/2025 62.5 58.3 51.0 0.02%^Mustafa Inc dba Adiba Grocery Food and BeverageStores Term Loan Prime plus2.75% 12/17/2025 103.8 96.7 96.2 0.05%^Learning Skills LLC andChristopher Shrope Educational Services Term Loan Prime plus2.75% 12/17/2025 10.8 10.1 8.5 —%^New York Home Health CareEquipment, LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/16/2025 875.0 817.8 801.9 0.38%F-33See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Moments to Remember USA LLCdba Retain Loyalty Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/16/2025 75.0 70.0 65.3 0.03%^Swalm Sreet LLC and New YorkHome Health Care Equipment LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/16/2040 375.0 370.1 376.1 0.18%^JAG Unit 1, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 12/16/2025 250.0 233.3 196.2 0.09%^D&G Capital LLC dba Miami Grill277 Food Services andDrinking Places Term Loan Prime plus2.75% 12/16/2025 83.8 87.2 80.6 0.04%^Abitino's JFK LLC dba Abitino's Food Services andDrinking Places Term Loan Prime plus2.75% 12/16/2022 125.0 113.8 100.8 0.05%^SDA Holdings LLC and LesCheveux Salon Inc Personal andLaundry Services Term Loan Prime plus2.75% 12/15/2040 428.8 421.1 412.2 0.20%^Evans & Paul LLC and E&PHoldings I LLC Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 12/15/2025 125.0 116.4 101.5 0.05%^Basista Family Limited Partnershipand UPE, Inc. MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 12/14/2040 342.5 336.9 333.8 0.16%^DC Enterprises Ltd. dba LakeviewTrue Value Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 12/14/2025 22.5 21.0 19.9 0.01%^Tri-State Remodeling &Investments, LLC Specialty TradeContractors Term Loan Prime plus2.75% 12/11/2025 15.9 14.8 14.3 0.01%^Alexandra Afentoulides dba Vi'sPizza Restaurant Food Services andDrinking Places Term Loan Prime plus2.75% 12/11/2040 46.3 45.5 47.0 0.02%^AGR Foodmart Inc dba NashuaRoad Mobil Gasoline Stations Term Loan Prime plus2.75% 12/11/2025 22.5 21.0 19.9 0.01%^ENI Inc. dba ENI Group, Inc Other InformationServices Term Loan Prime plus2.75% 12/11/2025 36.0 33.5 29.7 0.01%^Cares, Inc dba Dumpling GroundsDay Care Center Social Assistance Term Loan Prime plus2.75% 12/10/2025 7.5 7.0 6.9 —%^Custom Exteriors, Inc. Specialty TradeContractors Term Loan Prime plus2.75% 12/9/2025 100.0 93.2 81.5 0.04%^Sushiya, Inc. Food Services andDrinking Places Term Loan Prime plus2.75% 12/8/2025 108.8 101.3 88.9 0.04%^My Jewels, LLC dba The UPSStore #6712 Administrative andSupport Services Term Loan Prime plus2.75% 12/7/2025 56.3 33.2 27.9 0.01%^Food & Fuel Company LLC dbaLowery Food Mart Food and BeverageStores Term Loan Prime plus2.75% 12/4/2040 122.5 120.5 124.2 0.06%^Blue Ox Trucking Inc. Truck Transportation Term Loan Prime plus2.75% 12/4/2025 12.3 11.5 11.5 0.01%^LC Blvd Holdings LLC and MtPleasant Wash & Wax LLC Repair andMaintenance Term Loan Prime plus2.75% 12/4/2040 502.5 494.3 497.1 0.24%F-34See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^American Campgrounds LLC dbaWhit's End Campground Accommodation Term Loan Prime plus2.75% 12/4/2040 293.0 288.2 290.4 0.14%^Tariq, LLC dba 76 Food Mart Gasoline Stations Term Loan Prime plus2.75% 12/2/2040 375.0 368.9 371.4 0.18%^401 JJS, Corp and G. Randazzo'sTrattoria Corporation Food Services andDrinking Places Term Loan Prime plus2.75% 12/1/2040 52.8 52.1 51.6 0.02%^Delta Aggregate, LLC Mining (except Oiland Gas) Term Loan Prime plus2.75% 11/30/2025 100.0 95.4 95.7 0.05%^Block and Grinder LLC Food Services andDrinking Places Term Loan Prime plus2.75% 11/30/2025 200.0 187.5 186.6 0.09%^Hurshell Leon Dutton dba HighJump Party Rentals Rental and LeasingServices Term Loan Prime plus2.75% 11/30/2025 17.6 16.2 16.0 0.01%^Japp Business Inc dba Pick and Eatand Japp Drink Corp. Food Services andDrinking Places Term Loan Prime plus2.75% 11/30/2025 125.0 115.6 102.7 0.05%^Smokeyard Inc dba SmokeyardBBQ and Chop Shop Food Services andDrinking Places Term Loan Prime plus2.75% 11/30/2025 125.0 115.6 99.6 0.05%^Alejandro Rico dba Rico Motorsand Golden West Motel and AlrimaCo Inc Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 11/25/2040 146.3 143.9 148.4 0.07%^State Painting and Decorating CoInc Specialty TradeContractors Term Loan Prime plus2.75% 11/25/2025 100.0 92.5 77.8 0.04%^Medeiros Holdings Inc dba OutdoorLighting Perspectives of the Triad Electrical Equipment,Appliance, andComponentManufacturing Term Loan Prime plus2.75% 11/25/2025 22.5 20.7 17.4 0.01%^DWeb Studio, Inc. Educational Services Term Loan Prime plus2.75% 11/25/2025 11.3 10.4 8.7 —%^Sambella Holdings, LLC and StrikeZone Entertainment Center LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 11/23/2040 750.0 747.7 764.6 0.37%^Play and Learn Child Care andSchool Inc Social Assistance Term Loan Prime plus2.75% 11/23/2025 11.1 10.3 10.3 —%^Ronny Ramirez RX Corp dbaNaturxheal Family Pharmacy Health and PersonalCare Stores Term Loan Prime plus2.75% 11/20/2025 89.0 83.4 71.7 0.03%^Haven Hospitality Group Inc. dbaHaven Gastropub Food Services andDrinking Places Term Loan Prime plus2.75% 11/20/2025 132.5 122.6 105.2 0.05%^CNYP 717 Irondequoit LLC andCNYP 2002 Ontario LLC Food Services andDrinking Places Term Loan Prime plus2.75% 11/20/2040 244.4 240.0 224.7 0.11%^S.B.B. Enterprises Inc dbaWilliamston Hardware Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 11/19/2040 108.8 106.6 100.1 0.05%^Key Pix Productions Inc. dba AirBud Entertainment Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 11/18/2040 839.8 824.8 851.8 0.41%F-35See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Holloway & CO. P.L.L.C. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 11/16/2025 75.0 69.4 69.5 0.03%^RDT Enterprises, L.L.C. Specialty TradeContractors Term Loan Prime plus2.75% 11/12/2025 22.5 20.8 19.5 0.01%^E.S.F.P. LLC dba Volusia Van andStorage Truck Transportation Term Loan Prime plus2.75% 11/11/2025 91.3 84.4 72.8 0.03%^Green Life Lawnscapes LLC dbaGreen Life Lawn Care Administrative andSupport Services Term Loan Prime plus2.75% 11/6/2025 127.3 117.7 114.7 0.05%^Joseph Nich and Tina M. Nich dbaVic's Greenhouses Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 11/4/2025 62.5 58.2 58.3 0.03%^Jumbomarkets Inc dba RinesJumbomarkets Food and BeverageStores Term Loan Prime plus2.75% 11/4/2025 306.3 283.3 274.8 0.13%^Bisson Transportation Inc dba I & RAssociates and Document Secutiry Truck Transportation Term Loan Prime plus2.75% 10/30/2025 22.5 20.7 19.4 0.01%^Top Cat Ready Mix, LLC, PlesInvestments LLC Specialty TradeContractors Term Loan Prime plus2.75% 10/28/2025 711.3 653.6 572.5 0.27%^L.M. Jury Enterprises, Inc dbaMidwest Monograms Textile Product Mills Term Loan Prime plus2.75% 10/28/2025 77.0 70.6 60.8 0.03%^Windsor Direct Distribution LLC MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 10/26/2025 14.3 13.0 11.0 0.01%^Financial Network Recovery Administrative andSupport Services Term Loan Prime plus2.75% 10/26/2025 40.0 36.8 30.9 0.01%^Insurance Fire & WaterRestorations, LLC Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 10/23/2025 22.5 20.7 19.6 0.01%^Jacksonville Beauty Institute Inc. Educational Services Term Loan Prime plus2.75% 10/23/2025 50.0 45.9 38.6 0.02%^Werthan Packaging Inc. Paper Manufacturing Term Loan Prime plus2.75% 10/14/2025 1,162.5 1,104.0 1,030.3 0.49%^Tannehill Enterprises Inc dbaHobbytown USA Folsom Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 10/14/2025 87.4 80.2 67.5 0.03%^ADMO Inc dba Mid StatesEquipment Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 10/8/2025 22.5 20.7 17.9 0.01%^SCJEN Management Inc dba Bowlof Heaven Food Services andDrinking Places Term Loan Prime plus2.75% 9/30/2025 71.3 65.7 55.2 0.03%^Naeem Khan LTD ApparelManufacturing Term Loan Prime plus2.75% 9/30/2025 125.0 114.0 95.8 0.05%^Accent Homes Services LLC dbaBenjamin Franklin Plumbing ofKansas City Specialty TradeContractors Term Loan Prime plus2.75% 9/30/2028 66.5 62.4 60.4 0.03%F-36See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Recycling Consultants, Inc. andPrairie State Salvage and Recycling MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/30/2027 767.5 714.8 643.3 0.31%^Barub Realty LLC and Barub LLCdba Woodlawn Cabinets Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 9/30/2040 143.0 140.0 143.9 0.07%^R.H. Hummer Jr., Inc. Truck Transportation Term Loan Prime plus2.75% 9/30/2025 375.0 354.3 338.4 0.16%^Bat Bridge Investments Inc dbaKalologie 360 Spa Personal and LaundryServices Term Loan Prime plus2.75% 9/30/2025 85.5 79.5 66.8 0.03%^Binky's Vapes LLC Miscellaneous StoreRetailers Term Loan Prime plus2.75% 9/30/2025 22.5 20.5 17.2 0.01%^Joyce Outdoor Advertising LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/29/2040 234.8 231.0 235.0 0.11%^Greensward of Marco Inc. Administrative andSupport Services Term Loan Prime plus2.75% 9/28/2040 87.5 85.7 84.4 0.04%^RIM Investments LLC and RIMArchitects LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/28/2040 399.0 390.7 383.0 0.18%^The Grasso Companies LLC andGrasso Pavement Maintenance LLC Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 9/28/2025 518.8 469.8 469.2 0.22%^South Towne Dental Center, P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/25/2025 50.0 45.6 45.7 0.02%^Hemingway Custom Cabinetry LLC Furniture and RelatedProductManufacturing Term Loan Prime plus2.75% 9/25/2025 220.0 200.6 172.8 0.08%^Daniel W. Stark dba MountainValley Lodge and RV Park Accommodation Term Loan Prime plus2.75% 9/25/2040 13.5 13.2 13.6 0.01%^Sandlot Ventures LLC and SandboxVentures LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/25/2040 442.5 433.9 418.9 0.20%^Yachting Solutions LLC Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 9/25/2040 962.5 942.4 908.0 0.43%^Prestigious LifeCare for SeniorsLLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/25/2025 9.8 9.0 8.2 —%^St Lawrence Hotel Corp and OhekaCatering Inc dba Quality Inn Accommodation Term Loan Prime plus2.75% 9/24/2040 625.0 611.9 608.5 0.29%^Hagerstown Muffler, Inc. and JMSMuffler, Inc Repair andMaintenance Term Loan Prime plus2.75% 9/24/2040 327.5 320.7 331.0 0.16%^J.R. Wheeler Corporation dbaStructurz Exhibits and Graphics Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 10/24/2025 21.0 19.2 19.2 0.01%^Rutledge Enterprises Inc dba BLCProperty Management Administrative andSupport Services Term Loan Prime plus2.75% 9/23/2040 62.5 60.7 60.4 0.03%F-37See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Finish Strong Inc dba FASTSIGNSSt Peters MiscellaneousManufacturing Term Loan Prime plus2.75% 9/23/2025 50.0 45.6 38.3 0.02%^J3K LLC dba Ronan True ValueHardware Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 9/23/2025 152.5 139.1 116.9 0.06%^Stormrider Inc dba Shirley'sStormrider Inc Truck Transportation Term Loan Prime plus2.75% 9/23/2025 67.5 62.6 52.6 0.03%^Frozen Treats of Hollywood FL,LLC dba Sub Zero Ice Cream Food Services andDrinking Places Term Loan Prime plus2.75% 9/22/2025 15.8 14.4 12.8 0.01%^Nova Solutions Inc Furniture and RelatedProductManufacturing Term Loan Prime plus2.75% 9/22/2040 320.0 313.3 311.9 0.15%^Pine Belt Wood Products LLC Forestry and Logging Term Loan Prime plus2.75% 9/22/2040 163.8 160.3 146.9 0.07%^IIoka Inc dba New Cloud Networks Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/21/2025 665.0 609.3 512.1 0.24%^Sound Manufacturing Inc Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 9/21/2025 50.0 45.6 40.6 0.02%^MiJoy Inc dba Imo's Pizza Food Services andDrinking Places Term Loan Prime plus2.75% 9/18/2025 8.3 7.5 6.3 —%^Vanderhoof LLC dba Soxfords ApparelManufacturing Term Loan Prime plus2.75% 9/18/2025 15.9 14.5 12.2 0.01%^Naeem Khan LTD ApparelManufacturing Term Loan Prime plus2.75% 9/17/2025 125.0 114.0 95.8 0.05%^Import Car Connection Inc dba CarConnection Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 9/16/2040 407.5 399.0 406.5 0.19%^FirstVitals Health and Wellness Inc MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/15/2025 150.0 136.8 114.9 0.05%^Johnson Carwash LLC and JohnsonPetroleum LLC Gasoline Stations Term Loan Prime plus2.75% 9/14/2040 340.0 334.8 345.1 0.17%^Almost Home Daycare LLC Social Assistance Term Loan Prime plus2.75% 9/11/2025 62.5 57.0 56.3 0.03%^Veliu LLC dba FASTSIGNS#15901 MiscellaneousManufacturing Term Loan Prime plus2.75% 9/10/2025 50.0 46.2 40.0 0.02%^B and A Friction Materials Inc MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/9/2025 102.5 92.7 77.9 0.04%^Gardner's Wharf Holdings LLC andGardner's Wharf Seafood Inc MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 9/8/2040 140.0 137.1 141.5 0.07%^AIG Inc Specialty TradeContractors Term Loan Prime plus2.75% 9/4/2040 363.8 356.1 338.8 0.16%F-38See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Empower Autism Academy Social Assistance Term Loan Prime plus2.75% 9/4/2040 685.0 670.7 692.4 0.33%^Higher Grounds CommunityCoffeehouse, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 9/2/2025 8.3 7.5 6.6 —%^Delray Scrap Recycling LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 8/31/2025 22.5 20.1 16.9 0.01%^The Camera House Inc MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 8/31/2025 1,250.0 1,131.6 1,036.9 0.50%^LAN Doctors Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/28/2025 81.3 73.6 66.8 0.03%^Elite Institute LLC dba HuntingtonLearning Center Educational Services Term Loan Prime plus2.75% 8/28/2025 15.0 13.7 11.6 0.01%^Zephyr Seven Series LLC dba 18/8Fine Men's Salon Personal andLaundry Services Term Loan Prime plus2.75% 8/28/2025 81.3 76.2 65.7 0.03%^J and K Fitness L.L.C. dbaPhysiques Womens Fitness Center Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 2/28/2041 93.8 92.7 93.5 0.04%^Trading Group 3 Inc Nonstore Retailers Term Loan Prime plus2.75% 8/28/2025 50.0 45.3 38.0 0.02%^B and J Catering Inc dba CulinarySolutions Food Services andDrinking Places Term Loan Prime plus2.75% 8/27/2040 547.5 540.3 523.4 0.25%^God Be Glorified Inc dba GBG Inc Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 8/20/2025 53.0 48.0 40.3 0.02%^3000 CSI Property LLC andConsulting Solutions Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/20/2040 137.5 134.4 136.7 0.07%^GDP Gourmet LLC dba Joe andJohn's Pizza Restaurant Food Services andDrinking Places Term Loan Prime plus2.75% 8/19/2040 145.0 141.7 140.1 0.07%^Screenmobile Management Inc Specialty TradeContractors Term Loan Prime plus2.75% 8/14/2025 47.0 42.5 36.1 0.02%^Gold Jet Corp. Couriers andMessengers Term Loan Prime plus2.75% 8/14/2025 68.3 65.3 59.2 0.03%^SKJ Inc dba Subway Food Services andDrinking Places Term Loan Prime plus2.75% 8/13/2025 84.8 76.8 65.5 0.03%^LP Industries Inc dba Childforms Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 7/29/2025 125.0 114.5 107.0 0.05%^Advanced Machine & Technology,Inc. Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 7/29/2025 90.3 81.1 74.8 0.04%^Pauley Tree and Lawn Care Inc Administrative andSupport Services Term Loan Prime plus2.75% 7/28/2025 65.8 59.2 53.0 0.03%F-39See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Beale Street Blues Company-WestPalm Beach LLC Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 7/24/2025 66.3 59.5 52.2 0.02%^Forever & Always of Naples Incdba Island Animal Hospital Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 7/24/2025 107.5 96.6 88.0 0.04%^C& D Medical of Naples, Inc andForever & Always of Naples, Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 7/24/2040 135.0 131.8 123.2 0.06%^Pooh's Corner Realty LLC andPooh's Corner Inc Social Assistance Term Loan Prime plus2.75% 7/23/2040 103.8 101.4 103.8 0.05%^Smart Artists Inc. Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 7/23/2025 22.5 20.2 17.0 0.01%^Free Ion Advisors LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 7/21/2025 64.3 57.7 48.5 0.02%^Murrayville Donuts, Inc dbaDunkin' Donuts Food and BeverageStores Term Loan Prime plus2.75% 7/15/2040 344.5 340.4 329.4 0.16%^Union 2 LLC dba The Standard Food Services andDrinking Places Term Loan Prime plus2.75% 7/10/2025 91.5 85.9 79.1 0.04%^The Smile Place LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/30/2040 283.9 276.6 282.4 0.14%^BJ's Tavern LLC and BJ's CabanaBar Inc Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2040 212.5 207.1 210.9 0.10%^Jonathan E Nichols and NicholsFire and Security LLC Administrative andSupport Services Term Loan Prime plus2.75% 6/30/2025 75.0 66.9 65.2 0.03%^Thrifty Market, Inc. dba ThriftyFoods Food and BeverageStores Term Loan Prime plus2.75% 6/30/2030 262.5 246.5 231.3 0.11%^All About Smiles P A Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/30/2040 237.7 231.6 236.4 0.11%^Danny V, LLC dba Hugo'sTaproom Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2040 54.0 50.1 49.0 0.02%^Anglin Cultured Stone ProductsLLC dba Anglin Construction Specialty TradeContractors Term Loan Prime plus2.75% 6/30/2025 281.8 251.3 232.6 0.11%^Advanced Skincare Medcenter Incdba Advanced Skincare Surgery Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/29/2025 337.5 301.0 273.0 0.13%^Summit Beverage Group LLC Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 8/29/2030 291.9 274.4 261.4 0.13%^Myclean Inc. Personal andLaundry Services Term Loan Prime plus2.75% 6/29/2025 15.9 14.2 12.7 0.01%^E & G Enterprises LLC dbaComfort Keepers Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/26/2025 22.5 20.1 18.0 0.01%F-40See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^SofRep, Inc dba Force 12 Media Other InformationServices Term Loan Prime plus2.75% 6/26/2025 66.3 59.1 52.9 0.03%^Jihan Inc dba ARCO AM/PM andDiana Inc dba Diana's Recycling Gasoline Stations Term Loan Prime plus2.75% 6/26/2040 380.0 370.3 374.9 0.18%^TJU-DGT Inc dba The Lorenz Cafe Food Services andDrinking Places Term Loan Prime plus2.75% 6/26/2029 20.6 19.2 19.5 0.01%^CEM Autobody LLC dba Dawn'sAutobody Repair andMaintenance Term Loan Prime plus2.75% 6/26/2040 135.5 132.0 132.6 0.06%^Wolf Enviro Interests, LLC andEnviromax Services Inc Administrative andSupport Services Term Loan Prime plus2.75% 6/25/2040 246.5 240.2 234.0 0.11%^Ohs Auto Body, Inc. dba Ohs BodyShop Repair andMaintenance Term Loan 7.2775% 6/25/2040 1,207.5 1,187.4 1,190.9 0.57%^Evinger PA One, Inc. dba PostalAnnex, Falcon Miscellaneous StoreRetailers Term Loan Prime plus2.75% 6/24/2025 22.5 20.1 18.8 0.01%^Amboy Group, LLC dba Tommy'sMoloney's Food Manufacturing Term Loan Prime plus2.75% 6/24/2025 454.0 406.2 410.1 0.20%^Richards Plumbing and HeatingCo., Inc. dba Richards Mechanical Specialty TradeContractors Term Loan Prime plus2.75% 6/23/2040 551.8 537.6 561.8 0.27%^RJI Services, Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/23/2025 22.5 19.9 17.8 0.01%^Real Help LLC dba Real HelpDecorative Concrete Administrative andSupport Services Term Loan Prime plus2.75% 6/22/2025 53.1 47.4 47.1 0.02%^PM Cassidy Enterprises, Inc. dbaJunk King Waste Managementand RemediationServices Term Loan Prime plus2.75% 6/19/2025 14.9 13.3 11.9 0.01%^KRN Logistics, LLC,NewsomeTrucking, Inc Truck Transportation Term Loan Prime plus2.75% 6/19/2025 543.5 484.8 458.5 0.22%^Inverted Healthcare Staffing ofFlorida LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/18/2025 61.3 54.7 49.0 0.02%^Square Deal Siding Company,LLCdba Square Deal Siding Company Specialty TradeContractors Term Loan Prime plus2.75% 6/18/2025 22.5 20.4 20.6 0.01%^Flooring Liquidators Inc andFlooring Liquidators of Mt KiscoLLC Specialty TradeContractors Term Loan Prime plus2.75% 6/17/2025 437.5 390.2 390.4 0.19%^AM PM Properties, LLC and AMPM Willington, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/17/2040 87.1 84.6 87.5 0.04%^Nelson Sargsyan dba HDATrucking Support Activities forTransportation Term Loan Prime plus2.75% 6/16/2025 130.5 117.0 104.7 0.05%^Mirage Plastering Inc and MpireLLC and Mpire II LLC Specialty TradeContractors Term Loan Prime plus2.75% 6/12/2040 338.8 135.2 128.3 0.06%^Bizzare Foods Inc dba TrooperFoods MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 6/12/2025 125.0 108.7 97.3 0.05%F-41See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Anturio Marketing Inc dba LogicConsulting Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/12/2040 290.3 282.8 295.5 0.14%^Eldredge Tavern LLC dba Gonyea'sTavern Food Services andDrinking Places Term Loan Prime plus2.75% 6/8/2040 56.3 54.8 57.3 0.03%^Nicor LLC dba FibrenewSacramento Repair andMaintenance Term Loan Prime plus2.75% 6/5/2022 13.8 11.4 10.2 —%^Chitalian Fratelli LLC dbaFrancesca Brick Oven Pizza andPasta Food Services andDrinking Places Term Loan Prime plus2.75% 6/5/2025 16.1 14.0 12.5 0.01%^ViAr Visual Communications, Inc.dba Fastsigns 281701 MiscellaneousManufacturing Term Loan Prime plus2.75% 6/5/2025 62.0 55.3 50.4 0.02%^Video Vault & Tanning LLC andMosaic Salon LLC Rental and LeasingServices Term Loan Prime plus2.75% 6/4/2040 90.5 88.4 92.3 0.04%^Medworxs LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/3/2025 125.0 111.5 100.4 0.05%^DTM Parts Supply Inc. MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 6/2/2025 62.8 56.0 50.1 0.02%^XCESSIVE THROTTLE, INC dbaJake's Roadhouse Food Services andDrinking Places Term Loan Prime plus2.75% 5/29/2025 8.3 7.3 6.5 —%^God is Good LLC dba BurgerFi Food Services andDrinking Places Term Loan Prime plus2.75% 5/27/2025 67.3 16.6 16.7 0.01%^Villela CPA PL Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 5/27/2025 9.0 8.0 7.3 —%^Pen Tex Inc dba The UPS Store Administrative andSupport Services Term Loan Prime plus2.75% 5/20/2025 22.0 19.5 17.5 0.01%^Douglas Posey and Sally Watkinsondba Audrey's Farmhouse Accommodation Term Loan Prime plus2.75% 5/20/2040 174.1 169.4 173.9 0.08%^Capstone Pediatrics PLLC andCapstone Healthcare Consulting LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 5/15/2025 717.3 638.0 581.7 0.28%^15 McArdle LLC and No OtherImpressions Inc Printing and RelatedSupport Activities Term Loan Prime plus2.75% 5/15/2040 257.1 250.1 247.5 0.12%^E-Z Box Storage, Inc. Real Estate Term Loan Prime plus2.75% 5/11/2025 89.3 73.3 74.0 0.04%^Guard Dogs MFS LLC Repair andMaintenance Term Loan Prime plus2.75% 5/8/2025 65.0 57.5 51.8 0.02%^George S Cochran DDS Inc Ambulatory HealthCare Services Term Loan Prime plus2.75% 5/7/2025 130.0 115.5 103.6 0.05%^South Park Properties LLC andMidlothian Hardware LLC Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 5/6/2040 170.5 164.8 172.1 0.08%F-42See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Matthew Taylor and Landon FarmLLC Personal and LaundryServices Term Loan Prime plus2.75% 5/4/2040 100.0 98.0 93.7 0.04%^Cares Inc dba Dumpling GroundsDay Care Center Social Assistance Term Loan Prime plus2.75% 5/1/2040 81.9 78.8 82.4 0.04%^RDRhonehouse ENT. LLC dbaChill Skinz Miscellaneous StoreRetailers Term Loan Prime plus2.75% 4/29/2025 88.9 79.8 71.5 0.03%^Orchid Enterprises Inc dbaAssisting Hands of Sussex County Ambulatory HealthCare Services Term Loan Prime plus2.75% 4/24/2025 15.0 13.2 11.8 0.01%^Ragazza Restaurant Group, Inc. dbaBambolina Food Services andDrinking Places Term Loan Prime plus2.75% 4/21/2025 22.5 19.8 18.3 0.01%^Diamond Solutions LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 4/21/2025 22.5 19.3 17.3 0.01%^Giacchino Maritime Consultants Inc Personal and LaundryServices Term Loan Prime plus2.75% 4/17/2025 22.5 19.8 17.7 0.01%^Sound Coaching Inc Securities,CommodityContracts, and OtherFinancial Investmentsand RelatedActivities Term Loan Prime plus2.75% 4/14/2025 44.4 39.0 34.9 0.02%^Carolina Beefs, LLC dba BeefO'Brady's Food Services andDrinking Places Term Loan Prime plus2.75% 4/13/2025 19.5 17.1 15.3 0.01%^Faramarz Nikourazm dba Car ClinicCenter Repair andMaintenance Term Loan Prime plus2.75% 4/3/2040 73.8 71.5 72.3 0.03%^Advance Case Parts RE HoldingsLLC and Advance Case Parts Inc Repair andMaintenance Term Loan Prime plus2.75% 3/31/2040 758.3 737.4 723.8 0.35%^T and B Boots Inc dba Takkens Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 3/31/2025 807.8 705.6 688.1 0.33%^HAVANA CENTRAL NJ1, LLCdba Havana Central Food Services andDrinking Places Term Loan Prime plus2.75% 3/31/2025 250.0 225.0 225.6 0.11%^Mid-South Lumber Co. ofNorthwest Florida, Inc. MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 3/31/2040 428.8 415.7 406.4 0.19%^Copper Beech Financial Group LLC Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 3/30/2025 125.0 109.0 103.4 0.05%^Delta Aggregate LLC Mining (except Oiland Gas) Term Loan Prime plus2.75% 3/30/2025 90.0 83.7 84.5 0.04%^Sunset Marine Resort LLC andGoXpeditions LLC Accommodation Term Loan Prime plus2.75% 3/27/2040 301.8 292.6 305.6 0.15%^Shorr Enterprises Inc dba NewDesign Furniture Manufacturers Furniture and RelatedProductManufacturing Term Loan Prime plus2.75% 3/27/2025 106.5 92.9 89.1 0.04%^South Florida Air Conditioning andRefrigeration Corp. Specialty TradeContractors Term Loan Prime plus2.75% 3/27/2040 155.5 150.8 155.8 0.07%F-43See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Shellhorn and Hill Inc dba TotalFleet Service Nonstore Retailers Term Loan Prime plus2.75% 3/27/2040 1,040.3 1,004.8 982.4 0.47%^Foresite Realty Partners LLC andForesite Real Estate Holdings LLC Real Estate Term Loan Prime plus2.75% 3/27/2025 1,238.3 1,079.5 965.3 0.46%^Geo Los Angeles LLC dba GeoFilm Group Rental and LeasingServices Term Loan Prime plus2.75% 3/26/2025 130.0 113.4 108.2 0.05%^Joyce Outdoor Advertising NJ LLCand Joyce Outdoor Advertising LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/26/2040 54.0 52.4 54.2 0.03%^Zero-In Media Inc Data Processing,Hosting, and RelatedServices Term Loan Prime plus2.75% 3/25/2025 22.5 19.6 17.5 0.01%^Carpet Exchange of North TexasInc and Clyde E. Cumbie Jr Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 3/25/2040 810.0 785.4 816.3 0.39%^Loriet LLC MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 3/24/2025 12.0 10.5 9.4 —%^Shelton Incorporated dba Mrs.Winners Food Services andDrinking Places Term Loan Prime plus2.75% 3/20/2040 112.5 109.1 113.6 0.05%^Jaymie Hazard dba Indigo HairStudio and Day Spa Personal andLaundry Services Term Loan Prime plus2.75% 3/20/2040 42.9 41.6 41.9 0.02%^R & R Security and InvestigationsInc dba Pardners Lake Buchanan Food Services andDrinking Places Term Loan Prime plus2.75% 3/19/2040 85.4 82.9 86.5 0.04%^MMS Realty, LLC and MolecularMS Diagnostics LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/18/2040 160.7 155.8 156.1 0.07%^Royal Crest Motors LLC Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 3/16/2040 91.3 88.5 89.8 0.04%^BND Sebastian Limited LiabilityCompany and Sebastian Fitness Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 3/16/2040 172.5 167.3 171.6 0.08%^Douglas Printy Motorsports, Inc.dba Blackburn Trike Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 3/9/2040 191.8 185.9 186.2 0.09%^Luigi's on Main LLC and Luigi'sMain Street Pizza Inc Food Services andDrinking Places Term Loan Prime plus2.75% 3/4/2025 11.3 9.8 9.9 —%^Calhoun Satellite CommunicationsInc and Transmission SolutionsGroup Broadcasting (exceptInternet) Term Loan Prime plus2.75% 2/27/2025 952.8 825.3 763.2 0.37%^Road to Sedona Inc dba Thirteen Food Services andDrinking Places Term Loan Prime plus2.75% 2/27/2025 56.6 49.0 44.3 0.02%^Baystate Firearms and Training,LLC Educational Services Term Loan Prime plus2.75% 2/27/2025 63.4 54.7 49.3 0.02%^Kingseal LLC dba Desoto Healthand Rehab Center Nursing andResidential CareFacilities Term Loan Prime plus2.75% 2/26/2040 1,250.0 1,210.1 1,263.9 0.60%F-44See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Pace Motor Lines, Inc. Truck Transportation Term Loan Prime plus2.75% 2/26/2025 66.2 57.3 57.8 0.03%^Nelson Financial Services LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 2/24/2025 12.5 10.8 9.6 —%^Kiddie Steps 4 You Inc. Social Assistance Term Loan Prime plus2.75% 2/19/2040 61.8 59.7 59.6 0.03%^Triangle Trash LLC dba Bin ThereDump That Waste Managementand RemediationServices Term Loan Prime plus2.75% 2/18/2025 74.4 64.3 60.6 0.03%^Silva Realty Holdings, LLC andMF-Silva Enterprises, Inc. Food Services andDrinking Places Term Loan Prime plus2.75% 2/11/2040 171.6 166.3 166.0 0.08%^740 Barry Street Realty LLC andWild Edibles Inc MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 2/10/2040 492.5 476.7 498.0 0.24%^Kostekos Inc dba New York StylePizza Food Services andDrinking Places Term Loan Prime plus2.75% 2/6/2040 66.3 64.1 64.8 0.03%^DuCharme Realty LLC andDuCharme Enterprises LLC Wood ProductManufacturing Term Loan Prime plus2.75% 2/2/2040 225.1 217.9 215.7 0.10%^Limameno LLC dba Sal's ItalianRistorante Food Services andDrinking Places Term Loan Prime plus2.75% 1/23/2025 83.3 71.4 65.4 0.03%^Palmabak Inc dba Mami Nora's Food Services andDrinking Places Term Loan Prime plus2.75% 1/22/2025 21.5 15.9 16.1 0.01%^Jung Design Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 1/20/2022 8.4 6.5 5.8 —%^Grand Blanc Lanes, Inc. and H, Hand H, LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/31/2039 133.0 128.5 133.0 0.06%^Bear Creek Entertainment, LLC dbaThe Woods at Bear Creek Accommodation Term Loan Prime plus2.75% 12/30/2024 106.3 90.7 91.4 0.04%^Evans and Paul LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 12/30/2024 223.8 190.5 188.1 0.09%^FHJE Ventures LLC and EisenreichII Inc dba Breakneck Tavern Food Services andDrinking Places Term Loan Prime plus2.75% 12/30/2039 245.5 238.2 234.6 0.11%^First Prevention and DialysisCenter, LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/30/2024 273.3 248.4 241.4 0.12%^Bowlerama Inc Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/24/2039 1,202.5 1,161.9 1,213.0 0.58%^401 JJS Corporation and G.Randazzo Corporation Food Services andDrinking Places Term Loan Prime plus2.75% 12/23/2039 473.5 460.9 473.5 0.23%^The Lodin Group LLC and LodinHealth Imaging Inc dba HighlandsBreast Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/23/2039 530.3 511.6 500.9 0.24%F-45See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Thermoplastic Services Inc andParagon Plastic Sheet, Inc Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 12/23/2039 500.0 482.4 503.6 0.24%^Carolina Flicks Inc dba The HowellTheater Motion Picture andSound RecordingIndustries Term Loan Prime plus2.75% 12/23/2032 163.3 153.0 151.0 0.07%^Atlantis of Daytona LLC and OceanClub Sportswear Inc Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 12/23/2039 240.0 214.8 224.3 0.11%^Beale Street Blues Company-WestPalm Beach, LLC Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 12/22/2024 187.5 159.6 148.4 0.07%^MM and M Management Inc dbaPizza Artista Food Services andDrinking Places Term Loan Prime plus2.75% 4/19/2025 46.3 40.4 36.7 0.02%^The Jewelers Inc. dba The Jewelersof Las Vegas Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 12/19/2024 1,250.0 1,063.3 959.5 0.46%^B.S. Ventures LLC dba Dink'sMarket MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/19/2039 53.8 51.9 54.1 0.03%^B & W Towing, LLC andBoychucks Fuel LLC Repair andMaintenance Term Loan Prime plus2.75% 12/17/2039 164.5 160.0 159.4 0.08%^All American Games, LLC andSportslink - The Game, LLC Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 12/10/2024 400.0 340.4 318.1 0.15%^Kemmer LLC and Apples Tree TopLiquors LLC Food and BeverageStores Term Loan Prime plus2.75% 12/4/2039 138.4 133.5 131.8 0.06%^Trading Group 3, Inc. Miscellaneous StoreRetailers Term Loan Prime plus2.75% 11/26/2024 22.5 19.0 17.0 0.01%^The Red Pill Management, Inc. dbaUFC Gym Matthews Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 11/26/2024 54.3 46.6 43.2 0.02%^Teamnewman Enterprises LLC dbaNewmans at 988 and John H.Newman Food Services andDrinking Places Term Loan Prime plus2.75% 11/25/2039 148.8 143.3 143.9 0.07%^DeRidder Chiropractic LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 11/25/2024 13.2 11.1 11.2 0.01%^Modern Manhattan LLC Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 11/25/2024 220.0 185.8 167.8 0.08%^Stormrider Inc dba Shirley'sStormrider, Inc Truck Transportation Term Loan Prime plus2.75% 11/25/2024 150.0 129.1 115.3 0.06%^Meridian Hotels, LLC dba BestWestern Jonesboro Accommodation Term Loan Prime plus2.75% 11/25/2039 228.0 220.6 230.3 0.11%^Legacy Estate Planning Inc dbaAmerican Casket Enterprises Personal and LaundryServices Term Loan Prime plus2.75% 11/21/2024 42.0 35.5 31.7 0.02%F-46See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^J&D Resources, LLC dba AquaScience Specialty TradeContractors Term Loan Prime plus2.75% 11/21/2024 767.9 641.4 582.5 0.28%^DC Real LLC and DC EnterprisesLTD dba Lakeview True Value Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 11/20/2039 119.4 115.5 118.5 0.06%^MLM Enterprises LLC andDemand Printing Solutions Inc Printing and RelatedSupport Activities Term Loan Prime plus2.75% 11/18/2024 70.5 59.5 57.5 0.03%^JEJE Realty LLC and La FamiliaInc Food Services andDrinking Places Term Loan Prime plus2.75% 11/10/2039 205.8 197.1 198.2 0.09%^Joey O's LLC and JenniferOlszewski Specialty TradeContractors Term Loan Prime plus2.75% 11/7/2024 13.1 0.9 0.8 —%^Heartland American PropertiesLLC and Skaggs RV Outlet LLC Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 10/31/2039 479.0 460.6 471.0 0.23%^Golden Transaction Corporationdba Bleh Sunoco Gasoline Stations Term Loan Prime plus2.75% 10/30/2039 156.7 150.7 155.4 0.07%^Seelan Inc dba Candleridge Market Gasoline Stations Term Loan Prime plus2.75% 10/27/2039 90.5 87.0 87.3 0.04%^185 Summerfield Inc and ValconContracting Corp Construction ofBuildings Term Loan Prime plus2.75% 10/24/2039 162.3 156.0 160.5 0.08%^Navdeep B Martins and BusyBubbles LLC dba Wishy Washy Personal andLaundry Services Term Loan Prime plus2.75% 10/24/2039 89.0 85.7 84.6 0.04%^3 F Management LLC and ATCPort Charlotte LLC dba Around TheClock Fitness Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 10/17/2024 131.3 109.9 102.5 0.05%^One Hour Jewelry Repair Inc Repair andMaintenance Term Loan Prime plus2.75% 10/14/2024 20.6 17.2 15.4 0.01%^DNT Storage and Properties LLC Real Estate Term Loan Prime plus2.75% 10/10/2039 101.8 97.8 101.0 0.05%^Capitol Waste and RecyclingServices LLC Waste Managementand RemediationServices Term Loan Prime plus2.75% 10/10/2024 257.8 215.8 202.7 0.10%^Sound Manufacturing Inc Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 10/10/2024 187.5 157.1 145.6 0.07%^Return to Excellence, Inc. dba TheWaynesville Inn Golf & Spa Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 10/10/2039 1,250.0 1,216.5 1,270.0 0.61%^Boilermaker Industries LLC dbaPostNet Administrative andSupport Services Term Loan Prime plus2.75% 10/9/2024 18.8 5.7 5.8 —%^Smith Spinal Care Center P.C. andJames C. Smith Ambulatory HealthCare Services Term Loan Prime plus2.75% 10/8/2039 60.0 57.7 58.8 0.03%^Doctors Express Management ofCentral Texas LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 10/8/2024 105.0 77.8 76.5 0.04%F-47See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Michael Rey Jr. and Lynn J.Williams and GIG Petcare dbaHickory Personal and LaundryServices Term Loan Prime plus2.75% 10/3/2039 126.9 120.2 123.6 0.06%^Sumad LLC dba BrightStar Care ofEncinitas Administrative andSupport Services Term Loan Prime plus2.75% 10/2/2024 92.5 44.5 44.9 0.02%^Roccos LLC and Sullo PantaloneInc Food Services andDrinking Places Term Loan Prime plus2.75% 9/30/2039 255.8 245.5 244.8 0.12%^Keller Holdings LLC and David HKeller III and Carie C Keller Scenic andSightseeingTransportation Term Loan Prime plus2.75% 9/30/2039 100.0 96.0 99.7 0.05%^Orange County InsuranceBrokerage Inc dba Beaty InsuranceAgency Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 9/29/2039 325.1 313.1 326.7 0.16%^The Woods at Bear Creek LLC andBear Creek Entertainment LLC Accommodation Term Loan Prime plus2.75% 9/29/2039 513.3 495.1 516.6 0.25%^Keys Phase One LLC dba TheGrand Guesthouse Accommodation Term Loan Prime plus2.75% 9/26/2039 736.3 706.7 725.2 0.35%^Gordon E Rogers dba StonehouseMotor Inn Accommodation Term Loan Prime plus2.75% 9/26/2039 57.5 55.2 57.6 0.03%^Auto Shine Carwash Inc and AKMR. Hossain and Jessica F. Masud Gasoline Stations Term Loan Prime plus2.75% 9/26/2024 22.5 18.7 17.2 0.01%^Colts V LLC and Nowatzke ServiceCenter, Inc Repair andMaintenance Term Loan Prime plus2.75% 9/26/2039 601.8 578.6 591.7 0.28%^North Columbia LLC and LoopLiquor and Convenience Store LLC Food and BeverageStores Term Loan Prime plus2.75% 9/24/2039 159.3 152.9 156.6 0.07%^6 Price Avenue, LLC and PauleyTree & Lawn Care, Inc Administrative andSupport Services Term Loan Prime plus2.75% 9/24/2039 452.5 435.8 422.4 0.20%^R A Johnson Inc dba Rick JohnsonAuto and Tire Repair andMaintenance Term Loan Prime plus2.75% 9/23/2039 301.3 289.2 301.8 0.14%^Andrene's LLC dba Andrene'sCaribbean Soul Food Carry Out Food Services andDrinking Places Term Loan Prime plus2.75% 9/23/2024 37.8 29.5 26.4 0.01%^Play and Stay LLC dba ZoomRoom Tinton Falls Personal and LaundryServices Term Loan Prime plus2.75% 9/18/2024 42.1 35.4 31.6 0.02%^Ryan Crick and Pamela J. Crick andCrick Enterprises Inc Repair andMaintenance Term Loan Prime plus2.75% 9/17/2039 145.5 139.7 145.7 0.07%^Modern Leather Goods Repair ShopInc Repair andMaintenance Term Loan Prime plus2.75% 9/17/2024 58.8 48.3 43.2 0.02%^Tavern Properties LLC andWildwood Tavern LLC Food Services andDrinking Places Term Loan Prime plus2.75% 9/15/2039 425.0 410.7 419.6 0.20%^RDT Enterprises LLC Specialty TradeContractors Term Loan Prime plus2.75% 9/15/2027 162.8 143.6 143.5 0.07%^Animal Intrusion PreventionSystems Holding Company, LLC Administrative andSupport Services Term Loan Prime plus2.75% 9/15/2024 272.5 226.3 211.6 0.10%F-48See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^KW Zion, LLC and Key WestGallery Inc Miscellaneous StoreRetailers Term Loan Prime plus2.75% 9/12/2039 1,250.0 1,199.9 1,230.5 0.59%^Indy East Smiles Youth DentistryLLC dba Prime Smile East Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/11/2024 630.2 523.3 469.6 0.22%^B&P Diners LLC dba EngineHouse Restaurant Food Services andDrinking Places Term Loan Prime plus2.75% 9/10/2024 80.0 66.4 59.3 0.03%^Feel The World Inc dba Xero Shoesand Invisible Shoes Leather and AlliedProductManufacturing Term Loan Prime plus2.75% 9/5/2024 51.9 43.1 39.3 0.02%^Delta Aggregate LLC Mining (except Oiland Gas) Term Loan Prime plus2.75% 8/28/2039 911.3 862.4 900.0 0.43%^Lamjam LLC, Goldsmith LambrosInc Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 8/27/2024 133.8 110.4 111.2 0.05%^Orange County Cleaning Inc Administrative andSupport Services Term Loan Prime plus2.75% 8/27/2024 41.3 34.0 30.3 0.01%^Qycell Corporation Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 8/26/2024 121.0 99.7 94.5 0.05%^Atlas Auto Body Inc dba AtlasAuto Sales Repair andMaintenance Term Loan Prime plus2.75% 8/22/2039 51.6 49.4 49.6 0.02%^Katie Senior Care LLC dba HomeInstead Senior Care Social Assistance Term Loan Prime plus2.75% 8/15/2024 124.3 102.3 91.3 0.04%^S&P Holdings of Daytona LLCS&P Corporation of Daytona Beach Miscellaneous StoreRetailers Term Loan Prime plus2.75% 8/15/2039 433.5 404.3 421.9 0.20%^Alpha Preparatory Academy LLC Social Assistance Term Loan Prime plus2.75% 8/15/2039 145.2 139.7 145.8 0.07%^Almost Home Property LLC andAlmost Home Daycare LLC Social Assistance Term Loan Prime plus2.75% 8/7/2039 715.8 686.9 710.4 0.34%^AGV Enterprises LLC dba Jet'sPizza #42 Food Services andDrinking Places Term Loan Prime plus2.75% 7/31/2024 54.8 44.8 40.8 0.02%^iFood, Inc. dba Steak N Shake Food Services andDrinking Places Term Loan Prime plus2.75% 7/31/2024 379.1 321.6 304.2 0.15%^575 Columbus Avenue HoldingCompany, LLC and LA-ZE LLC dbaEST EST EST Food Services andDrinking Places Term Loan Prime plus2.75% 7/30/2039 22.5 21.2 22.1 0.01%^L&S Insurance & FinancialServices Inc Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 7/25/2024 22.5 18.4 16.6 0.01%^Honeyspot Investors LLP and PaceMotor Lines Inc Truck Transportation Term Loan Prime plus2.75% 7/24/2039 150.0 143.6 149.5 0.07%^Miss Cranston Diner II, LLC andMiss Cranston II Realty LLC Food Services andDrinking Places Term Loan Prime plus2.75% 7/17/2039 100.0 96.6 98.4 0.05%^AMG Holding, LLC and StetsonAutomotive, Inc Repair andMaintenance Term Loan Prime plus2.75% 6/30/2039 208.0 198.7 211.2 0.10%F-49See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Highway Striping Inc Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 6/30/2024 53.1 43.0 42.7 0.02%^Lisle Lincoln II Limited Partnershipdba Lisle Lanes LP Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/30/2024 100.0 81.0 82.6 0.04%^Honeyspot Investors LLP and PaceMotor Lines Inc Truck Transportation Term Loan Prime plus2.75% 6/30/2039 875.3 837.8 890.1 0.43%^iFood, Inc. dba Steak N Shake Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2039 629.8 602.1 626.0 0.30%^FHJE Ventures LLC and EisenreichII Inc. dba Breakneck Tavern Food Services andDrinking Places Term Loan Prime plus2.75% 6/27/2039 321.8 307.3 324.1 0.16%^Zinger Hardware and GeneralMerchant Inc Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 6/26/2024 110.5 89.4 89.9 0.04%^JPM Investments LLC and CarolinaFamily Foot Care P.A. Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/26/2039 136.1 132.6 140.2 0.07%^Nikobella Properties LLC and JPOInc dba Village Car Wash Repair andMaintenance Term Loan Prime plus2.75% 6/25/2039 476.3 456.1 481.5 0.23%^Big Sky Plaza LLC and Strickland,Incorporated Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 6/20/2039 233.4 222.9 235.1 0.11%^510 ROK Realty LLC dba ROKHealth and Fitness and Robert N.D'urso Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/19/2024 332.0 269.1 274.3 0.13%^Nirvi Enterprises LLC dba HowardJohnson / Knights Inn Accommodation Term Loan Prime plus2.75% 6/17/2039 920.3 878.8 934.4 0.45%^Hotels of North Georgia LLC dbaComfort Inn and Suites Accommodation Term Loan Prime plus2.75% 6/17/2039 837.5 799.8 850.4 0.41%^Global Educational DeliveryServices LLC Educational Services Term Loan Prime plus2.75% 6/16/2024 60.0 49.2 50.2 0.02%^Rainbow Dry Cleaners Personal and LaundryServices Term Loan Prime plus2.75% 6/13/2024 122.5 99.1 98.7 0.05%^NVR Corporation dba DiscountFood Mart Food and BeverageStores Term Loan Prime plus2.75% 6/11/2039 68.3 63.5 67.5 0.03%^Sico & Walsh Insurance AgencyInc and The AMS Trust Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 6/6/2039 250.0 89.2 94.9 0.05%^Sujata Inc dba Stop N Save FoodMart and Dhruvesh Patel Food and BeverageStores Term Loan Prime plus2.75% 6/3/2024 22.5 18.2 18.1 0.01%^Long Island Barber + Beauty LLC Educational Services Term Loan Prime plus2.75% 6/2/2039 55.5 53.0 55.7 0.03%^CJR LLC and PowerWash Plus,Inc. Repair andMaintenance Term Loan Prime plus2.75% 5/30/2024 53.0 42.5 43.0 0.02%F-50See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Pocono Coated Products, LLC Printing and RelatedSupport Activities Term Loan Prime plus2.75% 5/30/2024 22.5 18.0 18.3 0.01%^EGM Food Services Inc dba GoldStar Chili Food Services andDrinking Places Term Loan Prime plus2.75% 5/29/2024 19.2 15.4 15.3 0.01%^R. A. Johnson, Inc. dba RickJohnson Auto & Tire Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 5/29/2039 943.8 899.8 956.7 0.46%^Wilton Dental Care P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 5/29/2024 128.1 105.0 103.4 0.05%^Jonesboro Health Food Center LLC Health and PersonalCare Stores Term Loan Prime plus2.75% 5/27/2024 60.0 48.1 47.3 0.02%^USI Properties LLC dba U Store It Real Estate Term Loan Prime plus2.75% 5/23/2039 144.6 137.9 146.4 0.07%^Bay State Funeral Services, LLCand Riley Funeral Home Inc Personal andLaundry Services Term Loan Prime plus2.75% 5/21/2039 134.9 129.0 137.1 0.07%^Hae M. and Jin S. Park dba BufordCar Wash Repair andMaintenance Term Loan Prime plus2.75% 5/15/2039 166.5 158.0 165.6 0.08%^Moochie's LLC Food Services andDrinking Places Term Loan Prime plus2.75% 5/13/2024 100.5 81.6 80.6 0.04%^The River Beas LLC and PunamSingh Food Services andDrinking Places Term Loan Prime plus2.75% 5/8/2039 90.3 86.0 90.7 0.04%^AS Boyals LLC dba Towne Liquors Food and BeverageStores Term Loan Prime plus2.75% 4/29/2039 117.5 111.8 118.9 0.06%^ENI Inc, Event Networks Inc, ENIWorldwide LLC and Spot Shop Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 4/25/2024 500.0 397.5 390.5 0.19%^Gerami Realty, LC SherrillUniversal City Corral, LP Food Services andDrinking Places Term Loan Prime plus2.75% 4/23/2027 78.8 67.5 69.6 0.03%^Complete Body & Paint, Inc. Repair andMaintenance Term Loan Prime plus2.75% 4/23/2039 20.8 19.9 21.1 0.01%^Island Wide Realty LLC and LongIsland Partners, Inc. Real Estate Term Loan Prime plus2.75% 4/22/2039 103.8 98.8 105.1 0.05%^Wilshire Media Systems Inc Specialty TradeContractors Term Loan Prime plus2.75% 4/17/2024 186.3 148.3 146.7 0.07%^1899 Tavern & Tap LLC and AleHouse Tavern & Tap LLC Food Services andDrinking Places Term Loan Prime plus2.75% 4/9/2039 137.5 129.9 137.4 0.07%^Hodges Properties LLC andEchelon Enterprises Inc dba TreadsBicycle Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 3/31/2039 449.0 426.5 450.8 0.22%^Dantanna's Tavern LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2024 164.3 131.5 130.9 0.06%^Little People's Village II LLC andIliopoulos Realty LLC Social Assistance Term Loan Prime plus2.75% 3/31/2039 92.1 88.1 91.9 0.04%F-51See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^RDT Enterprises, LLC Specialty TradeContractors Term Loan Prime plus2.75% 12/31/2028 141.2 123.9 128.3 0.06%^Little People's Village II LLC andIliopoulos Realty LLC Social Assistance Term Loan Prime plus2.75% 3/31/2039 101.5 97.1 101.4 0.05%^Eagle Aggregate Transportation,LLC and Eagle Pneumatic TransportLLC Truck Transportation Term Loan Prime plus2.75% 3/31/2024 1,250.0 590.9 602.4 0.29%^Kemmer, LLC and Pitts PackageStore, Inc. Food and BeverageStores Term Loan Prime plus2.75% 3/31/2039 117.5 111.8 115.7 0.06%^Wilban LLC Food Services andDrinking Places Term Loan Prime plus2.75% 3/28/2039 427.5 407.2 429.7 0.21%^Lake Area Autosound LLC andRyan H. Whittington Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 7/28/2039 125.0 120.5 126.7 0.06%^Hascher Gabelstapler Inc Repair andMaintenance Term Loan Prime plus2.75% 3/26/2024 143.3 114.5 115.4 0.06%^Knowledge First Inc dba MagicYears of Learning and KimberlyKnox Social Assistance Term Loan Prime plus2.75% 3/21/2039 145.0 138.0 144.6 0.07%^Cormac Enterprises and WyomingValley Beverage Incorporated Food and BeverageStores Term Loan Prime plus2.75% 3/20/2039 110.8 105.4 112.0 0.05%^636 South Center Holdings, LLCand New Mansfield Brass andAluminum Co. Primary MetalManufacturing Term Loan Prime plus2.75% 3/20/2039 497.5 477.3 507.2 0.24%^Kinisi, Inc. dba The River NorthUPS Store Administrative andSupport Services Term Loan Prime plus2.75% 3/18/2024 41.3 26.2 26.4 0.01%^SE Properties 39 Old Route 146,LLC, SmartEarly Clifton Park LLC Social Assistance Term Loan Prime plus2.75% 3/14/2039 408.0 388.7 413.0 0.20%^Tortilla King Inc. Food Manufacturing Term Loan Prime plus2.75% 3/14/2039 216.9 206.9 216.0 0.10%^Tortilla King, Inc. Food Manufacturing Term Loan Prime plus2.75% 3/14/2029 1,033.1 926.1 943.6 0.45%^Bowl Mor, LLC dba Bowl MorLanes / Spare Lounge, Inc. Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 3/13/2039 223.5 212.3 225.6 0.11%^Avayaan2 LLC dba Island Cove Gasoline Stations Term Loan Prime plus2.75% 3/7/2039 157.5 149.6 157.8 0.08%^Onofrio's Fresh Cut Inc MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 3/6/2024 75.0 59.1 59.9 0.03%^R & R Boyal LLC dba Cap N CatClam Bar and Little Ease Tavern Food and BeverageStores Term Loan Prime plus2.75% 2/28/2039 417.5 396.0 416.4 0.20%^Summit Beverage Group LLC Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 2/28/2024 350.6 273.7 275.2 0.13%^952 Boston Post Road Realty, LLCand HNA LLC dba StylesInternational Personal andLaundry Services Term Loan Prime plus2.75% 2/28/2039 211.0 200.1 209.9 0.10%F-52See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Choe Trade Group Inc dba RapidPrinters of Monterey Printing and RelatedSupport Activities Term Loan Prime plus2.75% 2/28/2024 159.3 124.4 126.8 0.06%^Faith Memorial Chapel LLC Personal andLaundry Services Term Loan Prime plus2.75% 2/28/2039 214.2 203.6 213.3 0.10%^96 Mill Street LLC, Central PizzaLLC and Jason Bikakis GeorgeBikaki Food Services andDrinking Places Term Loan Prime plus2.75% 2/12/2039 141.3 134.5 142.9 0.07%^JWB Industries, Inc. dba CarteretDie Casting Primary MetalManufacturing Term Loan Prime plus2.75% 2/11/2024 280.0 218.6 216.4 0.10%^Awesome Pets II Inc dba Mellisa'sPet Depot Miscellaneous StoreRetailers Term Loan Prime plus2.75% 2/7/2024 83.2 65.7 65.2 0.03%^986 Dixwell Avenue HoldingCompany, LLC and Mughali Foods,LLC Food Services andDrinking Places Term Loan Prime plus2.75% 2/7/2039 99.1 94.4 99.5 0.05%^Sovereign Communications LLC Broadcasting (exceptInternet) Term Loan Prime plus2.75% 2/7/2024 907.8 712.6 702.2 0.34%^Sarah Sibadan dba Sibadan Agency Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 1/27/2039 129.4 122.5 129.7 0.06%^3Fmanagement LLC and ATCFitness Cape Coral, LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 1/24/2024 425.0 328.7 326.6 0.16%^JDR Industries Inc dba CST-TheComposites Store, JetCat USA MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 1/21/2024 140.3 108.5 108.2 0.05%^Icore Enterprises Inc dba Air FlowFilters Inc MiscellaneousManufacturing Term Loan Prime plus2.75% 1/15/2024 21.8 16.8 17.1 0.01%^Carl R. Bieber, Inc. dba BieberTourways/BieberTransportation/Bieber Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 9/30/2027 712.5 616.3 635.8 0.30%^Nutmeg North Associates LLCSteeltech Building Products Inc Construction ofBuildings Term Loan Prime plus2.75% 12/31/2038 897.8 868.1 909.1 0.43%^CLU Amboy, LLC and AmboyGroup, LLC dba Tommy Moloney's Food Manufacturing Term Loan Prime plus2.75% 12/27/2023 656.3 511.4 521.0 0.25%^Shane M. Howell and BuckHardware and Garden Center, LLC Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 12/27/2038 322.5 304.7 318.7 0.15%^KK International TradingCorporation MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/23/2028 190.0 165.0 169.4 0.08%^Kurtis Sniezek dba Wolfe's ForeignAuto Repair andMaintenance Term Loan Prime plus2.75% 12/20/2038 88.9 84.0 89.2 0.04%^Mosley Auto Group LLC dbaAmerica's Automotive Repair andMaintenance Term Loan Prime plus2.75% 12/20/2038 221.5 209.3 221.5 0.11%^Lefont Theaters Inc. Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 12/19/2023 14.4 11.0 11.0 0.01%F-53See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^PLES Investements, LLC and JohnRedder, Pappy Sand & Gravel, Inc. Specialty TradeContractors Term Loan Prime plus2.75% 12/19/2038 555.3 524.6 550.6 0.26%^TAK Properties LLC andKinderland Inc Social Assistance Term Loan Prime plus2.75% 12/18/2038 405.0 383.2 402.7 0.19%^Any Garment Cleaner-EastBrunswick, Inc. Personal andLaundry Services Term Loan Prime plus2.75% 12/18/2023 53.8 41.4 41.9 0.02%^TOL LLC dba Wild BirdsUnlimited Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 12/13/2023 18.0 14.3 14.2 0.01%^8 Minute Oil Change of SpringfieldCorporation and John Nino Repair andMaintenance Term Loan Prime plus2.75% 12/12/2038 196.8 182.0 192.9 0.09%^920 CHR Realty LLC V. GarofaloCarting Inc Waste Managementand RemediationServices Term Loan Prime plus2.75% 12/10/2038 418.1 395.0 419.6 0.20%^DKB Transport Corp Truck Transportation Term Loan Prime plus2.75% 12/5/2038 138.8 131.1 139.2 0.07%^Firm Foundations Inc David SGaitan Jr and Christopher K Daigle Specialty TradeContractors Term Loan Prime plus2.75% 12/3/2038 104.3 98.5 102.3 0.05%^Spectrum Development LLC andSolvit Inc & Solvit North, Inc Specialty TradeContractors Term Loan Prime plus2.75% 12/2/2023 387.3 296.6 296.7 0.14%^BVIP Limousine Service LTD Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 11/27/2038 76.5 72.1 76.2 0.04%^Eco-Green Reprocessing LLC andDenali Medical Concepts, LLC MiscellaneousManufacturing Term Loan Prime plus2.75% 11/27/2023 67.2 51.0 50.4 0.02%^Wallace Holdings LLC,GFAInternational Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.5% 11/25/2023 125.0 94.5 92.5 0.04%^AcuCall LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 11/21/2023 15.8 11.9 11.6 0.01%^Seven Peaks Mining Inc andCornerstone Industrial MineralsCorporation Mining (except Oiland Gas) Term Loan Prime plus2.75% 11/18/2038 1,250.0 1,175.6 1,218.3 0.58%^Kids in Motion of Springfield LLCdba The Little Gym of SpringfieldIL Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 11/18/2023 45.0 34.8 34.3 0.02%^Yousef Khatib dba Y&MEnterprises Wholesale ElectronicMarkets and Agentsand Brokers Term Loan Prime plus2.75% 11/15/2023 75.0 56.9 56.2 0.03%^Howell Gun Works LLC Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 11/14/2023 8.3 6.4 6.2 —%^Polpo Realty, LLC, PolpoRestaurant, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 11/6/2038 62.5 58.9 62.5 0.03%F-54See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Twinsburg Hospitality Group LLCdba Comfort Suites Accommodation Term Loan Prime plus2.75% 10/31/2038 945.0 893.7 937.8 0.45%^Mid-Land Sheet Metal Inc Specialty TradeContractors Term Loan Prime plus2.75% 10/31/2038 137.5 129.6 136.9 0.07%^Master CNC Inc & MasterProperties LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 10/31/2038 596.6 561.6 585.4 0.28%^Janice B. McShan and TheMetropolitan Day School, LLC Social Assistance Term Loan Prime plus2.75% 10/31/2023 42.8 33.1 33.7 0.02%^1 North Restaurant Corp dba 1North Steakhouse Food Services andDrinking Places Term Loan Prime plus2.75% 10/31/2038 212.5 200.0 211.6 0.10%^Meridian Hotels LLC dba BestWestern Jonesboro Accommodation Term Loan Prime plus2.75% 10/29/2038 664.5 625.3 664.1 0.32%^New Image Building Services Inc.dba New Image Repair Services Repair andMaintenance Term Loan Prime plus2.75% 10/29/2023 331.3 248.9 247.0 0.12%^Greenbrier Technical Services, Inc Repair andMaintenance Term Loan Prime plus2.75% 10/24/2023 240.1 164.4 167.5 0.08%^Clairvoyant Realty Corp. andNapoli Marble & Granite Design,Ltd Specialty TradeContractors Term Loan Prime plus2.75% 10/24/2038 246.3 231.8 242.6 0.12%^Kelly Auto Care LLC dba ShorelineQuick Lube and Car Wash Repair andMaintenance Term Loan Prime plus2.75% 10/18/2023 87.5 65.7 65.3 0.03%^Cencon Properties LLC and CentralConnecticut Warehousing Company Warehousing andStorage Term Loan Prime plus2.75% 9/30/2038 344.5 324.0 343.7 0.16%^Onofrios Enterprises LLC OnofriosFresh Cut, Inc Food Manufacturing Term Loan Prime plus2.75% 9/30/2038 312.5 294.6 310.8 0.15%^Discount Wheel and Tire Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 9/30/2038 223.8 210.1 220.5 0.11%^First Steps Real Estate Company,LLC and First Steps Preschool Social Assistance Term Loan Prime plus2.75% 9/30/2038 97.6 91.7 95.7 0.05%^Lenoir Business Partners LLC LPIndustries, Inc dba Childforms Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 9/30/2038 322.7 308.0 324.4 0.16%^Top Properties LLC and LPIndustries, Inc dba Childforms Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 9/30/2038 120.0 114.3 121.4 0.06%^Mitchellville Family Dentistry, Dr.Octavia Simkins-Wiseman DDS PC Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/27/2038 335.1 314.6 331.2 0.16%^Gabrielle Realty, LLC Gasoline Stations Term Loan Prime plus2.75% 9/27/2038 757.6 711.3 746.0 0.36%^Anthony C Dinoto and Susan S PDinoto and Anthony C DinotoFuneral Homes Personal and LaundryServices Term Loan Prime plus2.75% 9/26/2038 100.0 94.0 99.8 0.05%^Eastside Soccer Dome, Inc . Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/26/2038 463.8 435.4 462.1 0.22%F-55See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Southeast Chicago Soccer, Inc. Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/26/2038 51.3 48.1 51.1 0.02%^HJ & Edward Enterprises, LLC dbaSky Zone Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/26/2023 262.5 201.7 203.3 0.10%^Kiddie Steps 4 You Inc. Social Assistance Term Loan Prime plus2.75% 9/25/2038 89.3 85.6 89.5 0.04%^Diamond Memorials Incorporated Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/25/2023 14.3 9.7 9.5 —%^Serious-Fun in Alpharetta, LLC dbaThe Little Gym of Alpharetta Educational Services Term Loan Prime plus2.75% 9/20/2023 46.3 34.6 34.2 0.02%^Faith Memorial Chapel LLC Personal andLaundry Services Term Loan Prime plus2.75% 9/20/2038 268.4 252.8 266.1 0.13%^Westville Seafood LLC Food Services andDrinking Places Term Loan Prime plus2.75% 9/19/2038 112.3 105.4 110.7 0.05%^Maynard Enterprises Inc dbaFastsigns of Texarkana Miscellaneous StoreRetailers Term Loan Prime plus2.75% 9/18/2023 16.1 12.1 12.0 0.01%^Grafio Inc dba Omega LearningCenter-Acworth Educational Services Term Loan Prime plus2.75% 9/13/2023 156.3 123.3 122.2 0.06%^Sound Manufacturing Inc Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 9/12/2028 54.8 46.9 47.7 0.02%^The Berlerro Group, LLC dba SkyZone Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/12/2023 421.3 323.5 320.0 0.15%^Prospect Kids Academy Inc Educational Services Term Loan Prime plus2.75% 9/11/2038 124.3 116.4 122.8 0.06%^Alma J. and William R. Walton andAlmas Child Day Care Center Social Assistance Term Loan Prime plus2.75% 9/11/2038 39.5 37.1 39.4 0.02%^B for Brunette dba Blo Personal andLaundry Services Term Loan Prime plus2.75% 9/10/2023 53.4 40.3 39.5 0.02%^Schmaltz Holdings, LLC andSchmaltz Operations, LLC dbaCompanio Personal andLaundry Services Term Loan Prime plus2.75% 9/4/2038 224.2 208.8 219.1 0.10%^Excel RP Inc MachineryManufacturing Term Loan Prime plus2.75% 8/30/2023 130.3 96.0 97.5 0.05%^IlOKA Inc dba Microtech Tel andNewCloud Networks Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/30/2023 687.5 506.6 504.2 0.24%^ACI Northwest Inc. Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 8/30/2023 906.3 452.8 459.3 0.22%^Spectrum Radio Fairmont, LLC Broadcasting (exceptInternet) Term Loan Prime plus2.75% 8/30/2023 187.5 164.3 167.0 0.08%F-56See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Gulfport Academy Child Care andLearning Center, Inc. Social Assistance Term Loan Prime plus2.75% 8/30/2023 43.3 31.9 32.3 0.02%^Ramard Inc and Advanced HealthSciences Inc MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 8/28/2023 187.5 138.2 135.3 0.06%^RM Hawkins LLC dba Pure WaterTech West and Robert M Hawkins Nonstore Retailers Term Loan Prime plus2.75% 8/26/2023 85.8 59.8 60.9 0.03%^JSIL LLC dba BlackstonesHairdressing Personal andLaundry Services Term Loan Prime plus2.75% 8/16/2023 19.5 14.2 14.1 0.01%^Island Nautical Enterprises, Inc. andIngwall Holdings, LLC MiscellaneousManufacturing Term Loan Prime plus2.75% 8/14/2038 445.0 326.6 341.3 0.16%^Caribbean Concepts, Inc. dba QuickBleach Ambulatory HealthCare Services Term Loan Prime plus2.75% 8/12/2023 22.5 16.7 16.4 0.01%^209 North 3rd Street, LLC, YusterInsurance Group Inc Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 7/29/2038 83.9 78.5 82.7 0.04%^Majestic Contracting Services, Inc.dba Majestic Electric and Majestic Specialty TradeContractors Term Loan Prime plus2.75% 7/26/2038 190.0 177.7 186.2 0.09%^Daniel W and Erin H Gordon andSilver Lining Stables CT, LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 7/24/2023 11.3 8.2 8.4 —%^Angkor Restaurant Inc Food Services andDrinking Places Term Loan Prime plus2.75% 7/19/2038 93.0 87.1 92.1 0.04%^Harbor Ventilation Inc and EstesInvestment, LLC Specialty TradeContractors Term Loan Prime plus2.75% 7/19/2038 92.1 22.4 23.7 0.01%^Tri County Heating and CoolingInc. Specialty TradeContractors Term Loan Prime plus2.75% 7/19/2023 87.8 64.0 65.0 0.03%^Morning Star Trucking LLC andMorning Star Equipment and LeasingLLC Truck Transportation Term Loan Prime plus2.75% 7/17/2023 53.8 39.2 38.4 0.02%^Maxiflex LLC MiscellaneousManufacturing Term Loan Prime plus2.75% 6/28/2023 153.5 110.5 112.9 0.05%^GIA Realty LLC and VRAJ GIALLC dba Lakeview Laundromat Personal andLaundry Services Term Loan Prime plus2.75% 6/28/2038 97.5 91.0 97.1 0.05%^JRA Holdings LLC, Jasper CountyCleaners Inc dba Superior Cleaner Personal andLaundry Services Term Loan Prime plus2.75% 6/28/2038 121.0 112.0 119.4 0.06%^2161 Highway 6 Trail, LLC, R. H.Hummer JR., Inc. Truck Transportation Term Loan Prime plus2.75% 6/19/2026 1,250.0 788.0 812.6 0.39%^CBlakeslee Arpaia Chapman, Inc.dba Blakeslee Industrial Services Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 6/18/2028 875.0 737.8 765.6 0.37%^KDP LLC and KDP InvestmentAdvisors, Inc and KDP AssetManagement, Inc Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 6/14/2023 343.8 248.2 249.4 0.12%F-57See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Elite Structures Inc Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 6/12/2038 932.8 847.9 904.0 0.43%^Willowbrook Properties LLC,Grove Gardens Landscaping Inc. Administrative andSupport Services Term Loan Prime plus2.75% 6/5/2038 186.3 173.9 184.9 0.09%^Absolute Desire LLC and Mark H.Szierer, Sophisticated Smile Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/5/2038 188.3 175.9 186.1 0.09%^RKP Service dba Rainbow Carwash Repair andMaintenance Term Loan Prime plus2.75% 5/31/2023 300.0 216.7 218.1 0.10%^RXSB, Inc dba Medicine Shoppe Health and PersonalCare Stores Term Loan Prime plus2.75% 5/30/2023 186.3 133.3 133.7 0.06%^Gregory P Jellenek OD andAssociates PC dba Gregory PJellenek OD Ambulatory HealthCare Services Term Loan Prime plus2.75% 5/28/2023 63.5 45.3 45.8 0.02%^Ryan D. Thornton and Thornton &Associates LLC Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 5/24/2023 68.8 37.3 37.4 0.02%^PowerWash Plus, Inc. and CJR,LLC Repair andMaintenance Term Loan Prime plus2.75% 4/30/2038 550.0 512.3 543.3 0.26%^Peanut Butter & Co., Inc. Food Manufacturing Term Loan Prime plus2.75% 4/30/2023 100.0 70.3 70.6 0.03%^Brothers International Desserts Food Manufacturing Term Loan Prime plus2.75% 4/26/2023 230.0 162.6 164.9 0.08%^Kidrose, LLC dba KidvilleRiverdale Educational Services Term Loan Prime plus2.75% 4/22/2023 78.8 56.3 56.9 0.03%^Vernon & Stephanie Scott and LittleStars Day Care Center, Inc. Educational Services Term Loan Prime plus2.75% 4/18/2038 151.0 140.5 149.8 0.07%^1258 Hartford TPKE, LLC andPhelps and Sons, Inc Miscellaneous StoreRetailers Term Loan Prime plus2.75% 3/29/2038 124.6 115.7 122.4 0.06%^Capital Scrap Metal, LLC andPowerline Investment, LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 3/29/2038 500.0 441.7 470.7 0.23%^MRM Supermarkets Inc dbaConstantins Breads; Dallas GourmetBreads; Food Manufacturing Term Loan Prime plus2.75% 3/29/2038 336.0 312.5 330.0 0.16%^Neyra Industries, Inc. and EdwardNeyra Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 3/27/2023 217.5 152.1 155.1 0.07%^A & M Commerce, Inc. dbaCranberry Sunoco Gasoline Stations Term Loan Prime plus2.75% 3/27/2038 330.3 306.4 325.7 0.16%^Xela Pack, Inc. and Aliseo andCatherine Gentile Paper Manufacturing Term Loan Prime plus2.75% 3/27/2028 271.8 225.8 234.1 0.11%^American Diagnostic Imaging, Inc.dba St. Joseph Imaging Center Ambulatory HealthCare Services Term Loan Prime plus2.75% 3/25/2038 537.5 499.0 528.7 0.25%^Michael A.and HeatherR. Welschdba Art & FrameEtc. Miscellaneous StoreRetailers Term Loan Prime plus2.75% 3/22/2038 67.5 62.7 66.6 0.03%F-58See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^M & H Pine Straw Inc and Harris L.Maloy MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 3/21/2023 288.8 201.8 205.1 0.10%^Truth Technologies Inc dba TruthTechnologies Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/21/2023 79.5 55.6 55.9 0.03%^J. Kinderman & Sons Inc., dbaBriteStar Inc. Electrical Equipment,Appliance, andComponentManufacturing Term Loan Prime plus2.75% 12/31/2018 181.3 129.5 129.8 0.06%^Stellar Environmental LLC Waste Managementand RemediationServices Term Loan Prime plus2.75% 3/18/2023 56.3 39.4 40.1 0.02%^Sound Manufacturing, Inc. andMonster Power Equipment Inc. Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 3/15/2023 523.0 364.8 369.5 0.18%^Golden Gate Lodging LLC Accommodation Term Loan Prime plus2.75% 3/12/2038 115.0 106.8 113.4 0.05%^Bakhtar Group LLC dba Malmaison Food Services andDrinking Places Term Loan Prime plus2.75% 2/28/2023 103.8 72.4 72.6 0.03%^River Club Golf Course Inc dba TheRiver Club Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 2/28/2038 475.2 440.2 467.2 0.22%^Osceola River Mill, LLC(EPC)Ironman Machine, Inc. MachineryManufacturing Term Loan Prime plus2.75% 2/20/2038 86.3 79.9 84.9 0.04%^Java Warung, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 2/19/2038 51.0 47.3 50.3 0.02%^Nancy & Karl Schmidt(EPC)Moments to Remember USA, LLC Printing and RelatedSupport Activities Term Loan Prime plus2.75% 2/15/2038 106.3 98.5 104.6 0.05%^Orient Direct, Inc. dba Spracht,Celltek, ODI MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 2/12/2023 84.9 58.0 58.1 0.03%^Knits R Us, Inc. dba NYC Sports Textile Mills Term Loan Prime plus2.75% 2/11/2038 125.0 116.0 123.6 0.06%^North Country Transport, LLC Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 2/6/2023 15.0 10.4 10.6 0.01%^MJD Investments, LLC dba TheCommunity Day School Social Assistance Term Loan Prime plus2.75% 1/31/2038 258.3 238.9 253.2 0.12%^Sherill Universal City dba GoldenCorral Food Services andDrinking Places Term Loan Prime plus2.75% 1/28/2038 440.5 409.0 433.7 0.21%^Elegant Fireplace Mantels, Inc. dbaElegant Fireplace Mantels Specialty TradeContractors Term Loan Prime plus2.75% 12/31/2022 97.5 66.0 66.2 0.03%^Macho LLC Madelaine ChocolateNovelties Inc dba The Madelai Food Manufacturing Term Loan Prime plus2.75% 12/31/2037 500.0 463.9 494.1 0.24%^WI130, LLC & Lakeland Group,Inc dba Lakeland Electrical MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 12/31/2028 271.5 226.7 233.0 0.11%F-59See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Babie Bunnie Enterprises Inc dbaTriangle Mothercare Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/28/2027 46.3 34.4 35.0 0.02%^John Duffy Fuel Co., Inc. MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/28/2022 513.8 348.0 354.7 0.17%^Polpo Realty LLC & PolpoRestaurant LLC dba Polpo Restauran Food Services andDrinking Places Term Loan Prime plus2.75% 12/27/2037 517.5 479.6 510.7 0.24%^Martin L Hopp, MD PHD AMedical Corp dba Tower ENT Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/21/2022 66.3 44.7 45.1 0.02%^United Woodworking, Inc Wood ProductManufacturing Term Loan 6% 12/20/2022 17.3 11.7 11.9 0.01%^Pioneer Window Holdings, Inc andSubsidiaries dba Pioneer Windows Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 12/20/2022 225.0 152.3 154.0 0.07%^Ezzo Properties, LLC and GreatLakes Cleaning, Inc. Administrative andSupport Services Term Loan Prime plus2.75% 12/20/2027 389.6 318.7 326.0 0.16%^The Amendments Group LLC dbaBrightstar Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/17/2022 22.5 15.2 15.5 0.01%^Cheryle A Baptiste and CheryleBaptiste DDS PLLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 11/30/2037 286.5 265.0 281.5 0.13%^Aegis Creative Communications,Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 11/30/2022 387.5 252.3 252.6 0.12%^Daniel Gordon and Erin Gordon andSilver Lining Stables CT, LLC Support Activities forAgriculture andForestry Term Loan Prime plus2.75% 11/28/2037 223.8 206.2 219.5 0.10%^D&L Rescources, Inc. dba The UPSStore Miscellaneous StoreRetailers Term Loan Prime plus2.75% 11/27/2022 9.8 6.5 6.5 —%^Richmond Hill Mini Market, LLC Food and BeverageStores Term Loan Prime plus2.75% 11/27/2037 185.3 170.7 181.3 0.09%^DRV Enterprise, Inc. dba Cici'sPizza # 339 Food Services andDrinking Places Term Loan Prime plus2.75% 11/26/2022 65.0 40.5 41.3 0.02%^Clean Brothers Company Inc dbaServPro of North Washington County Repair andMaintenance Term Loan Prime plus2.75% 11/21/2022 17.0 7.7 7.8 —%^U & A Food and Fuel, Inc. dbaExpress Gas & Food Mart Gasoline Stations Term Loan Prime plus2.75% 11/21/2037 96.3 88.7 94.4 0.05%^Pioneer Windows ManufacturingCorp, Pioneer Windows Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 11/21/2022 275.0 184.0 186.0 0.09%^R & J Petroleum LLC Manar USA,Inc. Gasoline Stations Term Loan Prime plus2.75% 11/20/2037 180.0 165.8 176.3 0.08%^St Judes Physical Therapy P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 11/19/2022 21.0 14.0 14.3 0.01%^Hi-Def Imaging, Inc. dba SpeedProImaging Printing and RelatedSupport Activities Term Loan Prime plus2.75% 11/9/2022 22.2 14.9 15.0 0.01%F-60See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Reidville Hydraulics Mfg Inc dbaSummit MachineryManufacturing Term Loan Prime plus2.75% 11/2/2037 265.9 245.2 258.7 0.12%^Big Apple Entertainment Partners,LLC dba Ripley's Believe It or Not Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 10/26/2022 180.0 121.8 122.0 0.06%^LA Diner Inc dba Loukas L A Diner Food Services andDrinking Places Term Loan Prime plus2.75% 9/28/2037 677.5 625.7 666.0 0.32%^ATC Fitness LLC dba Around theClock Fitness Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/28/2022 180.0 120.7 122.5 0.06%^University Park Retreat, LLC dbaMassage Heights Personal andLaundry Services Term Loan Prime plus2.75% 9/27/2022 76.0 49.6 50.5 0.02%^Forno Italiano Di Nonna Randazzo,LLC dba Nonna Randazzo's Bakery Food and BeverageStores Term Loan Prime plus2.75% 9/26/2037 183.8 169.9 180.0 0.09%^LaSalle Market and Deli EOK Incand Rugen Realty LLC dba LaSalleMark Food Services andDrinking Places Term Loan Prime plus2.75% 9/21/2037 252.3 231.4 245.0 0.12%^O'Rourkes Diner LLC dbaO'Rourke's Diner Food Services andDrinking Places Term Loan Prime plus2.75% 9/19/2037 65.5 60.1 63.5 0.03%^Michael J. Speeney & JoyceSpeeney and R2 Tape, Inc. MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 8/31/2037 367.5 336.4 358.1 0.17%^AJK Enterprise LLC dba AJKEnterprise LLC Truck Transportation Term Loan Prime plus2.75% 8/27/2022 16.5 10.6 10.8 0.01%^New Image Building Services, Inc.dba New Image Repair Services Repair andMaintenance Term Loan Prime plus2.75% 8/23/2037 285.7 261.6 275.7 0.13%^Suncoast Aluminum Furniture, Inc Furniture and RelatedProductManufacturing Term Loan Prime plus2.75% 8/17/2037 360.0 329.8 351.0 0.17%^Hofgard & Co., Inc. dbaHofgardBenefits Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 7/27/2022 107.3 68.3 69.3 0.03%^Georgia Safe Sidewalks LLC Specialty TradeContractors Term Loan Prime plus2.75% 7/27/2022 15.0 9.4 9.5 —%^Scoville Plumbing & Heating Incand Thomas P. Scoville Specialty TradeContractors Term Loan Prime plus2.75% 7/25/2022 50.0 33.5 34.1 0.02%^Central Tire, Inc. dba Cooper Tire &Auto Services Repair andMaintenance Term Loan Prime plus2.75% 6/29/2037 288.5 262.8 280.1 0.13%^WPI, LLC TransportationEquipmentManufacturing Term Loan Prime plus2.75% 6/29/2024 129.5 92.0 94.2 0.05%^Havana Central (NY) 5, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/29/2022 1,166.8 766.6 780.9 0.37%^Jenkins-Pavia Corporation dbaVictory Lane Quick Oil Change Repair andMaintenance Term Loan Prime plus2.75% 6/27/2037 69.8 63.5 67.8 0.03%F-61See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^KIND-ER-ZZ Inc dba Kidville Educational Services Term Loan Prime plus2.75% 6/15/2022 50.0 31.2 31.6 0.02%^Graphish Studio, Inc. and ScottFishoff Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/14/2022 20.3 12.7 12.9 0.01%^ALF, LLC, Mulit-Service EagleTires Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 5/31/2037 62.9 57.2 61.1 0.03%^Craig R Freehauf dba LincolnTheatre Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 5/31/2022 47.9 22.0 22.4 0.01%^Lefont Theaters, Inc. Motion Picture andSound RecordingIndustries Term Loan Prime plus2.75% 5/30/2022 137.0 85.2 86.6 0.04%^Christou Real Estate Holdings LLCdba Tops American Grill Food Services andDrinking Places Term Loan Prime plus2.75% 5/17/2037 284.0 257.9 275.4 0.13%^Tracey Vita-Morris dba TraceyVita's School of Dance Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 5/10/2022 22.5 14.0 14.2 0.01%^Bisson Transportation, Inc. Truck Transportation Term Loan Prime plus2.75% 5/7/2037 588.1 553.0 588.9 0.28%^Bisson Moving & Storage CompanyBisson Transportation Inc and BTGReal Truck Transportation Term Loan Prime plus2.75% 5/7/2022 528.8 350.0 356.3 0.17%^Fair Deal Food Mart Inc dbaNeighbors Market Gasoline Stations Term Loan Prime plus2.75% 5/3/2037 381.3 346.5 370.3 0.18%^Tanner Optical, Inc. dba MurphyEye Care Ambulatory HealthCare Services Term Loan Prime plus2.75% 4/27/2022 8.3 5.0 5.1 —%^Zane Filippone Co Inc dba CulliganWater Conditioning Nonstore Retailers Term Loan Prime plus2.75% 4/12/2022 558.2 344.0 350.0 0.17%^Indoor Playgrounds LimitedLiability Company dba Kidville Educational Services Term Loan Prime plus2.75% 4/5/2022 19.5 8.4 8.6 —%^Brandywine Picnic Park, Inc. andB.Ross Capps & Linda Capps Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 3/30/2031 231.5 195.9 205.8 0.10%^Access Staffing, LLC Administrative andSupport Services Term Loan Prime plus2.75% 3/30/2022 187.5 113.6 114.8 0.05%^Willow Springs Golf Course, Inc. &JC Lindsey Family Limited Partners Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 3/29/2037 755.4 696.2 743.5 0.36%^Manuel P. Barrera and AccuraElectrical Contractor, Inc. Specialty TradeContractors Term Loan Prime plus2.75% 3/23/2028 103.7 82.0 84.9 0.04%^Shweiki Media, Inc. dba StudyBreaks Magazine Publishing Industries(except Internet) Term Loan Prime plus2.75% 3/22/2027 1,178.8 916.7 947.4 0.45%^ATC Fitness, LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 2/28/2022 10.2 6.1 6.2 —%F-62See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^ATI Jet, Inc. Air Transportation Term Loan Prime plus2.75% 12/28/2026 852.8 643.1 664.9 0.32%^J. Kinderman & Sons, Inc. dba BriteStar Manufacturing Company Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 12/22/2036 495.0 452.5 482.9 0.23%^K's Salon, LLC d/b/a K's Salon Personal andLaundry Services Term Loan Prime plus2.75% 12/20/2021 73.6 42.8 43.2 0.02%^15 Frederick Place LLC & PioneerWindows Holdings Inc & Subs Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 12/16/2021 250.0 144.1 146.2 0.07%^M & H Pinestraw, Inc. and HarrisL. Maloy MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/15/2021 238.3 138.6 140.5 0.07%^Taylor Transport, Inc Truck Transportation Term Loan Prime plus2.75% 12/8/2021 515.5 219.2 223.1 0.11%^Thomas P. Scoville dba ScovillePlumbing & Heating, Inc. Specialty TradeContractors Term Loan Prime plus2.75% 11/16/2021 62.5 35.6 36.3 0.02%^MRM Supermarkets, Inc. dbaConstantin's Breads Food Manufacturing Term Loan Prime plus2.75% 11/10/2021 137.5 79.0 80.2 0.04%^K9 Bytes, Inc & Epazz, Inc dba K9Bytes, Inc Publishing Industries(except Internet) Term Loan Prime plus2.75% 10/26/2021 58.8 34.4 34.8 0.02%^28 Cornelia Street Properties, LLCand Zouk, Ltd.dba Palma Food Services andDrinking Places Term Loan Prime plus2.75% 10/25/2021 22.5 12.5 12.7 0.01%^PTK, Incorporated dba Night N Day24 HR Convenience Store Food and BeverageStores Term Loan Prime plus2.75% 9/30/2036 137.5 122.9 131.0 0.06%^39581 Garfield, LLC and TricountyNeurological Associates, P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/30/2036 28.5 25.3 26.9 0.01%^39581 Garfield, LLC and TriCounty Neurological Associates,P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/30/2036 83.3 74.3 79.1 0.04%^Robert E. Caves, Sr. and AmericanPlank dba Caves Enterprises MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/30/2021 302.5 165.5 168.3 0.08%^Big Apple Entertainment Partners,LLC dba Ripley's Believe it or Not Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/28/2021 1,070.0 589.1 594.4 0.28%^Polymer Sciences, Inc. dba PolymerSciences, Inc. Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 9/28/2036 422.6 377.3 402.4 0.19%^Equity National Capital LLC &Chadbourne Road Capital, LLC Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 9/26/2021 62.5 34.8 35.2 0.02%^Bryan Bantry Inc. Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 9/8/2021 400.0 148.1 149.4 0.07%F-63See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^SBR Technologies d/b/a ColorGraphics Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/31/2021 806.2 433.9 441.2 0.21%^Michael S. Decker & Janet Deckerdba The Hen House Cafe Food Services andDrinking Places Term Loan Prime plus2.75% 8/30/2036 16.4 14.7 15.6 0.01%^Qycell Corporation Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 8/19/2021 187.5 97.1 98.2 0.05%^Trademark Equipment Company Incand David A. Daniel Miscellaneous StoreRetailers Term Loan Prime plus2.75% 8/19/2036 133.6 119.1 126.8 0.06%^Valiev Ballet Academy, Inc Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 8/12/2036 91.5 37.8 40.3 0.02%^A & A Auto Care, LLC dba A & AAuto Care, LLC Repair andMaintenance Term Loan Prime plus2.75% 8/12/2036 101.0 90.1 96.0 0.05%^LaHoBa, LLC dba Papa John's Food Services andDrinking Places Term Loan Prime plus2.75% 8/3/2036 77.5 68.6 73.2 0.04%^Kelly Chon LLC dba Shi-Golf MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 7/29/2021 17.5 6.9 7.0 —%^MTV Bowl, Inc. dba Legend Lanes Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/30/2036 248.5 223.0 237.7 0.11%^Lavertue Properties LLP dbaLavertue Properties Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 6/29/2036 44.8 39.8 42.5 0.02%^Lisle Lincoln II Limited Partnershipdba Lisle Lanes LP Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/29/2036 338.1 312.0 332.9 0.16%^Pierce Developments, Inc. dbaSouthside Granite MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 6/13/2036 256.1 227.3 242.2 0.12%^Major Queens Body & Fender Corp Repair andMaintenance Term Loan Prime plus2.75% 6/10/2021 28.6 15.2 15.4 0.01%^J&K Fitness, LLC dba PhysiquesWomens Fitness Center Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/8/2036 449.3 407.6 434.9 0.21%^Peanut Butter & Co., Inc. dbaPeanut Butter & Co. MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 6/3/2021 65.5 33.6 34.0 0.02%^Demand Printing Solutions, Inc. andMLM Enterprises, LLC dba Demand Printing and RelatedSupport Activities Term Loan Prime plus2.75% 5/27/2021 16.5 8.6 8.7 —%^Modern on the Mile, LLC dba LigneRoset Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 5/25/2021 212.5 110.0 111.4 0.05%F-64See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Music Mountain Water Company,LLC Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 4/25/2036 138.1 121.4 129.6 0.06%^Profile Performance, Inc. and EidakReal Estate, L.L.C. Repair andMaintenance Term Loan Prime plus2.75% 4/20/2036 127.5 112.6 120.2 0.06%^Northwind Outdoor Recreation, Inc.dba Red Rock Wilderness Store Nonstore Retailers Term Loan Prime plus2.75% 4/18/2036 129.5 116.5 124.4 0.06%^Michael S. Korfe dba North ValleyAuto Repair Repair andMaintenance Term Loan Prime plus2.75% 3/24/2036 15.5 13.7 14.6 0.01%^Actknowledge,Inc dbaActknowledge Personal and LaundryServices Term Loan Prime plus2.75% 3/21/2021 57.3 29.0 29.4 0.01%^Food & Beverage Associates OfN.J. Inc Food Services andDrinking Places Term Loan Prime plus2.75% 3/11/2021 10.0 4.4 4.5 —%^Key Products I&II, Inc. dba Dunkin'Donuts/Baskin-Robbins Food and BeverageStores Term Loan Prime plus2.75% 3/10/2021 153.0 77.5 78.4 0.04%^Stephen Frank, Patricia Frank andSuds Express LLC dba FrankChiropra Ambulatory HealthCare Services Term Loan Prime plus2.75% 2/25/2023 63.0 36.2 37.1 0.02%^SuzyQue’s LLC dba Suzy Que’s Food Services andDrinking Places Term Loan Prime plus2.75% 2/11/2036 61.0 53.8 57.4 0.03%^Little People’s Village, LLC dbaLittle People’s Village Social Assistance Term Loan Prime plus2.75% 1/31/2036 31.1 27.3 29.1 0.01%^Seagate Group Holdings, Inc. dbaSeagate Logistics, Inc. Support Activities forTransportation Term Loan Prime plus2.75% 1/28/2036 113.4 99.4 106.1 0.05%^Patrageous Enterprises, LLC dbaIncredibly Edible Delites of Laurel Food and BeverageStores Term Loan Prime plus2.75% 12/29/2020 7.6 3.5 3.5 —%Dixie Transport, Inc. & Johnny D.Brown & Jimmy Brown & MaudainBrown Support Activities forTransportation Term Loan 5.25% 12/28/2035 145.9 137.4 146.2 0.07%^Shree OM Lodging, LLC dba RoyalInn Accommodation Term Loan Prime plus2.75% 12/17/2035 27.7 24.2 25.8 0.01%Groundworks Unlimited LLC Specialty TradeContractors Term Loan 6% 12/17/2023 120.0 81.2 83.4 0.04%^Lodin Medical Imaging, LLC dbaWatson Imaging Center Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/1/2020 66.4 30.7 31.1 0.01%^Robert F. Schuler and Lori A.Schuler dba Bob’s Service Center Repair andMaintenance Term Loan Prime plus2.75% 11/30/2035 34.0 29.7 31.6 0.02%^Any Garment Cleaner-EastBrunswick, Inc dba Any GarmentCleaner Personal and LaundryServices Term Loan Prime plus2.75% 11/18/2020 42.5 16.9 17.1 0.01%^West Cobb Enterprises, Inc andAdvanced Eye Associates, L.L.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 11/12/2035 148.7 129.9 138.3 0.07%^Lincoln Park Physical Therapy Ambulatory HealthCare Services Term Loan Prime plus2.75% 10/20/2020 43.5 19.9 20.2 0.01%^K9 Bytes, Inc & Epazz, Inc Publishing Industries(except Internet) Term Loan Prime plus2.75% 9/30/2020 18.5 8.7 8.8 —%F-65See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Elan Realty, LLC and Albert BasseAsociates, Inc. Printing and RelatedSupport Activities Term Loan Prime plus2.75% 9/30/2035 228.2 198.3 211.3 0.10%^Success Express,Inc. dba SuccessExpress Couriers andMessengers Term Loan Prime plus2.75% 9/29/2020 91.8 41.1 41.4 0.02%^Modern Manhattan, LLC Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 9/20/2020 204.0 92.5 93.5 0.04%^Dirk's Trucking, L.L.C. dba Dirk'sTrucking Truck Transportation Term Loan Prime plus2.75% 9/17/2020 17.7 7.9 8.0 —%^Rudy & Louise Chavez dba Clyde'sAuto and Furniture Upholstery Repair andMaintenance Term Loan Prime plus2.75% 9/2/2035 50.1 43.4 46.3 0.02%^Newsome Trucking Inc and KevinNewsome Truck Transportation Term Loan Prime plus2.75% 9/2/2035 423.1 208.3 221.6 0.11%^California College ofCommunications, Inc. Educational Services Term Loan Prime plus2.75% 11/2/2020 172.5 79.7 80.5 0.04%^DDLK Investments LLC dbaSmoothie King Food Services andDrinking Places Term Loan Prime plus2.75% 8/30/2020 7.5 2.6 2.6 —%^Planet Verte,LLC dba AudioUnlimited Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/20/2020 40.0 17.9 18.0 0.01%^Members Only Software Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/30/2020 40.3 17.6 17.8 0.01%^ActKnowledge,Inc dbaActKnowledge Personal andLaundry Services Term Loan Prime plus2.75% 6/30/2020 50.0 21.4 21.6 0.01%^I-90 RV & Auto Supercenter Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 6/29/2035 74.9 64.6 68.9 0.03%^WeaverVentures, Inc dba The UPSStore Postal Service Term Loan Prime plus2.75% 7/28/2020 23.8 10.3 10.5 0.01%^CJ Park Inc. dba Kidville MidtownWest Educational Services Term Loan Prime plus2.75% 6/25/2020 26.4 8.9 9.0 —%^Zouk, Ltd. dba Palma Food Services andDrinking Places Term Loan Prime plus2.75% 8/25/2020 27.5 12.2 12.3 0.01%^Tanner Optical Inc. dba Murphy EyeCare Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/22/2035 94.6 81.7 87.1 0.04%^M & H Pine Straw, Inc.and HarrisMaloy Support Activities forAgriculture andForestry Term Loan Prime plus2.75% 7/10/2020 67.5 29.2 29.6 0.01%^Excel RP, Inc., Kevin and JoannFoley MachineryManufacturing Term Loan Prime plus2.75% 7/8/2028 50.0 37.9 39.6 0.02%ValleyStar, Inc. dba BrightStarHealthCare Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/28/2020 0.6 2.6 2.6 —%F-66See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^ValleyStar, Inc. dba BrightStarHealthcare Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/28/2020 7.5 3.2 3.2 —%^Diag, LLC dba Kidville Educational Services Term Loan Prime plus2.75% 6/21/2020 37.5 15.6 15.8 0.01%^M & H Pine Straw, Inc and HarrisL. Maloy Support Activities forAgriculture andForestry Term Loan 6% 4/30/2020 183.3 59.4 60.2 0.03%^New Economic Methods LLC dbaRita's Food Services andDrinking Places Term Loan Prime plus2.75% 7/15/2020 24.8 0.7 0.7 —%^Cocoa Beach Parasail Corp. dbaCocoa Beach Parasail Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 4/26/2020 6.3 2.5 2.6 —%^Vortex Automotive LLC Repair andMaintenance Term Loan Prime plus2.75% 3/5/2035 76.6 65.8 70.1 0.03%^ATC Fitness LLC dba Around theClock Fitness Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 2/28/2019 15.0 4.5 4.5 —%^Lahoba,LLC dba Papa John's Pizza Food Services andDrinking Places Term Loan Prime plus2.75% 12/30/2034 42.5 36.2 38.6 0.02%^Music Mountain WaterCompany,LLC dba Music MountainWater Co. Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 12/29/2019 185.4 69.1 69.9 0.03%^Animal Intrusion PreventionSystems Holding Company, LLC Administrative andSupport Services Term Loan Prime plus2.75% 3/29/2024 126.5 29.0 29.9 0.01%^David A. Nusblatt, D.M.D, P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/11/2019 9.0 3.3 3.3 —%^CMA Consulting dba ConstructionManagement Associates Construction ofBuildings Term Loan Prime plus2.75% 12/11/2019 58.5 19.5 19.7 0.01%^KMC RE, LLC & B&B Kennels Personal andLaundry Services Term Loan Prime plus2.75% 11/19/2034 58.3 49.5 52.7 0.03%^Demand Printing Solutions, Inc. Printing and RelatedSupport Activities Term Loan Prime plus2.75% 12/12/2019 10.0 3.6 3.7 —%^Planet Verte, LLC dba AudioUnlimited of Oceanside Administrative andSupport Services Term Loan Prime plus2.75% 11/28/2019 57.0 20.3 20.5 0.01%^Demand Printing Solutions, Inc Printing and RelatedSupport Activities Term Loan Prime plus2.75% 10/29/2034 147.5 124.9 132.9 0.06%^Supreme Screw Products Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 4/17/2019 308.2 87.6 88.4 0.04%^Gray Tree Service, Inc. Administrative andSupport Services Term Loan Prime plus2.75% 12/18/2018 50.0 12.4 12.5 0.01%^Envy Salon & Spa LLC Personal andLaundry Services Term Loan Prime plus2.75% 12/4/2018 20.3 4.9 4.9 —%^Gourmet to You, Inc. Food Services andDrinking Places Term Loan Prime plus2.75% 2/28/2019 12.1 3.3 3.3 —%F-67See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^The Alba Financial Group, Inc. Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan 6% 1/10/2019 22.5 12.1 12.2 0.01%^Grapevine Professional Services,Inc. Administrative andSupport Services Term Loan Prime plus2.75% 1/22/2019 8.2 2.0 2.0 —%^Inflate World Corporation Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/30/2018 7.5 1.3 1.3 —%^Peter Thomas Roth Labs LL MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/26/2018 425.0 93.3 93.9 0.04%^Dream Envy, Ltd. dba MassageEnvy Personal andLaundry Services Term Loan Prime plus2.75% 11/9/2018 88.0 20.6 20.7 0.01%^CBA D&A Pope, LLC dbaChristian Brothers Automotive Repair andMaintenance Term Loan Prime plus2.75% 6/14/2018 144.9 28.8 28.9 0.01%^Gilbert Chiropractic Clinic, Inc. Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/7/2018 22.5 4.0 4.1 —%^D & D's Divine Beauty School ofEsther, LLC Educational Services Term Loan 6% 8/1/2031 57.7 51.3 54.1 0.03%^Daniel S. Fitzpatrick dba Danny'sMobile Appearance ReconditioningService Repair andMaintenance Term Loan Prime plus2.75% 3/29/2018 9.4 1.6 1.6 —%^Burks & Sons Development LLCdba Tropical Smoothie Cafe Food Services andDrinking Places Term Loan Prime plus2.75% 3/22/2018 49.8 8.0 8.0 —%Bliss Coffee and Wine Bar, LLC Food Services andDrinking Places Term Loan 6% 3/19/2018 87.5 69.9 70.2 0.03%^Zog Inc. Other InformationServices Term Loan 6% 3/17/2018 97.5 62.1 62.3 0.03%^Saan M.Saelee dba Saelee'sDelivery Service Truck Transportation Term Loan Prime plus2.75% 3/12/2018 9.8 1.6 1.6 —%Integrity Sports Group, LLC Performing Arts,Spectator Sports, andRelated Industries Term Loan 6% 3/6/2018 75.0 31.7 31.8 0.02%^Enewhere Custom Canvas, LLC Textile Product Mills Term Loan Prime plus2.75% 2/15/2018 12.0 1.9 1.9 —%^A & A Acquisition, Inc. dba A & AInternational Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 2/15/2018 100.0 14.8 14.9 0.01%^All American Printing Printing and RelatedSupport Activities Term Loan Prime plus2.75% 10/26/2032 69.8 37.6 39.8 0.02%^Seo's Paradise Cleaners, Inc. Personal andLaundry Services Term Loan Prime plus2.75% 1/19/2018 9.8 0.6 0.6 —%^Margab, Inc. dba Smoothie King Food Services andDrinking Places Term Loan Prime plus2.75% 12/28/2017 44.0 5.7 5.7 —%F-68See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^RCB Enterprises, Inc. Administrative andSupport Services Term Loan Prime plus2.75% 12/18/2017 21.2 3.4 3.4 —%^Timothy S. Strange dba Strange'sMobile Apperance ReconditioningService Repair andMaintenance Term Loan Prime plus2.75% 12/17/2017 8.4 0.8 0.8 —%^Parties By Pat, Inc. and Jose M.Martinez Jr. Food Services andDrinking Places Term Loan Prime plus2.75% 12/11/2017 93.1 11.8 11.8 0.01%^Tammy's Bakery, Inc. dba Tammy'sBakery Food Manufacturing Term Loan Prime plus2.75% 12/10/2017 71.8 9.9 10.0 —%^Maria C. Sathre and David N.Sathre dba Black Forest Liquor Store Food and BeverageStores Term Loan Prime plus2.75% 11/28/2017 18.6 2.2 2.2 —%^MJ Mortgage & Tax Services, Inc. Credit Intermediationand RelatedActivities Term Loan Prime plus2.75% 11/14/2017 6.9 0.4 0.4 —%^Kings Laundry,LLC Personal andLaundry Services Term Loan Prime plus2.75% 10/30/2017 64.5 7.1 7.1 —%^Quality Engraving Services Inc. andIan M. Schnaitman Miscellaneous StoreRetailers Term Loan Prime plus2.75% 10/17/2017 15.0 1.7 1.7 —%^Louis B. Smith dba LAQ FuneralCoach Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 9/15/2017 12.6 1.2 1.2 —%^1911 East Main Street Holdings,Corp Repair andMaintenance Term Loan Prime plus2.75% 5/18/2032 15.8 12.3 13.1 0.01%^Metano IBC Services, Inc. andStone Brook Leasing, LLC Rental and LeasingServices Term Loan Prime plus2.75% 8/17/2017 315.0 25.2 25.3 0.01%^Mala Iyer, MD dba Child andFamily Wellness Center Ambulatory HealthCare Services Term Loan Prime plus2.75% 8/11/2017 50.0 4.8 4.9 —%^Twietmeyer Dentistry PA Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/30/2017 148.9 9.9 9.9 —%^Water Works Laundromat, LLC Personal andLaundry Services Term Loan Prime plus2.25% 9/7/2027 267.3 184.0 187.1 0.09%^Dave Kris, and MDK Ram Corp. Food and BeverageStores Term Loan Prime plus2.75% 2/5/2026 221.0 32.3 33.4 0.02%^No Thirst Software LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 4/26/2017 6.8 0.2 0.2 —%^CCIPTA, LLC Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 1/17/2017 47.0 0.2 0.2 —%^Gill Express Inc. dba AmericanEagle Truck Wash Repair andMaintenance Term Loan Prime plus2.75% 1/5/2027 286.9 187.3 194.8 0.09%^Spain Street LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/29/2017 63.0 0.9 0.9 —%F-69See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Kyoshi Enterprises, LLC Educational Services Term Loan Prime plus2.75% 12/29/2016 22.5 — — —%^Nora A. Palma and Julio O Villcas Food Services andDrinking Places Term Loan Prime plus2.75% 6/27/2017 56.3 0.1 0.1 —%^Smooth Grounds, Inc. Food Services andDrinking Places Term Loan 7.75% 12/31/2018 64.5 30.6 30.8 0.01%^Fran-Car Corporation dba HorizonLandscape Management Administrative andSupport Services Term Loan Prime plus2.75% 3/3/2028 407.8 161.0 168.0 0.08%^Head To Toe PersonalizedPampering, Inc. Personal and LaundryServices Term Loan Prime plus2.75% 1/27/2031 52.0 9.0 9.5 —%^Maxwell Place, LLC Nursing andResidential CareFacilities Term Loan 6.5% 12/31/2018 1,076.8 772.5 779.2 0.37%^Christopher F. Bohon & Pamela D.Bohon Social Assistance Term Loan Prime plus2.75% 10/28/2026 14.2 3.2 3.4 —%^Shree Om Lodging, LLC dba RoyalInn Accommodation Term Loan Prime plus2.75% 5/2/2030 333.3 64.1 67.4 0.03%^Pedzik's Pets, LLC Support Activities forAgriculture andForestry Term Loan Prime plus2.75% 3/31/2030 53.5 9.0 9.4 —%^Nancy Carapelluci & A & MSeasonal Corner Inc. Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 3/1/2025 106.9 14.5 15.0 0.01%^Moonlight Multi Media Production,Inc. Other InformationServices Term Loan 5.3% 2/1/2025 19.7 3.3 3.4 —%David M. Goens dba Superior AutoPaint & Body, Inc. Repair andMaintenance Term Loan 6% 8/26/2024 250.0 17.5 18.1 0.01%^McCallister Venture Group, LLCand Maw's Vittles, Inc. Food Services andDrinking Places Term Loan Prime plus2.75% 7/30/2029 75.0 11.6 12.1 0.01%^Computer Renaissance dba Dante ITServices, Inc. Electronics andAppliance Stores Term Loan Prime plus3.75% 3/1/2018 100.0 1.6 1.6 —%^Chong Hun Im dba Kim's Market Food and BeverageStores Term Loan Prime plus2.5% 2/27/2024 80.0 9.5 9.7 —%Whirlwind Car Wash, Inc. Repair andMaintenance Term Loan Prime plus2% 4/9/2029 333.3 65.5 65.8 0.03%^West Experience,Inc/West MountainEquipment Rental,Inc/Ski WestLodge Amusement,Gambling, andRecreation Industries Term Loan 6% 6/5/2026 1,333.0 863.5 895.8 0.43%^Center-Mark Car Wash, Ltd Specialty TradeContractors Term Loan Prime plus2.75% 5/18/2024 221.3 27.9 28.7 0.01%^Shuttle Car Wash, Inc. dba ShuttleCar Wash Repair andMaintenance Term Loan Prime plus2.25% 11/10/2028 109.8 17.2 17.5 0.01%^Min Hui Lin Food Services andDrinking Places Term Loan Prime plus2.75% 1/30/2028 134.3 17.5 18.2 0.01%^Delta Partners, LLC dba DeltaCarwash Repair andMaintenance Term Loan Prime plus2.5% 4/5/2029 280.9 42.5 44.0 0.02%F-70See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Auto Sales, Inc. Motor Vehicle andParts Dealers Term Loan 6% 8/17/2023 75.0 7.8 8.0 —%^B & J Manufacturing Corporationand Benson Realty Trust Fabricated MetalProductManufacturing Term Loan Prime plus2% 3/30/2021 250.0 18.8 18.8 0.01%^RAB Services, Inc. & ProfessionalFloor Installations Specialty TradeContractors Term Loan Prime plus2.5% 1/31/2023 62.5 7.0 7.1 —%^Ralph Werner dba WernerTransmissions Gasoline Stations Term Loan Prime plus2.75% 12/29/2021 26.6 2.3 2.4 —%^Taste of Inverness, Inc. dba ChinaGarden Food Services andDrinking Places Term Loan Prime plus2% 6/29/2025 73.8 8.8 8.8 —%^M. Krishna, Inc. dba Super 8 Motel Accommodation Term Loan Prime plus2% 3/20/2025 250.0 9.4 9.5 —%^Robin C. & Charles E. Taylor &Brigantine Aquatic Center LLC Amusement,Gambling, andRecreation Industries Term Loan 6% 9/14/2023 185.8 31.5 32.3 0.02%^OrthoQuest, P.C. Ambulatory HealthCare Services Term Loan Prime plus2% 3/12/2022 56.8 4.3 4.3 —%^CPN Motel, L.L.C. dba AmericanMotor Lodge Accommodation Term Loan Prime plus2.25% 4/30/2024 379.0 30.8 31.1 0.01%^Track Side Collision & Tire, Inc. Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 6/16/2025 44.8 4.9 5.0 —%^Duttakrupa, LLC dba BirminghamMotor Court Accommodation Term Loan Prime plus2.25% 9/8/2023 98.8 12.2 12.3 0.01%^Deesha Corporation, Inc. dba BestInn & Suites Accommodation Term Loan Prime plus2.25% 2/14/2025 250.0 27.4 27.8 0.01%^Maruti, Inc Accommodation Term Loan Prime plus2.25% 11/25/2024 220.0 25.4 25.7 0.01%Willington Hills Equestrian CenterLLC Animal Productionand Aquaculture Term Loan Prime plus2.75% 10/19/2022 85.0 12.8 13.1 0.01%^LABH, Inc. Accommodation Term Loan Prime plus2.25% 9/27/2024 555.0 40.8 41.3 0.02%^Randall D. & Patricia D. Casaburidba Pat's Pizzazz Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 3/13/2023 68.8 7.0 7.2 —%^Gain Laxmi, Inc. dba Super 8 Motel Accommodation Term Loan Prime plus2.25% 5/31/2023 202.5 20.0 20.2 0.01%^Naseeb Corporation Accommodation Term Loan Prime plus2.25% 3/31/2024 402.5 29.8 30.2 0.01%^Stillwell Ave Prep School Social Assistance Term Loan Prime plus2.75% 1/14/2023 72.0 6.4 6.5 —%^Karis, Inc. Accommodation Term Loan Prime plus2% 12/22/2023 148.8 13.4 13.4 0.01%^Five Corners, Ltd. Gasoline Stations Term Loan Prime plus2.75% 12/11/2019 85.0 4.7 4.8 —%F-71See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^Alyssa Corp dba Knights Inn Accommodation Term Loan Prime plus2.25% 9/30/2023 350.0 42.0 42.4 0.02%^Bhailal Patel dba New Falls Motel Accommodation Term Loan Prime plus2.75% 3/27/2023 100.0 3.7 3.8 —%^Pegasus Automotive, Inc. Gasoline Stations Term Loan Prime plus2.75% 12/23/2022 112.5 10.9 11.2 0.01%^Delyannis Iron Works Fabricated MetalProductManufacturing Term Loan 6% 12/8/2022 16.0 1.0 1.1 —%^P. Agrino, Inc. dba Andover Diner Food Services andDrinking Places Term Loan Prime plus2.75% 7/18/2021 150.0 8.9 9.1 —%^Golden Elevator Co., Inc. Support Activities forAgriculture andForestry Term Loan Prime plus2.75% 1/31/2022 50.0 0.4 0.4 —%^RJS Service Corporation Gasoline Stations Term Loan Prime plus2.75% 8/20/2021 79.0 6.2 6.3 —%Chez Rurene Bakery Food Services andDrinking Places Term Loan Prime plus2.75% 6/20/2017 150.0 9.2 9.2 —%Total Performing SBAUnguaranteed Investments $235,664.6 $204,850.6 $202,886.6 97.03% Non-Performing SBA UnguaranteedInvestments (3) ^*200 North 8th Street Associates LLCand Enchanted Acres Food Manufacturing Term Loan Prime plus2.75% 5/4/2028 $468.8 $469.3 $441.3 0.21%^*214 North Franklin, LLC and WinterVentures, Inc. Nonstore Retailers Term Loan 6% 11/29/2037 81.7 81.7 29.7 0.01%^*A + Quality Home Health Care, Inc. Ambulatory HealthCare Services Term Loan 6% 8/1/2016 1.3 1.3 1.2 —%*Almeria Marketing 1, Inc. Personal and LaundryServices Term Loan 7.75% 10/15/2015 4.3 4.3 0.6 —%^*Al-Mustafa Enterprise, Inc. and Al-Mustafa Enterprise Inc Motor Vehicle andParts Dealers Term Loan 6.25% 9/18/2040 129.3 129.5 109.0 0.05%^*AUM Estates, LLC and SculptedFigures Plastic Surgery Inc. Ambulatory HealthCare Services Term Loan 6% 3/14/2038 305.3 305.7 28.8 0.01%*AWA Fabrication & Construction,L.L.C. Fabricated MetalProductManufacturing Term Loan 6% 4/30/2025 34.7 34.8 19.4 0.01%^*B&B Fitness and Barbell, Inc. dbaElevations Health Club Amusement,Gambling, andRecreation Industries Term Loan 6% 6/22/2035 206.4 206.7 201.6 0.10%*Baker Sales, Inc. d/b/a Baker Sales,Inc. Nonstore Retailers Term Loan 6% 3/29/2036 177.0 177.4 80.2 0.04%^*Fieldstone Quick Stop LLC BarberInvestments LLC Gasoline Stations Term Loan 6% 9/30/2038 646.4 648.0 327.6 0.16%^*Barber Investments LLC andFieldstone Quickstop LLC and MaineDollar Gasoline Stations Term Loan Prime plus2.75% 8/15/2039 146.0 146.3 — —%F-72See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets*Bwms Management, LLC Food Services andDrinking Places Term Loan 0% 3/1/2018 5.1 5.1 4.9 —%^*Chickamauga Properties, Inc.,MSW Enterprises, LLP Amusement,Gambling, andRecreation Industries Term Loan 6.25% 12/22/2035 59.0 59.0 56.4 0.03%^*Chickamauga Properties, Inc. andMSW Enterprises, LLP Amusement,Gambling, andRecreation Industries Term Loan 6.25% 10/19/2022 43.4 43.5 — —%^*Custom Software, Inc. a ColoradoCorporation dba M-33 Access Professional,Scientific, andTechnical Services Term Loan 6.25% 6/17/2021 285.5 286.2 43.1 0.02%^*Custom Software, Inc. a ColoradoCorporation dba M-33 Access Broadcasting (exceptInternet) Term Loan 6.25% 4/30/2022 94.1 94.3 — —%^*Danjam Enterprises, LLC dbaAriel Dental Care Ambulatory HealthCare Services Term Loan 6% 3/31/2035 172.8 173.0 158.3 0.08%^*Danjam Enterprises, LLC dbaAriel Dental Care Ambulatory HealthCare Services Term Loan 6% 3/29/2023 64.7 64.8 58.6 0.03%^*DC Realty, LLC dba FOGO DataCenters Professional,Scientific, andTechnical Services Term Loan 6% 3/23/2037 2,646.6 2,673.3 2,609.4 1.25%^*DC Realty, LLC dba FOGO DataCenters Professional,Scientific, andTechnical Services Term Loan 6.25% 3/23/2022 178.9 179.3 169.4 0.08%^*Dean 1021 LLC dba Pure Pita Food Services andDrinking Places Term Loan Prime plus2.75% 4/29/2025 63.9 64.0 49.6 0.02%^*Dill Street Bar and Grill Inc andWO Entertainment, Inc Food Services andDrinking Places Term Loan 6% 9/27/2027 78.2 78.4 1.2 —%*Dr. Francis E. Anders, DVM Professional,Scientific, andTechnical Services Term Loan 6% 8/9/2015 1.6 1.6 1.5 —%^*Europlast Ltd Plastics and RubberProductsManufacturing Term Loan 6% 9/26/2022 316.1 316.9 36.5 0.02%^*Europlast Ltd Plastics and RubberProductsManufacturing Term Loan 6% 5/31/2023 155.2 155.6 114.8 0.05%^*Event Mecca LLC Other InformationServices Term Loan 6% 4/10/2023 12.6 12.6 9.4 —%^*EZ Towing, Inc. Support Activities forTransportation Term Loan 6% 1/31/2023 123.2 123.5 107.1 0.05%^*Gator Communications GroupLLC dba Harvard Printing Group Printing and RelatedSupport Activities Term Loan 6.25% 3/30/2022 232.9 233.5 22.7 0.01%^*Gator Communications GroupLLC dba Harvard Printing Group Printing and RelatedSupport Activities Term Loan 6.25% 4/25/2022 157.4 157.8 — —%^*Gator Communications Group,LLC dba Harvard Printing Group Printing and RelatedSupport Activities Term Loan 6.25% 3/27/2023 13.3 13.3 — —%F-73See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^*Grand Manor Realty, Inc. & KevinLaRoe Real Estate Term Loan 6% 2/20/2023 18.9 19.0 17.8 0.01%*Guzman Group,LLC Rental and LeasingServices Term Loan 6% 1/30/2016 189.7 190.2 154.5 0.07%^*Hamer Road Auto Salvage, LLCand Scott T. Cook and Nikki J. Cook Motor Vehicle andParts Dealers Term Loan 6% 8/8/2039 176.7 177.1 156.6 0.07%*Harrelson MaterialsManagement,Inc Waste Managementand RemediationServices Term Loan 6% 6/24/2021 464.2 465.4 36.4 0.02%^*Hartford Cardiology Group LLCand Ideal Nutrition of ConnecticutLLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/30/2026 478.9 480.1 127.1 0.06%^*Home Again Restaurant LLC Food Services andDrinking Places Term Loan 6.25% 6/30/2040 58.7 58.8 52.9 0.03%^*J Olson Enterprises LLC andOlson Trucking Direct, Inc. Truck Transportation Term Loan 6% 6/28/2025 647.5 649.1 226.8 0.11%^*J&M Concessions, Inc.dba A-1Liquors Food and BeverageStores Term Loan 6.25% 3/3/2039 130.2 130.6 91.9 0.04%^*J&M Concessions Inc dba A 1Liquors Food and BeverageStores Term Loan Prime plus2.75% 2/27/2025 79.8 80.0 11.7 0.01%*Jenny's Wunderland, Inc. Social Assistance Term Loan 6% 6/29/2036 149.7 150.1 52.2 0.02%^*Karykion, Corporation dbaKarykion Corporation Professional,Scientific, andTechnical Services Term Loan 6% 6/28/2022 144.4 144.8 140.4 0.07%^*Kantz LLC and Kantz Auto LLCdba Kantz's Hometown Auto Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 10/29/2039 63.4 63.5 57.2 0.03%*Krishna of Orangeburg, Inc. Accommodation Term Loan 6% 2/20/2032 10.3 10.3 5.6 —%^*Kup's Auto Spa Inc Repair andMaintenance Term Loan 6.25% 11/15/2038 373.2 374.1 351.8 0.17%*Kup’s Auto Spa, Inc. Repair andMaintenance Term Loan 6.25% 10/23/2025 59.1 59.3 55.7 0.03%^*Las Torres Development LLC dbaHouston Event Centers Real Estate Term Loan 6% 8/27/2028 51.0 51.0 4.0 —%^*M and C Renovations Inc Construction ofBuildings Term Loan Prime plus2.75% 10/31/2024 15.9 16.0 12.1 0.01%^*Matchless Transportation LLC dbaFirst Class Limo Transit and GroundPassengerTransportation Term Loan 6.25% 8/3/2022 126.4 126.7 17.5 0.01%^*Milliken and Milliken, Inc. dbaMilliken Wholesale Distribution MerchantWholesalers, DurableGoods Term Loan 6% 6/10/2036 152.8 152.9 140.3 0.07%^*Mojo Brands Media, LLC Broadcasting (exceptInternet) Term Loan 6% 8/28/2023 723.1 725.0 486.9 0.23%*Morris Glass and Construction Specialty TradeContractors Term Loan 6% 3/7/2021 44.8 44.8 3.0 —%^*New Paltz Dental Care, PLLC dbaAriel Dental Care Ambulatory HealthCare Services Term Loan 6% 6/19/2025 97.3 97.5 88.4 0.04%*Our Two Daughters L.L.C. dbaWashington's Restaurant Food Services andDrinking Places Term Loan 6% 6/18/2026 169.8 170.3 22.7 0.01%^*E & I Holdings, LP & PA FarmProducts, LLC Food Manufacturing Term Loan 6% 4/30/2030 1,227.7 1,230.8 436.4 0.21%F-74See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssets^*NB & T Services, LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 4/27/2026 36.5 36.6 — —%*Professional Systems, LLC andProfessional Cleaning Administrative andSupport Services Term Loan 6% 7/30/2020 132.0 132.1 7.2 —%^*Route 130 SCPI Holdings LLCRoute 130 SCPI Operations LLC Food Services andDrinking Places Term Loan 6.25% 9/30/2039 535.1 536.4 368.5 0.18%^*Seven Stars Enterprises, Inc. dbaAtlanta Bread Company Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2018 18.8 18.8 18.5 0.01%*Sheikh M Tariq dba SelbyvilleFoodrite Gasoline Stations Term Loan 6% 3/13/2023 21.2 21.2 — —%^*Shivsakti, LLC dba Knights Inn Accommodation Term Loan 6.25% 12/20/2032 69.7 69.9 62.9 0.03%^*STK Ventures Inc dba JP DockService & Supply Specialty TradeContractors Term Loan 6% 5/9/2037 31.6 31.6 2.3 —%*Stormwise South Florida dbaStormwise Shutters Specialty TradeContractors Term Loan 6% 11/7/2036 403.1 404.1 324.8 0.16%*Stormwise South Florida dbaStormwise Shutters Specialty TradeContractors Term Loan 6% 8/26/2024 201.1 201.6 — —%*Tequila Beaches, LLC dba FrescoRestaurant Food Services andDrinking Places Term Loan 6% 9/16/2021 0.2 0.2 0.2 —%^*The Conibear Corporation andConibear Trucking, LLC Truck Transportation Term Loan Prime plus2.75% 12/5/2024 7.9 7.9 0.9 —%*The Lucky Coyote, LLC MiscellaneousManufacturing Term Loan 6% 5/8/2017 6.2 6.2 2.3 —%^*Will Zac Management LLC dba PapaJohn's Food Services andDrinking Places Term Loan 6.25% 12/19/2024 42.4 42.5 41.3 0.02%^*Winter Ventures Inc and 214 NFranklin LLC Nonstore Retailers Term Loan 6% 4/29/2024 56.5 56.6 — —%^*Winter Ventures Inc dbaQualitybargainbooks andQualitybargainmall Nonstore Retailers Term Loan 6% 12/23/2024 149.1 149.3 — —%^*Winter Ventures Inc dbaQualitybargainbooks andQualitybargainmall Nonstore Retailers Term Loan 6% 4/3/2029 134.4 134.5 — —%^*Wired LLC and Moulison NorthCorporation Specialty TradeContractors Term Loan 6.25% 6/30/2024 325.2 326.0 306.6 0.15%^*Wired LLC and Moulison NorthCorporation Specialty TradeContractors Term Loan 6.25% 7/3/2024 137.9 138.3 13.8 0.01%*Woody's Trucking LLC Truck Transportation Term Loan Prime plus2.75% 1/12/2026 11.7 11.7 3.1 —%Total Non-Performing SBAUnguaranteed Investments $14,879.8 $14,933.6 $8,584.6 4.11% Total SBA UnguaranteedInvestments $250,544.4 $219,784.2 $211,471.2 101.14% Performing SBA GuaranteedInvestments (4) F-75See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment Interest Rate(2) Maturity Principal Cost Fair Value % of NetAssetsHMG Strategy, LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/14/2026 200.0 150.0 165.9 0.08%Techni-Pro Institute LLC Educational Services Term Loan Prime plus2.75% 12/15/2026 760.0 570.0 630.6 0.30%Sempco, Inc. MiscellaneousManufacturing Term Loan Prime plus2.75% 12/15/2041 168.0 126.0 142.3 0.07%Means Enterprises LLC dbaFastFrame Frisco Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 12/16/2026 150.0 127.5 141.1 0.07%New Image Building Services,Inc.dba The Maids ServicingOakland &Maco Administrative andSupport Services Term Loan Prime plus2.75% 12/21/2026 175.0 131.3 145.2 0.07%Jacliff Investments Inc. dbaInternational health Technologies Publishing Industries(except Internet) Term Loan Prime plus2.75% 12/23/2026 500.0 375.0 414.9 0.20%Joshua L. Baker Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 12/23/2026 105.0 89.3 98.7 0.05%Sand Hill Associates, Ltd. dbaCharlie O's Tavern on the Point Food Services andDrinking Places Term Loan Prime plus2.75% 12/27/2041 1,679.5 1,259.6 1,420.2 0.68%Fort Smith Wings Inc. dba WingStop Food Services andDrinking Places Term Loan Prime plus2.75% 12/28/2026 130.0 110.5 122.2 0.06%Elite Structures Inc Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 10/27/2029 900.0 675.0 754.3 0.36%Angelo Faia dba AVF Construction Construction ofBuildings Term Loan Prime plus2.75% 5/27/2041 394.9 296.1 334.3 0.16%Franklin Firm LLC dba Luv 2 Play Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 7/15/2041 691.5 518.7 585.4 0.28%Shooting Sports Academy LLC andJetaa LLC dba Shooting SportsAcademy Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/23/2041 1,500.0 1,125.0 1,268.4 0.61%Worldwide Estate, Inc. dbaWashington Heights Manor Nursing andResidential CareFacilities Term Loan Prime plus2.75% 10/21/2041 900.0 467.3 527.7 0.25%Bear Creek Entertainment LLC dbaThe Woods at Bear Creek Accommodation Term Loan Prime plus2.75% 8/12/2041 1,750.0 837.3 944.0 0.45%Nevey's LLC dba Stark Food III Food and BeverageStores Term Loan Prime plus2.75% 6/30/2041 1,175.5 739.7 833.0 0.40%Sambella Holdings, LLC and StrikeZone Entertainment Center LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/24/2041 2,000.0 1,099.4 1,240.3 0.59%Middlesex Auto Sales Corp Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 10/31/2041 500.0 142.5 160.9 0.08%131 Miles LLC and Ohm ShubhLaxmi, LLC. dba Mr Hero Food Services andDrinking Places Term Loan Prime plus2.75% 11/3/2041 510.1 107.5 121.1 0.06%F-76See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsSurgarloaf Concepts LLC dba Fat Biscuit Food Servicesand DrinkingPlaces Term Loan Primeplus2.75% 11/8/2026 675.0 287.6 317.9 0.15%MIK LLC dba Firehouse Subs Food Servicesand DrinkingPlaces Term Loan Primeplus2.75% 11/9/2026 800.0 490.0 542.1 0.26%Roast Beef Levittown LLC dba Arby's Food Servicesand DrinkingPlaces Term Loan Primeplus2.75% 12/13/2026 1,860.0 163.7 180.8 0.09%Imaginarium Foods LLC, Food Servicesand DrinkingPlaces Term Loan Primeplus2.75% 2/28/2042 1,506.9 373.3 421.0 0.20%Total SBA Guaranteed Performing Investments $19,031.4 $10,262.3 $11,512.3 5.51% Total SBA Unguaranteed and Guaranteed Investments $269,575.8 $230,046.5 $222,983.5 106.64% Controlled Investments (5) Advanced Cyber Security Systems, LLC (6), (16) Dataprocessing,hosting andrelatedservices. 50%MembershipInterest —% — — — — —% Term Loan 3% December2014 1,120.0 381.0 — —%*Automated Merchant Services, Inc. (7), (16) Dataprocessing,hosting andrelatedservices. 100%CommonStock —% — — — — —%CDS Business Services, Inc. (8) Securities,CommodityContracts,and OtherFinancialInvestmentsand RelatedActivities 100%CommonStock —% — — 4,428.0 750.0 0.36% Line ofCredit PrimePlus2.5% August2018 2,690.0 2,690.0 2,690.0 1.29%CrystalTech Web Hosting, Inc. (11) Dataprocessing,hosting andrelatedservices. 100%CommonStock —% — — 8,434.0 20,109.0 9.62%*Fortress Data Management, LLC (16) Dataprocessing,hosting andrelatedservices. 100%MembershipInterest —% — — — — —%Newtek Insurance Agency, LLC (13) (16) InsuranceCarriers andRelatedActivities 100%MembershipInterests —% — — — 2,500.0 1.20%PMTWorks Payroll, LLC (9) Dataprocessing,hosting andrelatedservices. 100%MembershipInterests —% — — 725.1 860.0 0.41% Term Loan 10%-12% VariousmaturitiesthroughMay 2018 1,685.0 1,685.0 1,185.0 0.57%Secure CyberGateway Services, LLC (10), (16) Dataprocessing,hosting andrelatedservices. 