8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

May 9, 2008 (May 5, 2008)

Date of Report (date of Earliest Event Reported)

NEWTEK BUSINESS SERVICES, INC.

(Exact Name of Company as Specified in its Charter)

NEW YORK	001-16123	11-3504638
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

1440 Broadway, 17^th floor, New York, NY 10018

(Address of principal executive offices and zip code)

(212) 356-9500

(Company’s telephone number, including area code)

(Former name or former address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Forward-Looking Statements

Statements in this Current Report on Form 8-K (including the exhibits), including statements regarding Newtek’s beliefs, expectations, intentions or strategies for the future, may be “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and other conditions which could cause Newtek’s actual results to differ from management's current expectations are contained in Newtek’s filings with the Securities and Exchange Commission. Newtek undertakes no obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date of this filing.

ITEM 2.02 Results of Operations and Financial Condition

On May 8, Newtek Business Services issued a press release entitled “Newtek Business Services Reports First Quarter 2008 Results.” A copy of the press release is filed as Exhibit 99.1 to this Form 8-K.

Newtek Business Services also posted a PowerPoint^™ presentation dated May 8, 2008 on its website referenced in the press release entitled “First Quarter 2008 Financial Results Conference Call.” A copy of the PowerPoint^™ presentation is filed as Exhibit 99.2 to this Form 8-K.

ITEM 8.01 Other Events.

On May 5, 2008, Newtek Business Services issued a press release entitled “Newtek Business Services Adopts Fair Market Value Accounting for Capco Segment.” A copy of the press release is filed as Exhibit 99.3 to this Form 8-K.

ITEM 9.01. Financial Statements and Exhibits

(c) Exhibits

99.1	Press Release dated May 8, 2008 issued by Newtek Business Services, Inc. entitled “Newtek Business Services Reports First Quarter 2008 Results.”
99.2	PowerPoint™ presentation dated May 8, 2008 entitled “First Quarter 2008 Financial Results Conference Call.”
99.3	Press Release dated May 5, 2008, entitled “Newtek Business Services Adopts Fair Market Value Accounting for Capco Segment.”

2

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NEWTEK BUSINESS SERVICES, INC.
Date: May 9, 2008	/s/ Barry Sloane
	Barry Sloane
	Chairman of the Board, Chief Executive Officer, Secretary

3

EXHIBIT INDEX

EXHIBIT NUMBER	DESCRIPTION
99.1	Press Release dated May 8, 2008 issued by Newtek Business Services, Inc. entitled “Newtek Business Services Reports First Quarter 2008 Results.”
99.2	PowerPoint™ presentation dated May 8, 2008 entitled “First Quarter 2008 Financial Results Conference Call.”
99.3	Press Release dated May 5, 2008, issued by Newtek Business Services, Inc. entitled “Newtek Business Services Adopts Fair Market Value Accounting for Capco Segment.”

4

EX-99.1

Exhibit 99.1

Newtek Business Services Reports First Quarter 2008 Financial Results

Meets Previously Stated First Quarter 2008 Consolidated Guidance

Company Maintains 2008 Quarterly and Annual Guidance

New York, N.Y. - May 8, 2008 - Newtek Business Services, Inc. (NASDAQ: NEWT) (www.newtekbusinessservices.com), a provider of business services and financial products to the small- and medium-sized business market, reports today its financial results for the first quarter ended March 31, 2008.

First Quarter 2008 and Related Highlights

• First quarter 2008 revenue for the three core operating segments (electronic payment processing, web hosting and small business finance) increased by 10% over the first quarter of 2007.

• SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”) was adopted in connection with the accounting for the Capco segment operations as of January 1, 2008.

• The adoption of SFAS 159 resulted in a one-time $14.3 million reduction in retained earnings which accelerated the decrease of the Company’s deferred tax liability by $9.6 million.

• For the 12 months ended March 31, 2008, total cash borrowings were reduced by $6.8 million.

• Cash and cash equivalents, and restricted cash totaled $30.9 million, or $0.86 per share, at March 31, 2008.

• First quarter 2008 pre-tax loss totaled $3.9 million, which is consistent with previously stated guidance.

• Total number of business accounts increased to over 88,000 at March 31, 2008, a 14% increase over March 31, 2007.

Barry Sloane, chairman and chief executive officer of Newtek Business Services, Inc. said, “We met our first quarter 2008 consolidated guidance, and are reaffirming our previously stated quarterly and annual guidance under SFAS 159.”

Mr. Sloane continued, “During the first quarter, we continued to undertake initiatives to draw increased focus on our operating businesses, and demonstrate why we believe Newtek is well positioned to capitalize on market opportunities and to continue to grow. We adopted SFAS 159, which enables us to simplify our reporting to more clearly depict our operating businesses. Additionally, in conjunction with the adoption of this accounting pronouncement, our deferred tax liability decreased by $9.6 million. Furthermore, we significantly increased our investor relations efforts leveraging both our internal and external investor relations functions as we believe the adoption of SFAS 159 clarifies Newtek’s model and enables us to more easily communicate to the investment community what we believe to be its inherent value.”