66.7%MembershipInterests —% — — — — —% Term Loan 7% June 2017 2,400.0 300.0 — —%F-77See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2016 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsSmall Business Lending, LLC (12) (16) Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities 100%MembershipInterest —% — — — 3,300.0 1.58%Titanium Asset Management, LLC (15)(16) Administrative andSupport Services 100%MembershipInterest —% — — — — —% Term Loan 3% July 2017 2,200.0 660.4 508.1 0.24%ADR Partners, LLC dba banc-serv Partners,LLC (12) Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities 100%MembershipInterest —% — — 5,260.3 5,400.0 2.58%*Summit Systems and Designs, LLC (14) (16) Data processing,hosting and relatedservices. 100%MembershipInterest —% — — — — —%Premier Payments LLC (11) Data processing,hosting and relatedservices. 100%MembershipInterest —% — — 16,438.0 21,000.0 10.04%Universal Processing Services ofWisconsin, LLC (11) (16) Data processing,hosting and relatedservices. 100%MembershipInterest —% — — — 63,000.0 30.13%Total Controlled Investments $10,095.0 $41,001.8 $121,302.1 58.01% Non-control/Non-affiliate Investments Excel WebSolutions, LLC Data processing,hosting and relatedservices. Term Loan 10% September2018 $1,020.2 $903.5 $903.5 0.43% Warrants —% — — — — —% $1,020.2 $903.5 $903.5 0.43% Investments in Money Market Funds UBS Select Treasury Institutional Fund -0.29% yield 9.6 9.6 9.6 —%Peapack Gladstone High Yield IMMA -0.30% yield 25.8 25.8 25.8 0.01%Total Money Market Funds $35.4 $35.4 $35.4 0.02% Total Investments $280,726.4 $271,987.2 $345,224.5 165.10%^ Denotes investment that has been pledged as collateral under the Securitization Trusts.* Denotes non-income producing security.(1) Newtek values each unguaranteed portion of SBA 7(a) performing loans (“Loan”) using a discounted cash flow analysis which projects future cash flows andincorporates projections for Loan pre-payments and Loan defaults using historical portfolio data. The data predicts future prepayment and default probability oncurves which are based on Loan age. The recovery assumption for each Loan is specific to the discounted valuation of the collateral supporting that Loan. EachLoan’s cash flow is discounted at a rate which approximates a market yield. The Loans were originated under the SBA 7(a) program and conform to theunderwriting guidelines in effect at their time of origination. Newtek has been awarded Preferred LenderF-78See accompanying notes to these consolidated financial statementsTable of ContentsProgram (“PLP”) status from the SBA. The portions of these Loans are not guaranteed by the SBA. Individual loan participations can be sold to institutions whichhave been granted an SBA 750 license. Loans can also be sold as a pool of loans in a security form to qualified investors.(2) Prime Rate is equal to 3.50% as of December 31, 2016 .(3) Newtek values non-performing SBA 7(a) loans using a discounted cash flow analysis of the underlying collateral which supports the loan. Net recovery ofcollateral, (fair value less cost to liquidate) is applied to the discounted cash flow analysis based upon a time to liquidate estimate. Modified loans are valued basedupon current payment streams and are re-amortized at the end of the modification period.(4) Newtek values guaranteed performing SBA 7(a) loans using the secondary SBA 7(a) market as a reference point. Newtek routinely sells performing SBA 7(a)loans into this secondary market. Guaranteed portions of SBA 7(a) loans partially funded as of the valuation date are valued using level two inputs as disclosed inNote 3.(5) Controlled Investments are disclosed above as equity investments (except as otherwise noted) in those companies that are “Controlled Investments” of theCompany as defined in the Investment Company Act of 1940. A company is deemed to be a “Controlled Investment” of Newtek Business Services Corp. ifNewtek Business Services Corp. or its subsidiaries owns more than 25% of the voting securities of such company. See Notes 5 and 16 in the accompanying notesto the consolidated financial statements for transactions during the year ended December 31, 2016 with affiliates the Company is deemed to control.(6) 50% owned by Wilshire Holdings I, Inc. (a subsidiary of Newtek Business Services Corp.), 50% owned by non-affiliate. The term loan is past its originalmaturity date and currently in default. As such, the fair value of the investment is zero.(7) 96.11% owned by Wilshire Partners, LLC (a subsidiary of Newtek Business Services Corp.), 3.89% owned by Newtek Business Services Corp.(8) 18.35% owned by Wilshire New York Partners IV, LLC (a subsidiary of Newtek Business Services Corp.), 31.8% owned by Wilshire New York Partners V,LLC (a subsidiary of Newtek Business Services Corp.) and 49.85% owned by Wilshire Holdings 1, Inc. (a subsidiary of Newtek Business Services Corp.).(9) 25% owned by Wilshire New York Partners V, LLC (a subsidiary of Newtek Business Services Corp.), 65% owned by Wilshire Holdings I, Inc. (a subsidiaryof Newtek Business Services Corp.), and 10% owned by Exponential business Development Co., Inc. (a subsidiary of Newtek Business Services Corp.).(10) 66.7% owned by The Whitestone Group, LLC (a subsidiary of Wilshire Holdings I, Inc., a subsidiary of Newtek Business Services Corp.), 33.3% owned bynon-affiliate.(11) 100% owned by Newtek Business Services Holdco1., Inc. (a subsidiary of Newtek Business Services Corp.).(12) 100% owned by Newtek LSP Holdco, LLC (a subsidiary of Wilshire Holdings I, Inc. and Banc-Serv Acquisition, Inc.,both subsidiaries of Newtek Business Services Corp.).(13) 100% owned by Wilshire Holdings I, Inc. (a subsidiary of Newtek Business Services Corp.).(14) 100% owned by The Whitestone Group, LLC (a subsidiary of Wilshire Holdings I, Inc., a subsidiary of Newtek Business Services Corp.).(15) 50% owned by Exponential Business Development Co., Inc. (a subsidiary of Newtek Business Services Corp.), 30%owned by Wilshire New York Partners V, LLC (a subsidiary of Newtek Business Services Corp.), 17.8% owned by WilshireNew York Partners IV, LLC (a subsidiary of Newtek Business Services Corp.), and 2.2% owned by Wilshire New YorkAdvisers II, LLC (a subsidiary of Newtek Business Services Corp.).(16) Zero cost basis is reflected as the portfolio company was organized by the Company and incurred internal legal costs to organize the entity and immaterialexternal filing fees which were expensed when incurred.(17) All of the Company's investments are in entities which are organized under the Laws of the United States and have a principal place of business in the UnitedStates(18) Under the Investment Company Act of 1940, as amended, the Company may not acquire any non-qualifying assets unless, at the time the acquisition is made,qualifying assets represent at least 70% of the Company’s total assets. At December 31, 2016 , 5.5% of total assets are non-qualifying assets.As of December 31, 2016 , the federal tax cost of investments was $263,179,000 resulting in estimated gross unrealized gains and losses of $99,380,000 and$17,335,000, respectively.F-79See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsPerforming SBA UnguaranteedInvestments (1) Bright Dialysis LLC and Ft PierceKidney Care LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/28/2025 $1,250.0 $1,250.0 $1,056.6 0.52%Return to Excellence, Inc. dba TheWaynesville Inn Golf & Spa Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 10/10/2039 1,250.0 1,233.3 1,252.8 0.61%Kingseal LLC dba Desoto Health andRehab Center Nursing andResidential CareFacilities Term Loan Prime plus2.75% 2/26/2040 1,250.0 1,233.3 1,253.1 0.61%The Camera House Inc MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 8/31/2025 1,250.0 1,226.7 1,116.1 0.55%KW Zion, LLC and Key West GalleryInc Miscellaneous StoreRetailers Term Loan Prime plus2.75% 9/12/2039 1,250.0 1,223.7 1,207.8 0.59%Ohs Auto Body, Inc. dba Ohs BodyShop Repair andMaintenance Term Loan 7.22% 6/25/2040 1,207.5 1,205.1 1,151.0 0.56%Seven Peaks Mining Inc andCornerstone Industrial MineralsCorporation Mining (except Oiland Gas) Term Loan Prime plus2.75% 11/18/2038 1,250.0 1,204.1 1,168.9 0.57%Grey Light Realty, LLC (EPC) NHPrecision Metal Fabricators Inc (OC) Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 8/21/2039 1,226.0 1,198.3 1,170.7 0.57%Bowlerama Inc Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/24/2039 1,202.5 1,184.5 1,202.6 0.59%Foresite Realty Partners LLC andForesite Real Estate Holdings LLC Real Estate Term Loan Prime plus2.75% 3/27/2025 1,238.3 1,176.0 977.4 0.48%The Jewelers Inc. dba The Jewelers ofLas Vegas Clothing and ClothingAccessories Stores Term Loan Prime plus2.75% 12/19/2024 1,250.0 1,165.5 978.9 0.48%Werthan Packaging Inc. Paper Manufacturing Term Loan Prime plus2.75% 10/14/2025 1,162.5 1,162.5 1,078.2 0.53%Shellhorn and Hill Inc dba Total FleetService Nonstore Retailers Term Loan Prime plus2.75% 3/27/2040 1,040.3 1,028.0 945.0 0.46%G.W. Fitness Centers, LLC and J.G.Fitness LLC and NP Gym LLC andANA Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/18/2040 1,025.0 1,025.0 1,044.6 0.51%Shweiki Media, Inc. dba Study BreaksMagazine Publishing Industries(except Internet) Term Loan Prime plus2.75% 3/22/2027 1,178.8 976.2 991.8 0.49%Tortilla King, Inc. Food Manufacturing Term Loan Prime plus2.75% 3/14/2029 1,033.1 975.2 946.5 0.46%Yachting Solutions LLC Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 9/25/2040 962.5 959.7 912.7 0.45%R. A. Johnson, Inc. dba Rick JohnsonAuto & Tire Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 5/29/2039 943.8 918.3 944.9 0.46%F-80See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsTwinsburg Hospitality Group LLCdba Comfort Suites Accommodation Term Loan Prime plus2.75% 10/31/2038 945.0 910.1 907.5 0.44%Calhoun Satellite CommunicationsInc and Transmission SolutionsGroup Broadcasting (exceptInternet) Term Loan Prime plus2.75% 2/27/2025 952.8 898.1 782.6 0.38%Nirvi Enterprises LLC dba HowardJohnson / Knights Inn Accommodation Term Loan Prime plus2.75% 6/17/2039 920.3 896.6 922.6 0.45%West Experience,Inc/West MountainEquipment Rental,Inc/Ski WestLodge Amusement,Gambling, andRecreation Industries Term Loan 6% 6/5/2026 1,333.0 885.1 909.0 0.45%P and D Enterprises Ind dbaWallaby's Liquor Warehouse Food and BeverageStores Term Loan Prime plus2.75% 8/28/2040 888.9 885.0 865.8 0.42%Nutmeg North Associates LLC (OC)Steeltech Building Products Inc Construction ofBuildings Term Loan Prime plus2.75% 12/31/2038 897.8 883.1 876.8 0.43%Premier Athletic Center of Ohio Inc.and Gates Investments and Wade Ga Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/22/2028 882.0 882.0 885.3 0.43%Havana Central (NY) 5, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/29/2022 1,166.8 878.5 887.2 0.44%New York Home Health CareEquipment, LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/16/2025 875.0 875.0 847.9 0.42%Elite Structures Inc Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 6/12/2038 932.8 873.5 907.2 0.44%Delta Aggregate LLC Mining (except Oiland Gas) Term Loan Prime plus2.75% 8/28/2039 911.3 871.5 885.0 0.43%Honeyspot Investors LLP and PaceMotor Lines Inc Truck Transportation Term Loan Prime plus2.75% 6/30/2039 875.3 854.5 876.2 0.43%2161 Highway 6 Trail, LLC, (EPC)R. H. Hummer JR., Inc. Truck Transportation Term Loan Prime plus2.75% 6/19/2026 1,250.0 842.8 858.4 0.42%Key Pix Productions Inc. dba Air BudEntertainment Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 11/18/2040 839.8 839.8 855.8 0.42%Hotels of North Georgia LLC dbaComfort Inn and Suites Accommodation Term Loan Prime plus2.75% 6/17/2039 837.5 816.0 838.7 0.41%Shepher Distr's and Sales Corp andThe Lederer Industries Inc. MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/30/2023 1,050.0 801.8 805.3 0.39%Maxwell Place, LLC Nursing andResidential CareFacilities Term Loan 6% 2/28/2016 1,076.8 801.3 802.4 0.39%Carpet Exchange of North Texas Incand Clyde E. Cumbie Jr Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 3/25/2040 810.0 800.4 804.9 0.39%Sovereign Communications LLC Broadcasting (exceptInternet) Term Loan Prime plus2.75% 2/7/2024 907.8 784.1 722.7 0.35%F-81See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsCBlakeslee Arpaia Chapman, Inc.dba Blakeslee Industrial Services Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 6/18/2028 875.0 780.5 797.9 0.39%T and B Boots Inc dba Takkens Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 3/31/2025 807.8 767.6 720.3 0.35%Recycling Consultants, Inc. andPrairie State Salvage and RecyclingInc MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/30/2027 767.5 760.1 680.7 0.33%Advance Case Parts RE HoldingsLLC and Advance Case Parts Inc Repair andMaintenance Term Loan Prime plus2.75% 3/31/2040 758.3 751.5 695.2 0.34%D.C. Group, Inc. dba Unique Settingof New York MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 12/21/2025 750.0 750.0 665.7 0.33%Gabrielle Realty, LLC Gasoline Stations Term Loan Prime plus2.75% 9/27/2038 757.6 726.6 724.4 0.36%Keys Phase One LLC dba The GrandGuesthouse Accommodation Term Loan Prime plus2.75% 9/26/2039 736.3 720.8 712.2 0.35%Top Cat Ready Mix, LLC, PlesInvestments LLC, and Pappy's Sandand Specialty TradeContractors Term Loan Prime plus2.75% 10/28/2025 711.3 707.8 618.5 0.30%Willow Springs Golf Course, Inc. &JC Lindsey Family Limited Partners Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 3/29/2037 755.4 706.5 737.4 0.36%J&D Resources, LLC dba AquaScience Specialty TradeContractors Term Loan Prime plus2.75% 11/21/2024 767.9 701.8 596.5 0.29%Almost Home Property LLC andAlmost Home Daycare LLC Social Assistance Term Loan Prime plus2.75% 8/7/2039 715.8 700.7 700.1 0.34%Contract Packaging Services Inc dbaSuperior Pack Group Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 6/21/2023 851.8 694.6 686.6 0.34%Big Apple Entertainment Partners,LLC dba Ripley's Believe it or Not Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/28/2021 1,070.0 692.9 689.2 0.34%ATI Jet, Inc. Air Transportation Term Loan Prime plus2.75% 12/28/2026 852.8 688.4 700.6 0.34%Scent-Sation Inc Textile Product Mills Term Loan Prime plus2.75% 9/18/2040 687.5 685.5 693.5 0.34%Empower Autism Academy Social Assistance Term Loan Prime plus2.75% 9/4/2040 685.0 683.0 695.9 0.34%C & G Engines Corp. TransportationEquipmentManufacturing Term Loan Prime plus2.75% 9/30/2021 1,041.5 675.1 676.2 0.33%Accent Tag and Label Inc Printing and RelatedSupport Activities Term Loan Prime plus2.75% 12/18/2040 665.8 665.8 652.7 0.32%IIoka Inc dba New Cloud Networks Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/21/2025 665.0 658.9 554.7 0.27%F-82See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsFieldstone Quick Stop LLC(OC)Barber Investments LLC (EPC)Thadius M B Gasoline Stations Term Loan Prime plus2.75% 9/30/2038 676.3 658.3 646.2 0.32%Carl R. Bieber, Inc. dba BieberTourways/BieberTransportation/Bieber Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 9/30/2027 712.5 655.6 662.7 0.32%Eagle Aggregate Transportation, LLCand Eagle Pneumatic Transport LLC Truck Transportation Term Loan Prime plus2.75% 3/31/2024 1,250.0 652.9 656.5 0.32%LA Diner Inc dba Loukas L A Diner Food Services andDrinking Places Term Loan Prime plus2.75% 9/28/2037 677.5 641.2 666.2 0.33%Meridian Hotels LLC dba BestWestern Jonesboro Accommodation Term Loan Prime plus2.75% 10/29/2038 664.5 637.5 654.4 0.32%St Lawrence Hotel Corp and OhekaCatering Inc dba Quality Inn Accommodation Term Loan Prime plus2.75% 9/24/2040 625.0 623.2 610.9 0.30%iFood, Inc. dba Steak N Shake Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2039 629.8 613.6 597.3 0.29%Colts V LLC and Nowatzke ServiceCenter, Inc dba Nowatzke Truck &Trai Repair andMaintenance Term Loan Prime plus2.75% 9/26/2039 601.8 589.1 579.5 0.28%Northeast Arkansas Pizza, Inc. dbaDomino’s Pizza Food Services andDrinking Places Term Loan Prime plus2.75% 6/23/2025 608.0 589.1 493.4 0.24%Indy East Smiles Youth DentistryLLC dba Prime Smile East Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/11/2024 630.2 574.0 479.7 0.24%Master CNC Inc & Master PropertiesLLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 10/31/2038 596.6 573.6 562.8 0.28%CLU Amboy, LLC (EPC) andAmboy Group, LLC (OC) dbaTommy Moloney's Food Manufacturing Term Loan Prime plus2.75% 12/27/2023 656.3 565.8 568.3 0.28%IlOKA Inc dba Microtech Tel andNewCloud Networks Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/30/2023 687.5 565.5 534.2 0.26%ACI Northwest Inc. Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 8/30/2023 906.3 560.8 548.7 0.27%Bisson Transportation, Inc. Truck Transportation Term Loan Prime plus2.75% 5/7/2037 588.1 557.0 577.2 0.28%Richards Plumbing and Heating Co.,Inc. dba Richards Mechanical Specialty TradeContractors Term Loan Prime plus2.75% 6/23/2040 551.8 547.7 556.6 0.27%B and J Catering Inc dba CulinarySolutions Food Services andDrinking Places Term Loan Prime plus2.75% 8/27/2040 547.5 547.5 523.5 0.26%CML RW Security, LLC Construction ofBuildings Term Loan Prime plus2.75% 3/20/2025 575.0 546.1 453.9 0.22%Sambella Holdings, LLC and StrikeZone Entertainment Center LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 11/23/2040 1,189.5 546.1 556.5 0.27%F-83See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsRoute 130 SCPI Holdings LLC(EPC) Route 130 SCPI OperationsLLC (OC) Food Services andDrinking Places Term Loan Prime plus2.75% 9/30/2039 538.8 536.3 505.9 0.25%PLES Investements, LLC and JohnRedder, Pappy Sand & Gravel, Inc. Specialty TradeContractors Term Loan Prime plus2.75% 12/19/2038 555.3 535.7 534.4 0.26%KRN Logistics, LLC,NewsomeTrucking, Inc Truck Transportation Term Loan Prime plus2.75% 6/19/2025 543.5 526.6 473.2 0.23%PowerWash Plus, Inc. and CJR, LLC Repair andMaintenance Term Loan Prime plus2.75% 4/30/2038 550.0 523.8 537.3 0.26%The Lodin Group LLC and LodinHealth Imaging Inc dba HighlandsBreast Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/23/2039 530.3 521.6 480.7 0.24%The Grasso Companies LLC andGrasso Pavement Maintenance LLCVeranda Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 9/28/2025 518.8 512.4 503.8 0.25%SBR Technologies d/b/a ColorGraphics Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/31/2021 806.2 512.0 517.0 0.25%American Diagnostic Imaging, Inc.dba St. Joseph Imaging Center Ambulatory HealthCare Services Term Loan Prime plus2.75% 3/25/2038 537.5 510.2 522.8 0.26%The Woods at Bear Creek LLC andBear Creek Entertainment LLC Accommodation Term Loan Prime plus2.75% 9/29/2039 513.3 503.9 511.9 0.25%LC Blvd Holdings LLC and MtPleasant Wash & Wax LLC Repair andMaintenance Term Loan Prime plus2.75% 12/4/2040 502.5 502.5 497.9 0.24%Thermoplastic Services Inc andParagon Plastic Sheet, Inc Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 12/23/2039 500.0 491.8 499.6 0.24%Polpo Realty LLC (EPC) & PolpoRestaurant LLC (OC) dba PolpoRestaurant Food Services andDrinking Places Term Loan Prime plus2.75% 12/27/2037 517.5 489.4 508.7 0.25%740 Barry Street Realty LLC andWild Edibles Inc MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 2/10/2040 492.5 485.9 493.7 0.24%200 North 8th Street Associates LLCand Enchanted Acres Farm Food Manufacturing Term Loan Prime plus2.75% 5/4/2028 494.6 484.0 484.5 0.24%636 South Center Holdings, LLC andNew Mansfield Brass and AluminumCo Primary MetalManufacturing Term Loan Prime plus2.75% 3/20/2039 497.5 482.3 496.1 0.24%Macho LLC (EPC) MadelaineChocolate Novelties Inc(OC) dbaThe Madelai Food Manufacturing Term Loan Prime plus2.75% 12/31/2037 500.0 474.5 493.2 0.24%401 JJS Corporation and G.Randazzo Corporation Food Services andDrinking Places Term Loan Prime plus2.75% 12/23/2039 473.5 469.9 464.8 0.23%Heartland American Properties LLCand Skaggs RV Outlet LLC Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 10/31/2039 479.0 469.7 461.5 0.23%Nikobella Properties LLC and JPOInc dba Village Car Wash Repair andMaintenance Term Loan Prime plus2.75% 6/25/2039 476.3 464.0 468.6 0.23%Firm Foundations Inc. David SGaitan Jr and Christopher K Daigle Specialty TradeContractors Term Loan Prime plus2.75% 12/3/2023 545.8 463.8 442.9 0.22%F-84See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsWired LLC and Moulison NorthCorporation Specialty TradeContractors Term Loan Prime plus2.75% 6/30/2024 500.0 463.4 441.2 0.22%J. Kinderman & Sons, Inc. dba BriteStar Manufacturing Company Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 12/22/2036 495.0 458.3 478.0 0.23%Capital Scrap Metal, LLC andPowerline Investment, LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 3/29/2038 500.0 452.8 470.8 0.23%River Club Golf Course Inc dba TheRiver Club Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 2/28/2038 475.2 450.2 463.2 0.23%Eastside Soccer Dome, Inc . Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/26/2038 463.8 444.8 457.3 0.22%Amboy Group, LLC dba Tommy'sMoloney's Food Manufacturing Term Loan Prime plus2.75% 6/24/2025 454.0 443.0 441.4 0.22%6 Price Avenue, LLC and PauleyTree & Lawn Care, Inc Administrative andSupport Services Term Loan Prime plus2.75% 9/24/2039 452.5 443.0 402.5 0.20%Sandlot Ventures LLC and SandboxVentures LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/25/2040 442.5 441.2 420.4 0.21%ENI Inc, Event Networks Inc, ENIWorldwide LLC and Spot Shop Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 4/25/2024 500.0 438.7 400.8 0.20%Hodges Properties LLC and EchelonEnterprises Inc dba Treads Bicycle Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 3/31/2039 449.0 435.3 441.4 0.22%SDA Holdings LLC and LesCheveux Salon Inc Personal andLaundry Services Term Loan Prime plus2.75% 12/15/2040 428.8 428.8 413.8 0.20%Flooring Liquidators Inc andFlooring Liquidators of Mt KiscoLLC Specialty TradeContractors Term Loan Prime plus2.75% 6/17/2025 437.5 423.9 411.6 0.20%Mid-South Lumber Co. of NorthwestFlorida, Inc. MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 3/31/2040 428.8 423.7 389.5 0.19%S&P Holdings of Daytona LLC(EPC) S&P Corporation of DaytonaBeach Miscellaneous StoreRetailers Term Loan Prime plus2.75% 8/15/2039 433.5 421.8 428.3 0.21%Tavern Properties LLC andWildwood Tavern LLC Food Services andDrinking Places Term Loan Prime plus2.75% 9/15/2039 425.0 418.8 411.2 0.20%Sherill Universal City dba GoldenCorral Food Services andDrinking Places Term Loan Prime plus2.75% 1/28/2038 440.5 418.3 429.6 0.21%Wilban LLC Food Services andDrinking Places Term Loan Prime plus2.75% 3/28/2039 427.5 415.6 419.8 0.21%Sound Manufacturing, Inc. andMonster Power Equipment Inc. Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 3/15/2023 523.0 411.4 408.2 0.20%J&K Fitness, LLC dba PhysiquesWomens Fitness Center Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/8/2036 449.3 411.3 429.0 0.21%F-85See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsImport Car Connection Inc dba CarConnection Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 9/16/2040 407.5 406.3 407.6 0.20%R & R Boyal LLC dba Cap N CatClam Bar and Little Ease Tavern Food and BeverageStores Term Loan Prime plus2.75% 2/28/2039 417.5 404.3 404.7 0.20%920 CHR Realty LLC (EPC) V.Garofalo Carting Inc (OC) Waste Managementand RemediationServices Term Loan Prime plus2.75% 12/10/2038 418.1 403.4 414.8 0.20%Utek Corporation dba Arcade CarWash Repair andMaintenance Term Loan Prime plus2.75% 9/22/2039 405.5 402.1 404.7 0.20%RIM Investments LLC and RIMArchitects LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/28/2040 399.0 397.8 384.7 0.19%Zane Filippone Co Inc dba CulliganWater Conditioning Nonstore Retailers Term Loan Prime plus2.75% 4/12/2022 558.2 397.1 400.0 0.20%SE Properties 39 Old Route 146,LLC (EPC) SmartEarly Clifton ParkLLC Social Assistance Term Loan Prime plus2.75% 3/14/2039 408.0 396.7 407.3 0.20%John Duffy Fuel Co., Inc. MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/28/2022 513.8 393.9 398.2 0.20%Bisson Moving & Storage CompanyBisson Transportation Inc and BTGReal Estate Truck Transportation Term Loan Prime plus2.75% 5/7/2022 528.8 391.4 395.0 0.19%TAK Properties LLC and KinderlandInc Social Assistance Term Loan Prime plus2.75% 12/18/2038 405.0 390.8 391.2 0.19%Polymer Sciences, Inc. dba PolymerSciences, Inc. Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 9/28/2036 422.6 387.2 403.7 0.20%Kup's Auto Spa Inc Repair andMaintenance Term Loan Prime plus2.75% 11/15/2038 396.7 377.2 386.0 0.19%Jihan Inc dba ARCO AM/PM andDiana Inc dba Diana's Recycling Gasoline Stations Term Loan Prime plus2.75% 6/26/2040 380.0 377.1 365.2 0.18%R.H. Hummer Jr., Inc. Truck Transportation Term Loan Prime plus2.75% 9/30/2025 375.0 375.0 355.3 0.17%Tariq, LLC dba 76 Food Mart Gasoline Stations Term Loan Prime plus2.75% 12/2/2040 375.0 375.0 372.0 0.18%Swalm Sreet LLC and New YorkHome Health Care Equipment LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/16/2040 375.0 375.0 370.9 0.18%B&B Organics LLC Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 12/22/2040 375.0 375.0 382.2 0.19%All American Games, LLC andSportslink - The Game, LLC Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 12/10/2024 400.0 372.1 329.1 0.16%3Fmanagement LLC and ATCFitness Cape Coral, LLC dba Aroundthe Clock Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 1/24/2024 425.0 364.2 342.2 0.17%F-86See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsAIG Inc Specialty TradeContractors Term Loan Prime plus2.75% 9/4/2040 363.8 362.7 340.6 0.17%The Berlerro Group, LLC dba SkyZone Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/12/2023 421.3 360.6 335.9 0.16%Gator Communications Group LLCdba Harvard Printing Group Printing and RelatedSupport Activities Term Loan Prime plus2.75% 8/31/2021 575.0 358.1 360.2 0.18%Fair Deal Food Mart Inc dbaNeighbors Market Gasoline Stations Term Loan Prime plus2.75% 5/3/2037 381.3 354.9 370.4 0.18%iFood, Inc. dba Steak N Shake Food Services andDrinking Places Term Loan Prime plus2.75% 7/31/2024 379.1 353.5 317.9 0.16%Murrayville Donuts, Inc dba Dunkin'Donuts Food and BeverageStores Term Loan Prime plus2.75% 7/15/2040 344.5 344.5 329.3 0.16%Michael J. Speeney & Joyce Speeneyand R2 Tape, Inc. MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 8/31/2037 367.5 344.4 357.7 0.18%Basista Family Limited Partnershipand UPE, Inc. MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 12/14/2040 342.5 342.5 334.5 0.16%Johnson Carwash LLC and JohnsonPetroleum LLC Gasoline Stations Term Loan Prime plus2.75% 9/14/2040 340.0 340.0 345.1 0.17%Ezzo Properties, LLC and GreatLakes Cleaning, Inc. Administrative andSupport Services Term Loan Prime plus2.75% 12/20/2027 389.6 338.3 335.0 0.16%Suncoast Aluminum Furniture, Inc Furniture and RelatedProductManufacturing Term Loan Prime plus2.75% 8/17/2037 360.0 337.5 350.3 0.17%Mirage Plastering Inc and MpireLLC and Mpire II LLC Specialty TradeContractors Term Loan Prime plus2.75% 6/12/2040 338.8 336.3 290.1 0.14%Cencon Properties LLC and CentralConnecticut Warehousing Company,Inc Warehousing andStorage Term Loan Prime plus2.75% 9/30/2038 344.5 331.0 339.2 0.17%Gator Communications Group LLCdba Harvard Printing Group Printing and RelatedSupport Activities Term Loan Prime plus2.75% 3/30/2022 466.3 330.4 331.0 0.16%Spectrum Development LLC andSolvit Inc & Solvit North, Inc Specialty TradeContractors Term Loan Prime plus2.75% 12/2/2023 387.3 329.2 314.3 0.15%Advanced Skincare Medcenter Incdba Advanced Skincare Surgery Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/29/2025 337.5 326.9 277.2 0.14%Hagerstown Muffler, Inc. and JMSMuffler, Inc Repair andMaintenance Term Loan Prime plus2.75% 9/24/2040 327.5 326.5 332.8 0.16%Mitchellville Family Dentistry, Dr.Octavia Simkins-Wiseman DDS PC Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/27/2038 335.1 321.4 323.3 0.16%Lisle Lincoln II Limited Partnershipdba Lisle Lanes LP Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/29/2036 338.1 320.1 334.0 0.16%F-87See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsOrange County Insurance BrokerageInc dba Beaty Insurance Agency Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 9/29/2039 325.1 319.3 324.3 0.16%Nova Solutions Inc Furniture and RelatedProductManufacturing Term Loan Prime plus2.75% 9/22/2040 320.0 319.1 313.0 0.15%MRM Supermarkets Inc dbaConstantins Breads; Dallas GourmetBreads Food Manufacturing Term Loan Prime plus2.75% 3/29/2038 336.0 319.0 324.6 0.16%Taylor Transport, Inc Truck Transportation Term Loan Prime plus2.75% 12/8/2021 515.5 317.2 320.2 0.16%FHJE Ventures LLC and EisenreichII Inc. dba Breakneck Tavern Food Services andDrinking Places Term Loan Prime plus2.75% 6/27/2039 321.8 313.6 315.9 0.15%A & M Commerce, Inc. dbaCranberry Sunoco Gasoline Stations Term Loan Prime plus2.75% 3/27/2038 330.3 313.3 323.5 0.16%Lenoir Business Partners LLC (EPC)LP Industries, Inc dba Childforms Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 9/30/2038 322.7 311.2 313.7 0.15%Shane M. Howell and BuckHardware and Garden Center, LLC Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 12/27/2038 322.5 311.1 307.8 0.15%Jumbomarkets Inc dba RinesJumbomarkets Food and BeverageStores Term Loan Prime plus2.75% 11/4/2025 306.3 306.3 294.4 0.14%BCD Holdings, LLC and H-MA,LLC d/b/a/ Hawaii MainlandAdministrators Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 3/2/2022 451.3 305.1 304.3 0.15%Summit Beverage Group LLC Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 2/28/2024 350.6 302.9 292.2 0.14%Onofrios Enterprises LLC (EPC)Onofrios Fresh Cut, Inc Food Manufacturing Term Loan Prime plus2.75% 9/30/2038 312.5 301.0 304.4 0.15%Joyce Outdoor Advertising ChicagoLLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/22/2040 300.0 300.0 284.5 0.14%Sunset Marine Resort LLC andGoXpeditions LLC and LavonGomes and Trac Accommodation Term Loan Prime plus2.75% 3/27/2040 301.8 298.2 303.0 0.15%510 ROK Realty LLC dba ROKHealth and Fitness and Robert N.D'urso Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/19/2024 332.0 296.3 294.5 0.14%R A Johnson Inc dba Rick JohnsonAuto and Tire Repair andMaintenance Term Loan Prime plus2.75% 9/23/2039 301.3 294.9 299.5 0.15%American Campgrounds LLC dbaWhit's End Campground Accommodation Term Loan Prime plus2.75% 12/4/2040 293.0 293.0 290.9 0.14%Custom Software, Inc. a ColoradoCorporation dba M-33 Access Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/17/2021 426.0 289.2 293.0 0.14%F-88See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsAnturio Marketing Inc dba LogicConsulting Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/12/2040 290.3 288.1 292.8 0.14%Summit Beverage Group LLC Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 8/29/2030 291.9 286.8 258.1 0.13%Aegis Creative Communications, Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 11/30/2022 387.5 286.2 277.3 0.14%The Smile Place LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/30/2040 283.9 282.2 276.4 0.14%KDP LLC and KDP InvestmentAdvisors, Inc and KDP AssetManagement, Inc Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 6/14/2023 343.8 278.0 270.9 0.13%New Image Building Services Inc.dba New Image Repair Services Repair andMaintenance Term Loan Prime plus2.75% 10/29/2023 331.3 277.0 259.8 0.13%Anglin Cultured Stone Products LLCdba Anglin Construction Specialty TradeContractors Term Loan Prime plus2.75% 6/30/2025 281.8 273.0 238.1 0.12%Cheryle A Baptiste and CheryleBaptiste DDS PLLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 11/30/2037 286.5 270.0 278.8 0.14%Central Tire, Inc. dba Cooper Tire &Auto Services Repair andMaintenance Term Loan Prime plus2.75% 6/29/2037 288.5 269.1 279.5 0.14%First Prevention and Dialysis CenterLLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/30/2024 273.3 268.9 251.4 0.12%New Image Building Services, Inc.dba New Image Repair Services Repair andMaintenance Term Loan Prime plus2.75% 8/23/2037 285.7 267.7 271.6 0.13%Christou Real Estate Holdings LLCdba Tops American Grill Food Services andDrinking Places Term Loan Prime plus2.75% 5/17/2037 284.0 264.1 275.3 0.13%Faith Memorial Chapel LLC Personal andLaundry Services Term Loan Prime plus2.75% 9/20/2038 268.4 258.1 259.5 0.13%Thrifty Market, Inc. dba ThriftyFoods Food and BeverageStores Term Loan Prime plus2.75% 6/30/2030 262.5 257.9 227.2 0.11%15 McArdle LLC and No OtherImpressions Inc Printing and RelatedSupport Activities Term Loan Prime plus2.75% 5/15/2040 257.1 254.9 238.4 0.12%Scent-Sation, Inc. d/b/a Scent-Sation,Inc. Textile Product Mills Term Loan Prime plus2.75% 11/21/2021 337.5 253.9 257.1 0.13%Reidville Hydraulics & Mfg Inc dbaSummit Farms LLC MachineryManufacturing Term Loan Prime plus2.75% 11/2/2037 265.9 250.6 254.6 0.12%All-Tag Corporation MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 11/30/2025 250.4 250.4 218.0 0.11%Roccos LLC and Sullo Pantalone Incdba Rocco's Food Services andDrinking Places Term Loan Prime plus2.75% 9/30/2039 255.8 250.4 237.3 0.12%F-89See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsJAG Unit 1, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 12/16/2025 250.0 250.0 210.6 0.10%V2 Tango LLC dba Palette 22 Food Services andDrinking Places Term Loan Prime plus2.75% 12/23/2025 250.0 250.0 217.1 0.11%Animal Intrusion Prevention SystemsHolding Company, LLC Administrative andSupport Services Term Loan Prime plus2.75% 9/15/2024 272.5 248.2 219.7 0.11%HAVANA CENTRAL NJ1, LLC dbaHavana Central Food Services andDrinking Places Term Loan Prime plus2.75% 3/31/2025 250.0 245.1 238.9 0.12%Wolf Enviro Interests, LLC andEnviromax Services Inc Administrative andSupport Services Term Loan Prime plus2.75% 6/25/2040 246.5 244.7 223.7 0.11%CNYP 717 Irondequoit LLC andCNYP 2002 Ontario LLC Food Services andDrinking Places Term Loan Prime plus2.75% 11/20/2040 244.4 244.4 226.0 0.11%MJD Investments, LLC dba TheCommunity Day School Social Assistance Term Loan Prime plus2.75% 1/31/2038 258.3 244.3 250.6 0.12%RKP Service dba Rainbow Carwash Repair andMaintenance Term Loan Prime plus2.75% 5/31/2023 300.0 243.1 237.5 0.12%FHJE Ventures LLC and EisenreichII Inc dba Breakneck Tavern Food Services andDrinking Places Term Loan Prime plus2.75% 12/30/2039 245.5 242.9 225.8 0.11%JWB Industries, Inc. dba Carteret DieCasting Primary MetalManufacturing Term Loan Prime plus2.75% 2/11/2024 280.0 241.8 225.3 0.11%800 on the Trax LLC and Matrix ZLLC Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 12/23/2040 240.0 240.0 234.6 0.12%Xela Pack, Inc. and Aliseo andCatherine Gentile Paper Manufacturing Term Loan Prime plus2.75% 3/27/2028 271.8 239.2 244.5 0.12%WI130, LLC (EPC) & LakelandGroup, Inc (OC) dba LakelandElectrical MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 12/31/2028 271.5 239.0 238.1 0.12%LaSalle Market and Deli EOK Incand Rugen Realty LLC dba LaSalleMarket Food Services andDrinking Places Term Loan Prime plus2.75% 9/21/2037 252.3 236.8 242.7 0.12%Clairvoyant Realty Corp. and NapoliMarble & Granite Design, Ltd Specialty TradeContractors Term Loan Prime plus2.75% 10/24/2038 246.3 236.8 234.5 0.11%Capitol Waste and RecyclingServices LLC Waste Managementand RemediationServices Term Loan Prime plus2.75% 10/10/2024 257.8 236.4 210.6 0.10%All About Smiles P A Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/30/2040 237.7 235.9 231.1 0.11%Joyce Outdoor Advertising LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/29/2040 234.8 234.8 235.3 0.12%Pierce Developments, Inc. dbaSouthside Granite MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 6/13/2036 256.1 233.3 242.6 0.12%Atlantis of Daytona LLC and OceanClub Sportswear Inc Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 12/23/2039 240.0 233.1 236.7 0.12%F-90See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsBig Sky Plaza LLC and Strickland,Incorporated dba Livingston TrueValue Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 6/20/2039 233.4 227.4 229.0 0.11%M & H Pine Straw Inc and Harris L.Maloy MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 3/21/2023 288.8 227.1 227.0 0.11%MTV Bowl, Inc. dba Legend Lanes Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/30/2036 248.5 226.4 235.8 0.12%Meridian Hotels, LLC dba BestWestern Jonesboro Accommodation Term Loan Prime plus2.75% 11/25/2039 228.0 224.9 228.4 0.11%HJ & Edward Enterprises, LLC dbaSky Zone Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/26/2023 262.5 224.8 218.5 0.11%DuCharme Realty LLC andDuCharme Enterprises LLC dbaSpecialty Wood ProductManufacturing Term Loan Prime plus2.75% 2/2/2040 225.1 222.1 208.0 0.10%Hemingway Custom Cabinetry LLC Furniture and RelatedProductManufacturing Term Loan Prime plus2.75% 9/25/2025 220.0 217.3 187.0 0.09%Bowl Mor, LLC dba Bowl MorLanes / Spare Lounge, Inc. Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 3/13/2039 223.5 216.7 222.9 0.11%Homegrown For Good LLC ApparelManufacturing Term Loan Prime plus2.75% 11/26/2024 230.0 215.5 195.5 0.10%Discount Wheel and Tire Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 9/30/2038 223.8 214.6 214.3 0.11%Newsome Trucking Inc and KevinNewsome Truck Transportation Term Loan Prime plus2.75% 9/2/2035 423.1 214.1 222.6 0.11%Schmaltz Holdings, LLC (EPC) andSchmaltz Operations, LLC dbaCompanio Personal and LaundryServices Term Loan Prime plus2.75% 9/4/2038 224.2 213.7 213.3 0.10%Mosley Auto Group LLC dbaAmerica's Automotive Repair andMaintenance Term Loan Prime plus2.75% 12/20/2038 221.5 213.7 217.6 0.11%Tortilla King Inc. Food Manufacturing Term Loan Prime plus2.75% 3/14/2039 216.9 211.2 207.8 0.10%Daniel Gordon and Erin Gordon andSilver Lining Stables CT, LLC Support Activities forAgriculture andForestry Term Loan Prime plus2.75% 11/28/2037 223.8 211.1 219.0 0.11%BJ's Tavern LLC and BJ's CabanaBar Inc Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2040 212.5 210.9 205.9 0.10%Pioneer Windows ManufacturingCorp, Pioneer Windows Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 11/21/2022 275.0 209.8 207.4 0.10%Evans and Paul LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 12/30/2024 223.8 208.2 198.7 0.10%Faith Memorial Chapel LLC Personal and LaundryServices Term Loan Prime plus2.75% 2/28/2039 214.2 207.9 206.4 0.10%F-91See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsSuperior Disposal Service, Inc. Waste Managementand RemediationServices Term Loan Prime plus2.75% 12/26/2023 240.5 204.4 200.8 0.10%952 Boston Post Road Realty, LLCand HNA LLC dba StylesInternational Personal andLaundry Services Term Loan Prime plus2.75% 2/28/2039 211.0 204.3 203.2 0.10%1 North Restaurant Corp dba 1 NorthSteakhouse Food Services andDrinking Places Term Loan Prime plus2.75% 10/31/2038 212.5 204.3 207.8 0.10%Brandywine Picnic Park, Inc. andB.Ross Capps & Linda Capps Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 3/30/2031 231.5 204.2 210.9 0.10%Elan Realty, LLC and Albert BasseAsociates, Inc. Printing and RelatedSupport Activities Term Loan Prime plus2.75% 9/30/2035 228.2 203.7 212.6 0.10%Modern Manhattan LLC Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 11/25/2024 220.0 203.3 171.5 0.08%AMG Holding, LLC and StetsonAutomotive, Inc Repair andMaintenance Term Loan Prime plus2.75% 6/30/2039 208.0 202.7 208.6 0.10%JEJE Realty LLC and La Familia Inc Food Services andDrinking Places Term Loan Prime plus2.75% 11/10/2039 205.8 202.1 193.6 0.09%Gill Express Inc. dba AmericanEagle Truck Wash Repair andMaintenance Term Loan Prime plus2.75% 1/5/2027 286.9 200.4 206.1 0.10%Block and Grinder LLC Food Services andDrinking Places Term Loan Prime plus2.75% 11/30/2025 200.0 200.0 196.6 0.10%Water Works Laundromat, L.L.C. Personal andLaundry Services Term Loan Prime plus2.25% 9/7/2027 267.3 194.8 195.3 0.10%Robert E. Caves, Sr. and AmericanPlank dba Caves Enterprises MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/30/2021 302.5 194.7 197.2 0.10%Spire Investment Partners, LLC Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 9/28/2022 258.8 192.7 186.7 0.09%Douglas Printy Motorsports, Inc. dbaBlackburn Trike Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 3/9/2040 191.8 189.5 180.5 0.09%8 Minute Oil Change of SpringfieldCorporation and John Nino Repair andMaintenance Term Loan Prime plus2.75% 12/12/2038 196.8 188.0 191.7 0.09%Sapienzo Properties LLC (EPC) CNSSelf-Storage Inc (OC) Real Estate Term Loan Prime plus2.75% 3/27/2039 193.8 187.0 192.4 0.09%Greenbrier Technical Services, Inc Repair andMaintenance Term Loan Prime plus2.75% 10/24/2023 240.1 183.0 183.2 0.09%Brothers International Desserts Food Manufacturing Term Loan Prime plus2.75% 4/26/2023 230.0 182.7 181.4 0.09%Majestic Contracting Services, Inc.dba Majestic Electric and MajesticPlumbing Specialty TradeContractors Term Loan Prime plus2.75% 7/26/2038 190.0 181.6 180.6 0.09%F-92See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsDanjam Enterprises, LLC dba ArielDental Care Ambulatory HealthCare Services Term Loan Prime plus2.75% 3/31/2035 204.0 180.7 188.4 0.09%(EPC) Absolute Desire LLC andMark H. Szierer (OC) SophisticatedSmile Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/5/2038 188.3 180.0 183.6 0.09%(EPC) Willowbrook Properties LLC(OC) Grove Gardens LandscapingInc. Administrative andSupport Services Term Loan Prime plus2.75% 6/5/2038 186.3 177.8 183.5 0.09%Trip Consultants U.S.A. Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/18/2025 175.0 175.0 147.4 0.07%Richmond Hill Mini Market, LLC Food and BeverageStores Term Loan Prime plus2.75% 11/27/2037 185.3 174.7 180.2 0.09%Beale Street Blues Company-WestPalm Beach, LLC dba LafayetteMusic Hall Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 12/22/2024 187.5 174.5 153.2 0.08%KK International TradingCorporation MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/23/2028 190.0 174.0 172.1 0.08%Bryan Bantry Inc. Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 9/8/2021 400.0 174.0 173.0 0.08%Forno Italiano Di Nonna Randazzo,LLC dba Nonna Randazzo's Bakery Food and BeverageStores Term Loan Prime plus2.75% 9/26/2037 183.8 173.9 178.5 0.09%Pioneer Window Holdings, Inc andSubsidiaries dba Pioneer Windows Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 12/20/2022 225.0 173.3 171.3 0.08%Douglas Posey and Sally Watkinsondba Audrey's Farmhouse Accommodation Term Loan Prime plus2.75% 5/20/2040 174.1 172.6 170.5 0.08%Sound Manufacturing Inc Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 10/10/2024 187.5 172.3 150.6 0.07%Neyra Industries, Inc. and EdwardNeyra Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 3/27/2023 217.5 171.2 173.2 0.08%Chickamauga Properties,Inc., MSWEnterprises, LLP Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/22/2035 189.5 171.1 178.5 0.09%R2 Tape Inc dba Presto Tape MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 6/29/2025 176.3 170.8 160.6 0.08%Fran-Car Corporation dba HorizonLandscape Management Administrative andSupport Services Term Loan Prime plus2.75% 3/3/2028 407.8 170.5 175.8 0.09%BND Sebastian Limited LiabilityCompany and Sebastian Fitness Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 3/16/2040 172.5 170.5 168.2 0.08%Silva Realty Holdings, LLC and MF-Silva Enterprises, Inc. Food Services andDrinking Places Term Loan Prime plus2.75% 2/11/2040 171.6 170.0 161.1 0.08%R & J Petroleum LLC (EPC) ManarUSA, Inc. (OC) Gasoline Stations Term Loan Prime plus2.75% 11/20/2037 180.0 169.5 175.4 0.09%F-93See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssets15 Frederick Place LLC & PioneerWindows Holdings Inc & Subs Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 12/16/2021 250.0 168.6 169.3 0.08%South Park Properties LLC andMidlothian Hardware LLC dba Grill Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 5/6/2040 170.5 167.9 170.0 0.08%Spectrum Radio Fairmont, LLC Broadcasting (exceptInternet) Term Loan Prime plus2.75% 8/30/2023 187.5 164.3 164.3 0.08%Wilshire Media Systems Inc Specialty TradeContractors Term Loan Prime plus2.75% 4/17/2024 186.3 163.4 151.7 0.07%Pine Belt Wood Products LLC Forestry and Logging Term Loan Prime plus2.75% 9/22/2040 163.8 163.3 147.9 0.07%Wise Forklift Inc Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 10/1/2020 296.9 162.9 164.7 0.08%Labmates LLC Miscellaneous StoreRetailers Term Loan Prime plus2.75% 12/18/2040 162.5 162.5 165.6 0.08%Gator Communications Group LLCdba Harvard Printing Group Printing and RelatedSupport Activities Term Loan Prime plus2.75% 4/25/2022 228.8 162.1 162.5 0.08%B & W Towing, LLC and BoychucksFuel LLC Repair andMaintenance Term Loan Prime plus2.75% 12/17/2039 164.5 161.8 153.1 0.08%Hae M. and Jin S. Park dba BufordCar Wash Repair andMaintenance Term Loan Prime plus2.75% 5/15/2039 166.5 161.2 160.0 0.08%M & H Pinestraw, Inc. and Harris L.Maloy MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/15/2021 238.3 161.2 161.6 0.08%185 Summerfield Inc and ValconContracting Corp Construction ofBuildings Term Loan Prime plus2.75% 10/24/2039 162.3 159.1 157.6 0.08%MMS Realty, LLC and MolecularMS Diagnostics LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/18/2040 160.7 158.8 151.3 0.07%Carolina Flicks Inc dba The HowellTheater Motion Picture andSound RecordingIndustries Term Loan Prime plus2.75% 12/23/2032 163.3 158.5 149.5 0.07%Spire Investment Partners, LLC Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 6/22/2021 250.0 157.4 157.8 0.08%North Columbia LLC and LoopLiquor and Convenience Store LLC Food and BeverageStores Term Loan Prime plus2.75% 9/24/2039 159.3 155.9 153.6 0.08%Ramard Inc and Advanced HealthSciences Inc MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 8/28/2023 187.5 154.3 140.5 0.07%South Florida Air Conditioning andRefrigeration Corp. Specialty TradeContractors Term Loan Prime plus2.75% 3/27/2040 155.5 153.7 153.3 0.08%F-94See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsGolden Transaction Corporation dbaBleh Sunoco Gasoline Stations Term Loan Prime plus2.75% 10/30/2039 156.7 153.6 152.9 0.07%Avayaan2 LLC dba Island Cove Gasoline Stations Term Loan Prime plus2.75% 3/7/2039 157.5 152.7 154.1 0.08%RDT Enterprises LLC Specialty TradeContractors Term Loan Prime plus2.75% 9/15/2027 162.8 152.7 147.6 0.07%J3K LLC dba Ronan True ValueHardware Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 9/23/2025 152.5 150.6 126.8 0.06%RXSB, Inc dba Medicine Shoppe Health and PersonalCare Stores Term Loan Prime plus2.75% 5/30/2023 186.3 149.8 145.3 0.07%FirstVitals Health and Wellness Inc MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/15/2025 150.0 148.1 124.7 0.06%Barber Investments LLC andFieldstone Quickstop LLC andMaine Dollar Deals Gasoline Stations Term Loan Prime plus2.75% 8/15/2039 150.0 147.2 131.7 0.06%Honeyspot Investors LLP and PaceMotor Lines Inc Truck Transportation Term Loan Prime plus2.75% 7/24/2039 150.0 146.4 147.7 0.07%Alejandro Rico dba Rico Motors andGolden West Motel and Alrima CoInc Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 11/25/2040 146.3 146.3 148.5 0.07%Teamnewman Enterprises LLC dbaNewmans at 988 and John H.Newman Food Services andDrinking Places Term Loan Prime plus2.75% 11/25/2039 148.8 146.1 139.8 0.07%Dantanna's Tavern LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2024 164.3 144.8 136.4 0.07%Cool Air Solutions, Inc. dba GrahamHeating & Air Conditioning Specialty TradeContractors Term Loan Prime plus2% 12/27/2018 411.5 144.8 144.3 0.07%GDP Gourmet LLC dba Joe andJohn's Pizza Restaurant Food Services andDrinking Places Term Loan Prime plus2.75% 8/19/2040 145.0 144.4 140.6 0.07%Vernon & Stephanie Scott and LittleStars Day Care Center, Inc. Educational Services Term Loan Prime plus2.75% 4/18/2038 151.0 143.6 149.3 0.07%J. Kinderman & Sons Inc., dbaBriteStar Inc. Electrical Equipment,Appliance, andComponentManufacturing Term Loan Prime plus2.75% 3/20/2023 181.3 142.7 144.3 0.07%Barub Realty LLC and Barub LLCdba Woodlawn Cabinets Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 9/30/2040 143.0 142.6 144.3 0.07%Alpha Preparatory Academy LLC Social Assistance Term Loan Prime plus2.75% 8/15/2039 145.2 142.5 144.7 0.07%Ryan Crick and Pamela J. Crick andCrick Enterprises Inc Repair andMaintenance Term Loan Prime plus2.75% 9/17/2039 145.5 142.4 144.6 0.07%Peter Thomas Roth Labs LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/26/2018 425.0 142.3 143.4 0.07%F-95See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsKnowledge First Inc dba MagicYears of Learning and KimberlyKnox Social Assistance Term Loan Prime plus2.75% 3/21/2039 145.0 140.8 139.9 0.07%USI Properties LLC dba U Store It Real Estate Term Loan Prime plus2.75% 5/23/2039 144.6 140.7 144.0 0.07%Wired LLC and Moulison NorthCorporation Specialty TradeContractors Term Loan Prime plus2.75% 7/3/2024 150.1 140.1 126.0 0.06%Gardner's Wharf Holdings LLC andGardner's Wharf Seafood Inc MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 9/8/2040 140.0 139.6 142.2 0.07%Stormrider Inc dba Shirley'sStormrider, Inc Truck Transportation Term Loan Prime plus2.75% 11/25/2024 150.0 138.6 115.1 0.06%Big Apple Entertainment Partners,LLC d/b/a Ripley's Believe It or Not Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 10/26/2022 180.0 138.4 134.2 0.07%ATC Fitness LLC dba Around theClock Fitness Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/28/2022 180.0 137.8 137.4 0.07%Choe Trade Group Inc dba RapidPrinters of Monterey Printing and RelatedSupport Activities Term Loan Prime plus2.75% 2/28/2024 159.3 137.6 137.4 0.07%Matchless Transportation LLC dbaFirst Class Limo Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 8/3/2022 185.0 137.0 135.7 0.07%96 Mill Street LLC, Central PizzaLLC and Jason Bikakis GeorgeBikaki Food Services andDrinking Places Term Loan Prime plus2.75% 2/12/2039 141.3 137.0 140.9 0.07%3000 CSI Property LLC andConsulting Solutions Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/20/2040 137.5 136.9 137.1 0.07%Kemmer LLC and Apples Tree TopLiquors LLC Food and BeverageStores Term Loan Prime plus2.75% 12/4/2039 138.4 136.1 126.9 0.06%Spectrumit, Inc, (OC) dbaLANformation Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 5/31/2030 154.9 135.8 139.4 0.07%Grafio Inc dba Omega LearningCenter-Acworth Educational Services Term Loan Prime plus2.75% 9/13/2023 156.3 135.0 126.3 0.06%CEM Autobody LLC dba Dawn'sAutobody Repair andMaintenance Term Loan Prime plus2.75% 6/26/2040 135.5 134.5 128.6 0.06%C& D Medical of Naples, Inc andForever & Always of Naples, Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 7/24/2040 135.0 134.2 124.0 0.06%Al-Mustafa Enterprise, Inc. and Al-Mustafa Enterprise Inc Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 9/18/2040 134.0 133.9 131.3 0.06%DKB Transport Corp Truck Transportation Term Loan Prime plus2.75% 12/5/2038 138.8 133.9 137.6 0.07%West Cobb Enterprises, Inc andAdvanced Eye Associates, L.L.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 11/12/2035 148.7 133.4 138.8 0.07%F-96See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsJPM Investments LLC and CarolinaFamily Foot Care P.A. Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/26/2039 136.1 133.1 134.9 0.07%1899 Tavern & Tap LLC and AleHouse Tavern & Tap LLC Food Services andDrinking Places Term Loan Prime plus2.75% 4/9/2039 137.5 132.6 134.6 0.07%Haven Hospitality Group Inc. dbaHaven Gastropub Food Services andDrinking Places Term Loan Prime plus2.75% 11/20/2025 132.5 132.5 113.7 0.06%Mid-Land Sheet Metal Inc Specialty TradeContractors Term Loan Prime plus2.75% 10/31/2038 137.5 132.4 134.1 0.07%City Sign Service, Incorporated Electrical Equipment,Appliance, andComponentManufacturing Term Loan Prime plus2.75% 11/30/2025 165.8 132.1 134.7 0.07%Bay State Funeral Services, LLC(EPC) and Riley Funeral HomeInc(OC) Personal andLaundry Services Term Loan Prime plus2.75% 5/21/2039 134.9 131.6 135.4 0.07%Jade Automotive d/b/a SearsHometown Store Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 10/6/2035 146.6 131.5 137.3 0.07%J&M Concessions, Inc.dba A-1Liquors Food and BeverageStores Term Loan Prime plus2.75% 3/3/2039 135.6 131.3 129.2 0.06%Modern on the Mile, LLC dba LigneRoset Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 5/25/2021 212.5 131.1 131.5 0.06%Access Staffing, LLC Administrative andSupport Services Term Loan Prime plus2.75% 3/30/2022 187.5 131.1 130.5 0.06%Grand Blanc Lanes, Inc. and H, Hand H, LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/31/2039 133.0 131.0 131.1 0.06%RDT Enterprises, LLC Specialty TradeContractors Term Loan Prime plus2.75% 12/31/2028 141.2 130.6 132.4 0.06%Demand Printing Solutions, Inc Printing and RelatedSupport Activities Term Loan Prime plus2.75% 10/29/2034 147.5 128.7 133.9 0.07%Green Life Lawnscapes LLC dbaGreen Life Lawn Care Administrative andSupport Services Term Loan Prime plus2.75% 11/6/2025 127.3 127.3 122.4 0.06%R2 Tape, Inc. dba Presto Tape andMichael J.and Joyce Speeney MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 10/20/2020 224.4 126.6 127.6 0.06%Nelson Sargsyan dba HDA Trucking Support Activities forTransportation Term Loan Prime plus2.75% 6/16/2025 130.5 126.4 105.1 0.05%PTK, Incorporated dba Night N Day24 HR Convenience Store Food and BeverageStores Term Loan Prime plus2.75% 9/30/2036 137.5 126.0 131.2 0.06%George S Cochran DDS Inc Ambulatory HealthCare Services Term Loan Prime plus2.75% 5/7/2025 130.0 125.1 104.4 0.05%Music Mountain Water Company,LLC Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 4/25/2036 138.1 125.1 130.7 0.06%F-97See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsSarah Sibadan dba Sibadan Agency Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 1/27/2039 129.4 125.0 127.4 0.06%Japp Business Inc dba Pick and Eatand Japp Drink Corp. Food Services andDrinking Places Term Loan Prime plus2.75% 11/30/2025 125.0 125.0 110.6 0.05%Smokeyard Inc dba Smokeyard BBQand Chop Shop Food Services andDrinking Places Term Loan Prime plus2.75% 11/30/2025 125.0 125.0 107.6 0.05%Evans & Paul LLC and E&PHoldings I LLC Nonmetallic MineralProductManufacturing Term Loan Prime plus2.75% 12/15/2025 125.0 125.0 110.9 0.05%Abitino's JFK LLC dba Abitino's Food Services andDrinking Places Term Loan Prime plus2.75% 12/16/2022 125.0 124.9 110.4 0.05%The LAX Shop Inc Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 12/22/2025 125.0 125.0 124.9 0.06%Hascher Gabelstapler Inc Repair andMaintenance Term Loan Prime plus2.75% 3/26/2024 143.3 124.6 121.0 0.06%Maxiflex LLC MiscellaneousManufacturing Term Loan Prime plus2.75% 6/28/2023 153.5 124.1 125.6 0.06%Michael Rey Jr. and Lynn J.Williams (EPC) and GIG Petcare Personal andLaundry Services Term Loan Prime plus2.75% 10/3/2039 126.9 123.6 122.1 0.06%Geo Los Angeles LLC dba Geo FilmGroup Rental and LeasingServices Term Loan Prime plus2.75% 3/26/2025 130.0 123.5 112.5 0.06%Naeem Khan LTD ApparelManufacturing Term Loan Prime plus2.75% 9/17/2025 125.0 123.5 103.9 0.05%Naeem Khan LTD ApparelManufacturing Term Loan Prime plus2.75% 9/30/2025 125.0 123.5 104.0 0.05%Lake Area Autosound LLC and RyanH. Whittington Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 7/28/2039 125.0 122.9 122.9 0.06%Food & Fuel Company LLC dbaLowery Food Mart Food and BeverageStores Term Loan Prime plus2.75% 12/4/2040 122.5 122.5 124.3 0.06%Lamjam LLC (EPC) GoldsmithLambros Inc (OC) Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 8/27/2024 133.8 122.2 121.6 0.06%Trademark Equipment Company Incand David A. Daniel Miscellaneous StoreRetailers Term Loan Prime plus2.75% 8/19/2036 133.6 122.1 126.9 0.06%Supreme Screw Products, Inc. andMisha Migdal Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 4/17/2019 308.2 121.6 122.7 0.06%Atlas Mountain Construction, LLC Construction ofBuildings Term Loan Prime plus2.75% 5/13/2038 127.3 121.2 126.1 0.06%Medworxs LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/3/2025 125.0 121.1 101.6 0.05%F-98See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsLP Industries Inc dba Childforms Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 7/29/2025 125.0 120.9 112.3 0.06%Bizzare Foods Inc dba TrooperFoods MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 6/12/2025 125.0 120.6 100.3 0.05%3 F Management LLC and ATC PortCharlotte LLC dba Around TheClock Fit Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 10/17/2024 131.3 120.4 106.2 0.05%JDR Industries Inc dba CST-TheComposites Store, JetCat USA MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 1/21/2024 140.3 120.4 114.1 0.06%Prospect Kids Academy Inc Educational Services Term Loan Prime plus2.75% 9/11/2038 124.3 119.2 120.5 0.06%Copper Beech Financial Group LLC Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 3/30/2025 125.0 118.7 107.2 0.05%Knits R Us, Inc. dba NYC Sports /Mingle Textile Mills Term Loan Prime plus2.75% 2/11/2038 125.0 118.4 123.1 0.06%1258 Hartford TPKE, LLC (EPC)and Phelps and Sons, Inc (OC) Miscellaneous StoreRetailers Term Loan Prime plus2.75% 3/29/2038 124.6 118.3 120.9 0.06%Northwind Outdoor Recreation, Inc.dba Red Rock Wilderness Store Nonstore Retailers Term Loan Prime plus2.75% 4/18/2036 129.5 117.9 123.2 0.06%DC Real LLC and DC EnterprisesLTD dba Lakeview True Value Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 11/20/2039 119.4 117.8 116.3 0.06%Balthazar Management VirginIslands LLC dba The Beach Cafe Food Services andDrinking Places Term Loan Prime plus2.75% 3/27/2025 123.3 117.1 116.6 0.06%Profile Performance, Inc. and EidakReal Estate, L.L.C. Repair andMaintenance Term Loan Prime plus2.75% 4/20/2036 127.5 115.7 120.8 0.06%Wilton Dental Care P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 5/29/2024 128.1 115.6 106.3 0.05%Top Properties LLC and LPIndustries, Inc dba Childforms Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 9/30/2038 120.0 115.5 118.8 0.06%JRA Holdings LLC (EPC) JasperCounty Cleaners Inc dba SuperiorCleaner Personal andLaundry Services Term Loan Prime plus2.75% 6/28/2038 121.0 115.5 120.1 0.06%Qycell Corporation Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 8/19/2021 187.5 114.2 114.2 0.06%Kemmer, LLC (EPC) and PittsPackage Store, Inc.(OC) Food and BeverageStores Term Loan Prime plus2.75% 3/31/2039 117.5 114.1 109.9 0.05%AS Boyals LLC dba Towne Liquors Food and BeverageStores Term Loan Prime plus2.75% 4/29/2039 117.5 114.1 117.4 0.06%R2 Tape Inc dba Presto Tape MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 8/31/2022 155.0 114.1 115.2 0.06%F-99See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsModern Manhattan, LLC Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 9/20/2020 204.0 113.3 113.5 0.06%5091 LLC and TR/AL LLC d/b/aCafe Africana Food Services andDrinking Places Term Loan Prime plus2.75% 5/31/2037 121.3 113.2 117.8 0.06%Lemonberry Food Stores Inc dbaLemonberry Frozen Yogurt Food and BeverageStores Term Loan Prime plus2.75% 12/29/2025 112.5 112.5 98.4 0.05%Katie Senior Care LLC dba HomeInstead Senior Care Social Assistance Term Loan Prime plus2.75% 8/15/2024 124.3 112.3 93.2 0.05%Shelton Incorporated dba Mrs.Winners Food Services andDrinking Places Term Loan Prime plus2.75% 3/20/2040 112.5 111.2 112.1 0.05%Dosus Inc dba Perry's Pools Specialty TradeContractors Term Loan Prime plus2.75% 8/7/2025 112.5 110.9 95.2 0.05%Qycell Corporation Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 8/26/2024 121.0 109.5 98.8 0.05%Golden Gate Lodging LLC (OC) Accommodation Term Loan Prime plus2.75% 3/12/2038 115.0 109.2 112.6 0.06%Rainbow Dry Cleaners Personal and LaundryServices Term Loan Prime plus2.75% 6/13/2024 122.5 109.1 102.8 0.05%S.B.B. Enterprises Inc dbaWilliamston Hardware Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 11/19/2040 108.8 108.8 100.8 0.05%Sushiya, Inc. Food Services andDrinking Places Term Loan Prime plus2.75% 12/8/2025 108.8 108.8 97.2 0.05%Westville Seafood LLC Food Services andDrinking Places Term Loan Prime plus2.75% 9/19/2038 112.3 107.7 107.6 0.05%Cormac Enterprises and WyomingValley Beverage Incorporated Food and BeverageStores Term Loan Prime plus2.75% 3/20/2039 110.8 107.6 110.6 0.05%Excel RP Inc MachineryManufacturing Term Loan Prime plus2.75% 8/30/2023 130.3 107.2 105.9 0.05%Wallace Holdings LLC (EPC) GFAInternational Inc (OC) Professional,Scientific, andTechnical Services Term Loan Prime plus2.5% 11/25/2023 125.0 105.2 96.5 0.05%Forever & Always of Naples Inc dbaIsland Animal Hospital Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 7/24/2025 107.5 104.7 94.8 0.05%Mustafa Inc dba Adiba Grocery Food and BeverageStores Term Loan Prime plus2.75% 12/17/2025 103.8 103.8 103.7 0.05%Pooh's Corner Realty LLC andPooh's Corner Inc Social Assistance Term Loan Prime plus2.75% 7/23/2040 103.8 103.2 104.0 0.05%Ridge Road Equestrian LLC dbaRicochet Ridge Ranch Inc Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/23/2040 102.5 102.5 102.3 0.05%F-100See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsSeagate Group Holdings, Inc. dbaSeagate Logistics, Inc. Support Activities forTransportation Term Loan Prime plus2.75% 1/28/2036 113.4 102.1 106.6 0.05%WPI, LLC TransportationEquipmentManufacturing Term Loan Prime plus2.75% 6/29/2024 129.5 101.3 102.2 0.05%B and A Friction Materials Inc MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 9/9/2025 102.5 101.2 85.2 0.04%Shorr Enterprises Inc dba NewDesign Furniture Manufacturers Furniture and RelatedProductManufacturing Term Loan Prime plus2.75% 3/27/2025 106.5 101.2 92.8 0.05%Island Wide Realty LLC and LongIsland Partners, Inc. Real Estate Term Loan Prime plus2.75% 4/22/2039 103.8 100.9 103.8 0.05%Nancy & Karl Schmidt(EPC)Moments to Remember USA, LLC Printing and RelatedSupport Activities Term Loan Prime plus2.75% 2/15/2038 106.3 100.7 103.9 0.05%Firm Foundations Inc David S GaitanJr and Christopher K Daigle Specialty TradeContractors Term Loan Prime plus2.75% 12/3/2038 104.3 100.5 97.9 0.05%State Painting and Decorating Co Inc Specialty TradeContractors Term Loan Prime plus2.75% 11/25/2025 100.0 100.0 84.2 0.04%Delta Aggregate, LLC Mining (except Oiland Gas) Term Loan Prime plus2.75% 11/30/2025 100.0 100.0 99.9 0.05%Custom Exteriors, Inc. Specialty TradeContractors Term Loan Prime plus2.75% 12/9/2025 100.0 100.0 87.3 0.04%Matthew Taylor and Landon FarmLLC Personal and LaundryServices Term Loan Prime plus2.75% 5/4/2040 100.0 99.8 88.7 0.04%DNT Storage and Properties LLC Real Estate Term Loan Prime plus2.75% 10/10/2039 101.8 99.8 99.4 0.05%Little People's Village II LLC (OC)and Iliopoulos Realty LLC (EPC) Social Assistance Term Loan Prime plus2.75% 3/31/2039 101.5 99.1 97.6 0.05%Bear Creek Entertainment, LLC dbaThe Woods at Bear Creek Accommodation Term Loan Prime plus2.75% 12/30/2024 106.3 99.0 98.6 0.05%Zinger Hardware and GeneralMerchant Inc Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 6/26/2024 110.5 98.4 94.9 0.05%Miss Cranston Diner II, LLC andMiss Cranston II Realty LLC Food Services andDrinking Places Term Loan Prime plus2.75% 7/17/2039 100.0 98.2 96.0 0.05%Keller Holdings LLC and David HKeller III and Carie C Keller Scenic andSightseeingTransportation Term Loan Prime plus2.75% 9/30/2039 100.0 97.9 98.5 0.05%Lefont Theaters, Inc. Motion Picture andSound RecordingIndustries Term Loan Prime plus2.75% 5/30/2022 137.0 97.9 98.4 0.05%G.M. Pop's, Inc. & S.D. Food, Inc.dba Popeyes Louisiana Kitchen Food Services andDrinking Places Term Loan Prime plus2.75% 12/11/2022 127.1 97.6 95.4 0.05%New Paltz Dental Care, PLLC dbaAriel Dental Care Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/19/2025 100.0 97.5 92.5 0.05%F-101See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsCalifornia College ofCommunications, Inc. Educational Services Term Loan Prime plus2.75% 11/2/2020 172.5 97.2 97.3 0.05%986 Dixwell Avenue HoldingCompany, LLC(EPC) and MughaliFoods, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 2/7/2039 99.1 96.4 97.1 0.05%Anthony C Dinoto and Susan S PDinoto and Anthony C DinotoFuneral Home Personal andLaundry Services Term Loan Prime plus2.75% 9/26/2038 100.0 96.0 98.7 0.05%Custom Software, Inc. a ColoradoCorporation dba M-33 Access Broadcasting (exceptInternet) Term Loan Prime plus2.75% 4/30/2022 125.0 94.3 95.6 0.05%J and K Fitness L.L.C. dba PhysiquesWomens Fitness Center Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 2/28/2041 93.8 93.7 93.2 0.05%First Steps Real Estate Company,LLC (EPC) and First Steps Preschool Social Assistance Term Loan Prime plus2.75% 9/30/2038 97.6 93.6 92.5 0.05%A & A Auto Care, LLC d/b/a A & AAuto Care, LLC Repair andMaintenance Term Loan Prime plus2.75% 8/12/2036 101.0 93.4 97.3 0.05%GIA Realty LLC and VRAJ GIALLC dba Lakeview Laundromat Personal andLaundry Services Term Loan Prime plus2.75% 6/28/2038 97.5 93.0 96.8 0.05%Key Products I&II, Inc. dba Dunkin'Donuts/Baskin-Robbins Food and BeverageStores Term Loan Prime plus2.75% 3/10/2021 153.0 92.6 93.0 0.05%Metro Used Cars Inc. dba MetroAuto Center Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 1/14/2027 117.6 92.6 94.9 0.05%MRM Supermarkets, Inc. dbaConstantin's Breads Food Manufacturing Term Loan Prime plus2.75% 11/10/2021 137.5 91.9 92.5 0.05%Union 2 LLC dba The Standard Food Services andDrinking Places Term Loan Prime plus2.75% 7/10/2025 91.5 91.5 83.7 0.04%E.S.F.P. LLC dba Volusia Van andStorage Truck Transportation Term Loan Prime plus2.75% 11/11/2025 91.3 91.2 78.6 0.04%U & A Food and Fuel, Inc. dbaExpress Gas & Food Mart Gasoline Stations Term Loan Prime plus2.75% 11/21/2037 96.3 90.7 94.3 0.05%Sico & Walsh Insurance Agency Incand The AMS Trust Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 6/6/2039 250.0 90.6 93.3 0.05%Royal Crest Motors LLC Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 3/16/2040 91.3 90.1 87.5 0.04%Moochie's LLC Food Services andDrinking Places Term Loan Prime plus2.75% 5/13/2024 100.5 90.0 83.2 0.04%Video Vault & Tanning LLC andMosaic Salon LLC Rental and LeasingServices Term Loan Prime plus2.75% 6/4/2040 90.5 89.9 91.2 0.04%Little People's Village II LLC (OC)and Iliopoulos Realty LLC (EPC) Social Assistance Term Loan Prime plus2.75% 3/31/2039 92.1 89.9 88.5 0.04%Lisle Lincoln II Limited Partnershipdba Lisle Lanes LP Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/30/2024 100.0 89.2 89.2 0.04%F-102See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsRonny Ramirez RX Corp dbaNaturxheal Family Pharmacy Health and PersonalCare Stores Term Loan Prime plus2.75% 11/20/2025 89.0 89.0 76.4 0.04%Angkor Restaurant Inc Food Services andDrinking Places Term Loan Prime plus2.75% 7/19/2038 93.0 88.9 90.5 0.04%Music Mountain WaterCompany,LLC dba Music MountainWater Co. Beverage andTobacco ProductManufacturing Term Loan Prime plus2.75% 12/29/2019 185.4 88.9 89.8 0.04%Seelan Inc dba Candleridge Market Gasoline Stations Term Loan Prime plus2.75% 10/27/2039 90.5 88.7 84.8 0.04%Delta Aggregate LLC Mining (except Oiland Gas) Term Loan Prime plus2.75% 3/30/2025 90.0 88.2 87.9 0.04%Advanced Machine & Technology,Inc. Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 7/29/2025 90.3 88.0 80.6 0.04%The River Beas LLC and PunamSingh Food Services andDrinking Places Term Loan Prime plus2.75% 5/8/2039 90.3 87.8 88.3 0.04%Manuel P. Barrera and AccuraElectrical Contractor, Inc. Specialty TradeContractors Term Loan Prime plus2.75% 3/23/2028 103.7 87.6 88.9 0.04%Navdeep B Martins and BusyBubbles LLC dba Wishy Washy Personal andLaundry Services Term Loan Prime plus2.75% 10/24/2039 89.0 87.4 81.6 0.04%Greensward of Marco Inc. Administrative andSupport Services Term Loan Prime plus2.75% 9/28/2040 87.5 87.2 84.8 0.04%Kiddie Steps 4 You Inc. Social Assistance Term Loan Prime plus2.75% 9/25/2038 89.3 86.7 85.9 0.04%Tannehill Enterprises Inc dbaHobbytown USA Folsom Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 10/14/2025 87.4 86.5 72.9 0.04%AM PM Properties, LLC and AMPM Willington, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/17/2040 87.1 86.2 86.1 0.04%E-Z Box Storage, Inc. Real Estate Term Loan Prime plus2.75% 5/11/2025 89.3 85.9 85.6 0.04%Animal Intrusion Prevention SystemsHolding Company, LLC Administrative andSupport Services Term Loan Prime plus2.75% 3/29/2024 126.5 85.7 87.2 0.04%Kurtis Sniezek dba Wolfe's ForeignAuto Repair andMaintenance Term Loan Prime plus2.75% 12/20/2038 88.9 85.7 88.2 0.04%Bat Bridge Investments Inc dbaKalologie 360 Spa Personal andLaundry Services Term Loan Prime plus2.75% 9/30/2025 85.5 85.5 72.0 0.04%Sumad LLC dba BrightStar Care ofEncinitas Administrative andSupport Services Term Loan Prime plus2.75% 10/2/2024 92.5 85.4 85.0 0.04%Doctors Express Management ofCentral Texas LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 10/8/2024 105.0 85.2 80.8 0.04%RDRhonehouse ENT. LLC dba ChillSkinz Miscellaneous StoreRetailers Term Loan Prime plus2.75% 4/29/2025 88.9 85.0 70.7 0.03%F-103See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsR & R Security and InvestigationsInc dba Pardners Lake Buchanan Food Services andDrinking Places Term Loan Prime plus2.75% 3/19/2040 85.4 84.4 85.8 0.04%Tanner Optical Inc. dba Murphy EyeCare Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/22/2035 94.6 84.0 87.4 0.04%SKJ Inc dba Subway Food Services andDrinking Places Term Loan Prime plus2.75% 8/13/2025 84.8 83.3 71.1 0.03%J&M Concessions Inc dba A 1Liquors Food and BeverageStores Term Loan Prime plus2.75% 2/27/2025 87.5 81.9 73.0 0.04%Osceola River Mill, LLC(EPC)Ironman Machine, Inc.(OC) MachineryManufacturing Term Loan Prime plus2.75% 2/20/2038 86.3 81.6 84.2 0.04%Bakhtar Group LLC dba Malmaison Food Services andDrinking Places Term Loan Prime plus2.75% 2/28/2023 103.8 81.7 79.2 0.04%Zephyr Seven Series LLC dba 18/8Fine Men's Salon Personal andLaundry Services Term Loan Prime plus2.75% 8/28/2025 81.3 81.3 70.0 0.03%209 North 3rd Street, LLC (EPC)Yuster Insurance Group Inc (OC) Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 7/29/2038 83.9 80.2 80.9 0.04%LAN Doctors Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/28/2025 81.3 79.7 72.0 0.04%Peanut Butter & Co., Inc. Food Manufacturing Term Loan Prime plus2.75% 4/30/2023 100.0 79.4 77.3 0.04%Cares Inc dba Dumpling GroundsDay Care Center Social Assistance Term Loan Prime plus2.75% 5/1/2040 81.9 78.8 80.1 0.04%Hofgard & Co., Inc. dbaHofgardBenefits Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 7/27/2022 107.3 78.1 78.0 0.04%Limameno LLC dba Sal's ItalianRistorante Food Services andDrinking Places Term Loan Prime plus2.75% 1/23/2025 83.3 78.0 66.9 0.03%Dean 1021 LLC dba Pure Pita Food Services andDrinking Places Term Loan Prime plus2.75% 4/29/2025 80.0 77.5 65.6 0.03%Firm Foundations Inc Specialty TradeContractors Term Loan Prime plus2.75% 3/13/2025 81.3 77.2 68.3 0.03%L.M. Jury Enterprises, Inc dbaMidwest Monograms Textile Product Mills Term Loan Prime plus2.75% 10/28/2025 77.0 76.5 65.8 0.03%39581 Garfield, LLC and Tri CountyNeurological Associates, P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/30/2036 83.3 76.2 79.1 0.04%Holloway & CO. P.L.L.C. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 11/16/2025 75.0 75.0 74.9 0.04%Moments to Remember USA LLCdba Retain Loyalty Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 12/16/2025 75.0 75.0 68.2 0.03%F-104See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsM & H Pine Straw, Inc and Harris L.Maloy Support Activities forAgriculture andForestry Term Loan 6% 4/30/2020 183.3 75.0 75.7 0.04%Elegant Fireplace Mantels, Inc. dbaElegant Fireplace Mantels Specialty TradeContractors Term Loan Prime plus2.75% 12/31/2022 97.5 74.8 72.6 0.04%BVIP Limousine Service LTD Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 11/27/2038 76.5 73.7 74.7 0.04%Zog Inc. Other InformationServices Term Loan 6% 3/17/2018 97.5 73.6 74.1 0.04%Kelly Auto Care LLC dba ShorelineQuick Lube and Car Wash Repair andMaintenance Term Loan Prime plus2.75% 10/18/2023 87.5 73.2 68.7 0.03%Faramarz Nikourazm dba Car ClinicCenter Repair andMaintenance Term Loan Prime plus2.75% 4/3/2040 73.8 72.9 70.4 0.03%B&P Diners LLC dba Engine HouseRestaurant Food Services andDrinking Places Term Loan Prime plus2.75% 9/10/2024 80.0 72.9 60.5 0.03%Awesome Pets II Inc dba Mellisa'sPet Depot Miscellaneous StoreRetailers Term Loan Prime plus2.75% 2/7/2024 83.2 72.7 68.1 0.03%Jonathan E Nichols and Nichols Fireand Security LLC Administrative andSupport Services Term Loan Prime plus2.75% 6/30/2025 75.0 72.7 68.2 0.03%Gerami Realty, LC (EPC) SherrillUniversal City Corral, LP Food Services andDrinking Places Term Loan Prime plus2.75% 4/23/2027 78.8 72.0 72.3 0.04%Tri County Heating and Cooling Inc. Specialty TradeContractors Term Loan Prime plus2.75% 7/19/2023 87.8 71.6 70.8 0.03%Bliss Coffee and Wine Bar, LLC Food Services andDrinking Places Term Loan 6% 3/19/2018 87.5 71.4 71.8 0.04%SCJEN Management Inc dba Bowl ofHeaven Food Services andDrinking Places Term Loan Prime plus2.75% 9/30/2025 71.3 71.3 60.0 0.03%LaHoBa, LLC d/b/a Papa John's Food Services andDrinking Places Term Loan Prime plus2.75% 8/3/2036 77.5 70.4 73.4 0.04%Triangle Trash LLC dba Bin ThereDump That Waste Managementand RemediationServices Term Loan Prime plus2.75% 2/18/2025 74.4 70.1 62.8 0.03%R2 Tape Inc dba Presto Tape MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 4/10/2024 78.8 69.1 69.5 0.03%Gold Jet Corp dba The UPS Store Couriers andMessengers Term Loan Prime plus2.75% 8/14/2025 68.3 68.3 61.7 0.03%Vortex Automotive LLC Repair andMaintenance Term Loan Prime plus2.75% 3/5/2035 76.6 67.6 70.4 0.03%Chickamauga Properties, Inc., MSWEnterprises, LLP Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 12/22/2035 74.3 67.3 70.3 0.03%F-105See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsNew Life Holdings, LLC andCertified Collision Services, Inc. Repair andMaintenance Term Loan Prime plus2.75% 7/29/2035 76.2 67.3 70.1 0.03%Kantz LLC and Kantz Auto LLC dbaKantz's Hometown Auto Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 10/29/2039 68.1 66.9 65.5 0.03%RM Hawkins LLC dba Pure WaterTech West and Robert M Hawkins Nonstore Retailers Term Loan Prime plus2.75% 8/26/2023 85.8 66.9 67.1 0.03%Stormrider Inc dba Shirley'sStormrider Inc Truck Transportation Term Loan Prime plus2.75% 9/23/2025 67.5 66.7 56.1 0.03%I-90 RV & Auto Supercenter Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 6/29/2035 74.9 66.5 69.4 0.03%Accent Homes Services LLC dbaBenjamin Franklin Plumbing ofKansas City Specialty TradeContractors Term Loan Prime plus2.75% 9/30/2028 66.5 65.9 63.2 0.03%Shree Om Lodging, LLC dba RoyalInn Accommodation Term Loan Prime plus2.75% 5/2/2030 333.3 65.6 67.9 0.03%NVR Corporation dba Discount FoodMart Food and BeverageStores Term Loan Prime plus2.75% 6/11/2039 68.3 65.4 67.3 0.03%Onofrio's Fresh Cut Inc MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 3/6/2024 75.0 65.4 64.2 0.03%Orient Direct, Inc. dba Spracht,Celltek, ODI MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 2/12/2023 84.9 65.4 63.4 0.03%Kostekos Inc dba New York StylePizza Food Services andDrinking Places Term Loan Prime plus2.75% 2/6/2040 66.3 65.4 63.1 0.03%MLM Enterprises LLC and DemandPrinting Solutions Inc Printing and RelatedSupport Activities Term Loan Prime plus2.75% 11/18/2024 70.5 65.1 60.3 0.03%Jenkins-Pavia Corporation dbaVictory Lane Quick Oil Change Repair andMaintenance Term Loan Prime plus2.75% 6/27/2037 69.8 65.0 67.7 0.03%Danjam Enterprises, LLC dba ArielDental Care Ambulatory HealthCare Services Term Loan Prime plus2.75% 3/29/2023 93.0 64.8 65.7 0.03%Beale Street Blues Company-WestPalm Beach LLC dba Lafayette's-West Palm Beach Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 7/24/2025 66.3 64.6 56.5 0.03%SofRep, Inc dba Force 12 Media Other InformationServices Term Loan Prime plus2.75% 6/26/2025 66.3 64.2 53.4 0.03%Pauley Tree and Lawn Care Inc Administrative andSupport Services Term Loan Prime plus2.75% 7/28/2025 65.8 64.1 57.1 0.03%Michael A.and HeatherR. Welschdba Art & FrameEtc. Miscellaneous StoreRetailers Term Loan Prime plus2.75% 3/22/2038 67.5 64.1 66.0 0.03%Kidrose, LLC dba Kidville Riverdale Educational Services Term Loan Prime plus2.75% 4/22/2023 78.8 63.3 62.3 0.03%F-106See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsYousef Khatib dba Y&M Enterprises Wholesale ElectronicMarkets and Agentsand Brokers Term Loan Prime plus2.75% 11/15/2023 75.0 63.2 58.7 0.03%Free Ion Advisors LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 7/21/2025 64.3 62.7 52.8 0.03%Truth Technologies Inc dba TruthTechnologies Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/21/2023 79.5 62.6 61.1 0.03%Guard Dogs MFS LLC Repair andMaintenance Term Loan Prime plus2.75% 5/8/2025 65.0 62.6 52.5 0.03%Joseph Nich and Tina M. Nich dbaVic's Greenhouses Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 11/4/2025 62.5 62.5 62.4 0.03%Sourceco Limited Liability Company MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/17/2025 62.5 62.5 54.5 0.03%Optima Health Care Inc Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/23/2025 62.5 62.5 62.4 0.03%Pace Motor Lines, Inc. Truck Transportation Term Loan Prime plus2.75% 2/26/2025 66.2 62.5 62.0 0.03%God is Good LLC dba BurgerFi Food Services andDrinking Places Term Loan Prime plus2.75% 5/27/2025 67.3 62.4 56.0 0.03%Kup’s Auto Spa, Inc. Repair andMaintenance Term Loan Prime plus2.75% 10/23/2025 62.5 62.1 60.2 0.03%Rutledge Enterprises Inc dba BLCProperty Management Administrative andSupport Services Term Loan Prime plus2.75% 9/23/2040 62.5 61.8 60.6 0.03%Almost Home Daycare LLC Social Assistance Term Loan Prime plus2.75% 9/11/2025 62.5 61.7 60.1 0.03%O'Rourkes Diner LLC dbaO'Rourke's Diner Food Services andDrinking Places Term Loan Prime plus2.75% 9/19/2037 65.5 61.5 62.9 0.03%Kiddie Steps 4 You Inc. Social Assistance Term Loan Prime plus2.75% 2/19/2040 61.8 61.1 57.8 0.03%DTM Parts Supply Inc. MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 6/2/2025 62.8 60.8 50.6 0.02%Polpo Realty, LLC(EPC) PolpoRestaurant, LLC (OC) Food Services andDrinking Places Term Loan Prime plus2.75% 11/6/2038 62.5 60.5 62.2 0.03%ViAr Visual Communications, Inc.dba Fastsigns 281701 MiscellaneousManufacturing Term Loan Prime plus2.75% 6/5/2025 62.0 60.1 51.2 0.03%Baystate Firearms and Training, LLC Educational Services Term Loan Prime plus2.75% 2/27/2025 63.4 59.7 50.1 0.02%Inverted Healthcare Staffing ofFlorida LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/18/2025 61.3 59.3 49.3 0.02%F-107See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsSmith Spinal Care Center P.C. andJames C. Smith Ambulatory HealthCare Services Term Loan Prime plus2.75% 10/8/2039 60.0 58.8 57.5 0.03%Home Again Restaurant LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2040 59.0 58.8 58.1 0.03%ALF, LLC (EPC) Mulit-ServiceEagle Tires (OC) Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 5/31/2037 62.9 58.6 61.0 0.03%Emerald Ironworks Inc Specialty TradeContractors Term Loan Prime plus2.75% 6/27/2023 72.0 58.5 57.3 0.03%Homegrown For Good LLC ApparelManufacturing Term Loan Prime plus2.75% 5/8/2025 60.0 57.8 50.5 0.02%Metano IBC Services, Inc. and StoneBrook Leasing, LLC Rental and LeasingServices Term Loan Prime plus2.75% 8/17/2017 315.0 57.1 57.4 0.03%Eco-Green Reprocessing LLC andDenali Medical Concepts, LLC MiscellaneousManufacturing Term Loan Prime plus2.75% 11/27/2023 67.2 56.7 52.5 0.03%University Park Retreat, LLC dbaMassage Heights Personal and LaundryServices Term Loan Prime plus2.75% 9/27/2022 76.0 56.5 57.1 0.03%Gordon E Rogers dba StonehouseMotor Inn Accommodation Term Loan Prime plus2.75% 9/26/2039 57.5 56.3 57.2 0.03%Eldredge Tavern LLC dba Gonyea'sTavern Food Services andDrinking Places Term Loan Prime plus2.75% 6/8/2040 56.3 55.8 56.8 0.03%SuzyQue’s LLC dba Suzy Que’s Food Services andDrinking Places Term Loan Prime plus2.75% 2/11/2036 61.0 55.3 57.7 0.03%Long Island Barber + Beauty LLC Educational Services Term Loan Prime plus2.75% 6/2/2039 55.5 54.1 54.1 0.03%Global Educational DeliveryServices LLC Educational Services Term Loan Prime plus2.75% 6/16/2024 60.0 54.0 54.3 0.03%Danny V, LLC dba Hugo's Taproom Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2040 54.0 53.6 49.2 0.02%D & D's Divine Beauty School ofEsther, LLC Educational Services Term Loan 6% 8/1/2031 57.7 53.5 55.5 0.03%Handy 6391 LLC dba The UPS Store#6391 Administrative andSupport Services Term Loan Prime plus2.75% 9/27/2023 62.5 53.4 53.6 0.03%Road to Sedona Inc dba Thirteen Food Services andDrinking Places Term Loan Prime plus2.75% 2/27/2025 56.6 53.4 45.1 0.02%Joyce Outdoor Advertising NJ LLCand Joyce Outdoor Advertising LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/26/2040 54.0 53.4 53.3 0.03%Modern Leather Goods Repair ShopInc Repair andMaintenance Term Loan Prime plus2.75% 9/17/2024 58.8 53.1 44.1 0.02%Jonesboro Health Food Center LLC Health and PersonalCare Stores Term Loan Prime plus2.75% 5/27/2024 60.0 52.9 48.6 0.02%F-108See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsB.S. Ventures LLC dba Dink'sMarket MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/19/2039 53.8 52.9 53.5 0.03%God Be Glorified Inc dba GBG Inc Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 8/20/2025 53.0 52.0 43.8 0.02%Real Help LLC dba Real HelpDecorative Concrete Administrative andSupport Services Term Loan Prime plus2.75% 6/22/2025 53.1 51.5 49.6 0.02%Akshar Group, LLC Accommodation Term Loan 6% 11/5/2028 321.3 51.3 53.0 0.03%KMC RE, LLC & B&B Kennels Personal and LaundryServices Term Loan Prime plus2.75% 11/19/2034 58.3 51.0 53.1 0.03%The Red Pill Management, Inc. dbaUFC Gym Matthews Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 11/26/2024 54.3 50.9 44.6 0.02%Gregory P Jellenek OD andAssociates PC dba Gregory PJellenek OD Ambulatory HealthCare Services Term Loan Prime plus2.75% 5/28/2023 63.5 50.9 50.4 0.02%Success Express,Inc. dba SuccessExpress Couriers andMessengers Term Loan Prime plus2.75% 9/29/2020 91.8 50.6 50.6 0.02%D&G Capital LLC dba Miami Grill277 Food Services andDrinking Places Term Loan Prime plus2.75% 12/16/2025 83.8 50.5 49.7 0.02%Martin L Hopp, MD PHD A MedicalCorp (OC) dba Tower ENT Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/21/2022 66.3 50.5 49.7 0.02%Atlas Auto Body Inc dba Atlas AutoSales Repair andMaintenance Term Loan Prime plus2.75% 8/22/2039 51.6 50.4 48.3 0.02%Veliu LLC dba FASTSIGNS #15901 MiscellaneousManufacturing Term Loan Prime plus2.75% 9/10/2025 50.0 50.0 43.2 0.02%K's Salon, LLC d/b/a K's Salon Personal and LaundryServices Term Loan Prime plus2.75% 12/20/2021 73.6 49.8 49.5 0.02%Jacksonville Beauty Institute Inc. dbaBeauty Institute's Educational Services Term Loan Prime plus2.75% 10/23/2025 50.0 49.7 41.9 0.02%Sound Manufacturing Inc Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 9/12/2028 54.8 49.6 48.1 0.02%Sound Manufacturing Inc Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 9/21/2025 50.0 49.5 43.9 0.02%South Towne Dental Center, P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/25/2025 50.0 49.4 49.3 0.02%Finish Strong Inc dba FASTSIGNSSt Peters MiscellaneousManufacturing Term Loan Prime plus2.75% 9/23/2025 50.0 49.4 41.6 0.02%AGV Enterprises LLC dba Jet's Pizza#42 Food Services andDrinking Places Term Loan Prime plus2.75% 7/31/2024 54.8 49.2 42.0 0.02%Southeast Chicago Soccer, Inc. Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/26/2038 51.3 49.1 50.5 0.02%F-109See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsTrading Group 3 Inc Nonstore Retailers Term Loan Prime plus2.75% 8/28/2025 50.0 49.1 41.3 0.02%Java Warung, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 2/19/2038 51.0 48.4 50.0 0.02%DRV Enterprise, Inc. dba Cici's Pizza# 339 Food Services andDrinking Places Term Loan Prime plus2.75% 11/26/2022 65.0 48.2 48.8 0.02%Ryan D. Thornton and Thornton &Associates LLC Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 5/24/2023 68.8 47.5 46.1 0.02%Highway Striping Inc Heavy and CivilEngineeringConstruction Term Loan Prime plus2.75% 6/30/2024 53.1 47.3 44.4 0.02%Feel The World Inc dba Xero Shoesand Invisible Shoes Leather and AlliedProductManufacturing Term Loan Prime plus2.75% 9/5/2024 51.9 47.3 40.4 0.02%CJR LLC (EPC) and PowerWashPlus, Inc. (OC) Repair andMaintenance Term Loan Prime plus2.75% 5/30/2024 53.0 46.9 45.8 0.02%Alexandra Afentoulides dba Vi'sPizza Restaurant Food Services andDrinking Places Term Loan Prime plus2.75% 12/11/2040 46.3 46.3 47.1 0.02%Screenmobile Management Inc Specialty TradeContractors Term Loan Prime plus2.75% 8/14/2025 47.0 46.1 39.2 0.02%Will Zac Management LLC dba PapaJohn's Food Services andDrinking Places Term Loan Prime plus2.75% 12/19/2024 48.8 46.1 45.9 0.02%Any Garment Cleaner-EastBrunswick, Inc. Personal and LaundryServices Term Loan Prime plus2.75% 12/18/2023 53.8 45.7 44.8 0.02%CBA D&A Pope, LLC dba ChristianBrothers Automotive Repair andMaintenance Term Loan Prime plus2.75% 6/14/2018 144.9 45.6 45.9 0.02%Chickamauga Properties, Inc. andMSW Enterprises, LLP Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 10/19/2022 59.8 45.0 45.5 0.02%LABH, Inc. t/a Ramada Ltd. Accommodation Term Loan Prime plus2.25% 9/27/2024 555.0 44.9 45.0 0.02%B for Brunette Personal and LaundryServices Term Loan Prime plus2.75% 9/10/2023 53.4 44.9 41.1 0.02%Delta Partners, LLC dba DeltaCarwash Repair andMaintenance Term Loan Prime plus2.5% 4/5/2029 280.9 44.8 45.7 0.02%Rudy & Louise Chavez dba Clyde'sAuto and Furniture Upholstery Repair andMaintenance Term Loan Prime plus2.75% 9/2/2035 50.1 44.7 46.6 0.02%Stellar Environmental LLC Waste Managementand RemediationServices Term Loan Prime plus2.75% 3/18/2023 56.3 44.3 44.5 0.02%Alyssa Corp dba Knights Inn Accommodation Term Loan Prime plus2.25% 9/30/2023 350.0 44.2 44.3 0.02%F-110See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsJatcoia, LLC dba Plato's Closet Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 8/15/2023 65.0 44.2 44.3 0.02%MM and M Management Inc dbaPizza Artista Food Services andDrinking Places Term Loan Prime plus2.75% 4/19/2025 46.3 44.0 37.4 0.02%Morning Star Trucking LLC andMorning Star Equipment and LeasingLLC Truck Transportation Term Loan Prime plus2.75% 7/17/2023 53.8 43.8 39.9 0.02%Sound Coaching Inc Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 4/14/2025 44.4 42.5 35.3 0.02%Jaymie Hazard dba Indigo HairStudio and Day Spa Personal andLaundry Services Term Loan Prime plus2.75% 3/20/2040 42.9 42.4 40.7 0.02%Thomas P. Scoville dba ScovillePlumbing & Heating, Inc. Specialty TradeContractors Term Loan Prime plus2.75% 11/16/2021 62.5 41.6 42.2 0.02%Stephen Frank, Patricia Frank andSuds Express LLC dba FrankChiropra Ambulatory HealthCare Services Term Loan Prime plus2.75% 2/25/2023 63.0 41.0 41.7 0.02%Lavertue Properties LLP dbaLavertue Properties Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 6/29/2036 44.8 40.9 42.8 0.02%Equity National Capital LLC &Chadbourne Road Capital, LLC Securities,CommodityContracts, and OtherFinancialInvestments andRelated Activities Term Loan Prime plus2.75% 9/26/2021 62.5 40.8 40.8 0.02%Excel RP, Inc./Kevin and JoannFoley MachineryManufacturing Term Loan Prime plus2.75% 7/8/2028 50.0 40.1 41.2 0.02%Peanut Butter & Co., Inc. d/b/aPeanut Butter & Co. MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 6/3/2021 65.5 39.8 40.0 0.02%Financial Network Recovery Administrative andSupport Services Term Loan Prime plus2.75% 10/26/2025 40.0 39.3 33.1 0.02%Jojan, Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.25% 12/18/2031 204.8 39.2 39.4 0.02%All American Printing Printing and RelatedSupport Activities Term Loan Prime plus2.75% 10/26/2032 69.8 39.0 40.6 0.02%Play and Stay LLC dba Zoom RoomTinton Falls Personal andLaundry Services Term Loan Prime plus2.75% 9/18/2024 42.1 38.8 32.2 0.02%K9 Bytes, Inc & Epazz, Inc dba K9Bytes, Inc Publishing Industries(except Internet) Term Loan Prime plus2.75% 10/26/2021 58.8 38.8 38.7 0.02%F-111See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsLegacy Estate Planning Inc dbaAmerican Casket Enterprises Personal andLaundry Services Term Loan Prime plus2.75% 11/21/2024 42.0 38.8 32.2 0.02%Valiev Ballet Academy, Inc Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 8/12/2036 91.5 38.8 40.4 0.02%Kids in Motion of Springfield LLCdba The Little Gym of Springfield IL Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 11/18/2023 45.0 38.7 35.8 0.02%Serious-Fun in Alpharetta, LLC dbaThe Little Gym of Alpharetta Educational Services Term Loan Prime plus2.75% 9/20/2023 46.3 38.6 35.9 0.02%Scoville Plumbing & Heating Inc andThomas P. Scoville Specialty TradeContractors Term Loan Prime plus2.75% 7/25/2022 50.0 38.3 38.7 0.02%Alma J. and William R. Walton(EPC) and Almas Child Day CareCenter Social Assistance Term Loan Prime plus2.75% 9/11/2038 39.5 37.9 39.0 0.02%Lahoba,LLC dba Papa John's Pizza Food Services andDrinking Places Term Loan Prime plus2.75% 12/30/2034 42.5 37.3 39.0 0.02%Orange County Cleaning Inc Administrative andSupport Services Term Loan Prime plus2.75% 8/27/2024 41.3 37.3 31.0 0.02%Lodin Medical Imaging, LLC dbaWatson Imaging Center Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/1/2020 66.4 37.3 37.7 0.02%Janice B. McShan and TheMetropolitan Day School, LLC Social Assistance Term Loan Prime plus2.75% 10/31/2023 42.8 36.9 36.8 0.02%Aiello's Pizzeria LLC Food Services andDrinking Places Term Loan Prime plus2.75% 4/18/2024 42.8 36.5 34.2 0.02%M & H Pine Straw, Inc.and HarrisMaloy Support Activities forAgriculture andForestry Term Loan Prime plus2.75% 7/10/2020 67.5 36.2 36.5 0.02%ENI Inc. dba ENI Group, Inc Other InformationServices Term Loan Prime plus2.75% 12/11/2025 36.0 36.0 31.8 0.02%Capital Scrap Metal LLC MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 12/18/2025 36.0 36.0 30.7 0.02%KIND-ER-ZZ Inc dba Kidville Educational Services Term Loan Prime plus2.75% 6/15/2022 50.0 35.7 35.6 0.02%Gulfport Academy Child Care andLearning Center, Inc. and Jennifer Sis Social Assistance Term Loan Prime plus2.75% 8/30/2023 43.3 35.6 35.1 0.02%Babie Bunnie Enterprises Inc dbaTriangle Mothercare Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/28/2027 46.3 35.4 34.7 0.02%Dave Kris, and MDK Ram Corp. Food and BeverageStores Term Loan Prime plus2.75% 2/5/2026 221.0 35.0 35.9 0.02%Actknowledge,Inc dba Actknowledge Personal andLaundry Services Term Loan Prime plus2.75% 3/21/2021 57.3 34.7 35.1 0.02%F-112See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssets401 JJS, Corp and G. Randazzo'sTrattoria Corporation Food Services andDrinking Places Term Loan Prime plus2.75% 12/1/2040 52.8 34.3 35.0 0.02%Andrene's LLC dba Andrene'sCaribbean Soul Food Carry Out Food Services andDrinking Places Term Loan Prime plus2.75% 9/23/2024 37.8 34.3 28.6 0.01%CPN Motel, L.L.C. dba AmericanMotor Lodge Accommodation Term Loan Prime plus2.25% 4/30/2024 379.0 34.0 34.1 0.02%Smooth Grounds, Inc. Food Services andDrinking Places Term Loan 7.75% 10/11/2016 64.5 33.9 34.1 0.02%Naseeb Corporation Accommodation Term Loan Prime plus2.25% 3/31/2024 402.5 33.1 33.1 0.02%Harbor Ventilation Inc and EstesInvestment, LLC Specialty TradeContractors Term Loan Prime plus2.75% 7/19/2038 92.1 32.8 33.7 0.02%Kino Oil of Texas, LLC dba Kino Oil MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 8/27/2020 60.0 32.6 32.9 0.02%My Jewels, LLC dba The UPS Store#6712 Administrative andSupport Services Term Loan Prime plus2.75% 12/7/2025 56.3 32.4 27.3 0.01%Kinisi, Inc. dba The River North UPSStore Administrative andSupport Services Term Loan Prime plus2.75% 3/18/2024 41.3 32.2 31.2 0.02%Center-Mark Car Wash, Ltd Specialty TradeContractors Term Loan Prime plus2.75% 5/18/2024 221.3 30.7 31.4 0.02%Robert F. Schuler and Lori A.Schuler dba Bob’s Service Center Repair andMaintenance Term Loan Prime plus2.75% 11/30/2035 34.0 30.5 31.8 0.02%Dream Envy, Ltd. d/b/a MassageEnvy Personal and LaundryServices Term Loan Prime plus2.75% 11/9/2018 88.0 30.4 30.7 0.02%Deesha Corporation, Inc. dba BestInn & Suites Accommodation Term Loan Prime plus2.25% 2/14/2025 250.0 30.0 30.1 0.01%Twietmeyer Dentistry PA Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/30/2017 148.9 29.0 29.2 0.01%CMA Consulting dba ConstructionManagement Associates Construction ofBuildings Term Loan Prime plus2.75% 12/11/2019 58.5 28.6 28.7 0.01%North Atlanta RV Rentals LLC Rental and LeasingServices Term Loan Prime plus2.75% 6/29/2025 144.3 28.2 23.5 0.01%Little People’s Village, LLC dbaLittle People’s Village Social Assistance Term Loan Prime plus2.75% 1/31/2036 31.1 28.0 29.2 0.01%Maruti, Inc Accommodation Term Loan Prime plus2.25% 11/25/2024 220.0 27.9 28.0 0.01%A & A Acquisition, Inc. dba A & AInternational Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 2/15/2018 100.0 26.8 27.0 0.01%ActKnowledge,Inc dbaActKnowledge Personal and LaundryServices Term Loan Prime plus2.75% 6/30/2020 50.0 26.5 26.9 0.01%F-113See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsPlanet Verte, LLC dba AudioUnlimited of Oceanside Administrative andSupport Services Term Loan Prime plus2.75% 11/28/2019 57.0 26.5 26.6 0.01%Seven Stars Enterprises, Inc. dbaAtlanta Bread Company Food Services andDrinking Places Term Loan Prime plus2.75% 6/30/2018 86.3 26.4 26.6 0.01%K & D Family and Associates, Inc.dba Philly Pretzel Factory Food and BeverageStores Term Loan Prime plus2.75% 8/5/2018 81.3 26.3 26.5 0.01%39581 Garfield, LLC and TricountyNeurological Associates, P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/30/2036 28.5 25.9 26.9 0.01%Craig R Freehauf d/b/a LincolnTheatre Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 5/31/2022 47.9 25.3 25.7 0.01%Shree OM Lodging, LLC dba RoyalInn Accommodation Term Loan Prime plus2.75% 12/17/2035 27.7 24.9 25.9 0.01%Lincoln Park Physical Therapy Ambulatory HealthCare Services Term Loan Prime plus2.75% 10/20/2020 43.5 24.4 24.7 0.01%Aldine Funeral Chapel, LLC dbaAldine Funeral Chapel Personal and LaundryServices Term Loan Prime plus2.75% 3/8/2038 73.8 24.0 24.9 0.01%Parties By Pat, Inc. and Jose M.Martinez Jr. Food Services andDrinking Places Term Loan Prime plus2.75% 12/11/2017 93.1 22.8 23.0 0.01%B & J Manufacturing Corporationand Benson Realty Trust Fabricated MetalProductManufacturing Term Loan Prime plus2% 3/30/2021 250.0 22.6 22.4 0.01%Gain Laxmi, Inc. dba Super 8 Motel Accommodation Term Loan Prime plus2.25% 5/31/2023 202.5 22.5 22.5 0.01%RDT Enterprises, L.L.C. Specialty TradeContractors Term Loan Prime plus2.75% 11/12/2025 22.5 22.5 20.9 0.01%Medeiros Holdings Inc dba OutdoorLighting Perspectives of the Triad Electrical Equipment,Appliance, andComponentManufacturing Term Loan Prime plus2.75% 11/25/2025 22.5 22.5 19.0 0.01%AGR Foodmart Inc dba Nashua RoadMobil Gasoline Stations Term Loan Prime plus2.75% 12/11/2025 22.5 22.5 21.1 0.01%DC Enterprises Ltd. dba LakeviewTrue Value Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 12/14/2025 22.5 22.5 21.2 0.01%ADMO Inc dba Mid StatesEquipment Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 10/8/2025 22.5 22.4 19.3 0.01%Insurance Fire & Water Restorations,LLC Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 10/23/2025 22.5 22.4 21.0 0.01%New Hampshire Precision MetalFabricators, Inc. Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 10/23/2025 22.5 22.4 22.3 0.01%Bisson Transportation Inc dba I & RAssociates and Document Secutiry Truck Transportation Term Loan Prime plus2.75% 10/30/2025 22.5 22.4 20.8 0.01%F-114See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsBinky's Vapes LLC Miscellaneous StoreRetailers Term Loan Prime plus2.75% 9/30/2025 22.5 22.2 18.7 0.01%Planet Verte,LLC d/b/a AudioUnlimited Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/20/2020 40.0 22.0 22.0 0.01%575 Columbus Avenue HoldingCompany, LLC and LA-ZE LLC dbaEST EST EST Food Services andDrinking Places Term Loan Prime plus2.75% 7/30/2039 22.5 22.0 22.3 0.01%Smart Artists Inc. Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 7/23/2025 22.5 21.9 18.5 0.01%Delray Scrap Recycling LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 8/31/2025 22.5 21.8 18.4 0.01%Square Deal Siding Company,LLCdba Square Deal Siding Company Specialty TradeContractors Term Loan Prime plus2.75% 6/18/2025 22.5 21.8 21.7 0.01%Evinger PA One, Inc. dba PostalAnnex, Falcon Miscellaneous StoreRetailers Term Loan Prime plus2.75% 6/24/2025 22.5 21.8 19.3 0.01%E & G Enterprises LLC dba ComfortKeepers Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/26/2025 22.5 21.8 18.2 0.01%Members Only Software Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/30/2020 40.3 21.8 21.9 0.01%RJI Services, Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/23/2025 22.5 21.6 18.0 0.01%KenBro Enterprises LLC dbaHearing Aids by Zounds-Cherry Hill Health and PersonalCare Stores Term Loan Prime plus2.75% 10/18/2023 25.8 21.5 20.9 0.01%Giacchino Maritime Consultants Inc Personal andLaundry Services Term Loan Prime plus2.75% 4/17/2025 22.5 21.5 17.9 0.01%Ragazza Restaurant Group, Inc. dbaBambolina Food Services andDrinking Places Term Loan Prime plus2.75% 4/21/2025 22.5 21.5 18.8 0.01%Diamond Solutions LLC MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 4/21/2025 22.5 21.5 17.9 0.01%Gurtej Singh and Ranjit Kaur dbaFood Fair Market Food and BeverageStores Term Loan Prime plus2.75% 3/18/2025 22.5 21.4 17.8 0.01%Zero-In Media Inc Data Processing,Hosting, and RelatedServices Term Loan Prime plus2.75% 3/25/2025 22.5 21.4 17.8 0.01%Pen Tex Inc dba The UPS Store Administrative andSupport Services Term Loan Prime plus2.75% 5/20/2025 22.0 21.2 17.6 0.01%Trading Group 3, Inc. Miscellaneous StoreRetailers Term Loan Prime plus2.75% 11/26/2024 22.5 20.8 17.3 0.01%J.R. Wheeler Corporation dbaStructurz Exhibits and Graphics Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 10/24/2025 21.0 20.7 20.7 0.01%F-115See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsAuto Shine Carwash Inc and AKMR. Hossain and Jessica F. Masud Gasoline Stations Term Loan Prime plus2.75% 9/26/2024 22.5 20.5 17.8 0.01%Jatcoia 60056, LLC dba Style Encore Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 3/31/2025 22.3 20.4 19.1 0.01%H.H. Leonards Trust and PotomacFund LLC and The 2020 O StreetCorporation Accommodation Term Loan Prime plus2.75% 7/23/2020 62.0 20.3 20.5 0.01%TJU-DGT Inc dba The Lorenz Cafe Food Services andDrinking Places Term Loan Prime plus2.75% 6/26/2029 20.6 20.2 20.0 0.01%L&S Insurance & Financial ServicesInc Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 7/25/2024 22.5 20.2 17.1 0.01%Complete Body & Paint, Inc. Repair andMaintenance Term Loan Prime plus2.75% 4/23/2039 20.8 20.2 20.7 0.01%Any Garment Cleaner-EastBrunswick, Inc dba Any GarmentCleaner Personal and LaundryServices Term Loan Prime plus2.75% 11/18/2020 42.5 20.2 20.4 0.01%Sujata Inc dba Stop N Save FoodMart and Dhruvesh Patel Food and BeverageStores Term Loan Prime plus2.75% 6/3/2024 22.5 20.0 18.7 0.01%Pocono Coated Products, LLC Printing and RelatedSupport Activities Term Loan Prime plus2.75% 5/30/2024 22.5 19.9 19.5 0.01%Palmabak Inc dba Mami Nora's Food Services andDrinking Places Term Loan Prime plus2.75% 1/22/2025 21.5 19.7 19.5 0.01%Diag, LLC dba Kidville Educational Services Term Loan Prime plus2.75% 6/21/2020 37.5 19.4 19.5 0.01%One Hour Jewelry Repair Inc Repair andMaintenance Term Loan Prime plus2.75% 10/14/2024 20.6 18.9 15.7 0.01%MCF Forte LLC Food Services andDrinking Places Term Loan Prime plus2.75% 12/29/2025 18.8 18.8 16.0 0.01%Carolina Beefs, LLC dba BeefO'Brady's Food Services andDrinking Places Term Loan Prime plus2.75% 4/13/2025 19.5 18.6 15.5 0.01%Icore Enterprises Inc dba Air FlowFilters Inc MiscellaneousManufacturing Term Loan Prime plus2.75% 1/15/2024 21.8 18.6 18.7 0.01%Caribbean Concepts, Inc. dba QuickBleach Ambulatory HealthCare Services Term Loan Prime plus2.75% 8/12/2023 22.5 18.6 17.3 0.01%M and C Renovations Inc Construction ofBuildings Term Loan Prime plus2.75% 10/31/2024 20.3 18.6 15.5 0.01%Tammy's Bakery, Inc. dba Tammy'sBakery Food Manufacturing Term Loan Prime plus2.75% 12/10/2017 71.8 18.5 18.6 0.01%Min Hui Lin Food Services andDrinking Places Term Loan Prime plus2.75% 1/30/2028 134.3 18.5 19.1 0.01%Major Queens Body & Fender Corp Repair andMaintenance Term Loan Prime plus2.75% 6/10/2021 28.6 18.2 18.5 0.01%F-116See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsShuttle Car Wash, Inc. dba ShuttleCar Wash Repair andMaintenance Term Loan Prime plus2.25% 11/10/2028 109.8 18.2 18.2 0.01%Gray Tree Service, Inc. Administrative andSupport Services Term Loan Prime plus2.75% 12/18/2018 50.0 18.2 18.3 0.01%Hattingh Incorporated dba ProstheticCare Facility Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/21/2025 18.0 18.0 16.0 0.01%Hurshell Leon Dutton dba High JumpParty Rentals Rental and LeasingServices Term Loan Prime plus2.75% 11/30/2025 17.6 17.6 17.1 0.01%Boilermaker Industries LLC dbaPostNet Administrative andSupport Services Term Loan Prime plus2.75% 10/9/2024 18.8 17.5 16.1 0.01%The Amendments Group LLC dbaBrightstar Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/17/2022 22.5 17.2 17.4 0.01%EGM Food Services Inc dba GoldStar Chili Food Services andDrinking Places Term Loan Prime plus2.75% 5/29/2024 19.2 17.0 15.9 0.01%Hi-Def Imaging, Inc. dba SpeedProImaging Printing and RelatedSupport Activities Term Loan Prime plus2.75% 11/9/2022 22.2 16.8 16.5 0.01%Tracey Vita-Morris dba Tracey Vita'sSchool of Dance Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 5/10/2022 22.5 16.1 16.0 0.01%St Judes Physical Therapy P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 11/19/2022 21.0 15.9 16.1 0.01%Tri-State Remodeling & Investments,LLC Specialty TradeContractors Term Loan Prime plus2.75% 12/11/2025 15.9 15.9 15.2 0.01%Panditos LLC dba White LotusHome MiscellaneousManufacturing Term Loan Prime plus2.75% 12/28/2025 15.9 15.9 13.4 0.01%Opes Campitor Corporation dba FruxDocuments Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 5/20/2025 16.5 15.9 13.5 0.01%JSIL LLC dba BlackstonesHairdressing Personal andLaundry Services Term Loan Prime plus2.75% 8/16/2023 19.5 15.8 14.9 0.01%Nancy Carapelluci & A & MSeasonal Corner Inc. Building Materialand GardenEquipment andSupplies Dealers Term Loan Prime plus2.75% 3/1/2025 106.9 15.8 16.2 0.01%TOL LLC dba Wild Birds Unlimited Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 12/13/2023 18.0 15.8 15.0 0.01%Vanderhoof LLC dba Soxfords ApparelManufacturing Term Loan Prime plus2.75% 9/18/2025 15.9 15.7 13.2 0.01%Vallmar Studios, LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/21/2025 15.8 15.6 13.1 0.01%Frozen Treats of Hollywood FL, LLCdba Sub Zero Ice Cream Food Services andDrinking Places Term Loan Prime plus2.75% 9/22/2025 15.8 15.6 13.8 0.01%F-117See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsChitalian Fratelli LLC dba FrancescaBrick Oven Pizza and Pasta Food Services andDrinking Places Term Loan Prime plus2.75% 6/5/2025 16.1 15.5 12.9 0.01%Myclean Inc. Personal and LaundryServices Term Loan Prime plus2.75% 6/29/2025 15.9 15.4 12.8 0.01%Kings Laundry,LLC Personal and LaundryServices Term Loan Prime plus2.75% 10/30/2017 64.5 15.3 15.4 0.01%Balthazar Management VirginIslands, LLC dba The Beach Cafe Food Services andDrinking Places Term Loan Prime plus2.75% 6/22/2025 15.8 15.3 15.2 0.01%Karis, Inc. Accommodation Term Loan Prime plus2% 12/22/2023 148.8 15.0 14.9 0.01%Michael S. Decker & Janet Deckerdba The Hen House Cafe Food Services andDrinking Places Term Loan Prime plus2.75% 8/30/2036 16.4 15.0 15.6 0.01%Bradley Stinson and Associates Inc Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 11/19/2025 15.0 15.0 12.6 0.01%Elite Institute LLC dba HuntingtonLearning Center Educational Services Term Loan Prime plus2.75% 8/28/2025 15.0 14.9 12.6 0.01%Zouk, Ltd. dba Palma Food Services andDrinking Places Term Loan Prime plus2.75% 8/25/2020 27.5 14.7 14.9 0.01%Graphish Studio, Inc. and ScottFishoff Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/14/2022 20.3 14.6 14.6 0.01%Jay Kevin Gremillion dba DinoSmiles Children's Cosmetic Dentistry Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/18/2025 73.0 14.6 14.6 0.01%28 Cornelia Street Properties, LLCand Zouk, Ltd.dba Palma Food Services andDrinking Places Term Loan Prime plus2.75% 10/25/2021 22.5 14.6 14.8 0.01%Vision Network Solutions, Inc. Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/12/2022 19.5 14.5 14.1 0.01%PM Cassidy Enterprises, Inc. dbaJunk King Waste Managementand RemediationServices Term Loan Prime plus2.75% 6/19/2025 14.9 14.4 12.0 0.01%Orchid Enterprises Inc dba AssistingHands of Sussex County Ambulatory HealthCare Services Term Loan Prime plus2.75% 4/24/2025 15.0 14.3 12.0 0.01%Windsor Direct Distribution LLC MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 10/26/2025 14.3 14.2 11.9 0.01%Atlas Mountain Construction LLC Construction ofBuildings Term Loan Prime plus2.75% 1/28/2024 16.5 14.1 14.2 0.01%Michael S. Korfe dba North ValleyAuto Repair Repair andMaintenance Term Loan Prime plus2.75% 3/24/2036 15.5 14.0 14.6 0.01%Burks & Sons Development LLC dbaTropical Smoothie Cafe Food Services andDrinking Places Term Loan Prime plus2.75% 3/22/2018 49.8 13.9 14.0 0.01%F-118See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsLaura L. Smith dba Lisa SmithStudio Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 11/3/2024 15.0 13.8 11.4 0.01%Insurance Problem Solvers LLC Insurance Carriersand RelatedActivities Term Loan Prime plus2.75% 5/20/2023 17.1 13.7 13.3 0.01%Gator Communications Group, LLCdba Harvard Printing Group Printing and RelatedSupport Activities Term Loan Prime plus2.75% 3/27/2023 17.3 13.7 13.6 0.01%Duttakrupa, LLC dba BirminghamMotor Court Accommodation Term Loan Prime plus2.25% 9/8/2023 98.8 13.6 13.6 0.01%Maynard Enterprises Inc dbaFastsigns of Texarkana Miscellaneous StoreRetailers Term Loan Prime plus2.75% 9/18/2023 16.1 13.5 12.6 0.01%Daniel W. Stark dba MountainValley Lodge and RV Park Accommodation Term Loan Prime plus2.75% 9/25/2040 13.5 13.5 13.7 0.01%Willington Hills Equestrian CenterLLC Animal Productionand Aquaculture Term Loan Prime plus2.75% 10/19/2022 85.0 13.2 13.5 0.01%Atlanta Vascular ResearchOrganization, Inc dba AtlantaVascular Found Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 8/6/2020 24.3 13.2 13.4 0.01%AcuCall LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 11/21/2023 15.8 13.1 12.0 0.01%Nicor LLC dba Fibrenew Sacramento Repair andMaintenance Term Loan Prime plus2.75% 6/5/2022 13.8 13.1 10.9 0.01%John B. Houston Funeral Home, Inc.dba George E. Cushnie FuneralHome Personal and LaundryServices Term Loan Prime plus2.75% 12/19/2028 78.8 13.0 13.4 0.01%Clean Brothers Company Inc dbaServPro of North Washington County Repair andMaintenance Term Loan Prime plus2.75% 11/21/2022 17.0 12.8 12.6 0.01%1911 East Main Street Holdings,Corp Repair andMaintenance Term Loan Prime plus2.75% 5/18/2032 15.8 12.8 13.3 0.01%WeaverVentures, Inc dba The UPSStore Postal Service Term Loan Prime plus2.75% 7/28/2020 23.8 12.8 12.9 0.01%Pegasus Automotive, Inc. Gasoline Stations Term Loan Prime plus2.75% 12/23/2022 112.5 12.4 12.7 0.01%S.Drake LLC dba ExpressEmployment Professionals of AnnArbor, Michigan Administrative andSupport Services Term Loan Prime plus2.75% 12/31/2023 18.8 12.3 11.4 0.01%Blue Ox Trucking Inc. Truck Transportation Term Loan Prime plus2.75% 12/4/2025 12.3 12.3 12.3 0.01%Lefont Theaters Inc. Performing Arts,Spectator Sports, andRelated Industries Term Loan Prime plus2.75% 12/19/2023 14.4 12.2 11.7 0.01%McCallister Venture Group, LLC andMaw's Vittles, Inc. Food Services andDrinking Places Term Loan Prime plus2.75% 7/30/2029 75.0 12.2 12.6 0.01%F-119See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsDeRidder Chiropractic LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 11/25/2024 13.2 12.2 11.9 0.01%AJK Enterprise LLC dba AJKEnterprise LLC Truck Transportation Term Loan Prime plus2.75% 8/27/2022 16.5 12.2 12.2 0.01%P. Agrino, Inc. dba Andover Diner Food Services andDrinking Places Term Loan Prime plus2.75% 7/18/2021 150.0 12.0 12.2 0.01%Nelson Financial Services LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 2/24/2025 12.5 11.7 9.8 —%North Country Transport, LLC Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 2/6/2023 15.0 11.7 11.8 0.01%Abbondanza Market LLC dbaHampton Falls Village Market Food and BeverageStores Term Loan Prime plus2.75% 12/18/2025 73.8 11.7 11.7 0.01%Indoor Playgrounds Limited LiabilityCompany dba Kidville Educational Services Term Loan Prime plus2.75% 4/5/2022 19.5 11.5 11.6 0.01%Loriet LLC MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 3/24/2025 12.0 11.4 9.5 —%Diamond Memorials Incorporated Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 9/25/2023 14.3 11.3 10.3 0.01%DWeb Studio, Inc. Educational Services Term Loan Prime plus2.75% 11/25/2025 11.3 11.3 9.5 —%CJ Park Inc. dba Kidville MidtownWest Educational Services Term Loan Prime plus2.75% 6/25/2020 26.4 11.1 11.2 0.01%Play and Learn Child Care andSchool Inc Social Assistance Term Loan Prime plus2.75% 11/23/2025 11.1 11.1 11.1 0.01%Margab, Inc. dba Smoothie King Food Services andDrinking Places Term Loan Prime plus2.75% 12/28/2017 44.0 11.0 11.1 0.01%Mala Iyer, MD dba Child and FamilyWellness Center Ambulatory HealthCare Services Term Loan Prime plus2.75% 8/11/2017 50.0 11.0 11.0 0.01%Learning Skills LLC and ChristopherShrope Educational Services Term Loan Prime plus2.75% 12/17/2025 10.8 10.8 9.1 —%Georgia Safe Sidewalks LLC Specialty TradeContractors Term Loan Prime plus2.75% 7/27/2022 15.0 10.8 10.7 0.01%Luigi's on Main LLC and Luigi'sMain Street Pizza Inc Food Services andDrinking Places Term Loan Prime plus2.75% 3/4/2025 11.3 10.7 10.6 0.01%Kino Oil of Texas LLC dba KinoCompany and B&D Oil MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 8/27/2035 12.0 10.5 10.9 0.01%Chong Hun Im dba Kim's Market Food and BeverageStores Term Loan Prime plus2.5% 2/27/2024 80.0 10.5 10.6 0.01%F-120See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsM. Krishna, Inc. dba Super 8 Motel Accommodation Term Loan Prime plus2% 3/20/2025 250.0 10.3 10.2 0.01%Demand Printing Solutions, Inc. andMLM Enterprises, LLC d/b/aDemand Printing Solutions Printing and RelatedSupport Activities Term Loan Prime plus2.75% 5/27/2021 16.5 10.3 10.4 0.01%K9 Bytes, Inc & Epazz, Inc Publishing Industries(except Internet) Term Loan Prime plus2.75% 9/30/2020 18.5 10.2 10.2 0.01%Prestigious LifeCare for Seniors LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 9/25/2025 9.8 9.7 8.8 —%Dirk's Trucking, L.L.C. dba Dirk'sTrucking Truck Transportation Term Loan Prime plus2.75% 9/17/2020 17.7 9.7 9.7 —%Taste of Inverness, Inc. dba ChinaGarden Food Services andDrinking Places Term Loan Prime plus2% 6/29/2025 73.8 9.6 9.5 —%Jennifer T Campbell Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 7/31/2025 9.8 9.5 8.0 —%Pedzik's Pets, LLC Support Activities forAgriculture andForestry Term Loan Prime plus2.75% 3/31/2030 53.5 9.4 9.8 —%Head To Toe PersonalizedPampering, Inc. Personal and LaundryServices Term Loan Prime plus2.75% 1/27/2031 52.0 9.4 9.7 —%Daniel W and Erin H Gordon andSilver Lining Stables CT, LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 7/24/2023 11.3 9.2 9.2 —%Capitol Compliance Associates Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 4/30/2025 15.9 9.0 7.5 —%It's A Buffalo Food Services andDrinking Places Term Loan Prime plus2.75% 5/26/2016 219.8 8.9 9.0 —%Oz B. Zamir dba Zamir Marble &Granite Specialty TradeContractors Term Loan Prime plus2.5% 8/6/2028 54.0 8.7 8.8 —%Villela CPA PL Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 5/27/2025 9.0 8.7 7.5 —%MiJoy Inc dba Imo's Pizza Food Services andDrinking Places Term Loan Prime plus2.75% 9/18/2025 8.3 8.1 6.9 —%Higher Grounds CommunityCoffeehouse, LLC Food Services andDrinking Places Term Loan Prime plus2.75% 9/2/2025 8.3 8.1 7.1 —%Kelly Chon LLC dba Shi-Golf MerchantWholesalers, DurableGoods Term Loan Prime plus2.75% 7/29/2021 17.5 8.1 8.2 —%Joey O's LLC and Jennifer Olszewski Specialty TradeContractors Term Loan Prime plus2.75% 11/7/2024 13.1 8.0 6.7 —%Aaron Delgado and Associates Inc Administrative andSupport Services Term Loan Prime plus2.75% 7/22/2025 8.2 8.0 6.7 —%F-121See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsXCESSIVE THROTTLE, INC dbaJake's Roadhouse Food Services andDrinking Places Term Loan Prime plus2.75% 5/29/2025 8.3 7.9 6.6 —%Randall D. & Patricia D. Casaburidba Pat's Pizzazz Furniture and HomeFurnishings Stores Term Loan Prime plus2.75% 3/13/2023 68.8 7.9 8.1 —%The Conibear Corporation andConibear Trucking, LLC Truck Transportation Term Loan Prime plus2.75% 12/5/2024 12.0 7.9 7.4 —%RAB Services, Inc. & ProfessionalFloor Installations Specialty TradeContractors Term Loan Prime plus2.5% 1/31/2023 62.5 7.9 7.9 —%JRJG, Inc. dba BrightStarHealthCare-Naperville/Oak Brook Ambulatory HealthCare Services Term Loan Prime plus2.75% 4/23/2020 15.0 7.7 7.7 —%RDJ Maayaa Inc dba RDJDistributors MerchantWholesalers,Nondurable Goods Term Loan Prime plus2.75% 6/23/2024 8.7 7.6 7.0 —%Jung Design Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 1/20/2022 8.4 7.6 6.3 —%Cares, Inc dba Dumpling GroundsDay Care Center Social Assistance Term Loan Prime plus2.75% 12/10/2025 7.5 7.5 7.3 —%Caring Hands Pediatrics,P.C. dbaCaring Hands Pediatrics Ambulatory HealthCare Services Term Loan Prime plus2.75% 4/9/2020 14.5 7.4 7.5 —%A-1 Quality Services Corporation Administrative andSupport Services Term Loan Prime plus2.75% 10/29/2023 8.9 7.4 6.7 —%D&L Rescources, Inc. dba The UPSStore Miscellaneous StoreRetailers Term Loan Prime plus2.75% 11/27/2022 9.8 7.4 7.2 —%RJS Service Corporation Gasoline Stations Term Loan Prime plus2.75% 8/20/2021 79.0 7.3 7.4 —%Stillwell Ave Prep School Social Assistance Term Loan Prime plus2.75% 1/14/2023 72.0 7.2 7.3 —%Envy Salon & Spa LLC Personal andLaundry Services Term Loan Prime plus2.75% 12/4/2018 20.3 7.2 7.2 —%Howell Gun Works LLC Sporting Goods,Hobby, MusicalInstrument, and BookStores Term Loan Prime plus2.75% 11/14/2023 8.3 7.1 6.4 —%ATC Fitness, LLC dba Around theClock Fitness Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 2/28/2022 10.2 7.1 7.1 —%Gilbert Chiropractic Clinic, Inc. Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/7/2018 22.5 6.9 7.0 —%RCB Enterprises, Inc. Administrative andSupport Services Term Loan Prime plus2.75% 12/18/2017 21.2 6.6 6.6 —%ATC Fitness LLC dba Around theClock Fitness Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 2/28/2019 15.0 6.3 6.3 —%F-122See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsFive Corners, Ltd. Gasoline Stations Term Loan Prime plus2.75% 12/11/2019 85.0 6.1 6.2 —%Tanner Optical, Inc. dba Murphy EyeCare Ambulatory HealthCare Services Term Loan Prime plus2.75% 4/27/2022 8.3 5.8 5.9 —%Food & Beverage Associates Of N.J.Inc Food Services andDrinking Places Term Loan Prime plus2.75% 3/11/2021 10.0 5.6 5.7 —%Track Side Collision & Tire, Inc. Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 6/16/2025 44.8 5.2 5.4 —%OrthoQuest, P.C. Ambulatory HealthCare Services Term Loan Prime plus2% 3/12/2022 56.8 5.1 5.1 —%Demand Printing Solutions, Inc. Printing and RelatedSupport Activities Term Loan Prime plus2.75% 12/12/2019 10.0 4.7 4.8 —%Bhailal Patel dba New Falls Motel Accommodation Term Loan Prime plus2.75% 3/27/2023 100.0 4.6 4.7 —%Maria C. Sathre and David N. Sathredba Black Forest Liquor Store Food and BeverageStores Term Loan Prime plus2.75% 11/28/2017 18.6 4.5 4.5 —%Gourmet to You, Inc. Food Services andDrinking Places Term Loan Prime plus2.75% 2/28/2019 12.1 4.5 4.5 —%David A. Nusblatt, D.M.D, P.C. Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/11/2019 9.0 4.3 4.3 —%South Dade Restoration Corp. dbaServpro of Kendall/Pinecrest Administrative andSupport Services Term Loan Prime plus2.75% 8/10/2016 61.8 4.0 4.0 —%ValleyStar, Inc. dba BrightStarHealthcare Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/28/2020 7.5 4.0 4.0 —%Moonlight Multi Media Production,Inc. Other InformationServices Term Loan 5.3% 2/1/2025 19.7 3.9 4.0 —%Patrageous Enterprises, LLC dbaIncredibly Edible Delites of Laurel Food and BeverageStores Term Loan Prime plus2.75% 12/29/2020 7.6 3.7 3.7 —%DDLK Investments LLC d/b/aSmoothie King Food Services andDrinking Places Term Loan Prime plus2.75% 8/30/2020 7.5 3.6 3.6 —%Christopher F. Bohon & Pamela D.Bohon Social Assistance Term Loan Prime plus2.75% 10/28/2026 14.2 3.5 3.6 —%Enewhere Custom Canvas, LLC Textile Product Mills Term Loan Prime plus2.75% 2/15/2018 12.0 3.4 3.4 —%Quality Engraving Services Inc. andIan M. Schnaitman Miscellaneous StoreRetailers Term Loan Prime plus2.75% 10/17/2017 15.0 3.3 3.3 —%ValleyStar, Inc. dba BrightStarHealthCare Ambulatory HealthCare Services Term Loan Prime plus2.75% 6/28/2020 0.6 3.2 3.2 —%Cocoa Beach Parasail Corp. dbaCocoa Beach Parasail Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 4/26/2020 6.3 3.2 3.2 —%F-123See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsKyoshi Enterprises, LLC Educational Services Term Loan Prime plus2.75% 12/29/2016 22.5 3.1 3.1 —%Champion Pest Control Systems, Inc. Administrative andSupport Services Term Loan 6% 1/15/2016 39.0 3.0 — —%Grapevine Professional Services, Inc. Administrative andSupport Services Term Loan Prime plus2.75% 1/22/2019 8.2 2.9 2.9 —%Louis B. Smith dba LAQ FuneralCoach Transit and GroundPassengerTransportation Term Loan Prime plus2.75% 9/15/2017 12.6 2.8 2.8 —%Spain Street LLC Food Services andDrinking Places Term Loan Prime plus2.75% 6/29/2017 63.0 2.8 2.8 —%Computer Renaissance dba Dante ITServices, Inc. Electronics andAppliance Stores Term Loan Prime plus3.75% 3/1/2018 100.0 2.7 2.8 —%Ralph Werner dba WernerTransmissions Gasoline Stations Term Loan Prime plus2.75% 12/29/2021 26.6 2.7 2.8 —%Flourishing Fruits, LLC dba EdibleArrangements Food Manufacturing Term Loan Prime plus2.75% 12/29/2017 21.1 2.7 2.7 —%Saan M.Saelee dba Saelee's DeliveryService Truck Transportation Term Loan Prime plus2.75% 3/12/2018 9.8 2.7 2.7 —%Daniel S. Fitzpatrick dba Danny'sMobile Appearance ReconditioningService Repair andMaintenance Term Loan Prime plus2.75% 3/29/2018 9.4 2.6 2.7 —%Flint Batteries, LLC General MerchandiseStores Term Loan Prime plus2.75% 7/21/2016 46.9 2.4 2.4 —%Danjam Enterprises, LLC dba ArielDental Care Ambulatory HealthCare Services Term Loan Prime plus2.75% 3/30/2021 3.8 2.3 2.4 —%L.C.N. Investments, L.L.C. dba MaxMuscle Sports Nutrition Clothing andClothing AccessoriesStores Term Loan Prime plus2.75% 5/27/2017 12.8 2.1 2.2 —%Inflate World Corporation Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 9/30/2018 7.5 2.0 2.0 —%Seo's Paradise Cleaners, Inc. Personal andLaundry Services Term Loan Prime plus2.75% 1/19/2018 9.8 1.9 2.0 —%Timothy S. Strange dba Strange'sMobile Apperance ReconditioningService Repair andMaintenance Term Loan Prime plus2.75% 12/17/2017 8.4 1.6 1.7 —%Golden Elevator Co., Inc. Support Activities forAgriculture andForestry Term Loan Prime plus2.75% 1/31/2022 50.0 1.6 1.7 —%Flint Batteries LLC dba BatteriesPlus of Flint General MerchandiseStores Term Loan Prime plus2.75% 8/29/2017 9.0 1.5 1.6 —%MJ Mortgage & Tax Services, Inc. Credit Intermediationand RelatedActivities Term Loan Prime plus2.75% 11/14/2017 6.9 1.5 1.5 —%F-124See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsCCIPTA, LLC Clothing and ClothingAccessories Stores Term Loan Prime plus2.75% 1/17/2017 47.0 1.5 1.5 —%Nora A. Palma and Julio O Villcas Food Services andDrinking Places Term Loan Prime plus2.75% 6/27/2017 56.3 1.4 1.5 —%Delyannis Iron Works Fabricated MetalProductManufacturing Term Loan 6% 12/8/2022 16.0 1.4 1.5 —%Zeroln Media LLC Data Processing,Hosting, and RelatedServices Term Loan Prime plus2.75% 4/25/2017 7.5 1.4 1.4 —%Nelson Financial Services, LLC Scenic andSightseeingTransportation Term Loan Prime plus2.75% 9/2/2016 57.0 1.3 1.3 —%Pro Levin Yoga, Incorporated d.b.a.Bikram's Yoga College of India Sug Educational Services Term Loan Prime plus2.75% 5/12/2016 16.4 0.9 0.9 —%No Thirst Software LLC Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 4/26/2017 6.8 0.9 0.9 —%New Economic Methods LLC dbaRita's Food Services andDrinking Places Term Loan Prime plus2.75% 7/15/2020 24.8 0.9 0.9 —%Saul A. Ramirez and Norma L. Trujillo Food Services andDrinking Places Term Loan Prime plus2.75% 1/31/2017 6.0 0.9 0.9 —%Eric R. Wise, D.C. dba Jamacha-ChaseChiropractic Ambulatory HealthCare Services Term Loan Prime plus2.75% 4/30/2017 15.6 0.6 0.6 —%Contractors Pumping Service, Inc. Specialty TradeContractors Term Loan Prime plus2.75% 11/3/2016 9.9 0.4 0.4 —%Tesserah Tile Design, Inc. Specialty TradeContractors Term Loan Prime plus2.75% 6/29/2016 7.1 0.4 0.4 —%Healthcare Interventions, Inc. dbaBrightstar HealthCare Ambulatory HealthCare Services Term Loan Prime plus2.75% 3/15/2016 8.3 0.4 0.4 —%Maynard Enterprises, Inc. MiscellaneousManufacturing Term Loan Prime plus2.75% 3/22/2016 22.5 0.3 0.4 —%Vincent Allen Fleece dba Living WellAccessories and Water Camel Building Material andGarden Equipmentand Supplies Dealers Term Loan Prime plus2.75% 11/1/2016 3.8 0.3 0.3 —%Spencer Fitness, Inc. Personal and LaundryServices Term Loan Prime plus2.75% 1/11/2016 6.0 — — —%Chez Rurene Bakery Food Services andDrinking Places Term Loan Prime plus2.75% 6/20/2017 150.0 31.6 45.2 0.02%Total Performing SBAUnguaranteed Investments $181,518.3 $155,980.4 $152,157.7 74.61% Non-Performing SBA UnguaranteedInvestments (3) F-125See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssets* 214 North Franklin, LLC and WinterVentures, Inc. Nonstore Retailers Term Loan Prime plus2.75% 11/29/2037 $146.0 $146.1 $136.9 0.07%* A + Quality Home Health Care, Inc. Ambulatory HealthCare Services Term Loan 6% 8/1/2016 1.3 1.3 1.2 —%* Almeria Marketing 1, Inc. Personal and LaundryServices Term Loan 7.75% 10/15/2015 4.7 4.7 0.7 —%* AUM Estates, LLC and SculptedFigures Plastic Surgery Inc. Ambulatory HealthCare Services Term Loan 6% 3/14/2038 305.3 305.7 136.2 0.07%Auto Sales, Inc. Motor Vehicle andParts Dealers Term Loan 6% 8/17/2023 4.3 4.3 3.8 —%* AWA Fabrication & Construction,L.L.C. Fabricated MetalProductManufacturing Term Loan 6% 4/30/2025 34.7 34.8 24.5 0.01%* Baker Sales, Inc. d/b/a Baker Sales,Inc. Nonstore Retailers Term Loan 6% 3/29/2036 181.5 182.0 99.9 0.05%* Barnum Printing & Publishing, Co. Printing and RelatedSupport Activities Term Loan 6% 7/29/2015 9.8 9.8 8.2 —%* BCD Enterprises, LLC dbaProgressive Tool and Nutmeg Tool Fabricated MetalProductManufacturing Term Loan 6% 6/22/2026 290.3 290.9 — —%* Bwms Management, LLC Food Services andDrinking Places Term Loan 6% 7/7/2027 75.2 75.4 23.2 0.01%* DC Realty, LLC dba FOGO DataCenters Professional,Scientific, andTechnical Services Term Loan 6% 3/23/2037 697.8 699.5 563.2 0.28%* DC Realty, LLC dba FOGO DataCenters Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 3/23/2022 206.1 206.6 182.4 0.09%* Dill Street Bar and Grill Inc and WOEntertainment, Inc Food Services andDrinking Places Term Loan 6% 9/27/2027 104.4 104.6 23.6 0.01%Dixie Transport, Inc. & Johnny D.Brown & Jimmy Brown & MaudainBrown Support Activities forTransportation Term Loan 5.25% 12/28/2035 140.8 141.0 78.1 0.04%* DocMagnet Inc Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 1/23/2025 16.3 16.3 — —%* Dr. Francis E. Anders, DVM Professional,Scientific, andTechnical Services Term Loan 6% 8/9/2015 1.6 1.6 1.6 —%* E & I Holdings, LP & PA FarmProducts, LLC Food Manufacturing Term Loan 6% 4/30/2030 1,234.0 1,237.1 487.3 0.24%E.W. Ventures, Inc. dba Swift Cleaners& Laundry Personal and LaundryServices Term Loan 0% 4/18/2017 91.0 91.2 1.3 —%* Elite Treats Enterprises, Inc. dbaRochelle Dairy Queen Food Services andDrinking Places Term Loan 6% 1/24/2032 131.2 131.5 95.9 0.05%* Europlast Ltd Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 9/26/2022 327.6 328.5 314.5 0.15%F-126See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssets* Europlast Ltd Plastics and RubberProductsManufacturing Term Loan Prime plus2.75% 5/31/2023 155.2 155.6 — —%* Event Mecca LLC Other InformationServices Term Loan 6% 4/10/2023 13.2 13.2 4.8 —%* EZ Towing, Inc. Support Activities forTransportation Term Loan 6% 1/31/2023 123.2 123.5 72.8 0.04%* Goetzke Chiropractic, Inc.Ambulatory HealthCare Services Term Loan 6% 10/25/2017 2.9 2.9 2.4 —%* Gotta Dance Studio, Inc. dba GottaDance Studio Academy ofPerforming Educational Services Term Loan Prime plus2.75% 11/16/2016 3.6 3.6 0.5 —%* Grand Manor Realty, Inc. & KevinLaRoe Real Estate Term Loan 6% 2/20/2023 18.9 19.0 18.2 0.01%* Groundworks Unlimited LLC Specialty TradeContractors Term Loan 6% 12/17/2023 89.4 89.5 77.9 0.04%Guzman Group,LLC Rental and LeasingServices Term Loan 6% 1/30/2016 196.9 197.4 176.2 0.09%* Harrelson Materials Management,IncWaste Managementand RemediationServices Term Loan 6% 6/24/2021 464.5 465.7 133.7 0.07%* Hybrid Racing LLC. TransportationEquipmentManufacturing Term Loan Prime plus2.75% 5/15/2023 100.1 100.3 44.5 0.02%* Integrity Sports Group, LLC Performing Arts,Spectator Sports, andRelated Industries Term Loan 6% 3/6/2018 14.7 14.7 12.6 0.01%Island Nautical Enterprises, Inc.(OC) and Ingwall Holdings, LLC(EPC) MiscellaneousManufacturing Term Loan Prime plus2.75% 8/14/2038 325.2 326.1 282.0 0.14%* J Olson Enterprises LLC and OlsonTrucking Direct, Inc.Truck Transportation Term Loan 6% 6/28/2025 658.9 660.5 262.5 0.13%* Jenny's Wunderland, Inc. Social Assistance Term Loan 6% 6/29/2036 149.7 150.1 73.6 0.04%* Krishna of Orangeburg, Inc. Accommodation Term Loan 6% 2/20/2032 10.3 10.3 — —%* Lamson and GoodnowManufacturing Co and Lamson andGoodnow LLC Fabricated MetalProductManufacturing Term Loan Prime plus2.75% 12/28/2037 28.2 28.2 — —%* Las Torres Development LLC dbaHouston Event Centers Real Estate Term Loan 6% 8/27/2028 51.0 51.0 — —%* LJ Parker, LLC Administrative andSupport Services Term Loan 7% 9/8/2014 8.9 8.9 1.7 —%* Lucil Chhor dba Baja Fresh #159 Food Services andDrinking Places Term Loan 6% 12/28/2022 30.0 30.0 15.6 0.01%* Milliken and Milliken, Inc. dbaMilliken Wholesale Distribution MerchantWholesalers, DurableGoods Term Loan 6% 6/10/2036 152.8 152.9 116.3 0.06%* Mojo Brands Media, LLC Broadcasting (exceptInternet) Term Loan 6% 8/28/2023 731.9 733.7 421.1 0.21%* Morris Glass and Construction Specialty TradeContractors Term Loan 6% 3/7/2021 44.8 44.8 0.8 —%* Our Two Daughters L.L.C. dbaWashington's Restaurant Food Services andDrinking Places Term Loan 6% 6/18/2026 169.8 170.3 12.7 0.01%F-127See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssets* Parth Dev, Ltd dba Amerihost InnHotel-Kenton Accommodation Term Loan 5.25% 10/3/2028 38.3 38.3 20.4 0.01%* Professional Systems, LLC andProfessional Cleaning Administrative andSupport Services Term Loan 6% 7/30/2020 132.0 132.1 54.5 0.03%Pure Water Innovations, LLC Ambulatory HealthCare Services Term Loan 6% 9/6/2016 0.2 0.2 0.2 —%Robin C. & Charles E. Taylor &Brigantine Aquatic Center LLC Amusement,Gambling, andRecreation IndustriesTerm Loan 6% 9/14/2023 16.4 16.4 13.6 0.01%* Sheikh M Tariq dba SelbyvilleFoodrite Gasoline Stations Term Loan 6% 3/13/2023 21.2 21.2 — —%Shivsakti, LLC dba Knights Inn Accommodation Term Loan Prime plus2.75% 12/20/2032 74.5 74.7 73.1 0.04%* Signs of Fortune, LLC dbaFastSigns MiscellaneousManufacturing Term Loan Prime plus2.5% 4/3/2023 321.0 321.8 83.3 0.04%* STK Ventures Inc dba JP DockService & Supply Specialty TradeContractors Term Loan 6% 5/9/2037 34.1 34.1 32.7 0.02%Stokes Floor Covering Company Inc.and Robert E. Rainey, Jr. Furniture and HomeFurnishings StoresTerm Loan 6% 12/29/2035 111.6 111.8 88.1 0.04%* Stormwise South Florida dbaStormwise Shutters Specialty TradeContractors Term Loan 6% 11/7/2036 406.6 407.6 353.6 0.17%* Stormwise South Florida dbaStormwise Shutters Specialty TradeContractors Term Loan 6% 11/7/2036 201.1 201.6 — —%* Summit Treatment Services Inc Social Assistance Term Loan Prime plus2.75% 3/11/2025 21.8 21.8 — —%* Summit Treatment Services, Inc.dba Summit Treatment Services Social AssistanceTerm Loan Prime plus2.75% 11/30/2037 129.3 129.6 112.8 0.06%* Sunmar, Inc. dba Creative Cooking Food Services andDrinking Places Term Loan Prime plus2.75% 8/19/2035 47.1 47.2 43.3 0.02%* Tequila Beaches, LLC dba FrescoRestaurant Food Services andDrinking Places Term Loan 6% 9/16/2021 15.8 15.8 12.0 0.01%The Alba Financial Group, Inc. Securities,CommodityContracts, and OtherFinancial Investmentsand RelatedActivities Term Loan 6% 1/10/2019 6.5 6.5 1.6 —%The Lucky Coyote, LLC MiscellaneousManufacturing Term Loan 6% 5/8/2017 10.3 10.3 4.7 —%* Top Class, Inc. Personal and LaundryServices Term Loan 6% 6/28/2016 1.3 1.3 0.1 —%United Woodworking, Inc Wood ProductManufacturing Term Loan 6% 12/20/2022 12.5 12.5 10.5 0.01%* Whirlwind Car Wash, Inc. Repair andMaintenance Term Loan Prime plus2% 8/26/2024 4.9 4.9 3.8 —%* Winter Ventures Inc and 214 NFranklin LLC Nonstore Retailers Term Loan Prime plus2.75% 4/29/2024 56.5 56.6 28.7 0.01%F-128See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssets* Winter Ventures Inc dbaQualitybargainbooks andQualitybargainmall Nonstore Retailers Term Loan Prime plus2.75% 12/23/2024 149.1 149.3 130.7 0.06%* Winter Ventures Inc dbaQualitybargainbooks andQualitybargainmall Nonstore Retailers Term Loan Prime plus2.75% 4/3/2029 134.4 134.5 29.4 0.01%* B&B Fitness and Barbell, Inc. dbaElevations Health Club Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 6/22/2035 217.8 218.1 200.0 0.10%* Hamer Road Auto Salvage, LLC andScott T. Cook and Nikki J. Cook Motor Vehicle andParts Dealers Term Loan Prime plus2.75% 8/8/2039 185.7 186.2 178.3 0.09%Capstone Pediatrics PLLC andCapstone Healthcare Consulting LLC Ambulatory HealthCare Services Term Loan Prime plus2.75% 5/15/2025 689.8 691.5 662.2 0.32%* Karykion, Corporation dba KarykionCorporation Professional,Scientific, andTechnical Services Term Loan Prime plus2.75% 6/28/2022 144.4 144.8 132.8 0.07%* David M. Goens dba Superior AutoPaint & Body, Inc. Repair andMaintenance Term Loan Prime plus2.75% 8/26/2024 15.7 15.7 14.4 0.01%* TechPlayZone, Inc. Social Assistance Term Loan Prime plus2.75% 1/27/2016 0.1 0.1 — —%Total Non-Performing SBAUnguaranteed Investments $10,748.0 $10,771.6 $6,197.2 3.04% Total SBA UnguaranteedInvestments $192,266.3 $166,752.0 $158,354.9 77.64% Performing SBA GuaranteedInvestments (4) Jay Kevin Gremillion dba Dino SmilesChildren's Cosmetic Dentistry Ambulatory HealthCare Services Term Loan Prime plus2.75% 12/18/2025 292.0 43.9 48.5 0.02%My Jewels, LLC dba The UPS Store#6712 Administrative andSupport Services Term Loan Prime plus2.75% 12/7/2025 225.0 97.2 107.4 0.05%Abbondanza Market LLC dba HamptonFalls Village Market Food and BeverageStores Term Loan Prime plus2.75% 12/18/2025 295.0 34.9 38.7 0.02%D&G Capital LLC dba Miami Grill 277 Food Services andDrinking Places Term Loan Prime plus2.75% 12/16/2025 417.6 151.6 167.6 0.08%Sambella Holdings, LLC and StrikeZone Entertainment Center LLC Amusement,Gambling, andRecreation Industries Term Loan Prime plus2.75% 11/23/2040 4,758.0 1,638.3 1,806.2 0.89%401 JJS, Corp and G. Randazzo'sTrattoria Corporation Food Services andDrinking Places Term Loan Prime plus2.75% 12/1/2040 211.0 102.9 115.4 0.06%Total SBA Guaranteed PerformingInvestments $6,198.6 $2,068.8 $2,283.8 1.12% Total SBA Unguaranteed andGuaranteed Investments $198,464.9 $168,820.8 $160,638.7 78.76% Controlled Investments (5) F-129See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsAdvanced Cyber Security Systems, LLC (6), (15) Dataprocessing,hosting andrelatedservices. 50%MembershipInterest —% — — — — —% Term Loan 3% December2014 1,120.0 381.0 — —%*Automated Merchant Services, Inc. (7), (15) Dataprocessing,hosting andrelatedservices. 100%CommonStock —% — — — — —%CDS Business Services, Inc. (8) (15) Securities,CommodityContracts, andOtherFinancialInvestmentsand RelatedActivities 100%CommonStock —% — — 4,428.0 925.0 0.45% Line of Credit PrimePlus2.5% August2018 2,870.0 2,870.0 2,870.0 1.41%CrystalTech Web Hosting, Inc. (11) Dataprocessing,hosting andrelatedservices. 100%CommonStock —% — — 8,764.0 21,413.9 10.50%Exponential Business Development Co. Inc. (15) Securities,CommodityContracts, andOtherFinancialInvestmentsand RelatedActivities 100%CommonStock —% — — — — —%*Fortress Data Management, LLC (15) Dataprocessing,hosting andrelatedservices. 100%MembershipInterest —% — — — — —%Newtek Insurance Agency, LLC (12) (15) InsuranceCarriers andRelatedActivities 100%MembershipInterests —% — — — 2,500.0 1.23%PMTWorks Payroll, LLC (9) Dataprocessing,hosting andrelatedservices. 90%MembershipInterests —% — — 700.1 1,020.0 0.50% Term Loan 10%-12% VariousmaturitiesthroughSeptember2016 935.0 935.0 — —%Secure CyberGateway Services, LLC (10), (15) Dataprocessing,hosting andrelatedservices. 66.7%MembershipInterests —% — — — — —% Term Loan 7% December2016 2,400.0 1,200.0 1,196.4 0.59%Small Business Lending, Inc. (13) (15) Securities,CommodityContracts, andOtherFinancialInvestmentsand RelatedActivities 100%CommonStock —% — — — 5,500.0 2.70%*Summit Systems and Designs, LLC (14) (15) Dataprocessing,hosting andrelatedservices. 100%MembershipInterest —% — — — — —%DataPremier Payments LLC (11) processing,hosting andrelatedservices. 100%MembershipInterest —% — — 16,503.0 16,503.0 8.09%Universal Processing Services of Wisconsin, LLC (11) (15) Dataprocessing,hosting andrelatedservices. 100%MembershipInterest —% — — — 52,448.1 25.72%F-130See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2015 (In Thousands) Portfolio Company Industry Type ofInvestment InterestRate (2) Maturity Principal Cost Fair Value % of NetAssetsTotal Controlled Investments $7,325.0 $35,781.1 $104,376.4 51.18% Non-control/Non-affiliateInvestments Titanium Asset Management LLC Administrative andSupport Services Term Loan 3% July 2017 $2,200.0 $1,847.4 $1,823.8 0.89% Warrants —% — — — — —% $2,200.0 $1,847.4 $1,823.8 0.89% Investments in Money Market Funds $— $35.0 $35.0 0.02% Total Investments $207,989.9 $206,484.3 $266,873.9 130.85%* Denotes non-income producing security.(1) Newtek values each unguaranteed portion of SBA 7(a) performing loans (“Loan”) using a discounted cash flow analysis which projects future cash flows andincorporates projections for Loan pre-payments and Loan defaults using historical portfolio data. The data predicts future prepayment and default probability oncurves which are based on Loan age. The recovery assumption for each Loan is specific to the discounted valuation of the collateral supporting that Loan. EachLoan’s cash flow is discounted at a rate which approximates a market yield. The Loans were originated under the SBA 7(a) program and conform to theunderwriting guidelines in effect at their time of origination. Newtek has been awarded Preferred Lender Program (“PLP”) status from the SBA. The portions ofthese Loans are not guaranteed by the SBA. Individual loan participations can be sold to institutions which have been granted an SBA 750 license. Loans can alsobe sold as a pool of loans in a security form to qualified investors.(2) Prime Rate is equal to 3.25% as of December 31, 2015.(3) Newtek values non-performing SBA 7(a) loans using a discounted cash flow analysis of the underlying collateral which supports the loan. Net recovery ofcollateral, (fair value less cost to liquidate) is applied to the discounted cash flow analysis based upon a time to liquidate estimate. Modified loans are valued basedupon current payment streams and are re-amortized at the end of the modification period.(4) Newtek values guaranteed performing SBA 7(a) loans using the secondary SBA 7(a) market as a reference point. Newtek routinely sells performing SBA 7(a)loans into this secondary market. Guaranteed portions of SBA 7(a) loans partially funded as of the valuation date are valued using level two inputs as disclosed inNote 6.(5) Controlled Investments are disclosed above as equity investments (except as otherwise noted) in those companies that are “Controlled Investments” of theCompany as defined in the Investment Company Act of 1940. A company is deemed to be a “Controlled Investment” of Newtek Business Services Corp. ifNewtek Business Services Corp. or its subsidiaries owns more than 25% of the voting securities of such company. See Note 5 in the accompanying notes to theconsolidated financial statements for transactions during the year ended December 31, 2015 with affiliates the Company is deemed to control.(6) 50% owned by Wilshire Holdings II, Inc. (a subsidiary of Newtek Business Services Corp.), 50% owned by non-affiliate. The term loan is past its originalmaturity date and currently in default. As such, the fair value of the investment is zero.(7) 96.11% owned by Wilshire Partners, LLC (a subsidiary of Newtek Business Services Corp.), 3.89% owned by Newtek Business Services Corp.(8) 28.20% owned by Wilshire New York Partners IV, LLC (a subsidiary of Newtek Business Services Corp.), 25.89% owned by Wilshire New York Partners V,LLC (a subsidiary of Newtek Business Services Corp.) and 45.91% owned by Newtek Business Services Corp.(9) 25% owned by Wilshire New York Partners V, LLC (a subsidiary of Newtek Business Services Corp.), 65% owned by Wilshire Holdings II, Inc. (a subsidiaryof Newtek Business Services Corp.), and 10% owned by non-affiliate.(10) 66.7% owned by Wilshire Holdings II, Inc. (a subsidiary of Newtek Business Services Corp.), 33.3% owned by non-affiliate.F-131See accompanying notes to these consolidated financial statementsTable of Contents(11) 100% owned by Newtek Business Services Holdco1., Inc. (a subsidiary of Newtek Business Services Corp.).(12) 100% owned by Wilshire Holdings II, Inc. (a subsidiary of Newtek Business Services Corp.).(13) 100% owned by Wilshire Holdings I, Inc. (a subsidiary of Newtek Business Services Corp.).(14) 100% owned by The Whitestone Group, LLC (a subsidiary of Wilshire Holdings I, Inc. and Wilshire Holdings II, Inc., both subsidiaries of Newtek BusinessServices Corp.).(15) Zero cost basis is reflected as the portfolio company was organized by the Company and incurred internal legal costs to organize the entity and immaterialexternal filing fees which were expensed when incurred.(16) All of the Company's investments are in entities which are organized under the Laws of the United States and have a principal place of business in the UnitedStates.(17) Under the Investment Company Act of 1940, as amended, the Company may not acquire any non-qualifying assets unless, at the time the acquisition is made,qualifying assets represent at least 70% of the Company’s total assets. At December 31, 2015, 5.3% of total assets are non-qualifying assets.As of December 31, 2015, the federal tax cost of investments was $200,004,000 resulting in estimated gross unrealized gains and losses of $81,538,000 and$14,669,000, respectively.F-132See accompanying notes to these consolidated financial statementsTable of ContentsNEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION:On November 12, 2014, Newtek Business Services, Inc. merged with and into Newtek Business Services Corp. (“NBS”), a newly-formed Maryland corporation,for the purpose of reincorporating in Maryland (the “Merger”), and thereafter filed an election to be regulated as a business development company (“BDC”) underthe Investment Company Act of 1940, as amended (“1940 Act”). This transaction is referred to as the “Conversion” or “BDC Conversion”. All subsidiaries andcontrolled portfolio companies became the property of Newtek Business Services Corp. as part of the Merger. Except as otherwise noted, the terms “we,” “us,”“our,” “Company” and “Newtek” refer to Newtek Business Services, Inc. prior to the Conversion and its successor, Newtek Business Services Corp. following theConversion.Description of Business and Basis of Presentation Prior to BDC ConversionPrior to the Conversion, Newtek Business Services, Inc . was a holding company for several wholly- and majority-owned subsidiaries, which included twelvecertified capital companies which are referred to as Capcos, and several portfolio companies in which the Capcos own non-controlling or minority interests. TheCompany provided a “one-stop-shop” for business services to the small- and medium-sized business market and uses state of the art web-based proprietarytechnology to be a low cost acquirer and provider of products and services. The Company partners with companies, credit unions, and associations to offer itsservices.Prior to the BDC Conversion, the Company’s principal business segments were:Electronic Payment Processing: Marketing third party credit card processing and check approval services to the small and medium-sized business market underthe name of Newtek Merchant Solutions (“NMS” or “UPSW”).Managed Technology Solutions: CrystalTech Web Hosting, Inc., d/b/a Newtek Technology Services (“NTS”), offers shared and dedicated web hosting, datastorage and backup services, cloud computing plans and related services to the small and medium-sized business market.Small Business Finance: Comprised of Small Business Lending, Inc., (“SBL”) a lender service provider for third-parties that primarily services governmentguaranteed U.S. Small Business Administration (“SBA”) loans and non-SBA loans; Newtek Small Business Finance, LLC (“NSBF”), a nationally licensed, SBAlender that originates, sells and services loans to qualifying small businesses, which are partially guaranteed by the SBA, and CDS Business Services, Inc. d/b/aNewtek Business Credit Solutions (“NBC”) which provides receivable financing and management services.All Other: Businesses formed from investments made through Capco programs and others which could not be aggregated with other operating segments,including insurance and payroll processing.Corporate Activities: Corporate implements business strategy, directs marketing, provides technology oversight and guidance, coordinates and integratesactivities of the segments, contracts with alliance partners, acquires customer opportunities, and owns our proprietary NewTracker® referral system. This segmentincludes revenue and expenses not allocated to other segments, including interest income, Capco management fee income and corporate operations expenses.Capco: Twelve certified capital companies which invest in small and medium-sized businesses. They generate non-cash income from tax credits and non-cashinterest expense and insurance expenses in addition to cash management fees.The consolidated financial statements of the Company and its subsidiaries and consolidated entities have been prepared in accordance with accounting principlesgenerally accepted in the United States of America (“GAAP”) and include all wholly- and majority-owned subsidiaries, and several portfolio companies in whichthe Capcos own non-controlling interest, or those variable interest entities of which Newtek is considered to be the primary beneficiary. All intercompany balancesand transactions have been eliminated in consolidation. Non-controlling interests are reported below net income (loss) under the heading “Net loss attributable tonon-controlling interests” in the consolidated statements of operations.F-133Table of ContentsNon-controlling interestsNon-controlling interests in results of operations of consolidated variable interest entities and majority-owned subsidiaries represents the non-controlling members’share of the earnings or loss of the consolidated variable interest entities and majority-owned subsidiaries. Description of Business and Basis of Presentation After BDC ConversionNewtek Business Services Corp. (the “Company” or “Newtek”) is a Maryland corporation which was formed in August 2013 and is an internally managed, closedend, non-diversified investment company. The Company's investment strategy is to maximize the investment portfolio's return by generating current income fromthe debt investments the Company makes and generate dividend income from equity investments in controlled portfolio companies. The Company has formed certain taxable subsidiaries (the “Taxable Subsidiaries”), which are taxed as corporations for federal income tax purposes. TheseTaxable Subsidiaries allow the Company to hold equity securities of portfolio companies organized as pass-through entities while continuing to satisfy therequirements of a Regulated Investment Company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”).The following wholly-owned subsidiaries are consolidated in the financial statements of the Company:•Newtek Small Business Finance, LLC•Newtek Asset Backed Securities, LLC•The Whitestone Group, LLC•Wilshire Colorado Partners, LLC•Wilshire DC Partners, LLC•Wilshire Holdings I, Inc.•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 New York Partners IV, LLC•Wilshire New York Partners V, LLC•Wilshire Partners, LLC•CCC Real Estate Holdings, LLC•Banc-Serv Acquisition Inc.•Exponential Business Development Co., Inc.•Newtek LSP Holdco, LLC•Newtek Business Services Holdco 1, Inc.F-134Table of ContentsThe consolidated financial statements of the Company have been prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Kand Article 6 or 10 of Regulation S-X. In the opinion of management, the consolidated financial statements reflect all adjustments and reclassifications that arenecessary for the fair presentation of financial results as of and for the periods presented. All intercompany balances and transactions have been eliminated. Certainprior period amounts have been reclassified to conform to the current period presentation.Except as otherwise noted, all financial information included in the tables in the following footnotes is stated in thousands, except per share data.NOTE 2—SIGNIFICANT ACCOUNTING POLICIES:Election to become a Business Development CompanyThe results of operations for 2014 are divided into two periods. The period from January 1, 2014 through November 11, 2014, reflects the Company’s results priorto operating as a BDC under the 1940 Act. The period from November 12, 2014 through December 31, 2014, reflects the Company’s results as a BDC under the1940 Act. Accounting principles used in the preparation of the consolidated financial statements beginning November 12, 2014 are different than those of priorperiods and, therefore, the financial position and results of operations of these periods are not directly comparable. The primary differences in accountingprinciples relate to the carrying value of debt and equity investments. Additionally, some of the Company's previously consolidated subsidiaries are now equityinvestments, or controlled portfolio companies, on the consolidated statements of assets and liabilities and carried at fair value. The following table reflects thecumulative effect of the BDC Conversion on November 11, 2014:Cumulative Effect of Business Development Company Election on Net AssetsDeconsolidation of subsidiaries$22,822Effect of recording debt investments at fair value(374)Effect of recording servicing assets at fair value960Effect of recording controlled investments at fair value36,118Reversal of goodwill(1,826)Other(397)Total cumulative effect of BDC election$57,303Fair ValueThe Company applies fair value accounting to certain of its financial instruments in accordance with Accounting Standards Codification (“ASC”) Topic 820— Fair Value Measurement (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures forfair value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority ofthe valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant whoholds the financial instrument rather than an entity-specific measure. Therefore, when market assumptions are not readily available, the Company’s ownassumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date. The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type ofproduct, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To theextent that the valuation is based on models or inputs that are less observable or unobservable in the market the determination of fair value requires more judgment.Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3. Any changes to the valuation methodology are reviewed by management and the Company’s Board to confirm that the changes are appropriate. As marketschange, new products develop and the pricing for products becomes more or less transparent, the Company will continue to refine its valuation methodologies. Seefurther description of fair value methodology in Note 3.F-135Table of ContentsUse of EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reportedamounts of revenue and expense during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until theunderlying transactions are complete. Actual results could differ from those estimates.ConsolidationAs provided under Regulation S-X and ASC Topic 946, the Company will generally not consolidate its investment in a company other than an investmentcompany subsidiary or a controlled operating company whose business consists of providing services to the Company. As of July 1, 2016, the Company determined that Exponential Business Development Co., Inc. (“Exponential”), previously a controlled portfolio company, met thecriteria for consolidation under ASC Topic 946. This determination was based on Exponential's purchase of membership interests in two controlled portfoliocompanies during the year ended December 31, 2016 .Assets related to transactions that do not meet ASC Topic 860 — Transfers and Servicing (“ASC Topic 860”) requirements for accounting sale treatment arereflected in the Company’s consolidated statements of assets and liabilities as investments. Those assets are owned by the securitization trusts, and are included inthe Company’s consolidated financial statements. The creditors of the special purpose entities have received security interests in such assets and such assets are notintended to be available to the creditors of the Company.Distributions Dividends and distributions to the Company's common shareholders are recorded on the declaration date. The timing and amount to be paid out as a dividend ordistribution is determined by the Company's Board each quarter and is generally based upon the taxable earnings estimated by management.Share Repurchase PlanOn November 21, 2016 the Company announced that its Board approved a new share repurchase program under which the Company may repurchase up to200,000 of the Company’s outstanding common shares on the open market. Unless extended or terminated by the Board, the Company expects the termination datefor this new repurchase program will be on May 21, 2017.On May 11, 2016, the Company announced that its Board approved a new share repurchase program under which the Company may repurchase up to 150,000 ofthe Company’s outstanding common shares on the open market. This program terminated on November 11, 2016.The Company had a program which allowed it to repurchase up to 150,000 of the Company’s outstanding common shares on the open market. Under the program,purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws andregulations. During the year ended December 31, 2016 , the Company repurchased and retired 70,000 common shares in open market transactions forapproximately $866,000. This program terminated on June 3, 2016.Purchase dateNumber of SharesPurchased Price per Share TotalMarch 10, 201610 $12.34 $123March 18, 201620 12.45 249March 18, 201630 12.48 375March 23, 201610 11.88 119Total70 $866F-136Table of ContentsNote Repurchase PlanThe Company has a program which allows the Company to repurchase up to 10%, or $832,400 in aggregate principal amount, of its 7.50% Notes due 2022 and upto 10%, or $4,025,000 in aggregate principal amount, of its 7.00% Notes due 2021 through open market purchases, including block purchases, in such manner aswill comply with the provisions of the 1940 Act and the Exchange Act. Unless extended or terminated by the Board, the Company expects the termination date forthe repurchase plan will be on May 21, 2017. The Company did not make any repurchases under this program during the year ended December 31, 2016 .Investment IncomeInterest on debt investments is accrued and included in income based on contractual rates applied to principal amounts outstanding. Interest income is determinedusing a method that results in a level rate of return on principal amounts outstanding. When a loan becomes 90 days or more past due, or if we otherwise do notexpect to receive interest and principal repayments, the loan is placed on non-accrual status and the recognition of interest income is discontinued. Interestpayments received on loans that are on non-accrual status are treated as reductions of principal until the principal is repaid. Dividend income is recognized on an accrual basis for preferred equity securities to the extent that such amounts are expected to be collected or realized. Indetermining the amount of dividend income to recognize, if any, from cash distributions on common equity securities, we will assess many factors including aportfolio company’s cumulative undistributed income and operating cash flow. Cash distributions from common equity securities received in excess of suchundistributed amounts are recorded first as a reduction of our investment and then as a realized gain on investment. We receive servicing income related to the guaranteed portions of SBA loan investments which we sell into the secondary market. These recurring fees are earneddaily and recorded when earned. Servicing income is earned for the full term of the loan or until the loan is repaid. We receive a variety of fees from borrowers in the ordinary course of conducting our business, including packaging, legal, late payment and prepayment fees. Allother income is recorded when earned. Other income is generally non-recurring in nature and earned as “one time” fees in connection with the origination of newdebt investments with non-affiliates. For the year ended December 31, 2015 , other income includes $99,000 of income related to the sale of an intangible asset to acontrolled portfolio company. Investment transactions are accounted for on a trade-date basis. Realized gains or losses on investments are measured by the difference between the net proceedsfrom the disposition and the cost basis of investment, without regard to unrealized gains or losses previously recognized. The Company reports current periodchanges in the fair value of investments as a component of the net change in unrealized appreciation (depreciation) on investments in the consolidated statementsof operations.Stock – Based Compensation The Company accounts for its equity-based compensation plan using the fair value method, as prescribed by ASC Topic 718, Stock Compensation. Accordingly,for restricted stock awards, the Company measures the grant date fair value based upon the market price of the Company’s common stock on the date of the grantand amortizes this fair value to compensation expense ratably over the requisite service period or vesting term.Recently Adopted Accounting Standards In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-03 “Simplifying the Presentation of Debt Issuance Costs.” This updaterequires that debt issuance costs be presented in the statement of assets and liabilities as a direct deduction from the debt liability. The Company adopted thisstandard with respect to its Notes payable - Securitization Trusts, Notes due 2022 and Notes due 2021.New Accounting Standards In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues TaskForce),” which require that the statement of cash flow explain the change during the period in the total of cash, cash equivalents, and amounts generally describedas restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash andcash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU isF-137Table of Contentseffective for annual reporting periods beginning after December 15, 2017, and interim periods within those periods. Early adoption is permitted. The Company iscurrently evaluating the impact this ASU will have on its consolidated financial statements and disclosures.In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” which is intended to simplify several aspects ofthe accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, andclassification on the statement of cash flows. The ASU is effective for annual reporting periods beginning after December 15, 2016, and interim periods withinthose periods. Early application is permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements anddisclosures. In February 2016, the FASB issued ASU 2016-02, “Leases”, which amends various aspects of existing accounting guidance for leases, including the recognition ofa right of use asset and a lease liability for leases with a duration of greater than one year. The ASU is effective for annual reporting periods beginning afterDecember 15, 2018, and interim periods within those periods. Early adoption is permitted. The Company has not completed its review of the new guidance;however, the Company anticipates that upon adoption of the standard it will recognize additional assets and corresponding liabilities related to leases on itsconsolidated statements of assets and liabilities. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets andFinancial Liabilities”, which, among other things, requires an entity to present separately in other comprehensive income the portion of the total change in the fairvalue of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance withthe fair value option for financial instruments. Additionally, the ASU changes the disclosure requirements for financial instruments. This ASU is effective forannual reporting periods beginning after December 15, 2017, and interim periods within those periods, and early adoption is permitted for certain provisions. TheCompany is currently evaluating the impact this ASU will have on its consolidated financial statements and disclosures.Revenue Recognition prior to BDC ConversionPrior to the BDC Conversion, the Company operated in a number of different segments. Revenues were recognized as services were rendered and are summarizedas follows:Electronic payment processing revenue: Electronic payment processing and fee income was derived from the electronic processing of credit and debit cardtransactions that are authorized and captured through third-party networks. Typically, merchants are charged for these processing services on a percentage of thedollar amount of each transaction plus a flat fee per transaction. Certain merchant customers are charged miscellaneous fees, including fees for handling charge-backs or returns, monthly minimum fees, statement fees and fees for other miscellaneous services. Revenues derived from the electronic processing of MasterCard® and Visa ® sourced credit and debit card transactions are reported gross of amounts paid to sponsor banks.Web hosting revenue: Managed technology solutions revenue was primarily derived from monthly recurring service fees for the use of its web hosting, webdesign and software support services. Customer set-up fees are billed upon service initiation and are recognized as revenue over the estimated customerrelationship period of 2.5 years . Payment for web hosting and related services, excluding cloud plans, is generally received one month to one year in advance.Deferred revenues represent customer payments for web hosting and related services in advance of the reporting period date. Revenue for cloud related services isbased on actual consumption used by a cloud customer.Income from tax credits: Following an application process, a state will notify a company that it has been certified as a Capco. The state or jurisdiction thenallocates an aggregate dollar amount of tax credits to the Capco. However, such amount is neither recognized as income nor otherwise recorded in the financialstatements since it has yet to be earned by the Capco. The Capco is entitled to earn tax credits upon satisfying defined investment percentage thresholds withinspecified time requirements. Newtek has Capcos operating in five states and the District of Columbia. Each statute requires that the Capco invest a thresholdpercentage of “certified capital” (the funds provided by the insurance company investors) in businesses defined as qualified within the time frames specified. Asthe Capco meets these requirements, it avoids grounds under the statute for its disqualification for continued participation in the Capco program. Such adisqualification, or “decertification” as a Capco results in a permanent recapture of all or a portion of the allocated tax credits. The proportion of the possiblerecapture is reduced over time as the Capco remains in general compliance with the program rules and meets the progressively increasing investment benchmarks.As the Capco progresses in its investments in Qualified Businesses and, accordingly, places anF-138Table of Contentsincreasing proportion of the tax credits beyond recapture, it earns an amount equal to the non-recapturable tax credits and records such amount as income, with acorresponding asset called “credits in lieu of cash” in the balance sheet.The amount earned and recorded as income is determined by multiplying the total amount of tax credits allocated to the Capco by the percentage of tax creditsimmune from recapture (the earned income percentage) at that point. To the extent that the investment requirements are met ahead of schedule, and the percentageof non-recapturable tax credits is accelerated, the present value of the tax credit earned is recognized currently and the asset, credits in lieu of cash, is accreted up tothe amount of tax credits deliverable to the certified investors. The obligation to deliver tax credits to the certified investors is recorded as notes payable in creditsin lieu of cash. On the date the tax credits are utilizable by the certified investors, the Capco decreases credits in lieu of cash with a corresponding decrease to notespayable in credits in lieu of cash.Sales and Servicing of SBA Loans: NSBF originates loans to customers under the SBA 7(a) program that generally provides for SBA guarantees of 75% to 90%of each loan, subject to a maximum guarantee amount. This guaranteed portion is generally sold to a third party via an SBA regulated secondary market transactionutilizing SBA Form 1086 for a price equal to the guaranteed loan amount plus a premium. NSBF recognizes premium on loan sales as equal to the cash premiumplus the fair value of the initial servicing assets. Revenue is recognized on the trade date of the sale of the guaranteed portion.Upon recognition of each loan sale, the Company retains servicing responsibilities and receives servicing fees of a minimum of 1% of the guaranteed loan portionsold. The Company is required to estimate its adequate servicing compensation in the calculation of its servicing assets. The purchasers of the loans sold have norecourse to the Company for failure of customers to pay amounts contractually due.Subsequent measurements of each class of servicing assets and liabilities may use either the amortization method or the fair value measurement method. Prior tothe BDC Conversion NSBF had chosen to apply the amortization method to its servicing assets, amortizing the asset in proportion to, and over the period of, theestimated future net servicing income on the underlying sold guaranteed portion of the loans and assessing the servicing assets for impairment based on fair valueat each reporting date. In the event future prepayments are significant or impairments are incurred and future expected cash flows are inadequate to cover theunamortized servicing assets, accelerated amortization or impairment charges would be recognized. In evaluating and measuring impairment of servicing assets,NSBF stratifies its servicing assets based on year of loan and loan term which are the key risk characteristics of the underlying loan pools. The Company estimatesthe fair value of the servicing assets by calculating the present value of estimated future net servicing cash flows, using assumptions of prepayments, defaults,servicing costs and discount rates that NSBF believes market participants would use for similar assets. If NSBF determines that the impairment for a stratum istemporary, a valuation allowance is recognized through a charge to current earnings for the amount the amortized balance exceeds the current fair value. If the fairvalue of the stratum were to later increase, the valuation allowance may be reduced as a recovery. However, if NSBF determines that impairment for a stratum isother than temporary, the value of the servicing assets and any related valuation allowance is written-down. Subsequent to the BDC Conversion, servicing assetsare recorded at fair value.SBA Loan Interest and Fees: Interest income on loans is recognized as earned. A loan is placed on non-accrual status if it exceeds 90 days past due with respectto principal or interest and, in the opinion of management, interest or principal on the loan is not collectible, or at such earlier time as management determines thatthe collectability of such principal or interest is unlikely. Such loans are designated as impaired non-accrual loans. All other loans are defined as performing loans.When a loan is designated as impaired non-accrual, the accrual of interest is discontinued, and any accrued but uncollected interest income is reversed and chargedagainst current operations. While a loan is classified as impaired non-accrual and the future collectability of the recorded loan balance is doubtful, collections ofinterest and principal are generally applied as a reduction to principal outstanding.The Company passes certain expenditures it incurs to the borrower, such as force placed insurance, insufficient funds fees, or fees it assesses, such as late fees,with respect to managing the loan. These expenditures are recorded when incurred. Due to the uncertainty with respect to collection of these passed throughexpenditures or assessed fees, any funds received to reimburse the Company are recorded on a cash basis as other income.Insurance commissions: Revenues were comprised of commissions earned on premiums paid for insurance policies and are recognized at the time thecommission is earned. At that date, the earnings process has been completed and the Company can estimate the impact of policy cancellations for refunds andestablish reserves. The reserve for policy cancellations is based on historical cancellation experience adjusted by known circumstances.Other income: Other income represented revenues derived from operating units that cannot be aggregated with other business segments. In addition, other incomerepresents one time recoveries or gains on investments. Revenue is recorded when there isF-139Table of Contentsstrong evidence of an agreement, the related fees are fixed, the service or product has been delivered, and the collection of the related receivable is assured.•Receivable fees: Receivable fees were derived from the funding (purchase) of receivables from finance clients. NBC recognizes the revenue on the datethe receivables are purchased at a percentage of face value as agreed to by the client. The Company also has arrangements with certain of its clientswhereby it purchases the client’s receivables and charges a fee at a specified rate based on the amount of funds advanced against such receivables. Thefunds provided are collateralized and the income is recognized as earned.•Late fees: Late fees were derived from receivables NBC has purchased that have gone over a certain period (usually over 30 days ) without payment. Theclient or the client’s customer is charged a late fee according to the agreement with the client and NBC records the fees as income in the month in whichsuch receivable becomes past due.•Billing fees: Billing fees were derived from billing-only (non-finance) clients. These fees are recorded when earned, which occurs when the service isrendered.•Other fees: These fees included annual fees, due diligence fees, termination fees, under minimum fees, and other fees including finance charges, suppliessold to clients, NSF fees, wire fees and administration fees. These fees are charged upon funding, takeovers or liquidation of finance clients. TheCompany also receives commission revenue from various sources.Electronic Payment Processing CostsElectronic payment processing costs consisted principally of costs directly related to the processing of merchant sales volume, including interchange fees, VISA®and MasterCard® dues and assessments, bank processing fees and costs paid to third-party processing networks. Such costs are recognized at the time the merchanttransactions are processed or when the services are performed. Two of the most significant components of electronic processing expenses included interchange andassessment costs, which are set by the credit card associations. Interchange costs are passed on to the entity issuing the credit card used in the transaction andassessment costs are retained by the credit card associations. Interchange and assessment fees are billed primarily as a percent of dollar volume processed and, to alesser extent, as a per transaction fee. In addition to costs directly related to the processing of merchant sales volume, electronic payment processing costs alsoinclude residual expenses. Residual expenses represent fees paid to third-party sales referral sources. Residual expenses are paid under various formulae ascontracted. These are generally linked to revenues derived from merchants successfully referred to the Company and that begin using the Company for merchantprocessing services. Such residual expenses are recognized in the Company’s consolidated statements of operations.Cash and Cash EquivalentsThe Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Invested cash is held almostexclusively at financial institutions of high credit quality. The Company invests cash not held in interest free checking accounts or bank money market accountsmainly in U.S. Treasury only money market instruments or funds and other investment-grade securities. As of December 31, 2016 , cash deposits in excess ofFDIC deposit insurance and SIPC insurance totaled approximately $10,689,000 .Restricted CashRestricted cash includes amounts due on Small Business Administration (“SBA”) loan-related remittances to third parties, cash reserves established as part of avoluntary agreement with the SBA, and cash reserves associated with securitization transactions.Broker ReceivableBroker receivable represents amounts due from third parties for loans which have been traded at period end but have not yet settled.Out of Period AdjustmentDuring the three months ended December 31, 2015 , the Company identified an error in its accounting for the BDC Conversion. The error related to the accountingfor recording debt investments in controlled portfolio companies at fair value. There wereF-140Table of Contentsno errors in the fair value of any investments at December 31, 2014 however, other assets and additional paid-in capital were overstated. The Company assessedthe materiality of the error on its prior quarterly and annual financial statements, assessing materiality both quantitatively and qualitatively, in accordance with theSEC’s Staff Accounting Bulletin (“SAB”) No. 99 and SAB No. 108 and concluded that the error was not material to any of its previously issued financialstatements. The cumulative adjustment as of December 31, 2015 was a reduction of $800,000 in other assets and an $800,000 reduction of additional paid-incapital. This item was recorded as an out-of-period adjustment at December 31, 2015 . There was no impact to the consolidated statements of operations for theyear ended December 31, 2015 or the period November 12, 2014 through December 31, 2014.Allowance for SBA Loan LossesPrior to the BDC conversion, impaired loans carried on a cost-basis had an allowance for loan losses established by management through provisions for loanlosses. The amount of the allowance for loan losses was inherently subjective, as it required making material estimates which may have varied from actual results.Management’s estimates of the allowance for loan losses were particularly affected by the changing composition of the loan portfolio over the last few years aswell as other portfolio characteristics, such as industry concentrations and loan collateral. The adequacy of the allowance for loan losses was reviewed bymanagement on a monthly basis at a minimum, and as adjustments became necessary, were reflected in provision for loan losses during the periods in which theybecame known. Considerations in this evaluation include past and anticipated loss experience, risks inherent in the current portfolio and evaluation of real estatecollateral as well as economic conditions. An allowance was established when the discounted cash flows or collateral value or observable market price of theimpaired loan was lower than the carrying value of that loan.In connection with the Company's conversion to a BDC, the allowance for loan losses associated with cost basis loans was released and recorded to the additionalpaid-in capital component of shareholders' equity as of the conversion date. Subsequent to the BDC Conversion, all SBA loans held for investment are measured atfair value.A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments ofprincipal or interest when due according to the contractual terms of the loan agreement. Other factors considered by management in determining impairmentinclude payment status and collateral value. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstancessurrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of theshortfall in relation to the principal and interest owed.The Company’s charge-off policy is based on a loan-by-loan review for which the estimated uncollectible portion of nonperforming loans is charged off against thecorresponding loan receivable and the allowance for possible loan losses or against the reduction in fair value.SBA Guaranteed LoansFor guaranteed portions funded, but not yet traded at each measurement date, management recorded SBA guaranteed loans at fair value. SBA guaranteed loans arevalued utilizing Level 2 inputs. These inputs include debt securities with quoted prices that are traded less frequently than exchange-traded instruments or havevalues determined using a pricing model with inputs that are observable in the market. The secondary market for the guaranteed portions is extremely robust withbroker dealers acting as primary dealers. NSBF sells regularly into the market and can quickly price its loans held for sale. The Company values the guaranteedportion based on observable market prices for similar assets. SBA guaranteed loans are sold with the servicing rights retained by the Company.Impairment of Long-Lived AssetsLong-lived assets, including fixed assets and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carryingvalue may not be recoverable. In reviewing for impairment, the carrying value of such assets is compared to the estimated undiscounted future cash flows expectedfrom the use of the assets and their eventual disposition. If such cash flows are not sufficient to support the asset’s recorded value, an impairment charge isrecognized to reduce the carrying value of the long-lived asset to its estimated fair value. The determination of future cash flows as well as the estimated fair valueof long-lived assets involves significant estimates on the part of management. In order to estimate the fair value of a long-lived asset, the Company may engage athird party to assist with the valuation. If there is a material change in economic conditions or other circumstances influencing the estimate of future cash flows orfair value, the Company could be required to recognize impairment charges in the future.F-141Table of ContentsSecuritization ActivitiesNSBF engages in securitization transactions involving the unguaranteed portions of its SBA 7(a) loans. Because the transfer of these assets do not meet the criteriaof a sale for accounting purposes, the transactions are treated as secured borrowings. NSBF continues to recognize the assets of the secured borrowing in SBAunguaranteed non-affiliate investments and the associated financing in Note payable - Securitization trust VIE, on the consolidated statements of assets andliabilities.Goodwill and Other Intangible AssetsGoodwill and other intangible assets deemed to have an indefinite life are not amortized and are subject to impairment tests, at least annually. Other intangibleassets with finite lives were amortized over their useful lives ranging from 18 to 66 months .The Company considers the following to be some examples of indicators that may trigger an impairment review outside its annual impairment review:(i) significant under-performance or loss of key contracts acquired in an acquisition relative to expected historical or projected future operating results;(ii) significant changes in the manner or use of the acquired assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets orchanges in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significantdecline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. In assessing the recoverability of the Company’s goodwill andintangibles, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. Theseinclude estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Company, the useful life overwhich cash flows will occur, and determination of the Company’s cost of capital. Changes in these estimates and assumptions could materially affect thedetermination of fair value and conclusions on goodwill impairment.In performing Step 1 of the impairment test the Company estimated the fair value of its reporting units based on a combination of an income approach using adiscounted cash flow analysis and market based approach based on comparable public companies. Based on this analysis, it was determined that the carrying valueof the NBC reporting unit, including goodwill exceeded its fair value requiring the Company to perform Step 2 of the goodwill impairment test to measure theamount of impairment loss, if any. In performing Step 2 of the goodwill impairment test, the Company compared the implied fair value of the NBC reporting unit'sgoodwill to the carrying value of goodwill. This test resulted in a goodwill impairment charge of $1,706,000 and a write off of goodwill. This impairment has beenreported in total expenses on the consolidated statement of operations during the period ended November 11, 2014.Income TaxesDeferred tax assets and liabilities are computed based upon the differences between the financial statement and income tax basis of assets and liabilities using theenacted tax rates in effect for the year in which those temporary differences are expected to be realized or settled. If available evidence suggests that it is morelikely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to theamount that is more likely than not to be realized.The Company’s U.S. federal and state income tax returns prior to fiscal year 2013 are generally closed, and management continually evaluates expiring statutes oflimitations, audits, proposed settlements, changes in tax law and new authoritative rulings.The Company has elected to be treated as a RIC beginning with the 2015 tax year under Subchapter M of the Internal Revenue Code of 1986, as amended and willoperate in a manner so as to qualify for the tax treatment applicable to RICs. The RIC tax return includes Newtek Business Services Corp. and NSBF, a singlemember LLC disregarded for tax purposes. None of the Company’s other subsidiaries are included in the RIC return. The Company will evaluate and record anydeferred tax assets and liabilities of the subsidiaries that are not part of the RIC. In order to qualify for tax treatment as a RIC, among other things, the Companywill be required to meet certain source of income and asset diversification requirements and timely distribute to its shareholders at least 90% of investmentcompany taxable income, as defined by the Code, for each tax year. The Company intends to make the requisite distributions to its shareholders, which willgenerally relieve the Company from U.S. federal income taxes with respect to all income distributed to its shareholders.As a result of the BDC Conversion and the Company's election of RIC status, the Company reversed the balance of its deferred tax asset as of December 31, 2014through additional paid-in capital. The deferred tax asset was attributable to previously consolidated subsidiaries of the Company that became non-consolidatedportfolio companies as part of the Conversion, or deferred tax assets related to NSBF.F-142Table of ContentsDepending on the level of taxable income earned in a tax year, the Company may choose to retain taxable income in excess of current year dividend distributions,and would distribute such taxable income in the next tax year. The Company would then pay a 4% excise tax on such income, as required. To the extent that theCompany determines that it’s estimated current year annual taxable income, determined on a calendar year basis, could exceed estimated current calendar yeardividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the years ended December 31,2016 and 2015 , no U.S. federal excise taxes were due.The Company’s Taxable Subsidiaries accrue income taxes payable based on the applicable corporate rates on the unrealized gains generated by the investmentsheld by the Taxable Subsidiaries. Such deferred tax liabilities were $5,983,000 and $857,000 at December 31, 2016 and 2015 , respectively and are recorded asdeferred tax liabilities on the consolidated statements of assets and liabilities. The change in deferred tax liabilities is included as a component of net realized andunrealized gains in the consolidated statements of operations.Accounting for Uncertainty in Income TaxesThe ultimate deductibility of positions taken or expected to be taken on tax returns is often uncertain. In order to recognize the benefits associated with a taxposition taken (i.e., generally a deduction on a corporation’s tax return), the entity must conclude that the ultimate allowability of the deduction is more likely thannot. If the ultimate allowability of the tax position exceeds 50% (i.e., it is more likely than not), the benefit associated with the position is recognized at the largestdollar amount that has more than a 50% likelihood of being realized upon ultimate settlement. Differences between tax positions taken in a tax return andrecognized will generally result in (1) an increase in income taxes currently payable or a reduction in an income tax refund receivable or (2) an increase in adeferred tax liability or a decrease in a deferred tax asset, or both (1) and (2). The Company has evaluated its tax positions, for all open tax years and in all majortax jurisdictions, and determined that there is no material impact on our Consolidated Financial Statements.SegmentsSubsequent to the BDC Conversion, the Company has determined that it has a single reporting segment and operating unit structure. The Company issues debt andmakes equity investments in portfolio companies in various industries. The Company separately evaluates the performance of each of its lending and investmentrelationships. However, because of each of these debt and equity investment relationships have similar business and economic characteristics, they have beenaggregated into a single lending and investment segment.ReclassificationsCertain prior period amounts have been reclassified to conform to the current year presentation.NOTE 3—FAIR VALUE MEASUREMENTSFair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between marketparticipants at the measurement date. In determining fair value, management uses various valuation approaches, all of which have been approved by the Company'sBoard. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes theuse of unobservable inputs by requiring that the most observable inputs be used when available. The fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and gives the lowest priority tounobservable inputs (Level 3). An asset or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation.The levels of the fair value hierarchy are as follows:F-143Table of Contents Level 1 Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivativecontracts that are traded in an active exchange market, as well as certain U.S. Treasury, other U.S. Government and agency mortgage-backed debtsecurities that are highly liquid and are actively traded in over-the-counter markets. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or otherinputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assetsand liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contractswhose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated byobservable market data. This category generally includes certain U.S. Government and agency mortgage-backed debt securities, corporate debtsecurities, derivative contracts and residential mortgage loans held-for-sale. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assetsand liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similartechniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This categorygenerally includes certain private equity investments, retained residual interests in securitizations, residential mortgage servicing rights, and highlystructured or long-term derivative contracts.In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or a liability’s categorizationwithin the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significanceof a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company assessesthe levels of assets and liabilities at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstancesthat caused the transfers. There were no transfers among Level 1, 2 and 3 of the fair value hierarchy for assets and liabilities during the years ended December 31,2016 and 2015 . The following section describes the valuation techniques used by the Company to measure different assets and liabilities at fair value and includesthe level within the fair value hierarchy in which the assets and liabilities are categorized.Level 1 investments are valued using quoted market prices. Level 2 investments are valued using market consensus prices that are corroborated by observablemarket data and quoted market prices for similar assets and liabilities. Level 3 investments are valued at fair value as determined in good faith by the Board, basedon input of management, the audit committee and independent valuation firms that have been engaged at the direction of the Board to assist in the valuation ofcertain portfolio investments without a readily available market quotation at least once during a trailing twelve-month period under a valuation policy and aconsistently applied valuation process. When determining fair value of Level 3 debt and equity investments, the Company may take into account the following factors, where relevant: the enterprisevalue of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cashflows, the markets in which the portfolio company does business, comparisons to publicly traded securities, changes in the interest rate environment and the creditmarkets generally that may affect the price at which similar investments may be made and other relevant factors. The primary methods for determining enterprisevalue include a discounted cash flow analysis and a multiple analysis whereby appropriate multiples are applied to the portfolio company’s net income before netinterest expense, income tax expense, depreciation and amortization (“EBITDA”) or revenue. The enterprise value analysis is performed to determine the value ofequity investments and to determine if debt investments are credit impaired. If debt investments are credit impaired, the Company will use the enterprise valueanalysis or a liquidation basis analysis to determine fair value. For debt investments that are not determined to be credit impaired, the Company uses a marketinterest rate yield analysis to determine fair value. In addition, for certain debt investments, the Company may base its valuation on quotes provided by an independent third party broker. Due to the inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair value of theinvestments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from thevalues that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions or otherwise are less liquid thanpublicly traded instruments. IfF-144Table of Contentsthe Company were required to liquidate a portfolio investment in a forced or liquidation sale, the Company may realize significantly less than the value at whichsuch investment had previously been recorded. The Company’s investments are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impactedby the volatility and liquidity in the markets in which the investments are traded.The following tables present fair value measurements of the Company’s assets and liabilities measured at fair value and indicates the fair value hierarchy of thevaluation techniques utilized by the Company to determine such fair values as of December 31, 2016 and 2015 : Fair Value Measurements at December 31, 2016 using: Total Level 1 Level 2 Level 3Assets Investments in money markets funds$35 $35 $— $—SBA unguaranteed non-affiliate investments211,471 — — 211,471SBA guaranteed non-affiliate investments11,512 — 11,512 —Controlled investments121,302 — — 121,302Other real estate owned (1)875 — 875 —Non-control/non-affiliate investments904 — — 904Servicing assets16,246 — — 16,246Total assets$362,345 $35 $12,387 $349,923(1) Included in Other Assets on the Consolidated Statements of Assets and LiabilitiesFor the year ended December 31, 2016 , the change in unrealized appreciation (depreciation) included in the consolidated statement of operations attributable toLevel 3 investments still held at December 31, 2016 includes $102,000 in unrealized appreciation on SBA unguaranteed non-affiliate investments, $11,337,000 inunrealized appreciation on controlled investments, $43,000 in unrealized depreciation on non-control/non-affiliate investments and $2,269,000 in unrealizeddepreciation on servicing assets. Fair Value Measurements at December 31, 2015 using: Total Level 1 Level 2 Level 3 Total Gainsand (Losses)Assets Investments in money markets funds$35 $35 $— $— $—Credits in lieu of cash860 — 860 — (7)SBA unguaranteed non-affiliate investments158,355 — — 158,355 (8,410)SBA guaranteed non-affiliate investments2,284 — 2,284 — 215Controlled investments104,376 — — 104,376 12,250Other real estate owned (1)989 — 989 — (221)Non-control/non-affiliate investments1,824 — — 1,824 (24)Servicing assets13,042 — — 13,042 (428)Total assets$281,765 $35 $4,133 $277,597 $3,375Liabilities Notes payable in credits in lieu of cash$860 $— $860 $— $(3)(1) Included in Other Assets on the Consolidated Statements of Assets and LiabilitiesThe following tables provide a summary of quantitative information about the Company’s Level 3 fair value measurements as of December 31, 2016 and 2015 . Inaddition to the techniques and inputs noted in the table below, according to our valuation policy we may also use other valuation techniques and methodologieswhen determining our fair value measurements. The tables below are not intended to be all-inclusive, but rather provide information on the significant Level 3inputs as they relate to the Company’s fair value measurements at December 31, 2016 and 2015 .F-145Table of Contents Range Fair Value as ofDecember 31, 2016 Valuation Techniques Unobservable Input WeightedAverage Minimum MaximumAssets: SBA unguaranteednon-affiliateinvestments -performing loans $202,887 Discounted cash flow Market yields 5.50% 5.50% 5.50%SBA unguaranteednon-affiliateinvestments - non-performing loans $8,584 Discounted cash flow Market yields 6.19% 6.19% 6.19%Controlled equityinvestments (A) $116,919 Market comparablecompanies EBITDA multiples (B) 6.10x 3.01x 6.99x Market comparablecompanies Revenue multiples (B) 1.21x 0.62x 3.08x Discounted cash flow Weighted average cost ofcapital (B) 12.57% 11.00% 15.30%Controlled debtinvestments $3,875 Discounted cash flow Market yields 7.05% 5.75% 10.00% $508 Liquidation value Asset value N/A N/A N/ANon-SBA debtinvestments $904 Liquidation value Asset value N/A N/A N/AServicing assets $16,246 Discounted cash flow Market yields 12.20% 12.20% 12.20%(A) In determining the fair value of the Company's controlled equity investments as of December 31, 2016 , the proportion of the market comparable companiesvaluation technique and the discounted cash flow valuation technique were 46.1% and 53.9%, respectively, on a weighted average basis.(B) The Company valued $106,609,000 of investments using an equal weighting of EBITDA and revenue multiples and $860,000 of investments using onlyrevenue multiples in the overall valuation approach which included the use of market comparable companies. The Company valued $9,450,000 of investmentsusing only discounted cash flows.F-146Table of Contents Range Fair Value as ofDecember 31, 2015 Valuation Techniques Unobservable Input WeightedAverage Minimum MaximumAssets: SBA unguaranteednon-affiliateinvestments -performing loans $152,158 Discounted cash flow Market yields 5.30% 5.30% 5.30%SBA unguaranteednon-affiliateinvestments - non-performing loans $6,197 Discounted cash flow Market yields 8.76% 8.76% 8.76%Controlled equityinvestments (A) $100,310 Market comparablecompanies EBITDA multiples (B) 6.00x 3.00x 7.00x Market comparablecompanies Revenue multiples (B) 1.08x 0.50x 3.00x Discounted cash flow Weighted average cost ofcapital (B) 12.37% 11.30% 15.60%Controlled debtinvestments $4,066 Discounted cash flow Market yields 6.26% 5.75% 7.50%Non/control/non-affiliate investments $1,824 Liquidation value Asset value N/A N/A N/AServicing assets $13,042 Discounted cash flow Market yields 12.03% 12.03% 12.03%(A) In determining the fair value of the Company's controlled investments as of December 31, 2015 , the proportion of the market comparable companies valuationtechnique and the discounted cash flow valuation technique were 47.1% and 52.9%, respectively, on a weighted average basis.(B) The Company valued $92,865,000 of investments using a 50/50 weighting of EBITDA and revenue multiples and $1,020,000 of investments using onlyrevenue multiples in the overall valuation approach which included the use of market comparable companies. The Company valued $6,425,000 of investmentsusing only discounted cash flows.The following table presents the changes in investments and servicing assets measured at fair value using Level 3 inputs for the years ended December 31, 2016and 2015 :F-147Table of Contents Year ended December 31, 2016 SBA unguaranteednon-affiliateinvestments Controlledinvestments Non-control/non-affiliateinvestments ServicingassetsFair value, beginning of period$158,355 $104,376 $1,824 $13,042Net change in unrealized appreciation (depreciation)18 11,337 (43) (2,269)Realized loss(925) — — —SBA unguaranteed non-affiliate investments funded74,239 — — —Foreclosed real estate acquired(446) — — —Funding of investments— 8,595 1,020 —Transfer from due from related parties— 435 — —Transfer of Titanium Asset Management LLC from non-control/non-affiliate toControlled Investments— 1,146 (1,146) —Purchase of loan from SBA2,057 — — —Return of investment— (535) — —Principal payments received on debt investments(21,827) (4,052) (751) —Additions to servicing assets— — — 5,473Fair value, end of period$211,471 $121,302 $904 $16,246 Year ended December 31, 2015 SBA unguaranteednon-affiliateinvestments Controlledinvestments Non-control/non-affiliateinvestments ServicingassetsFair value, beginning of period$121,477 $77,499 $— $9,483Net change in unrealized appreciation (depreciation)1,183 12,250 (24) (1,268)Realized loss(1,189) — — —SBA unguaranteed non-affiliate investments funded57,053 — — —Foreclosed real estate acquired(1,130) — — —Funding of investments— 19,573 2,200 —Purchase of loan from SBA703 — — —Return of investment— (3,746) — —Principal payments received on debt investments(19,742) (1,200) (352) —Additions to servicing assets— — — 4,827Fair value, end of period$158,355 $104,376 $1,824 $13,042NOTE 4—INVESTMENTS:Investments, all of which are with portfolio companies in the United States, consisted of the following at December 31, 2016 and 2015 :F-148Table of Contents 2016 2015 Cost Fair Value Cost Fair ValueMoney market funds $35 $35 $35 $35Non-affiliate debt investments 230,950 223,887 170,668 162,463Controlled investments Equity 35,285 116,919 30,395 100,310Debt 5,716 4,383 5,386 4,066Total investments $271,986 $345,224 $206,484 $266,874The following table shows the Company's portfolio investments by industry at December 31, 2016 and 2015 : December 31, 2016 December 31, 2015Industry Cost Fair Value Cost Fair ValueData Processing, Hosting and Related Services $29,010 $107,180 $28,506 $92,600Food Services and Drinking Establishments 21,941 21,702 15,241 14,453Amusement, Gambling, and Recreation Industries 18,486 18,995 14,372 14,632Securities, Commodity Contracts, and Other Financial Investments and Related Activities 12,909 12,649 8,057 10,031Ambulatory Health Care Services 13,068 11,976 8,858 8,214Repair and Maintenance 12,066 12,228 9,440 9,337Professional, Scientific, and Technical Services 12,240 11,582 7,378 6,856Accommodation 9,455 9,849 6,940 6,974Specialty Trade Contractors 8,311 7,595 8,492 7,718Merchant Wholesalers, Durable Goods 6,211 5,989 6,726 6,299Truck Transportation 7,469 6,938 6,142 5,699Food and Beverage Stores 5,221 5,194 4,178 4,087Heavy and Civil Engineering Construction 4,328 4,209 1,901 1,895Fabricated Metal Product Manufacturing 5,922 5,961 3,943 3,577Administrative and Support Services 6,379 5,727 4,797 4,566Social Assistance 4,903 4,905 3,955 3,845Motor Vehicle and Parts Dealers 5,059 5,051 4,289 4,249Food Manufacturing 5,596 4,873 5,386 4,630Transit and Ground Passenger Transportation 1,836 1,703 881 888Clothing and Clothing Accessories Stores 4,221 4,134 2,357 2,125Personal and Laundry Services 4,255 4,206 3,231 3,064Gasoline Stations 5,938 5,570 4,040 4,008Printing and Related Support Activities 3,547 3,183 2,521 2,506Insurance Carriers and Related Activities 1,126 3,631 1,288 3,769Other 62,454 60,159 43,530 40,817Total $271,951 $345,189 $206,449 $266,839NOTE 5—TRANSACTIONS WITH AFFILIATED COMPANIES:F-149Table of ContentsAn affiliated company is a company in which the Company has an ownership of 5% or more of its voting securities. A controlled affiliate is a company in whichthe Company owns more than 25% of its voting securities. Transactions related to our investments with controlled affiliates for the year ended December 31, 2016were as follows:Portfolio Company Fair Value atDecember 31,2015 Purchases(cost) Principalreceived (cost) Net realizedgains/(losses) Net unrealizedgains/(losses) Fair Value atDecember 31,2016 Interest andother income DividendincomeControlled Affiliates Small Business Lending, LLC $5,500 $— $— $— $(2,200) $3,300 $— $696PMTWorks Payroll, LLC 1,020 1,210 — — (185) 2,045 154 —Universal Processing Services ofWisconsin, LLC 52,448 — — — 10,552 63,000 — 6,800CrystalTech Web Hosting, Inc. 21,414 — (330) — (975) 20,109 — 990CDS Business Services, Inc. 3,795 2,420 (2,600) — (175) 3,440 143 —Titanium Asset ManagementLLC 1,824 — (1,187) — (129) 508 15 —Premier Payments LLC 16,503 — (65) — 4,562 21,000 — 1,735Newtek Insurance Agency, LLC 2,500 — — — — 2,500 — —banc-serv Partners, LLC — 5,400 (140) — 140 5,400 — 300Secure CyberGateway Services,LLC 1,196 — (900) — (296) — 48 52Total Controlled Affiliates $106,200 $9,030 $(5,222) $— $11,294 $121,302 $360 $10,573Prior to July 1, 2016, Titanium Asset Management LLC (“Titanium”) was not a controlled investment. Interest, fees, and dividends credited to income only includethe period for which Titanium was a controlled investment. Interest, fees, and dividends attributable to the investment in Titanium that were credited to incomeprior to July 1, 2016 are included in investment income from non-affiliates investments on the consolidated statements of operations.NOTE 6—SERVICING ASSETS:At December 31, 2016 and 2015 , servicing assets are measured at fair value. The Company earns servicing fees from SBA 7(a) loans it originates. Prior to theBDC Conversion, the Company also earned servicing fees from loans originated by third parties. This income is now earned by one of the Company's controlledportfolio companies. Prior to the BDC Conversion, servicing assets were amortized and not recorded at fair value.The following table summarizes the fair value and valuation assumptions related to servicing assets at December 31, 2016 and 2015 : 2016 2015Fair Value$16,246 $13,042Discount factor (1)12.20% 12.03%Cumulative prepayment rate18.50% 15.50%Average cumulative default rate20.00% 20.00%(1) Determined based on risk spreads and observable secondary market transactions.The following table summarizes servicing fee income earned for the years ended December 31, 2016 and 2015 , the period November 12, 2014 through December31, 2014 and the period January 1, 2014 through November 11, 2014:F-150Table of Contents December 31, 2016 December 31, 2015 November 12, 2014through December31, 2014 January 1, 2014 throughNovember 11, 2014Servicing fees from Newtek originated loans$6,160 $4,611 $562 $3,111Servicing fees from third party originated loans (2)— — — 6,142Total servicing fees earned$6,160 $4,611 $562 $9,253(2) For servicing functions on loans originated by third party lenders, the Company did not retain any risk on such portfolios and earned servicing fees based on amutually negotiated fee per loan.NOTE 7—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES:The following table details the components of accounts payable, accrued expenses and other liabilities at December 31, 2016 and 2015 : 2016 2015Due to participants and SBA (a)$5,512 $3,943Due to borrowers195 184Accrued payroll and related expenses2,528 2,091Deferred rent and other lease related liabilities2,641 78Loan processing, servicing and other loan related expenses1,479 1,331Other1,549 1,318Total accounts payable, accrued expenses and other liabilities$13,904 $8,945(a) Primarily represents loan related remittances received by NSBF, and due to third parties.NOTE 8—BORROWINGS:At December 31, 2016 and 2015 , the Company had borrowings comprised of the following: December 31, 2016 December 31, 2015Facility Commitments BorrowingsOutstanding Weighted AverageInterest Rate Commitments BorrowingsOutstanding Weighted AverageInterest RateCapital One line of credit - guaranteed(1) $50,000 $5,100 4.50% $50,000 $29,100 4.25%Capital One line of credit -unguaranteed (1) — — —% — — —%Notes due 2021 40,250 38,767 7.00% — — —%Notes due 2022 8,324 7,853 7.50% 8,324 7,770 7.50%Note payable - related party 38,000 1,400 7.67% 38,000 5,647 7.50%Notes payable - Securitization Trusts 120,945 118,122 3.79% 91,745 89,244 3.29%Total $257,519 $171,242 4.75% $188,069 $131,761 3.93%(1) Total combined commitments of the guaranteed and unguaranteed lines of credit are $50,000,000 at December 31, 2016 and 2015 .Outstanding borrowings under the Notes due 2022, Notes due 2021 and Notes payable - Securitization Trusts consisted of the following:F-151Table of Contents December 31, 2016 December 31, 2015 Notes Due 2022 Notes Due 2021 Notes Payable-Securitization Trusts Notes Due 2022 Notes Payable-Securitization TrustsPrincipal$8,324 $40,250 $120,945 $8,324 $91,745Unamortized debt issuance costs(471) (1,483) (2,823) (554) (2,501)Net carrying amount$7,853 $38,767 $118,122 $7,770 $89,244As of December 31, 2016 and 2015 , the carrying amount of the Company's borrowings under the Capital One lines of credit, Notes payable - related parties andNotes payable - Securitization Trusts, approximates their fair value due to their variable interest rates.The fair value of the fixed rate Notes due 2022 and Notes due 2021 is based on the closing public share price on the date of measurement. On December 31, 2016 ,the closing price of the Notes due 2022 was $26.09 per note, or $8,687,000. On December 31, 2015 , the closing price of the Notes due 2022 was $26.00 or$8,657,000. On December 31, 2016 , the closing price of the Notes due 2021 was $25.53 per note, or $41,103,000. These borrowings are not recorded at fair valueon a recurring basis.Total interest expense for the years ended December 31, 2016 and 2015 , the period November 12, 2014 through December 31, 2014 and the period January 1,2014 to November 11, 2014 was $8,440,000 , $6,479,000 , $568,000 and $7,323,000 , respectively.7.50% Notes Due 2022In September 2015, the Company and U.S. Bank, N.A. (the “Trustee”), entered into the First Supplemental Indenture (the “First Supplemental Indenture”) to theBase Indenture between the Company and the Trustee, dated September 23, 2015, relating to the Company’s issuance, offer and sale of $8,200,000 aggregateprincipal amount of 7.50% Notes due 2022 (the “2022 Notes”). In October 2015, the underwriters issued notification to exercise their over-allotment option for anadditional $124,000 in aggregate principal amount of the 2022 Notes. The sale of the 2022 Notes generated net proceeds of approximately $7,747,000.The Notes will mature on September 30, 2022 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or afterSeptember 23, 2018, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable forthe then-current quarterly interest period accrued to but not including the date fixed for redemption. The Notes bear interest at a rate of 7.50% per year payablequarterly on March 31, June 30, September 30, and December 31 of each year, commencing on December 31, 2015, and trade on the Nasdaq Global Market underthe trading symbol “NEWTZ.”The 2022 Notes will be the Company’s direct unsecured obligations and will rank: (i) pari passu with the Company’s other outstanding and future unsecuredindebtedness; (ii) senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2022 Notes; (iii) effectively subordinated toall the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security),to the extent of the value of the assets securing such indebtedness; (iv) structurally subordinated to all existing and future indebtedness and other obligations of anyof the Company’s subsidiaries.The Base Indenture, as supplemented by the First Supplemental Indenture, contains certain covenants including covenants requiring the Company to comply with(regardless of whether it is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act and tocomply with the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940Act. These covenants are subject to important limitations and exceptions that are described in the Base Indenture, as supplemented by the First SupplementalIndenture. The Base Indenture, as supplemented by the First Supplemental Indenture, also contains certain reporting requirements, including a requirement that theCompany provide financial information to the holders of the 2022 Notes and the Trustee if the Company should no longer be subject to the reporting requirementsunder the Securities Exchange Act of 1934. The Base Indenture provides for customary events of default. As of December 31, 2016 , the Company was incompliance with the terms of the Base Indenture as supplemented by the First Supplemental Indenture.At December 31, 2016 the 2022 Notes had an outstanding principal balance of $8,324,000 . For the year ended December 31, 2016 interest expense andamortization of related deferred financing costs were $624,000 and $83,000, respectively. For theF-152Table of Contentsyear ended December 31, 2015 , interest expense and amortization of related deferred financing costs were $169,000 and $22,900, respectively.7.00% Notes Due 2021In April 2016, the Company and the Trustee, entered into the Second Supplemental Indenture (the “Second Supplemental Indenture”) to the Base Indenturebetween the Company and the Trustee, relating to the Company’s issuance, offer and sale of $35,000,000 aggregate principal amount of 7.00% Notes due 2021(the “2021 Notes”). The Company granted an overallotment option of up to $5,250,000 in aggregate principal amount of the 2021 Notes. The sale of the 2021Notes generated proceeds of approximately $33,750,000, net of underwriter's fees and expenses. In May 2016, the underwriters exercised their option to purchase$5,250,000 in aggregate principal amount of 2021 Notes for an additional $5,066,000 in net proceeds. The 2021 Notes will mature on March 31, 2021 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or afterApril 22, 2017, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for thethen-current quarterly interest period accrued to but not including the date fixed for redemption. The 2021 Notes bear interest at a rate of 7.00% per year payablequarterly on March 31, June 30, September 30, and December 31 of each year, commencing on June 30, 2016, and trade on the Nasdaq Global Market under thetrading symbol “NEWTL.”The 2021 Notes will be the Company’s direct unsecured obligations and will rank: (i) pari passu with the Company’s other outstanding and future unsecuredindebtedness; (ii) senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2022 Notes; (iii) effectively subordinated toall the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security),to the extent of the value of the assets securing such indebtedness; (iv) structurally subordinated to all existing and future indebtedness and other obligations of anyof the Company’s subsidiaries.The Base Indenture, as supplemented by the Second Supplemental Indenture, contains certain covenants including covenants requiring the Company to complywith (regardless of whether it is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act and tocomply with the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940Act. These covenants are subject to important limitations and exceptions that are described in the Base Indenture, as supplemented by the Second SupplementalIndenture. The Base Indenture, as supplemented by the Second Supplemental Indenture, also contains certain reporting requirements, including a requirement thatthe Company provide financial information to the holders of the 2021 Notes and the Trustee if the Company should no longer be subject to the reportingrequirements under the Securities Exchange Act of 1934. The Base Indenture provides for customary events of default. As of December 31, 2016 , the Companywas in compliance with the terms of the Base Indenture as supplemented by the Second Supplemental Indenture.At December 31, 2016 the 2021 Notes had an outstanding principal balance of $40,250,000 . For the year ended December 31, 2016 , interest expense andamortization of related deferred financing costs were $1,941,000 and $240,000, respectively.Capital One Lines of Credit (Guaranteed and Unguaranteed)The Company’s wholly owned subsidiary, NSBF, has a $50,000,000 credit facility with Capital One. The facility provides for a 55% advance rate on the non-guaranteed portions of the SBA 7(a) loans it originates, and a 90% advance rate on the guaranteed portions of SBA 7(a) loans it originates. The interest rate on theportion of the facility, collateralized by the government guaranteed portion of SBA 7(a) loans, is set at Prime plus 1.00%, and there is a quarterly facility fee equalto 0.25% on the unused portion of the revolving credit calculated as of the end of each calendar quarter. The interest rate on the portion of the facility,collateralized by the non-guaranteed portion of SBA 7(a) loans, is set at Prime plus 1.875%, and there is a quarterly facility fee equal to 0.25% on the unusedportion of the revolving credit calculated as of the end of each calendar quarter. In June 2015, NSBF amended the existing facility to eliminate the fixed chargecoverage ratio in exchange for a debt service ratio, new EBITDA minimums, the elimination of restrictions on the ability to pay dividends to shareholders, as wellas the release of the guarantees of our former subsidiaries (now treated as portfolio companies). In addition, the amendment extended the date on which the facilitywill convert to a term loan from May 16, 2016 to May 16, 2017 and extended the maturity date of the facility to May 16, 2019. NSBF and Capital One entered intoa letter of intent to increase the facility to $75,000,000 with a reduction in the interest rates, subject to SBA approval. The facility provides for quarterly covenantsincluding a debt service ratio, EBITDA minimum requirements and a minimum net income covenant. At December 31, 2016 , the Company was in fullcompliance with all applicable loan covenants.F-153Table of ContentsAt December 31, 2016 the Capital One lines of credit had an outstanding principal balance of $5,100,000 . For the year ended December 31, 2016 , interestexpense and amortization of related deferred financing costs were $941,000 and $319,000, respectively. For the year ended December 31, 2015 , interest expenseand amortization of related deferred financing costs were $834,000 and $331,000, respectively. For the period November 12, 2014 through December 31, 2014interest expense and amortization of related deferred financing costs were $776,000 and $144,000, respectively. For the period January 1, 2014 through November11, 2014 interest expense and amortization of related deferred financing costs were $141,000 and $8,000, respectively.Notes Payable - Securitization TrustsSince 2010, NSBF has engaged in securitizations of the unguaranteed portions of its SBA 7(a) loans. In the securitization, it uses a special purpose entity (the“Trust”) which is considered a VIE. Applying the consolidation requirements for VIEs under the accounting rules in ASC Topic 860, Transfers and Servicing, andASC Topic 810, Consolidation, which became effective January 1, 2010, the Company determined that as the primary beneficiary of the securitization vehicle,based on its power to direct activities through its role as servicer for the Trust and its obligation to absorb losses and right to receive benefits, it needed toconsolidate the Trusts. NSBF therefore consolidated the entity using the carrying amounts of the Trust’s assets and liabilities. NSBF reflects the assets in SBAUnguaranteed Non-Affiliate Investments and reflects the associated financing in Notes Payable - Securitization Trusts.In December 2014, NSBF completed a securitization which resulted in the transfer of $36,000,000 of unguaranteed portions of SBA loans. The Trust in turnissued securitization notes for the par amount of $31,700,000 against the assets in a private placement. The notes received an “A” rating by S&P, and the finalmaturity date of the notes is April 2040.In September 2015, NSBF issued additional unguaranteed SBA 7(a) loan-backed notes as part of an upsizing of the Newtek Small Business Loan Trust, Series2010-1. Note principal amounts of the original and exchanged notes were approximately $8,771,000 with additional notes which totaled approximately$32,028,000 as part of the upsizing. The initial aggregate amount of the senior notes issued by the Trust were approximately $40,800,000 on the closing date. Thenotes are collateralized by approximately $46,458,000 of SBA 7(a) unguaranteed portions and include a prefunded amount of $14,679,000 to be originated andtransferred subsequently to the trust. The notes retained their AA rating under S&P, and the final maturity of the amended notes is February 25, 2041.In November 2016, NSBF completed a securitization which resulted in the transfer of $56,073,000 of unguaranteed portions of SBA loans. The Trust in turnissued securitization notes for the par amount of $53,444,000, consisting of $43,632,000 Class A notes and $9,812,000 of Class B notes, against the assets in aprivate placement. The Class A and Class B notes received an “A” and “BBB+” rating by S&P, respectively, and the final maturity date of the notes is February2042.At December 31, 2016 the Securitization Trusts had an outstanding principal balance of $120,945,000 . For the year ended December 31, 2016 , interest expenseand amortization of related deferred financing costs were $3,191,000 and $650,000, respectively. For the year ended December 31, 2015 , interest expense andamortization of related deferred financing costs were $3,180,000 and $630,000, respectively. For the period November 12, 2014 through December 31, 2014interest expense and amortization of related deferred financing costs were $337,000 and $51,000, respectively. For the period January 1, 2014 through November11, 2014 interest expense and amortization of related deferred financing costs were $2,252,000 and $441,000, respectively.At December 31, 2016 and 2015 , the assets of the consolidated Trusts totaled $205,060,000 and $152,098,000 respectively. At December 31, 2016 and 2015 , theliabilities of the consolidated Trusts totaled $ 120,945,000 and $ 91,745,000 , respectively.The Trusts are only permitted to purchase the unguaranteed portion of SBA 7(a) loans, issue asset-backed securities, and make payments on the securities. TheTrusts only issued a single series of securities to pay for the unguaranteed portions it acquired from NSBF and will be dissolved when those securities have beenpaid in full. The primary source for repayment of the debt is the cash flows generated from the unguaranteed portion of SBA 7(a) loans owned by the Trusts;principal on the debt will be paid by cash flow in excess of that needed to pay various fees related to the operation of the Trusts and interest on the debt. The debthas an expected maturity of approximately six years based on the expected performance of the underlying collateral and structure of the debt and a legal maturityof 30 years from the date of issuance. The assets of the Trusts are legally isolated and are not available to pay NSBF’s creditors. However, NSBF continues toretain rights to cash reserves and residual interests in the Trusts and will receive servicing income. For bankruptcy analysis purposes, NSBF sold the unguaranteedportions to the Trusts in a true sale and the Trusts are separate legal entities. The investors and the Trusts have no recourse to any of NSBF’s other assets for failureof debtors to pay when due; however, NSBF’s parent, Newtek, has provided a limited guaranty to the investors in the Trusts in an amount not to exceed 10% of theoriginal issuance amount to be used after all of the assets of the Trusts have been exhausted.F-154Table of ContentsNote Payable - Related PartyIn June 2015, the Company entered into an unsecured revolving line of credit agreement with two of its wholly owned controlled portfolio companies, UPSW andNTS. Maximum borrowings under the line of credit are $38,000,000. The outstanding balance bears interest at a rate equal to (a) the greater of LIBOR or 50 basispoints plus (b) 7% or at a rate equal to (y) the greater of the Prime Rate or 3.5%, plus (z) 6%. The interest rate in effect is equal to the interest rate on the term loanbetween UPSW, NTS, Premier Payments LLC (“Premier”) and Goldman Sachs Bank USA as discussed in Note 9. At December 31, 2016 , the line of credit bearsinterest at 7.67%. The revolving line of credit has a maturity date of June 21, 2019. The outstanding borrowings at December 31, 2016 were $1,400,000 . Interestexpense for the year ended December 31, 2016 was approximately $260,000.Total expected principal repayments on the Company's borrowings for the next five fiscal years and thereafter are as follows:December 31,Borrowings2017$5,1002018—20191,4002020—202140,250Thereafter129,269 $176,019NOTE 9—COMMITMENTS AND CONTINGENCIES:Operating and Employment CommitmentsThe Company leases office space and other office equipment in several states under operating lease agreements which expire at various dates through 2029. Thoseoffice space leases which are for more than one year generally contain scheduled rent increases or escalation clauses.The following summarizes the Company’s obligations and commitments, as of December 31, 2016 for future minimum cash payments required under operatinglease and employment agreements:YearOperatingleases Employmentagreements Total2017$2,006 $281 $2,28720181,764 — 1,76420191,295 — 1,29520201,121 — 1,12120211,153 — 1,153Thereafter6,612 — 6,612Total$13,951 $281 $14,232Minimum payments have not been reduced by minimum sublease rentals of $935,000 due in the future under non-cancellable subleases.Rent expense for the years ended December 31, 2016 and 2015 , the period November 12, 2014 through December 31, 2014 and the period January 1, 2014through November 11, 2014 was $1,765,000, $866,000, $97,000 and $2,264,000, respectively.Legal MattersIn the ordinary course of business, the Company and its wholly owned portfolio companies may from time to time be party to lawsuits and claims. The Companyevaluates such matters on a case by case basis and its policy is to contest vigorously any claims it believes are without compelling merit. The Company is notcurrently involved in any litigation matters.F-155Table of ContentsGuaranteesThe Company is a guarantor on a bank line of credit held at NBC, a controlled portfolio company. Maximum borrowings under the line of credit are $10,000,000with a maturity date of February 2018. At December 31, 2016 , total principal owed by NBC was $9,847,000. In addition, the Company deposited $750,000 tocollateralize the guarantee. On August 27, 2015, NBC entered into Amendment No. 2 (the “Amendment”) to the Loan and Security Agreement, dated February 28,2011 (as amended through August 27, 2015, including the Amendment, the “Agreement”), by and between Sterling National Bank (“Sterling”) and NBC. TheAmendment permits NBC to use a portion of the warehouse line of credit provided by Sterling under the Agreement to fund inventory financing arrangementsNBC may provide to its clients. The Amendment also removed certain restrictions placed upon the Company in connection with its guaranty of the credit facilityprovided under the Agreement. At December 31, 2016 , the Company determined that it is not probable that payments would be required to be made under theguarantee. NBC also entered into an additional Loan and Security Agreement with Sterling on August 27, 2015 (as amended through December 4, 2015) (the “504 LoanAgreement”), pursuant to which Sterling and any future participant lenders agreed to provide NBC another line of credit to fund SBA 504 loans extended by NBC(the “504 Facility”). The maximum amount of the 504 Facility is up to $35,000,000, depending upon syndication. At December 31, 2016 , total principal owed byNBC was $2,311,000. The 504 Loan Agreement specifies certain events of default, pursuant to which all outstanding amounts under the 504 Facility could becomeimmediately due and payable. In addition, the Company has guaranteed NBC’s obligations under the 504 Loan Agreement, pursuant to a Guaranty dated as ofAugust 27, 2015. At December 31, 2016 , the Company determined that it is not probable that payments would be required to be made under the guarantee. On June 23, 2015, UPSW and NTS (together, the “Borrowers”), each a controlled portfolio company of the Company, entered into a Credit and GuarantyAgreement (the “Agreement”), dated June 23, 2015, with Goldman Sachs Bank USA (“GS Bank”), as Administrative Agent, Collateral Agent and Lead Arranger,pursuant to which GS Bank agreed to extend the Borrowers a term loan facility up to an aggregate principal amount of $38,000,000 (the “Facility” and each termloan made thereunder, a “Term Loan”). On September 18, 2015, the Agreement was amended to add Premier as a borrower. The Company, Newtek BusinessServices Holdco 1, Inc., a wholly-owned subsidiary of the Company (“Intermediate Holdings”), and certain subsidiaries of Intermediate Holdings party to theAgreement from time to time, have agreed to guarantee the repayment of the Facility and are parties to the Agreement as “Guarantors” thereunder. At December 31, 2016 , $22,000,000 was outstanding under this Facility. At December 31, 2016 , the Company determined that it is not probable that paymentswould be required to be made under the guarantee.NOTE 10—EARNINGS PER SHARE:The following table summarizes the calculation for net increase in net assets per common share for the years ended December 31, 2016 and 2015 and the periodNovember 12, 2014 through December 31, 2014: December 31, 2016 December 31, 2015 November 12, 2014through December 31,2014Net increase in net assets $27,305 $35,736 $681Weighted average shares outstanding 14,541 10,770 7,620Net increase in net assets per common share $1.88 $3.32 $0.09Basic income per share is computed based on the weighted average number of common shares outstanding during the period. The dilutive effect of common shareequivalents is included in the calculation of diluted income per share only when the effect of their inclusion would be dilutive:F-156Table of Contents January 1, 2014 throughNovember 11, 2014The calculations of Net Income Per Share were: Numerator: Numerator for basic and diluted EPS—net income available to common shareholders $3,293Denominator: Denominator for basic EPS—weighted average shares 7,315Denominator for diluted EPS—weighted average shares 7,315Net income per share: Basic $0.45Net income per share: Diluted $0.45Anti-dilutive shares excluded from above: Contingently issuable shares 17NOTE 11—PUBLIC OFFERINGS:The following table summarizes the total shares issued and proceeds received net of underwriting and offering costs in public offerings of the Company’s commonstock for the years ended December 31, 2016 , 2015 , and 2014 : Years ended December 31, 2016 2015 2014Shares issued — 2,300,000 2,530,000Offering price per share $— $16.50 $12.50Proceeds net of underwriting discounts and offering costs $— $35,290 $27,883On November 18, 2014 the Company priced a public offering of 2,200,000 shares of its common stock at a public offering price of $12.50 per share. The Companyalso sold an additional 330,000 shares of its common stock at a public offering price of $12.50 per share pursuant to the underwriter's full exercise of the over-allotment option.On October 15, 2015 the Company priced a public offering of 2,000,000 shares of its common stock at a public offering price of $16.50 per share. The Companyalso sold an additional 300,000 shares of its common stock at a public offering price of $16.50 per share pursuant to the underwriter's full exercise of the over-allotment option.NOTE 12—DIVIDENDS AND DISTRIBUTIONS:The Company's dividends and distributions are recorded on the declaration date. The following table summarizes the Company's dividend declarations anddistributions during the years ended December 31, 2016 and 2015 . There were no dividend declarations or distributions during any prior years.F-157Table of ContentsDate Declared Record Date Payment Date Amount PerShare Cash Distribution DRIP SharesIssued DRIP SharesValueDecember 31, 2016 February 25, 2016 March 22, 2016 March 31, 2016 $0.35 $4,708 29 $362June 9, 2016 June 20, 2016 June 30, 2016 $0.35 $4,985 7 $83September 7, 2016 September 20, 2016 September 30, 2016 $0.43 $6,152 6 $77November 17, 2016 December 15, 2016 December 30, 2016 $0.40 $5,706 6 $91 December 31, 2015 March 19, 2015 March 30, 2015 April 13, 2015 $0.39 $3,985 — $—June 15, 2015 June 29, 2015 July 15, 2015 $0.47 $4,715 5 $87October 1, 2015 October 22, 2015 November 3, 2015 $0.50 $6,123 12 $201October 1, 2015 (1) November 18, 2015 December 31, 2015 $2.69 $9,195 — $—December 16, 2015 January 7, 2016 January 19, 2016 $0.40 $5,659 13 $143 During the year ended December 31, 2016 , an additional 6,100 shares valued at $93,000 were issued related to dividends from unvested restricted stock awards.Special Dividend (1) On October 1, 2015, the Company declared a one-time special dividend of approximately $34,055,000 payable on December 31, 2015 to shareholders of record asof November 18, 2015. This special dividend was declared as a result of the Company’s intention to elect RIC status for tax year 2015, as it was required todistribute 100% of its accumulated earnings and profits through December 31, 2014 in order to qualify as a RIC. The special dividend amount of approximately$34,055,000 was computed based on an earnings and profits analysis completed through December 31, 2014.The dividend was paid in cash and shares of the Company's common stock at the election of each shareholder. The total amount of cash distributed to allshareholders was limited to 27% or $9,195,000 of the total dividend. The remainder of the dividend was paid in the form of shares of the Company's commonstock. As a result approximately 1,844,000 shares of the Company's common shares were issued.NOTE 13—BENEFIT PLANS:Defined Contribution PlanThe Company’s employees participate in a defined contribution 401(k) plan (the “Plan”) adopted in 2004 which covers substantially all employees based oneligibility. The Plan is designed to encourage savings on the part of eligible employees and qualifies under Section 401(k) of the Internal Revenue Code. Under thePlan, eligible employees may elect to have a portion of their pay, including overtime and bonuses, reduced each pay period, as pre-tax contributions up to themaximum allowed by law. The Company may elect to make a matching contribution equal to a specified percentage of the participant’s contribution, on theirbehalf as a pre-tax contribution. For the years ended December 31, 2016 , 2015 and 2014 , the Company matched 50% of the first 2% of employee contributions,resulting in $63,000 , $177,000 and $130,000 in expense, respectively.NOTE 14—INCOME TAXES:F-158Table of ContentsAs a RIC, the Company must distribute substantially all of its respective net taxable income each tax year as dividends to its shareholders. Accordingly, noprovision for federal income tax has been made in the financial statements for the years ended December 31, 2016 and 2015 .Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal tax regulations, which maydiffer from amounts determined in accordance with GAAP and those differences could be material. These book-to-tax differences are either temporary orpermanent in nature. Reclassifications due to permanent book-tax differences, including the offset of net operating losses against net short-term gains andnondeductible meals and entertainment, have no impact on net assets.The following differences were reclassified for tax purposes for the years ended December 31, 2016 and 2015 : December 31, 2016 December 31, 2015Increase (decrease) in additional paid-in capital$(649) $195Increase in undistributed net investment income12,915 10,622Decrease in net realized gains on investments(12,266) (10,817)Taxable income generally differs from net increase (decrease) in net assets for financial reporting purposes due to temporary and permanent differences in therecognition of income and expenses and generally excludes unrealized appreciation (depreciation) on investments as investment gains and losses are not includedin taxable income until they are realized.The following table reconciles net increase in net assets to taxable income for the years ended December 31, 2016 and 2015 : December 31, 2016 December 31, 2015Net increase in net assets$27,305 $35,736Net change in unrealized depreciation on investments(12,343) (10,187)Net change in deferred tax liabilities5,128 857GAAP versus tax basis consolidation of subsidiaries1,536 (4,115)Other deductions/losses for tax, not book(17) (307)Other differences1,871 92Taxable income before deductions for distributions$23,480 $22,076The tax character of distributions paid during the years ended December 31, 2016 and 2015 was as follows: December 31, 2016 December 31, 2015Ordinary income$18,774 $15,043Long-term capital gains3,390 67Return of capital— —The determination of the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon the Company’staxable income for the full year and distributions paid for the full year. The Company’s fourth quarter dividend which was declared in December 2015, but had arecord date in 2016, is included in the 2016 dividends reportable to shareholders. Approximately 34.8% of the Company’s ordinary income was from qualifieddividends. The actual tax characteristics of distributions to shareholders are reported to shareholders annually on Form 1099-DIV.The tax basis components of distributable earnings/(accumulated losses) and reconciliation to accumulated earnings/(deficit) on a book basis for the years endedDecember 31, 2016 and 2015 were as follows:F-159Table of Contents December 31, 2016 December 31, 2015Undistributed ordinary income - tax basis$2,377 $6,781Undistributed net realized gains - tax basis— 184Net change in unrealized appreciation on investments13,025 8,062GAAP versus tax basis consolidation of subsidiaries2,579 4,115Other temporary differences2,348 1,288Dividends payable— (5,802)Total accumulated earnings - book basis$20,329 $14,628The differences between the components of distributable earnings on a tax basis and the amounts reflected in the consolidated statements of changes in net assetsare primarily due to temporary book-tax differences that will reverse in a subsequent period.Income Taxes Prior to RIC ElectionThe Company’s tax provision is based on the Company’s results for the full year on a consolidated tax basis. Although the company converted to a BDC onNovember 11, 2014, it was not be eligible to elect RIC status until the year ended December 31, 2015. The Company’s deferred tax asset at December 31, 2015 ,was closed out to additional paid-in capital on January 1, 2015.Provision for income taxes for the year ended December 31, 2014 is as follows: December 31, 2014Current: Federal$2,742State and local1,043 3,785Deferred: Federal296State and local48 344Total provision for income taxes$4,129A reconciliation of income taxes computed at the U.S. federal statutory income tax rate to the provision for income taxes for the year ended December 31, 2014 isas follows: 2014 ProvisionProvision for income taxes at U.S. federal statutory rate of 35%$2,655State and local taxes, net of federal benefit709Permanent differences(47)Goodwill impairment597Deferred tax asset valuation allowance increase200Other15Total provision for income taxes$4,129NOTE 15—FINANCIAL HIGHLIGHTS:The financial highlights for the Company are as follows:F-160Table of ContentsPer share data (2) Year endedDecember 31, 2016 Year endedDecember 31, 2015 November 12, 2014through December 31,2014Net asset value at beginning of period $14.06 $16.31 $13.49Issuance of common stock — 2.43 2.73Dividends from capital gains (1.53) (1.76) —Special dividend — (2.69) —Net investment loss (0.64) (0.57) (0.33)Net realized gain on investments 2.17 3.14 0.08Net unrealized appreciation on investments 0.85 0.95 0.36Change in provision for deferred taxes (0.35) (0.06) —Stock compensation 0.04 — —Net unrealized depreciation on servicing assets (0.16) (0.12) (0.02)Exponential of New York LLC distributions to members — (0.25) —Consolidation of Exponential Business Development Co., Inc. (0.03) — —Reversal of deferred tax asset — (0.19) —Out of period adjustment related to BDC Conversion — (0.06) —Impact of restricted stock awards (0.11) — —Dilutive effect of special dividend — (3.07) —Net asset value at end of period $14.30 $14.06 $16.31 Per share market value at end of period $15.90 $14.32 $14.76Total return based on market value (3) 24.51 % 24.46 % 13.10 %Total return based on average net asset value (4) 12.59 % 13.52 % 20.87 %Shares outstanding at end of period 14,624 14,509 10,206 Ratios/Supplemental Data: Ratio of expenses to average net assets 19.48 % 17.42 % 20.46 %Ratio of net investment loss to average net assets (4.48)% (3.34)% (11.99)%Net assets at end of period $209,094 $203,949 $166,418Average debt outstanding $151,502 $128,680 $108,483Average debt outstanding per share $10.36 $8.87 $10.63Asset coverage ratio 222 % 249 % 223 %Portfolio turnover 109.64 % 103.50 % 5.08 %(1) Years prior to becoming a business development company are not presented in the financial highlights as the information would not be meaningful.(2) Based on actual number of shares outstanding at the end of the corresponding period or the weighted average shares outstanding for the period, unlessotherwise noted, as appropriate.(3) Assumes dividends are reinvested.(4) Total return based on average net asset value was calculated using the sum of ending net asset value plus dividends to shareholders during the period, dividedby the beginning net asset value.NOTE 16—RELATED PARTY TRANSACTIONS:Investment in Premier Payments LLCOn July 23, 2015, the Company invested in 100% of the membership interests of Premier which was owned 100% by Jeffrey Rubin, former President ofNewtek. The total investment was approximately $16,483,000, of which $14,011,000 was paid in cash and $2,472,000 was paid in newly issued restricted shares ofNewtek common stock. A total of 130,959 shares were issuedF-161Table of Contentson the date of investment which may not be sold or transferred for six months from the acquisition date. The Company’s Board, including a majority ofindependent directors, approved the investment.Consulting AgreementsIn July 2015, the Company entered into a consulting agreement (the “Agreement”), with Jeffrey Rubin, former President of Newtek and former CEO of Premier (acontrolled portfolio company acquired in July 2015). The Agreement retained Jeffrey Rubin to perform business development consulting services. The Agreemententitled Jeffrey Rubin to annual compensation of $200,000 paid monthly. For the year ended December 31, 2015 , the Company incurred approximately $83,000 inconsulting fees related to the Agreement. The Agreement was terminated in December 2015 and no additional payments are required to be made. On January 1,2016, Jeffrey Rubin entered into an independent sale agent agreement with Premier.In September 2016, the Company entered into an advisory services agreement (the “AK Agreement”) with AK Capital, LLC (“AK Capital”). The Company's ChiefExecutive Officer is a director of AK Capital. AK Capital provides consulting and advisory services to the Company in connection with the sale and/orsecuritization of participations in SBA guaranteed and unguaranteed SBA 7(a) loans. The AK agreement contains total fees of $10,000, to be paid monthly overone year. During the year ended December 31, 2016 , the Company incurred $3,000 in fees from AK Capital.Investment in PMTWorks Payroll, LLCIn November 2015, the Company exercised a warrant for nominal consideration to acquire an additional 10% membership interest in PMTWorks Payroll, LLC(“PMT”). The additional 10% interest was obtained from the founder and current board member of PMT, a controlled portfolio company.Note Payable - Related PartyIn June 2015, the Company entered into an unsecured revolving line of credit agreement with UPSW and NTS. The maximum borrowings under the line of creditare $38,000,000. The outstanding balance bears interest at a rate equal to (a) the greater of LIBOR or 50 basis points plus (b) 7% or at a rate equal to (y) the greaterof the Prime Rate or 3.5%, plus (z) 6%. Refer to Note 8 - “Borrowings” for additional discussion.Lake Success, New York OfficesBeginning in April 2016, the Company began sub-leasing portions of its office space in Lake Success, New York to certain portfolio companies. Amounts chargedfor the year ended December 31, 2016 were as follows:Portfolio CompanyDecember 31, 2016Small Business Lending, LLC$104CDS Business Services, Inc.80PMTWorks Payroll, LLC30Universal Processing Services of Wisconsin, LLC32Newtek Insurance Agency, LLC46Titanium Asset Management LLC4Premier Payments LLC57Total$353Managerial Assistance Fees from Controlled InvestmentsThe Company offers managerial assistance to all portfolio companies and currently provides managerial assistance to certain controlled portfolio companies.Amounts are charged based on estimates of time and effort spent by certain employees providing managerial services for certain controlled portfolio companies.Fees are recorded on a quarterly basis, are recurring in nature and charged at an arms length basis. The table below summarizes amounts charged to each controlledaffiliate for the years ended December 31, 2016 and 2015. The amounts are recorded as a credit to salaries and benefits in the consolidated statements ofoperations. No amounts were charged in 2014.F-162Table of ContentsPortfolio Company December 31, 2016 December 31, 2015Universal Processing Services of Wisconsin, LLC $468 $590CrystalTech Web Hosting, Inc. 654 528PMTWorks Payroll, LLC 96 149Newtek Insurance Agency, LLC 235 241Summit Systems and Designs, LLC 26 30Secure CyberGateway Services, LLC 1 45Premier Payments LLC 192 45banc-serv Partners, LLC 110 —Small Business Lending, LLC 525 176Total $2,307 $1,804Sale of Intangible AssetIn December 2015, the Company sold a portfolio of health-related insurance policies to Newtek Insurance Agency, LLC (“NIA”) for $407,000. The carrying valueof the portfolio at the time of sale was $308,000 which resulted in gain on sale of $99,000 which is included in other income from controlled investments on theconsolidated statements of operations. The purchase price was calculated based on one times the trailing twelve month gross commissions earned from theremaining active policies.Other Transactions with Related PartiesThe Company incurs expenses and earns revenue by providing managed technology services, loan processing, closing, and payroll processing to NTS, PMT, andvarious related parties. December 31, 2016 December 31, 2015Managed technology services$969 $599Loan processing and closing59 255Payroll processing35 22Consulting fees and other revenue— 51A member of the Company’s Board and audit committee chairman receives a pension from CohnReznick LLP and capital payouts from his partnershipinterests. CohnReznick LLP performs tax services for the Company.The spouse of the Chief Accounting Officer of the Company is the Controller of certain of the Company's controlled portfolio companies and is paid an annualsalary in excess of $125,000.The brother and nephew of the Chief Executive Officer of the Company are employed by certain of the Company's controlled portfolio companies and earn annualsalaries less than $125,000.Prior to the BDC Conversion, and during the period January 1, 2014 through November 11, 2014, the Company provided merchant processing for a companycontrolled by the father-in-law of a major shareholder and former President of the Company, in the approximate amount of $15,000.Prior to the BDC Conversion, the Company paid gross residuals to an independent sales organization (“ISO”) controlled by a major shareholder of the Company.The ISO earned gross residuals from Newtek, and in turn paid commissions to its sales representatives as well as other operating expenses. Gross residuals paid bythe Company to the ISO for the period January 1, 2014 through November 11, 2014 were approximately $3,241,000.As a result of the BDC Conversion, subsidiaries which were consolidated in prior years are now reflected as investments in controlled portfolio companies,recorded at fair value. As a result, transactions and balances with these companies are no longer eliminated in consolidation. As of December 31, 2016 , theCompany has $ 3,748,000 due from related parties and $ 1,227,000 due to related parties. At December 31, 2015 , the Company had $3,056,000 due from relatedparties and $256,000 due to related parties.F-163Table of ContentsNOTE 17—STOCK OPTIONS AND RESTRICTED STOCK GRANTED TO EMPLOYEES:Stock PlanThe Company accounts for its stock-based compensation plan using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation.Accordingly, for restricted stock awards, the Company measured the grant date fair value based upon the market price of its common stock on the date of the grantand amortizes the fair value of the awards as stock-based compensation expense over the requisite service period, which is generally the vesting term. The Company's Board approves the issuance of shares of restricted stock to employees and directors pursuant to the Company’s 2015 Equity Incentive Plan (the“Equity Incentive Plan”). These shares generally vest over a one or two year period from the grant date. The fair value is expensed over the service period, startingon the grant date. The following table summarizes the restricted stock issuances under the Equity Incentive Plan, net of shares forfeited and the remaining shares ofrestricted stock available for issuance as of December 31, 2016 .Restricted Stock authorized under the plan (1) 1,462,394Less net restricted stock granted during: Year ended December 31, 2016 (120,933)Restricted stock available for issuance as of December 31, 2016 1,341,461(1) A maximum of 20% of total shares of common stock issued and outstanding, calculated on a fully diluted basis, not to exceed 3,000,000 shares, are availablefor awards of restricted stock and stock options under the Equity Incentive Plan. No more than 50% of the shares of stock reserved for the grant of awards underthe Equity Incentive Plan may be restricted stock awards at any time during the term of the Equity Incentive Plan. No stock options have been granted under theEquity Incentive Plan.For the year ended December 31, 2016 and the period January 1, 2014 through November 11, 2014, the Company recognized total stock-based compensationexpense of $577,000 and $865,000, respectively. No stock-based compensation expense was incurred during the year ended December 31, 2015 and the periodNovember 12, 2014 through December 31, 2014.As of December 31, 2016 , there was $1,081,000 of total unrecognized compensation expense related to unvested restricted shares. This compensation expense isexpected to be recognized over a remaining weighted-average period of approximately 0.87 years as of December 31, 2016 .NOTE 18—SEGMENT REPORTING:Prior to the BDC Conversion, operating segments were organized internally primarily by the type of services provided. The Company aggregated similar operatingsegments into six reportable segments: Electronic payment processing, Managed technology solutions, Small business finance, All other, Corporate and Capcos.The Electronic payment processing segment was a processor of credit card transactions, as well as a marketer of credit card and check approval services to thesmall- and medium-sized business market. Expenses included direct costs (included in a separate line captioned electronic payment processing costs), professionalfees, salaries and benefits, and other general and administrative costs, all of which are included in the respective caption on the consolidated statements ofoperations.The Small business finance segment consisted of SBL, a lender service provider for third-parties that primarily services government guaranteed SBA loans andnon-SBA loans; Texas Whitestone Group which managed the Company’s Texas Capco; NSBF, a nationally licensed SBA lender that originates, sells and servicesloans to qualifying small businesses; and NBC which provides accounts receivable financing, billing and accounts receivable maintenance services to businesses.NSBF generates revenues from sales of loans, servicing income and interest income earned on the loans themselves. The lender generates expenses for interest,professional fees, salaries and benefits, depreciation and amortization, and provision for loan losses, all of which are included in the respective caption on theconsolidated statements of operations. NSBF also has expenses such as loan recovery expenses, loan processing costs, and other expenses that are all included inthe other general and administrative costs caption on the consolidated statements of operations.F-164Table of ContentsThe Managed technology solutions segment consisted of NTS which was acquired in July 2004. NTS’ revenues were derived primarily from web hosting servicesand consisted of web hosting and set up fees. NTS generated expenses such as professional fees, payroll and benefits, and depreciation and amortization, which areincluded in the respective caption on the accompanying consolidated statements of operations, as well as licenses and fees, rent, and general office expenses, all ofwhich are included in other general and administrative costs in the respective caption on the consolidated statements of operations.The All other segment includes revenues and expenses primarily from qualified businesses that received investments made through the Company’s Capcos whichcannot be aggregated with other operating segments. The three largest entities in the segment were NIA, an insurance sales operation, PMT, a provider of payrollprocessing services and Business Connect, LLC, a provider of sales and processing services.Corporate activities represented revenue and expenses not allocated to other segments. Revenue included interest income and management fees earned fromCapcos (and included in expenses in the Capco segment). Expenses primarily included corporate operations related to broad-based sales and marketing, legal,finance, information technology, corporate development and additional costs associated with administering the Capcos.The Capco segment, which consisted of the twelve Capcos, generated non-cash income from tax credits, interest income and gains from investments in qualifiedbusinesses which are included in other income. Expenses primarily included non-cash interest and insurance expense, management fees paid to Newtek (andincluded in Corporate activities revenues), legal, audit fees and losses from investments in qualified businesses.Management considered the following characteristics when making its determination of its operating and reportable segments:•the nature of the product and services;•the type or class of customer for their products and services;•the methods used to distribute their products or provide their services; and•the nature of the regulatory environment (for example, banking, insurance, or public utilities).The accounting policies of the segments were the same as those described in the summary of significant accounting policies.The Company no longer has six reportable segments after November 11, 2014 as a result of the BDC Conversion. The segment information presented belowrepresents results up until the date of conversion. For the years ended December 31, 2016 and 2015 and the period from November 12, 2014 through December 31,2014 the Company had one reportable segment.The following table presents the Company’s segment information for the period January 1, 2014 through November 11, 2014: F-165Table of Contents January 1, 2014through November 11,2014Third Party Revenue Electronic payment processing$79,529Small business finance36,426Managed technology solutions13,997All other2,277Corporate activities774Capco364Total reportable segments133,367Eliminations(1,520)Consolidated Total$131,847Inter Segment Revenue Electronic payment processing$3,708Small business finance454Managed technology solutions528All other1,435Corporate activities3,406Capco692Total reportable segments10,223Eliminations(10,223)Consolidated Total$—Income (loss) before income taxes Electronic payment processing$7,366Small business finance9,090Managed technology solutions2,818All other(1,153)Corporate activities(9,879)Capco(778)Total reportable segments7,464Eliminations(321)Consolidated Total$7,143Depreciation and Amortization Electronic payment processing$226Small business finance1,440Managed technology solutions1,165All other180Corporate activities129Capco—Consolidated Total$3,140F-166Table of Contents January 1, 2014through November 11,2014Interest (Income) Expense, net Electronic payment processing$(1)Small business finance(712)Managed technology solutions41All other—Corporate activities2,264Capco(234)Total reportable segments1,358Eliminations302Consolidated Total$1,660NOTE 19—UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES:In accordance with the SEC’s Regulation S-X and GAAP, we are not permitted to consolidate any subsidiary or other entity that is not an investment company,including those in which we have a controlling interest. We had one unconsolidated subsidiary as of December 31, 2016 and for the year ended December 31, 2016that met at least one of the significance conditions under Rule 1-02(w) of Regulation S-X for which we are required, pursuant to Rule 3-09 of Regulation S-X, toattach separate financial statements as exhibits to the Form 10-K. Accordingly, the financial statements of UPSW for the years ended December 31, 2016 and 2015and the period November 12, 2014 through December 31, 2014 have been attached as exhibits.NOTE 20—SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):The following table sets forth certain unaudited consolidated quarterly statement of operations data from the eight quarters ended December 31, 2016 . Thisinformation is unaudited, but in the opinion of management, it has been prepared substantially on the same basis as the audited consolidated financial statementsappearing elsewhere in this report, and all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts stated below.The consolidated quarterly data should be read in conjunction with the current audited consolidated statements and notes thereto. The total of the quarterly EPSdata may not equal to the full year results. Three Months Ended2016March 31 June 30 September 30 December 31Total investment income$6,794 $7,223 $7,851 $9,097Net investment loss$(1,380) $(4,081) $(2,125) $(1,674)Net gain on investments$6,984 $9,453 $12,165 $7,963Net increase in net assets$5,604 $5,372 $10,040 $6,289Net increase in net assets per share$0.39 $0.37 $0.69 $0.43Net asset value per share at period end$14.10 $14.11 $14.26 $14.30 Three Months Ended2015March 31 June 30 September 30 December 31Total investment income$4,750 $5,606 $7,038 $8,676Net investment (loss) income$(2,476) $(2,295) $(1,491) $77Net gain on investments$12,479 $7,171 $6,240 $16,031Net increase in net assets$10,003 $4,876 $4,749 $16,108Net increase in net assets per share$0.98 $0.48 $0.46 $1.31Net asset value per share at period end$16.61 $16.62 $16.88 $14.06F-167Table of ContentsNOTE 21—SUBSEQUENT EVENTS:Public OfferingOn January 25, 2017, the Company completed a public offering of 2,250,000 shares of its common stock at a public offering price of $15.25 per share. TheCompany also sold an additional 337,500 shares of its common stock at a public offering price of $15.25 per share pursuant to the underwriter's full exercise of theover-allotment option. Proceeds, net of offering costs and expenses were $37,326,000.Capital One Lines of CreditNSBF signed a letter of intent to increase its existing revolving credit facility through Capital One by $25,000,000 to $75,000,000 as well as reduce the borrowingrate. The upsize of the credit facility and rate reduction are subject to final documentation and approval from the SBA.Quarterly Dividend On March 6, 2017 the Company declared a quarterly cash dividend of $0.36 per share payable on March 31, 2017 to shareholders of record as of March 20, 2017.The dividend will be paid in cash or shares of the Company's common stock through participation in the Company's dividend reinvestment plan, at the election ofshareholders.F-168See accompanying notes to these consolidated financial statementsTable of ContentsNewtek Business Services Corp. and SubsidiariesSchedule of Investments In and Advances to AffiliatesDecember 31, 2016Portfolio Company/Type of Investment (1) Amount of Interest, Feesor Dividends Credited inIncome Fair Value at December 31,2015 Gross Additions (2) Gross Reductions (3) Fair Value at December 31,2016Controlled Investments Advanced Cyber Security Systems, LLC 50% Membership Interest $— $— $— $— $—Term loan — — — — — Automated Merchant Services, Inc. 100% Common Stock — — — — — CDS Business Services, Inc. 100% Common Stock — 925 — (175) 750Line of credit 143 2,870 2,420 (2,600) 2,690 CrystalTech Web Hosting, Inc. 100% Common Stock 990 21,414 — (1,305) 20,109 Fortress Data Management, LLC 100% Membership Interest — — — — — Newtek Insurance Agency, LLC 100% Membership Interest — 2,500 — — 2,500 PMTWorks Payroll, LLC 100% Membership Interest — 1,020 25 (185) 860Term Loan 154 — 1,185 — 1,185 Secure CyberGateway Services, LLC 66.7% Membership Interest 52 — — — —Term Loan 48 1,196 — (1,196) — Premier Payments LLC 100% Membership Interest 1,735 16,503 4,562 (65) 21,000 Small Business Lending, LLC 100% Membership Interest 696 5,500 — (2,200) 3,300 banc-serv Partners, LLC 100% Membership Interest 300 — 5,540 (140) 5,400 Titanium Asset Management, LLC (4) 100% Membership Interest — — — — —Term loans 15 1,824 — (1,316) 508 Summit Systems and Designs, LLC 100% Membership Interest — — — — — F-169See accompanying notes to these consolidated financial statementsTable of ContentsPortfolio Company/Type of Investment (1) Amount of Interest, Feesor Dividends Credited inIncome Fair Value at December 31,2015 Gross Additions (2) Gross Reductions(3) Fair Value atDecember 31, 2016Universal Processing Services of Wisconsin,LLC 100% Membership Interest 6,800 52,448 10,552 — 63,000 Total Controlled Investments $10,933 $106,200 $24,284 $(9,182) $121,302(1) The principal amount and ownership detail as shown in the Company's Consolidated Schedule of Investments.(2) Gross additions includes increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and the exchange of one ormore existing securities for one or more new securities. Gross additions also includes net increases in unrealized appreciation or net decreases in unrealizeddepreciation.(3) Gross reductions include decreases in the cost basis of investments resulting from principal payments or sales and exchanges of one or more existing securitiesfor one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.( 4) Prior to July 1, 2016, Titanium was not a controlled investment. Interest, fees, and dividends credited to income only include the period for which Titaniumwas a controlled investment.F-170See accompanying notes to these consolidated financial statementsNEWTEK BUSINESS SERVICES CORP. SUBSIDIARIES Name of Company State of Incorporation/Organization CCC Real Estate Holdings, LLC DelawareExponential Business Development Co., Inc. New YorkNewtek Small Business Finance, LLC New YorkNewtek Asset Backed Securities, LLC DelawareNewtek Business Services Holdco1, Inc. New YorkThe Whitestone Group, LLC New YorkWilshire Colorado Partners, LLC ColoradoWilshire DC Partners, LLC District of ColumbiaWilshire Holdings I, Inc. New YorkWilshire Louisiana Bidco, LLC LouisianaWilshire Louisiana Partners II, LLC LouisianaWilshire Louisiana Partners III, LLC LouisianaWilshire Louisiana Partners IV, LLC LouisianaWilshire New York Advisers II, LLC New YorkWilshire New York Partners III, LLC New YorkWilshire New York Partners IV, LLC New YorkWilshire New York Partners V, LLC New YorkWilshire Partners, LLC FloridaNewtek LSP Holdco, LLC New YorkBanc-Serv Acquisition Inc. New YorkExhibit 31.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 302 OF THESARBANES-OXLEY ACT OF 2002I, Barry Sloane, certify that:1. I have reviewed this annual report on Form 10-K of Newtek Business Services Corp. (the “registrant”).2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant andhave:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles;c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’sinternal control over financial reporting.5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. / S / B ARRY S LOANE Barry Sloane Principal Executive OfficerDate: March 10, 2017Exhibit 31.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 302 OF THESARBANES-OXLEY ACT OF 2002I, Jennifer Eddelson, certify that:1. I have reviewed this annual report on Form 10-K of Newtek Business Services Corp. (the “registrant”).2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant andhave:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles;c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’sinternal control over financial reporting.5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. / S / J ENNIFER E DDELSON Jennifer Eddelson Principal Financial OfficerDate: March 10, 2017Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Newtek Business Services Corp. (the “Company”), for the year ended December 31, 2016 , as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Barry Sloane, Chief Executive Officer of the Company, pursuant to 18 U.S.C.Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, certify that, to the best of our knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company. / S / B ARRY S LOANE Barry Sloane Principal Executive OfficerMarch 10, 2017Exhibit 32.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Newtek Business Services Corp. (the “Company”), for the year ended December 31, 2016 , as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Jennifer Eddelson, Chief Accounting Officer of the Company, pursuant to 18U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, certify that, to the best of our knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company. / S / J ENNIFER E DDELSON Jennifer Eddelson Principal Financial OfficerMarch 10, 2017Universal Processing Services of Wisconsin, LLC (A Limited Liability Company) Financial Report and Independent Auditor’s Report Year Ended December 31, 2016 Universal Processing Services of Wisconsin, LLC Index Year Ended December 31, 2016 Pages Independent Auditor’s Report ................................................................................................................... 1 Financial Statements Balance Sheet ................................................................................................................................................ 2 Statement of Income ..................................................................................................................................... 3 Statement of Changes in Member’s Deficit .................................................................................................. 4 Statement of Cash Flows .............................................................................................................................. 5 Notes to Financial Statements .................................................................................................................. 6-13 1 INDEPENDENT AUDITOR’S REPORT To the Board of Directors and Stockholders of Universal Processing Services of Wisconsin, LLC We have audited the accompanying financial statements of Universal Processing Services of Wisconsin, LLC (the “Company”), which comprise the balance sheet as of December 31, 2016, and the related statements of income, member’s deficit, and cash flows for the year then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no suchopinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Universal Processing Services of Wisconsin, LLC as of December 31, 2016, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. New York, New York February 22, 2017 Universal Processing Services of Wisconsin, LLC Balance Sheet December 31, 2016 See notes to financial statements. 2 Assets Current Assets: Cash 7,898,628$ Accounts receivable 3,115,054 Prepaid expenses and other current assets 263,066 Inventory 245,500 Total current assets 11,522,248 Fixed assets, net 402,040 Customer merchant accounts, net 1,191,600 Restricted cash 587,707 Due from related parties 317,103 Notes receivable - related party 500,000 Goodwill 1,908,495 Total assets 16,429,193$ Liabilities and Member's Deficit Liabilities: Current Liabilities: Accounts payable and accrued expenses 3,484,204$ Residuals payable 868,087 Due to related parties 464,045 Chargeback reserves 802,722 Total current liabilities 5,619,058 Bank note payable, net of deferred financing costs 16,431,529 Total liabilities 22,050,587 Commitments and contingencies (Note 9) Member's deficit (5,621,394) Total liabilities and member's deficit 16,429,193$ Universal Processing Services of Wisconsin, LLC Statement of Income Year Ended December 31, 2016 See notes to financial statements. 3 Revenue: Electronic payment processing 103,885,710$ Expenses: Electronic payment processing costs 88,013,827 Salaries and benefits 4,677,273 Professional fees 783,846 Depreciation and amortization 799,006 Other general and administrative costs 1,221,448 Total expenses 95,495,400 Income from operations 8,390,310 Interest expense, net (1,588,970) Interest income - related party 183,050 Net income 6,984,390$ Universal Processing Services of Wisconsin, LLC Statement of Changes in Member’s Deficit Year Ended December 31, 2016 See notes to financial statements. 4 Member's Deficit Balance, January 1, 2016 (3,495,974)$ Net income 6,984,390 Member distributions (9,109,810) Balance, December 31, 2016 (5,621,394)$ Universal Processing Services of Wisconsin, LLC Statement of Cash Flows Year Ended December 31, 2016 See notes to financial statements. 5 Cash flows from operating activities: Net income 6,984,390$ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 799,006 Amortization of deferred financing costs 257,232 Changes in operating assets and liabilities: Restricted cash (94,992) Accounts receivable (569,643) Prepaid expenses and other current assets (179,718) Inventory 41,975 Accounts payable, accrued expenses and other current liabilities 1,508,596 Due to/from related parties 260,352 Net cash provided by operating activities 9,007,198 Cash flows from investing activities: Purchase of customer merchant accounts (152,103) Principal payments received on related party note 5,146,749 Purchase of fixed assets (203,472) Net cash provided by investing activities 4,791,174 Cash flows used in financing activities: Distributions to member (9,109,810) Net increase in cash 4,688,562 Cash, beginning of year 3,210,066 Cash, end of year 7,898,628$ Supplemental disclosure of cash flow information Interest paid 1,236,274$ Universal Processing Services of Wisconsin, LLC Notes to Financial Statements Year Ended December 31, 2016 6 1. Organization, Description of Business, and Basis of Presentation Universal Processing Services of Wisconsin, LLC (“UPS-WI”), was organized as a limited liability company (“LLC”) under the laws of the State of Wisconsin and is a wholly-owned subsidiary of Newtek Business Services Holdco 1, Inc. (“Holdco”). As a limited liability company, the liability of Holdco is limited to its capital account. UPS-WI and its formerly wholly-owned subsidiary, Solar Processing Services, LLC (“Solar”) are collectively hereinafter referred to as the “Company”. In June 2016, Solar merged into UPS-WI. The Company markets credit and debit card processing services, check approval services and ancillary processing equipment and software to merchants who accept credit cards, debit cards, checks and other non-cash forms of payment. 2. Significant Accounting Policies Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates, by their nature, are based on judgment and available information. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the reserve for chargeback losses. Recently Adopted Accounting Standards In April 2015, the Financial Accounting Standards Board issued ASU 2015-03 “Simplifying the Presentation of Debt Issuance Costs.” This update requires that debt issuance costs be presented in the balance sheet as a direct deduction from the debt liability. The Companyadopted this standard with respect to its Bank note payable. Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable and accrued expenses, residuals payable, notes receivable from a related party and a bank note payable. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses and residuals payable approximate fair value due to their short term maturities. The carrying amounts of notes receivable from a related party and bank note payable approximate fair value due to the variable interest rate they carry. Cash The Company maintains cash balances at financial institutions of high credit quality. As of December 31, 2016, cash deposits in excess of insured amounts totaled approximately $7,683,000. Universal Processing Services of Wisconsin, LLC Notes to Financial Statements Year Ended December 31, 2016 7 Restricted Cash Under the terms of the processing agreement between UPS-WI and its processing banks, UPS-WI maintains cash accounts as reserves against chargeback losses. As the Company receives fees from the processing bank, a certain percentage is allocated to the cash reserve account. Inventory Inventory consists primarily of equipment to be installed in merchant locations to enable them to process electronic transactions. Inventory is stated at the lower of cost or market, which is determined on a FIFO (first in-first out) basis. Fixed Assets Fixed assets, which are comprised of telephone systems, software, website, computer equipment and leasehold improvements, are stated at cost less accumulated depreciation and amortization. Depreciation of fixed assets is provided on a straight-line basis using estimated useful lives of the related assets. Amortization of leasehold improvements is provided on a straight-line basis using the lesser of the useful life of the asset, which generally is three to five years, or lease term. Goodwill and Customer Merchant Accounts Goodwill is not amortized but is instead subject to impairment testing, at least annually. Customer merchant accounts with finite lives are amortized over 66 months as discussed in Note 5. The Company considers the following to be some examples of indicators that may trigger an impairment review: (i) significant under-performance or loss of key contracts acquired in an acquisition relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of the acquired assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s fair market value for asustained period of time; and (vi) regulatory changes. In assessing the recoverability of the Company’s goodwill and customer merchant accounts, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. These include estimation of future cash flows, which is dependent on internal forecasts, estimation of the long- term rate of growth for the Company, the period over which cash flows will occur, and determination of the Company’s cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and conclusion on impairment. Revenue Recognition Electronic Payment Processing Electronic payment processing and fee income is derived from the electronic processing of credit and debit card transactions that are authorized and captured through third-party networks. Typically, merchants are charged for these processing services as a percentage of each transaction dollar plus a flat fee per transaction. Certain merchant customers are charged miscellaneous fees, including fees for handling charge-backs or returns, monthly minimum fees, statement fees and fees for other miscellaneous services. Revenues derived from the electronic processing of MasterCard®, Visa® and Discover® sourced credit and debit card transactions are reported gross of amounts paid to sponsor banks. Interest Income Universal Processing Services of Wisconsin, LLC Notes to Financial Statements Year Ended December 31, 2016 8 Interest income is recorded on an accrual basis, when earned, based on the current lending rate in place. Reserve for Losses on Merchant Accounts Disputes between a cardholder and a merchant periodically arise as a result of, among other things, cardholder dissatisfaction with merchandise quality or merchant services. Such disputes may not be resolved in the merchant’s favor. In these cases, the transaction is “charged back” to the merchant, which means the purchase price is refunded to the customer through the merchant’s acquiring bank and charged to the merchant. If the merchant has inadequate funds, the Company or, under limited circumstances, the Company and the acquiring bank, must bear the credit risk for the full amount of the transaction. The Company evaluates its risk for such transactions and estimates its potential loss for charge-backs based primarily on historical experience and other relevant factors. The Company records reserves for charge-backs and contingent liabilities when such amounts are deemed to be probable and estimable. The required reserves may change in the future due to new developments, including, but not limited to, changes in litigation or increased charge-back exposure as the result of merchant insolvency, liquidation, or other reasons. The required reserves are reviewed periodically to determine if adjustments are required. Electronic Payment Processing Costs Electronic payment processing costs consist principally of costs directly related to the processing of merchant sales volume, including interchange fees, Visa®, MasterCard® and Discover® dues and assessments, bank processing fees and costs paid to third-party processing networks. Such costs are recognized at the time the merchant transactions are processed or when the services are performed. Two of the most significant components of electronic processing expenses include interchange and assessment costs, which are set by the credit card associations. Interchange costs are passed on to the entity issuing the credit card used in the transaction and assessment costs are retained by the credit card associations. Interchange and assessment fees are billed primarily as a percentage of dollar volume processed and, to a lesser extent, as a per transaction fee. In addition to costs directly related to the processing of merchant sales volume, electronic payment processing costs also include residual expenses. Residual expenses represent fees paid to third-party sales referral sources. Residual expenses are paid in accordance with contracted terms. These are generally linked to revenues derived from merchants successfully referred to the Company and that begin using the Company for merchant processing services. Such residual expenses are recognized in the Company’s statement of income. During the year ended December 31, 2016, the Company partnered with two sponsor banks for substantially all merchant transactions. Substantially all merchant transactions were processed by one merchant processor. Income Taxes The Company is a limited liability company (“LLC”) and therefore pays no corporate taxes. The Company’s income, instead, passes through to its member. Accordingly, no liability for Federal, State and/or local income taxes has been recorded in the accompanying financial statements. As a wholly-owned subsidiary of Holdco, the Company evaluated its tax positions at year end, and based on its analysis, determined that there were no uncertain tax positions. The Company’s U.S. Federal and State income tax returns prior to fiscal 2013 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Universal Processing Services of Wisconsin, LLC Notes to Financial Statements Year Ended December 31, 2016 9 Subsequent Events The Company has evaluated subsequent events for potential recognition and/or disclosure through February 22, 2017, the date these financial statements were available to be issued. 3. Fixed Assets The Company’s fixed assets are comprised of the following at December 31, 2016: Accumulated Depreciation Net Book Cost and Amortization Value Telephone systems 375,861$ 155,621$ 220,240$ Software 488,791 331,712 157,079 Leasehold improvements 63,644 53,227 10,417 Computer equipment 93,257 79,040 14,217 Website 5,205 5,118 87 Totals 1,026,758$ 624,718$ 402,040$ Depreciation expense related to fixed assets for the year ended December 31, 2016 was approximately $198,000. 4. Goodwill The carrying value of goodwill at December 31, 2016 is approximately $1,908,000. The Company performed a qualitative assessment to determine if it is more likely than not that the Company’s fair value is less than its carrying amount. Based on its qualitative assessment, the Company determined that goodwill was not impaired at December 31, 2016 and no further assessment was required. 5. Customer Merchant Accounts The net carrying value of customer merchant accounts is approximately $1,192,000 which consists of approximately $2,744,000 of gross costs, net of accumulated amortization of approximately $1,552,000 at December 31, 2016. Customer merchant accounts are being amortized over 66 months. Total amortization expense of customer merchant accounts using the sum of the year’s digits is included in depreciation and amortization in the accompanying statement of income was approximately $601,000. Total expected amortization expense for the next five fiscal years and thereafter is as follows: Universal Processing Services of Wisconsin, LLC Notes to Financial Statements Year Ended December 31, 2016 10 Year Ending December 31, 2017 480,935 2018 353,545 2019 228,385 2020 111,382 2021 17,025 Thereafter 328 1,191,600$ 6. Bank Note Payable, Net of Deferred Financing Costs In June 2015, the Company, CrystalTech Web Hosting, Inc. (“CrystalTech”) and Premier Payments LLC (“Premier”), all subsidiaries of Holdco, collectively as “Borrowers” entered into a Credit and Guarantee Agreement (the “Agreement”) with Goldman Sachs Bank USA which extended a multi draw term loan facility (the “Facility”) up to an aggregate principal amount of $38,000,000. The total outstanding balance under the Facility as of December 31, 2016 was $22,000,000. The Borrowers are collectively liable for the outstanding balance under the Facility. All assets of the Borrowers are pledged as collateral under the Agreement and the Facility is guaranteed by Holdco’s parent, Newtek Business Services Corp (“Newtek”). The Facility provides for monthly/quarterly interest only payments with total principal due at maturity. The Facility matures in June 2019. Borrowings under the facility are classified either as a “Base Rate Loan” or a “LIBOR Rate Loan” at the Company’s election. Each LIBOR Rate Loan shall bear interest on the outstanding balance at a rate equal to (a) the greater of LIBOR or 50 basis points plus (b) 7%, and each Base Rate Loan shall bear interest on the outstanding balance at a rate equal to (y) the greater of the Prime Rate or 350 basis points, plus (z) 6%. The effective interest rate at December 31, 2016 was 7.67%. The Company may make principal payments within 24 months of the closing date and pay a prepayment premium based on a percentage of the principal outstanding as defined in the Agreement. After 24 months, principal may be repaid under no penalty. The Agreement requires certain restrictive covenants for which the Company is in compliancewith as of December 31, 2016. At December 31, 2016, the Company had approximately $16,999,000 of total borrowings outstanding under the Facility. Interest expense and amortization of deferred financing costs for the year ended December 31, 2016 was approximately $1,608,000. Outstanding borrowings under the Bank note payable consisted of the following at December 31, 2016: Principal 16,998,694$ Unamortized deferred financing costs (567,165) Net carrying amount 16,431,529$ 7. Notes Receivable – Related Party The Company had $500,000 outstanding on its revolving line of credit with Newtek, at December 31, 2016. The line, which matures in June 2019, allows for maximum borrowings of $38,000,000 and bears interest at a rate equal to that in effect under the Company’s Facility, at any given time. The Company recorded related party interest income of approximately $183,000 during the year Universal Processing Services of Wisconsin, LLC Notes to Financial Statements Year Ended December 31, 2016 11 ended December 31, 2016. At December 31, 2016 there was approximately $188,000 in accrued interest income under the line. 8. Related Party Transactions The Company earned electronic payment processing revenue of approximately $45,000 from Premier. The Company incurred residual expenses totaling approximately $3,878,000 from several related parties. In addition, the Company incurred gateway fees of approximately $138,000 from Secure Cyber Gateway Services, LLC, and breach insurance costs of approximately $270,000 from Newtek Insurance Agency, LLC, which are included in electronic payment processing costs on the statement of income. Salaries and overhead costs of approximately $36,000 charged from CrystalTech are included in salaries and benefits. Payroll processing costs of approximately $20,000 from PMTWorks Payroll, LLC and managed technology services of approximately $160,000 from CrystalTech are included in other general and administrative costs. At December 31, 2016, total amounts due to related parties are approximately $147,000. Included in salaries and benefits are charges from Newtek related to salaries for management and certain other employees that perform services for the Company. Total amounts allocated to the Company for the year ended December 31, 2016, were approximately $468,000. The Company’s parent, Holdco, and Newtek are both guarantors of the Facility with Goldman Sachs Bank USA. 9. Commitments and Contingencies Operating Commitments The Company entered into noncancellable operating leases for office facilities with future rentals as follows: Year Ending December 31, 2017 181,067 181,067$ Total rent expense for the year ended December 31, 2016 was approximately $186,000. Under the amended terms of a Service Agreement, amended terms of a Merchant Program ProcessingAgreement, amended terms of a Preferred Card Agreement, and amended terms of a Marketing Agreement, UPS-WI is required to pay minimum fees of $4,200,000 in total under these agreements during the period January 1, 2016 through December 31, 2017. The term of the Service agreement was extended to December 31, 2018. The Merchant Program Processing Agreement initial term was extended to November 30, 2018 and renews automatically each year. The Marketing Agreement initial term was extended to May 31, 2018 and renews automatically each two years for two year terms. The Preferred Card Agreement initial term was extended to April 30, 2018 and renews automatically for six-month terms. Universal Processing Services of Wisconsin, LLC Notes to Financial Statements Year Ended December 31, 2016 12 Under the terms of an Independent Sales Organization Agreement and Member Services Provider Agreement between UPS-WI and one of their sponsoring banks, UPS-WI is required to pay monthly minimum fees of $10,000 during the term of the agreement. The Company exceeded the monthly minimum required amount under the agreement for the year ended December 31, 2016. The agreement renews automatically annually. Under the amended terms of a Processing Services Agreement between UPS-WI and one of their front-end processors, UPS-WI is required to pay a quarterly minimum of $68,000 during the term of the amended agreement. The Company’s fee payments for the 12-month period ended December 31, 2016, exceeded the minimum required amount under these agreements. The agreement expires July 2018. Litigation In 2013, the Federal Trade Commission (the “FTC”) amended an existing complaint in the matter Federal Trade Commission v. WV Universal Management, LLC et al., pending in the United States District Court for the Middle District of Florida (the “Court”), to add UPS-WI, as an additional defendant on one count of providing substantial assistance in violation of the Telemarketing Sales Rule. On November 18, 2014, the Court issued an Order granting the FTC’s motion for summary judgment against UPS-WI on the single count. Subsequently, the FTC filed motions for a permanent injunction and equitable monetary relief against UPS-WI and the other remaining defendants. Prior to the Court hearing on the motions, UPS-WI and the FTC reached a settlement on the FTC’s motion for a permanent injunction. The Court granted the FTC’s motion for equitable relief against UPS-WI and the other remaining defendants, ordering that the remaining defendants pay approximately $1,735,000 in equitable monetary relief. This amount was deposited with the Court pending the outcome of an appeal of the judgement. On June 14, 2016, the United States Court of Appeals for the Eleventh Circuit set aside the Court’s judgment awarding joint and several liability for equitable monetary relief in the amount of approximately $1,735,000 against UPS-WI, and remanded the case to the Court for findings of fact and conclusions of law as to whether and why UPS-WI should be jointly and severally liable for restitution, and in what amount, if any. On October 18, 2016, the Court ordered that the $1,735,000 payment be returned to UPS-WI. On October 26, 2016, the Court entered an equitable monetary judgment against UPS-WI for approximately $1,735,000. UPS-WI has filed a notice of appeal of the judgment. The total $1,735,000 has been accrued and is included in the balance sheet in Accounts payable and accrued expenses. There is no current year income statement effect. In January 2014, NCMIC Finance Corporation (“NCMIC”) filed a complaint against the Company in the United States District Court for the Southern District of Iowa. The complaint asserted claims against the Company for breach of the UPS-WI and NCMIC agreement for the processing of credit card transactions, and seeks monetary relief. In April 2016, in order to avoid the cost of trial and any appeals, UPS-WI settled the matter for $200,000. The total $200,000 was paid during 2016 and is included in the statement of income in other general and administrative costs. In September 2014, UPS-WI filed an action in Wisconsin state court against a former independent sales agent and his company. The complaint alleges several causes of action including breach of contract. The defendant filed an answer and filed counterclaims against UPS-WI seeking monetary damages. The court granted certain aspects of defendants’ motions for summary judgment, Universal Processing Services of Wisconsin, LLC Notes to Financial Statements Year Ended December 31, 2016 13 dismissing certain of the claims asserted by UPS-WI. The matter is presently stayed pending the Wisconsin Supreme Court’s ruling on matters under appeal. Universal Processing Services of Wisconsin, LLC (A Limited Liability Company) and Subsidiary Consolidated Financial Report and Independent Auditor’s Report Year Ended December 31, 2015 Universal Processing Services of Wisconsin, LLC and Subsidiary Index Year Ended December 31, 2015 Pages Independent Auditor’s Report ................................................................................................................... 1 Financial Statements Consolidated Balance Sheet .......................................................................................................................... 2 Consolidated Statement of Income ............................................................................................................... 3 Consolidated Statement of Changes in Member’s Deficit ............................................................................ 4 Consolidated Statement of Cash Flows ........................................................................................................ 5 Notes to Consolidated Financial Statements ............................................................................................ 6-12 Independent Auditor's Report To the Board of Directors and Member of Universal Processing Services of Wisconsin, LLC We have audited the accompanying consolidated financial statements of Universal Processing Services of Wisconsin, LLC and Subsidiary, which comprise the consolidated balance sheet as of December 31, 2015, and the related consolidated statements of income, changes in member’s deficit and cash flows for the year then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Universal Processing Services of Wisconsin, LLC and Subsidiary as of December 31, 2015, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. C Jericho, New York March 2, 2016 Universal Processing Services of Wisconsin, LLC and Subsidiary Consolidated Balance Sheet December 31, 2015 See notes to consolidated financial statements. 2 Assets Current Assets: Cash 3,210,066$ Accounts receivable 2,545,411 Prepaid expenses and other current assets 83,348 Inventory 287,475 Total current assets 6,126,300 Fixed assets, net 396,483 Customer merchant accounts, net 1,640,588 Deferred financing costs, net 824,397 Restricted cash 492,715 Due from related parties 378,188 Notes receivable - related party 5,646,749 Goodwill 1,908,495 Total assets 17,413,915$ Liabilities and Member's Deficit Liabilities: Current Liabilities: Accounts payable and accrued expenses 2,231,648$ Residuals payable 809,843 Due to related parties 264,778 Chargeback reserves 604,926 Total current liabilities 3,911,195 Bank note payable 16,998,694 Total liabilities 20,909,889 Commitments and contingencies Member's deficit (3,495,974) Total liabilities and member's deficit 17,413,915$ Universal Processing Services of Wisconsin, LLC and Subsidiary Consolidated Statement of Income Year Ended December 31, 2015 See notes to consolidated financial statements. 3 Revenue: Electronic payment processing 98,474,937$ Expenses: Electronic payment processing costs 82,505,282 Salaries and benefits 5,070,083 Professional fees 1,682,895 Depreciation and amortization 318,262 Other general and administrative costs 1,041,980 Total expenses 90,618,502 Income from operations 7,856,435 Interest expense, net (811,383) Inter st income - related party 484,222 Net income 7,529,274$ Universal Processing Services of Wisconsin, LLC and Subsidiary Consolidated Statement of Changes in Member’s Deficit Year Ended December 31, 2015 See notes to consolidated financial statements. 4 Member's Equity (Deficit) Balance, December 31, 2014 3,537,404$ Net income 7,529,274 Member distributions (14,562,652) Balance, December 31, 2015 (3,495,974)$ Universal Processing Services of Wisconsin, LLC and Subsidiary Consolidated Statement of Cash Flows Year Ended December 31, 2015 See notes to consolidated financial statements. 5 Cash flows from operating activities: Net income 7,529,274$ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 318,262 Amortization of deferred financing costs 140,493 Changes in operating assets and liabilities: Restricted cash 209,304 Accounts receivable 1,115,267 Prepaid expenses and other current assets 36,330 Inventory (78,002) Accounts payable, accrued expenses and other current liabilities (1,777,781) Due to/from related parties (957,313) Net cash provided by operating activities 6,535,834 Cash flows from investing activities: Purchase of customer merchant accounts (1,524,853) Net advances under related party note (5,646,749) Purchase of fixed assets (263,761) Net cash used in investing activities (7,435,363) Cash flows used in financing activities: Distributions to member (14,562,652) Proceeds from term loan 16,998,694 Deferred financing costs paid (964,890) Net cash provided by financing activities 1,471,152 Net increase in cash 571,623 Cash, beginning of year 2,638,443 Cash, end of year 3,210,066$ Supplemental disclosure of cash flow information Interest paid 680,281$ Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements Year Ended December 31, 2015 6 1. Organization, Basis of Presentation and Description of Business Universal Processing Services of Wisconsin, LLC (“UPS-WI”), was organized as a limited liability company (“LLC”) under the laws of the State of Wisconsin and is a wholly-owned subsidiary of Newtek Business Services Holdco 1, Inc. (“Holdco”). As a limited liability company, the liability of Holdco is limited to its capital account. Prior to being a wholly-owned subsidiary of Holdco, UPS-WI was a wholly-owned subsidiary of The Whitestone Group, LLC (“The Whitestone Group”). In 2015, the Whitestone Group transferred all of its membership interest in UPS-WI to Holdco. UPS-WI, and its wholly-owned subsidiary, Solar Processing Services, LLC (“Solar”), are hereinafter referred to as the “Company”. The Company markets credit and debit card processing services, check approval services and ancillary processing equipment and software to merchants who accept credit cards, debit cards, checks and other non-cash forms of payment. The accompanying consolidated financial statements include the accounts of UPS-WI and Solar. All significant intercompany accounts and transactions have been eliminated in consolidation. 2. Significant Accounting Policies Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates, by their nature, are based on judgment and available information. Actual results could differ from those estimates. Material estimates that are particularlysusceptible to significant changes in the near term relate to the determination of the reserve for chargeback losses. Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable, residuals payable, notes receivable from a related party and a bank note payable. The carrying amounts of cash, accounts receivable, accounts payable and residuals payable approximate fair value due to their short term maturities. The carrying amounts of notes receivable from a related party and bank note payable approximate fair value due to the variable interest rate they carry. Cash The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Invested cash is held exclusively at financial institutions of high credit quality. As of December 31, 2015, cash deposits in excess of insured amounts totaled approximately $2,648,000. Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements Year Ended December 31, 2015 7 Restricted Cash Under the terms of the processing agreement between UPS-WI and its processing banks, UPS-WI maintains cash accounts as reserves against chargeback losses. As the Company receives fees from the processing bank, a certain percentage is allocated to the cash reserve account. Inventory Inventory consists primarily of equipment to be installed in merchant locations to enable them to process electronic transactions. Inventory is stated at the lower of cost or market, which is determined on a FIFO (first in-first out) basis. Fixed Assets Fixed assets, which are comprised of telephone systems, software, website, computer equipment and leasehold improvements, are stated at cost less accumulated depreciation and amortization. Depreciation of fixed assets is provided on a straight-line basis using estimated useful lives of the related assets. Amortization of leasehold improvements is provided on a straight-line basis using the lesser of the useful life of the asset, which generally is three to five years, or lease term. Goodwill and Customer Merchant Accounts Goodwill is not amortized but is instead subject to impairment testing, at least annually. Customer merchant accounts with finite lives are amortized over 66 months as discussed in Note 5. The Company considers the following to be some examples of indicators that may trigger an impairment review outside its annual impairment review: (i) significant under-performance or loss of key contracts acquired in an acquisition relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of the acquired assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) asignificant decline in the Company’s fair market value for a sustained period of time; and (vi) regulatory changes. In assessing the recoverability of the Company’s goodwill and customer merchant accounts, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. These include estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Company, the period over which cash flows will occur, and determination of the Company’s cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and conclusions on goodwill impairment. Revenue Recognition Electronic Payment Processing Electronic payment processing and fee income is derived from the electronic processing of credit and debit card transactions that are authorized and captured through third-party networks. Typically, merchants are charged for these processing services as a percentage of each transaction dollar plus a flat fee per transaction. Certain merchant customers are charged miscellaneous fees, including fees for handling charge-backs or returns, monthly minimum fees, statement fees and fees for other miscellaneous services. Revenues derived from the electronic processing of MasterCard®, Visa® and Discover® sourced credit and debit card transactions are reported gross of amounts paid to sponsor banks. Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements Year Ended December 31, 2015 8 Interest Income Interest income is recorded on an accrual basis, when earned, based on the current lending rate in place. Reserve for Losses on Merchant Accounts Disputes between a cardholder and a merchant periodically arise as a result of, among other things, cardholder dissatisfaction with merchandise quality or merchant services. Such disputes may not be resolved in the merchant’s favor. In these cases, the transaction is “charged back” to the merchant, which means the purchase price is refunded to the customer through the merchant’s acquiring bank and charged to the merchant. If the merchant has inadequate funds, the Company or, under limited circumstances, the Company and the acquiring bank, must bear the credit risk for the full amount of the transaction. The Company evaluates its risk for such transactions and estimates its potential loss for charge-backs based primarily on historical experience and other relevant factors. The Company records reserves for charge-backs and contingent liabilities when such amounts are deemed to be probable and estimable. The required reserves may change in the future due to new developments, including, but not limited to, changes in litigation or increased charge-back exposure as the result of merchant insolvency, liquidation, or other reasons. The required reserves are reviewed periodically to determine if adjustments are required. Electronic Payment Processing Costs Electronic payment processing costs consist principally of costs directly related to the processing of merchant sales volume, including interchange fees, Visa®, MasterCard® and Discover® dues and assessments, bank processing fees and costs paid to third-party processing networks. Such costs are recognized at the time the merchant transactions are processed or when the services are performed. Two of the most significant components ofelectronic processing expenses include interchange and assessment costs, which are set by the credit card associations. Interchange costs are passed on to the entity issuing the credit card used in the transaction and assessment costs are retained by the credit card associations. Interchange and assessment fees are billed primarily as a percentage of dollar volume processed and, to a lesser extent, as a per transaction fee. In addition to costs directly related to the processing of merchant sales volume, electronic payment processing costs also include residual expenses. Residual expenses represent fees paid to third-party sales referral sources. Residual expenses are paid in accordance with contracted terms. These are generally linked to revenues derived from merchants successfully referred to the Company and that begin using the Company for merchant processing services. Such residual expenses are recognized in the Company’s consolidated statement of income. During the year ended December 31, 2015, the Company partnered with two sponsor banks for substantially all merchant transactions. Substantially all merchant transactions were processed by one merchant processor. Income Taxes The Company is a limited liability company (“LLC”) and therefore pays no corporate taxes. The Company’s income, instead, passes through to its member. Accordingly, no liability for Federal, State and/or local income taxes has been recorded in the accompanying consolidated financial statements. As a wholly-owned subsidiary of Holdco, the Company evaluated its tax positions at year end, and based on its analysis, determined that there were no uncertain tax positions. The Company’s U.S. Federal and State income tax returns prior to fiscal 2012 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements Year Ended December 31, 2015 9 Subsequent Events The Company has evaluated subsequent events for potential recognition and/or disclosure through March 2, 2016, the date these consolidated financial statements were available to be issued. 3. Fixed Assets The Company’s fixed assets are comprised of the following at December 31, 2015: Accumulated Depreciation Net Book Cost and Amortization Value Telephone systems 273,549$ 88,423$ 185,126$ Software 398,256 222,590 175,666 Leasehold improvements 63,644 41,546 22,098 Computer equipment 86,157 72,648 13,509 Website 5,202 5,118 84 Totals 826,808$ 430,325$ 396,483$ Depreciation expense related to fixed assets for the year ended December 31, 2015 was approximately $166,000. 4. Goodwill The carrying value of goodwill at December 31, 2015 is approximately $1,908,000. The Company performed a qualitative assessment to determine if it is more likely than not that the Company’s fair value is less than its carrying amount. Based on its qualitative assessment, the Company determined that goodwill was not impaired at December 31, 2015 and no further assessment was required. 5. Customer Merchant Accounts The net carrying value of customer merchant accounts is approximately $1,641,000 which consists of approximately $2,593,000 of gross costs, net of accumulated amortization of approximately $952,000 at December 31, 2015. Customer merchant accounts are being amortized over 66 months. Total amortization expense of customer merchant accounts using the sum of the year’s digits is included in depreciation and amortization in the accompanying consolidated statement of income was approximately $152,000. In 2015, the Company purchased approximately $1,525,000 of customer merchant accounts of which approximately $1,515,000 was purchased from three separate related parties.The purchase price was based on the present value of the merchant accounts future cash flows. These merchant accounts are being amortized over 66 months. Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements Year Ended December 31, 2015 10 Total expected amortization expense for the next five fiscal years and thereafter is as follows: Year Ending December 31, 2016 566,393$ 2017 442,921 2018 322,317 2019 203,943 2020 94,739 Thereafter 10,275 1,640,588$ 6. Bank Note Payable In 2015, the Company, CrystalTech Web Hosting, Inc. (“CrystalTech”) and Premier Payments LLC (“Premier”), all subsidiaries of Holdco, collectively as “Borrowers” entered into a Credit and Guarantee Agreement (the “Agreement”) with Goldman Sachs Bank USA which extended a multi draw term loan facility (the “Facility”) up to an aggregate principal amount of $38,000,000. The total outstanding balance under the Facility as of December 31, 2015 was $22,000,000. The Borrowers are collectively liable for the outstanding balance under the Facility. All assets of the Borrowers are pledged as collateral under the Agreement. The Facility provides for monthly interest only payments with total principal due at maturity. The Facility matures in June 2019. Borrowings under the facility are classified either as a “Base Rate Loan” or “LIBOR Rate Loan” at the Company’s election. Each LIBOR Rate Loan shall bear interest on the outstanding balance at a rate equal to (a) the greater of LIBOR or 50 basis points plus (b) 7% and each Base Rate Loan shall bear interest on the outstanding balance at a rate equal to (y) the greater of the Prime Rate or 350 basis points, plus (z) 6%. The effective interest rate at December 31, 2015 was 7.5%. The Company may make principal payments within 24 months of the closing date and pay a prepayment premium based on a percentage of the principal outstanding as defined in the Agreement. After 24 months, principal may be repaid under no penalty. The Agreement requires certain restrictive covenants for which the Company is in compliance with as of December31, 2015. During the year ended December 31, 2015, the Company borrowed approximately $16,999,000 of the $22,000,000 total borrowings under the Facility all of which is outstanding as of December 31, 2015. Interest expense for the year ended December 31, 2015 was approximately $680,000. Deferred financing costs incurred by the Company related to the Facility were $965,000. Amortization of deferred financing costs for the year ended December 31, 2015 was approximately $140,000 and included in interest expense on the consolidated income statement. Deferred financing costs are amortized over the term of the Facility under the effective interest method. 7. Notes Receivable – Related Party In June 2015, the Company and CrystalTech entered into a revolving line of credit agreement with Newtek Business Services Corp. (“Newtek”) and Holdco as borrowers. The line of credit bears interest at a rate of 7.5% and matures in June 2019. Maximum borrowings under the line of credit are $38,000,000. At December 31, 2015, net advances to Newtek and Holdco are approximately Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements Year Ended December 31, 2015 11 $5,647,000. The Company recorded related interest income of approximately $484,000 during the year ended December 31, 2015. 8. Related Party Transactions The Company generated management fees of $11,000 each from Summit Systems, LLC (“Summit”) and Business Connect, LLC (“Business Connect”), both affiliates of the Company. At December 31, 2015, the total amount due from related parties was approximately $378,000. The Company incurred residual expenses totaling approximately $1,971,000 from several related parties. In addition, the Company incurred gateway fees of approximately $129,000 from Secure Cyber Gateway Services, LLC, and breach insurance costs of approximately $270,000 from Newtek Insurance Agency, LLC, which are included in electronic payment processing costs on the consolidated statement of income. Salaries and overhead costs of approximately $352,000 and $42,000 charged from Business Connect and CrystalTech, respectively, are included in salaries and benefits. Payroll processing costs of approximately $15,000 from PMTWorks Payroll, LLC, overhead expenses from Business Connect of approximately $53,000, and managed technology services of approximately $15,000 from CrystalTech are included in other general and administrative costs. At December 31, 2015 total amounts due to related parties are approximately $265,000. Included in salaries and benefits are charges from Newtek related to salaries for management and certain other employees that perform services for the Company. Total amounts allocated to the Company for the year ended December 31, 2015 were approximately $590,000. In 2015, the Company purchased approximately $1,515,000 of customer merchant accounts from three related parties. See Note 5. In June 2015, the Company and CrystalTech providedNewtek and Holdco with a revolving line of credit facility. See Note 7. The Company’s parent, Holdco, and Newtek are both guarantors of the Facility with Goldman Sachs Bank USA. 9. Commitments and Contingencies Operating Commitments The Company entered into noncancellable operating leases for office facilities with future rentals as follows: Year Ending December 31, 2016 176,917$ 2017 181,067 357,984$ Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements Year Ended December 31, 2015 12 Total rent expense for the year ended December 31, 2015 was approximately $161,000. Under the amended terms of a Service Agreement and amended terms of Merchant Program Processing Agreement, UPS-WI is required to pay minimum fees of $1,000,000 in total under these agreements during each processing year. The Company’s fee payments for the 12-month period ended December 31, 2015, exceeded the minimum required amount under these agreements. The term of the service agreement was extended to March 2016. The Merchant Program Processing Agreement initial term ends December 2015 and renews automatically each year. Under the terms of an Independent Sales Organization Agreement and Member Services Provider Agreement between UPS and one of their sponsoring banks, UPS-WI is required to pay monthly minimum fees of $10,000 during the term of the agreement. The Company exceeded the monthly minimum required amount under the agreement for the year ended December 31, 2015. The agreement renews automatically annually. Under the amended terms of a Processing Services Agreement between UPS-WI and one of their front-end processors, UPS-WI is required to pay a quarterly minimum of $68,000 during the term of the amended agreement. The Company’s fee payments for the 12-month period ended December 31, 2015, exceeded the minimum required amount under these agreements. The agreement expires July 2016. Litigation In 2013, the Federal Trade Commission (the “FTC”) amended an existing complaint in the matter Federal Trade Commission v. WV Universal Management, LLC et al., pending in the United States District Court for the Middle District of Florida (the “Court”), to add UPS-WI, as an additional defendant on one count of providing substantial assistance in violation of theTelemarketing Sales Rule. On November 18, 2014, the Court issued an Order granting the FTC’s motion for summary judgment against UPS-WI on the single count. Subsequently, the FTC filed motions for a permanent injunction and equitable monetary relief against UPS-WI and the other remaining defendants. Prior to the Court hearing on the motions, UPS-WI and the FTC reached a settlement on the FTC’s motion for a permanent injunction. The Court granted the FTC’s motion for equitable relief against UPS-WI and the other remaining defendants, ordering that the remaining defendants pay approximately $1,735,000 in equitable monetary relief. This amount has been deposited with the Court pending the outcome of an appeal of the judgement. In January 2014, NCMIC Finance Corporation (“NCMIC”) filed a complaint against the Company in the United States District Court for the Southern District of Iowa. The complaint asserts claims against the Company for breach of the UPS-WI and NCMIC agreement for the processing of credit card transactions, and seeks monetary relief. The Company believes that the claims asserted in the complaint are wholly without merit and intends to vigorously defend the action. Trial is currently set for March 2016. The Company does not expect this matter to have a material impact on its operations. In October 2015, the Company filed an action against NCMIC and NCMIC related entities seeking, among other things, indemnification in connection with the claims asserted by NCMIC against the Company, as well as for monetary damages for breach of contract and fraud. Universal Processing Services of Wisconsin, LLC (A Limited Liability Company) and Subsidiary Consolidated Financial Report As of December 31, 2014 and for the Period November 12, 2014 to December 31, 2014 (Unaudited) Universal Processing Services of Wisconsin, LLC and Subsidiary Index December 31, 2014 Pages Financial Statements Consolidated Balance Sheet .......................................................................................................................... 1 Consolidated Statement of Operations .......................................................................................................... 2 Consolidated Statement of Changes in Member’s Equity ............................................................................ 3 Consolidated Statement of Cash Flows ........................................................................................................ 4 Notes to Consolidated Financial Statements ............................................................................................ 5-10 Universal Processing Services of Wisconsin, LLC and Subsidiary Consolidated Balance Sheet (Unaudited) December 31, 2014 See notes to consolidated financial statements. 1 Assets Cash and cash equivalents 2,638,443$ Restricted cash 702,019 Accounts receivable 3,660,678 Prepaid expenses and other current assets 119,678 Inventory 209,473 Total current assets 7,330,291 Fixed assets, net 298,653 Customer merchant accounts, net 268,066 Due from related parties 161,281 Goodwill 1,908,495 Total assets 9,966,786$ Liabilities and Member's Equity Liabilities: Accounts payable and accrued expenses 3,344,614$ Residuals payable 1,090,431 Chargeback reserves 989,153 Total current liabilities 5,424,198 Due to related parties 1,005,184 Total liabilities 6,429,382 Commitments and contingencies Member's equity 3,537,404 Total liabilities and member's equity 9,966,786$ Universal Processing Services of Wisconsin, LLC and Subsidiary Consolidated Statement of Operations (Unaudited) For the Period November 12, 2014 to December 31, 2014 See notes to consolidated financial statements. 2 Revenues Electronic payment processing 11,520,751$ Expenses Electronic payment processing costs 9,756,025 Salaries and benefits 535,340 Profes ional fees 1,900,119 Depreciation and amortization 34,798 Other general and administrative costs 109,413 Total expenses 12,335,695 Net loss (814,944)$ Universal Processing Services of Wisconsin, LLC and Subsidiary Consolidated Statement of Changes in Member’s Equity (Unaudited) For the Period November 12, 2014 to December 31, 2014 See notes to consolidated financial statements. 3 Member's Equity Balance, November 12, 2014 42,098,332$ Net loss (814,944) Member distributions (37,745,984) Balance, December 31, 2014 3,537,404$ Universal Processing Services of Wisconsin, LLC and Subsidiary Consolidated Statement of Cash Flows (Unaudited) For the Period November 12, 2014 to December 31, 2014 See notes to consolidated financial statements. 4 Cash flows from operating activities: Net loss (814,944)$ Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 34,798 Changes in operating assets and liabilities: Restricted cash (68,753) Accounts receivable 797,773 Prepaid expenses and other current assets 23,891 Inventory (22,939) Accounts payable and accrued expenses 1,683,666 Due from related parties (34,620) Due to related parties (138,782) Net cash provided by operating activities 1,460,090 Cash flows from investing activities: Purchase of customer merchant accounts (7,172) Purchase of fixed assets (9,889) Net cash used in investing activities (17,061) Cash flows used in financing activities: Advances on revolving credit line - related party (9,472,390) Net increase in cash and cash equivalents 1,443,029 Cash and cash equivalents, beginning of year 1,195,414 Cash and cash equivalents, end of year 2,638,443$ Supplemental disclosure of cash flow activities Non-cash financing activity: Advances/distributions to related party 37,745,984$ Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements (Unaudited) December 31, 2014 5 1. Organization, Basis of Presentation and Description of Business Universal Processing Services of Wisconsin, LLC (“UPS-WI”), was organized as a limited liability company (“LLC”) under the laws of the State of Wisconsin and is a wholly owned subsidiary of The Whitestone Group, LLC (“The Whitestone Group”). The accompanying consolidated financial statements include the accounts of UPS-WI and its wholly owned subsidiary, Solar Processing Services, LLC (“Solar”). All significant intercompany accounts and transactions have been eliminated in consolidation. UPS-WI, along with its subsidiary, Solar, are hereinafter referred to as “the Company". The Company markets credit and debit card processing services, check approval services and ancillary processing equipment and software to merchants who accept credit cards, debit cards, checks and other non-cash forms of payment. 2. Significant Accounting Policies Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates, by their nature, are based on judgment and available information. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the reserve for chargeback losses. Financial Instruments The Company’s financial instruments include cash and cash equivalents, accounts receivable, and accounts payable including residuals payable. The carrying amounts of the cash and cash equivalents,accounts receivable, and accounts and residuals payable approximate fair value because of their short term maturity and interest rates which approximate current rates. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Invested cash is held exclusively at financial institutions of high credit quality. As of December 31, 2014, cash deposits in excess of FDIC deposit insurance and SIPC insurance totaled approximately $2,207,000. Restricted Cash Under the terms of the processing agreement between UPS-WI and its processing banks, UPS-WI maintains cash accounts as reserves against chargeback losses. As fees are received by the processing bank, a certain percentage is allocated to the cash reserve account. Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements (Unaudited) December 31, 2014 6 Inventory Inventory consists primarily of equipment to be installed in merchant locations to enable them to process electronic transactions. Inventory is stated at the lower of cost or market, determined on the FIFO (first in-first out) basis. Fixed Assets Fixed assets, which are comprised of furniture and fixtures, software, computer office equipment and leasehold improvements, are stated at cost less accumulated depreciation and amortization. Depreciation of fixed assets is provided on a straight-line basis using estimated useful lives of the related assets. Amortization of leasehold improvements is provided on a straight-line basis using the lesser of the useful life of the asset or lease term. Useful lives of assets are generally three to five years. Goodwill and Customer Merchant Accounts Goodwill is not amortized and is subject to impairment tests, at least annually. Customer merchant accounts with finite lives are amortized over their useful lives ranging from 18 to 66 months, and evaluated as discussed in Note 5. The Company considers the following to be some examples of indicators that may trigger an impairment review outside its annual impairment review: (i) significant under-performance or loss of key contracts acquired in an acquisition relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of the acquired assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. In assessing the recoverability of the Company’s goodwill and customer merchant accounts, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. These include estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Company, the useful life over which cash flows will occur, and determination of the Company’s cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and conclusions on goodwill impairment. Revenue Recognition Electronic payment processing and fee income is derived from the electronic processing of credit and debit card transactions that are authorized and captured through third-party networks. Typically, merchants are charged for these processing services on a percentage of the dollar amount of each transaction plus a flat fee per transaction. Certain merchant customers are charged miscellaneous fees, including fees for handling charge-backs or returns, monthly minimum fees, statement fees and fees for other miscellaneous services. Revenues derived from the electronic processing of MasterCard®, Visa® and Discover® sourced credit and debit card transactions are reported gross of amounts paid to sponsor banks. Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements (Unaudited) December 31, 2014 7 Reserve for Losses on Merchant Accounts Disputes between a cardholder and a merchant periodically arise as a result of, among other things, cardholder dissatisfaction with merchandise quality or merchant services. Such disputes may not be resolved in the merchant’s favor. In these cases, the transaction is “charged back” to the merchant, which means the purchase price is refunded to the customer through the merchant’s acquiring bank and charged to the merchant. If the merchant has inadequate funds, the Company or, under limited circumstances, the Company and the acquiring bank, must bear the credit risk for the full amount of the transaction. The Company evaluates its risk for such transactions and estimates its potential loss for charge-backs based primarily on historical experience and other relevant factors. The Company records reserves for charge-backs and contingent liabilities when such amounts are deemed to be probable and estimable. The required reserves may change in the future due to new developments, including, but not limited to, changes in litigation or increased charge-back exposure as the result of merchant insolvency, liquidation, or other reasons. The required reserves are reviewed periodically to determine if adjustments are required. Electronic Payment Processing Costs Electronic payment processing costs consist principally of costs directly related to the processing of merchant sales volume, including interchange fees, VISA®, MasterCard® and Discover® dues and assessments, bank processing fees and costs paid to third-party processing networks. Such costs are recognized at the time the merchant transactions are processed or when the services are performed. Two of the most significant components of electronic processing expenses include interchange and assessment costs, which are set by the credit card associations.Interchange costs are passed on to the entity issuing the credit card used in the transaction and assessment costs are retained by the credit card associations. Interchange and assessment fees are billed primarily as a percent of dollar volume processed and, to a lesser extent, as a per transaction fee. In addition to costs directly related to the processing of merchant sales volume, electronic payment processing costs also include residual expenses. Residual expenses represent fees paid to third-party sales referral sources. Residual expenses are paid under various formulae as contracted. These are generally linked to revenues derived from merchants successfully referred to the Company and that begin using the Company for merchant processing services. Such residual expenses are recognized in the Company’s consolidated statements of income. Income Taxes The Company is an LLC and in lieu of corporate taxes, the members of the LLC are taxed on their proportionate share of the entity’s taxable income. Accordingly, no liability for federal, state and local income taxes has been recorded in the accompanying consolidated financial statements. As a controlled portfolio company of a public company, the Company evaluated its tax positions at year end, and based on its analysis, determined that there were no uncertain tax positions. The Company’s U.S. Federal and state income tax returns prior to fiscal 2011 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Subsequent Events The Company has evaluated subsequent events for potential recognition and/or disclosure through March 31, 2015, the date these financial statements were available to be issued. Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements (Unaudited) December 31, 2014 8 3. Fixed Assets The Company’s fixed assets are comprised of the following at December 31, 2014: Accumulated Depreciation and Net Book Cost Amortization Value Computer equipment 75,730$ 62,382$ 13,348$ Furniture and fixtures 125,639 48,670 76,969 Software 292,829 118,770 174,059 Website 5,205 4,771 434 Leasehold improvements 63,644 29,801 33,843 Total 563,047$ 264,394$ 298,653$ Depreciation expense related to fixed assets for the period November 12, 2014 to December 31, 2014 was $17,088. 4. Goodwill The carrying value of goodwill at December 31, 2014 is $1,908,495. Based upon the Company’s performance of an impairment test using the fair value approach of the discounted cash flows method, the Company determined that goodwill was not impaired at December 31, 2014. 5. Customer Merchant Accounts The carrying amount of customer merchant accounts, net of accumulated amortization at December 31, 2014 is $268,066. Customer merchant accounts are being amortized over sixty-six months. Total amortization expense of customer merchant accounts included in the accompanying consolidated statement of income was $17,710. Total expected amortization expense for the next five fiscal years and thereafter is as follows: December 31, Amount 2015 103,671$ 2016 74,579 2017 50,418 2018 29,127 2019 10,065 Thereafter 206 Total 268,066$ Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements (Unaudited) December 31, 2014 9 6. Related Party Transactions The Company generated management and consulting fees of approximately $1,500 and $2,500, respectively from Summit Systems, LLC (“Summit”), and $1,500 in management fees from Business Connect, LLC (“Business Connect”). Summit and Business Connect are both affiliates of The Whitestone Group. Amounts due from related parties at December 31, 2014 were approximately $161,000. The Company incurred residual expenses totaling approximately $46,000, gateway fees of approximately $16,000, breach insurance of approximately $34,000, salaries and overhead of approximately $33,000, payroll processing of approximately $1,800 and server support services of approximately $1,900 from affiliates of The Whitestone Group. These expenses are included in electronic payment processing costs, salaries and benefits and other general and administrative costs respectively, on the consolidated statement of income. The total liabilities resulting from related party transactions included in due to related parties on the consolidated balance sheet at December 31, 2014 is approximately $1,005,000. 7. Commitments and Contingencies Operating Commitments The Company entered into noncancellable operating leases for office facilities with future rentals as follows: Year Ended December 31, 2015 160,788$ 2016 176,905 2017 181,067 Total 518,760$ Under the amended terms of a Service Agreement and amended terms of Merchant Program Processing Agreement, UPS is required to pay minimum fees of $1,000,000 in total under these agreements during each processing year. The Company’s fee payments for the 12-month period ended December 31, 2014, exceeded the minimum required amount under these agreements. The term of the service agreement ends December 2015. The Merchant ProgramProcessing Agreement initial term ends December 2015 and renews automatically each year. Under the terms of an Independent Sales Organization Agreement and Member Services Provider Agreement between UPS and one of their sponsoring banks, UPS is required to pay monthly minimum fees of $10,000 during the term of the agreement. The Company exceeded the monthly minimum required amount under the agreement for the year ended December 31, 2014. The agreement renews automatically annually. Universal Processing Services of Wisconsin, LLC and Subsidiary Notes to Consolidated Financial Statements (Unaudited) December 31, 2014 10 Under the amended terms of a Processing Services Agreement between UPS and one of their front- end processors, UPS is required to pay a quarterly minimum of $68,000 during the term of the amended agreement. The Company’s fee payments for the 12-month period ended December 31, 2014, exceeded the minimum required amount under these agreements. The agreement expires July 2016. Litigation In 2013, the Federal Trade Commission (the “FTC”) amended an existing complaint in the matter Federal Trade Commission v. WV Universal Management, LLC et al., pending in the United States District Court for the Middle District of Florida (the “Court”), to add Universal Processing Services of Wisconsin, LLC, as an additional defendant on one count of providing substantial assistance in violation of the Telemarketing Sales Rule. On November 18, 2014, the Court issued an Order granting the FTC’s motion for summary judgment against UPS-WI on the single count. Subsequently, the FTC filed motions for a permanent injunction and equitable monetary relief against UPS-WI and the other remaining defendants. Prior to the Court hearing on the motions, UPS-WI and the FTC reached a settlement on the FTC’s motion for a permanent injunction. The Court granted the FTC’s motion for equitable relief against UPS-WI and the other remaining defendants, ordering that the remaining defendants pay $1,734,972 in equitable monetary relief. While the court has yet to issue a judgment setting forth the terms of the relief granted, UPS-WI has recorded a reserve for the full amount of the potential loss as of December 31, 2014, which is reflected in the consolidated statement of income.

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