Commenting on the first quarter 2008 results Mr. Sloane concluded, “Our results were materially affected by the loss in our lending segment, which was partially offset by the results in our electronic payment processing and web hosting segments. While we deliberately originated fewer loans in the first quarter of 2008, we do not expect to continue this trend, and are on track to meet our lending segment guidance for the remainder of the year. In fact, we expect the first quarter to be the low point of our lending operation in 2008. In the second quarter of 2008, we are already seeing loans that better meet our underwriting criteria, which should have a positive impact on the amount of loans we originate. In addition, we continued to actively bid on performing and non-performing loan portfolios and have the funding in place to support this initiative, which we firmly believe will have a material positive impact on our lending segment. Furthermore, we are hopeful to receive our license to originate USDA government-guaranteed loans by the third quarter of 2008, which will enable us to expand our product offering beyond SBA loans, allowing us to offer loans up to $25 million and potentially generate additional income through premium and processing fees.”

First Quarter 2008 Financial Results

For the first quarter ended March 31, 2008, the Company reported a loss before benefit for income taxes of $3.9 million, compared to a loss before benefit for income taxes and discontinued operations of $4.1 million, for the same period last year. The Company reported a net loss of $2.7 million, or $(0.08) per share, in the first quarter of 2008, compared to a net loss of $2.9 million, or $(0.08) per share, in the first quarter of 2007. First quarter 2008 results reflect the adoption of SFAS 159, which reduced the Capco note related non-cash loss (income from tax credits less Capco note interest expense and amortization of prepaid insurance without giving effect to taxes) by approximately $2.0 million compared to previous cost basis accounting.

For the first quarter of 2008, total revenue increased by $1.7 million, or 7.8 percent, to $23.5 million compared to $21.8 million one year ago. Total revenue from the three core business services segments (electronic payment processing, web hosting and small business finance) increased to $21.4 million, or 10 percent, in the first quarter of 2008 compared with $19.5 million for the comparable period in 2007. These three segments represented 91 percent of total revenue in the first quarter of 2008, an increase from 89 percent of total revenue in the first quarter of 2007.

Adoption of Fair Market Value Accounting for Capco Segment

The Company adopted SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”) in connection with certain of the financial elements of the Capco segment, commencing January 1, 2008. In February 2007, the FASB issued SFAS 159 which permits companies to choose to measure many financial instruments and certain other items at fair value. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company’s adoption of SFAS 159 will have a material non-cash effect on the Company’s statement of operations and financial position. The adoption will result in a decrease in future non-cash losses associated with the Capco segment, an approximate one-time $14.3 million after-tax reduction to the Company’s retained earnings and a $9.6 million reduction in its deferred tax liability.

The unaudited table below for the Capco segment illustrates the Capco note related non-cash losses (income from tax credits less Capco note interest expense and amortization of prepaid insurance without giving effect to taxes) projected for 2008 through 2012 both without and with the adoption of SFAS 159.

(In thousands):	2008			2009			2010			2011			2012
Without adoption of SFAS 159: Projected non-cash loss	$	(8,320	)	$	(6,283	)	$	(4,323	)	$	(2,692	)	$	(1,387	)
With the Adoption of SFAS 159: Projected pro forma non-cash (loss) income		(645	)		(303	)		12			102			76
Improvement from SFAS 159 adoption	$	7,675		$	5,980		$	4,335		$	2,794		$	1,463

Reaffirmation of Outlook for 2008

The Company expects 2008 consolidated revenues to be between $100.5 million and $103.1 million. As a result of the adoption of SFAS 159, and as previously reported, the Company expects a loss before benefit for income taxes of between $9.6 million and $12.0 million. Quarterly and annual guidance by segment for revenue, loss before benefit for income taxes, and EBITDA are provided in the tables below.

Cautionary Statement

2008 Guidance information contained in this press release is based on management’s current expectations. These statements are forward looking and actual results may differ materially. See “Note Regarding Forward Looking Statements” below.

Use of Non-GAAP Financial Measures

In evaluating its business, Newtek considers and uses EBITDA as a supplemental measure of its operating performance. The Company defines EBITDA as earnings before interest expense, taxes, depreciation and amortization. Newtek uses EBITDA as a supplemental measure to review and assess its operating performance. The Company also presents EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.

The term EBITDA is not defined under U.S. generally accepted accounting principles, (“U.S. GAAP”), and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. EBITDA has limitations as an analytical tool and, when assessing the Company’s operating performance, investors should not consider EBITDA in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Among other things, EBITDA does not reflect the Company’s actual cash expenditures. Other companies may calculate similar measures differently than Newtek, limiting their usefulness as comparative tools. Newtek compensates for these limitations by relying primarily on its GAAP results and using EBITDA only supplementally.

Additionally, the term Capco note related non-cash losses is defined as income from tax credits less Capco note interest expense and amortization of prepaid insurance without giving effect to taxes.

First Quarter 2008 Conference Call and Webcast

A conference call to discuss these results will be hosted by Barry Sloane, chairman and chief executive officer, and Seth Cohen, chief financial officer, today Thursday, May 8, 2008 at 4:15 p.m. ET. The live conference call can be accessed by dialing (877) 340-7913 (domestic) or (719) 325-4846 (international).

A live audio webcast of the call and the corresponding presentation will be available in the ‘Events & Presentation’ section of the Investor Relations portion of Newtek’s website at www.newtekbusinessservices.com. A replay of the webcast with the corresponding presentation will be available on Newtek’s website shortly following the live presentation. The telephone replay can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international), and using the replay passcode 1210451. Both web-based and telephonic replays will be available for 90 days following the live presentation.

About Newtek Business Services, Inc.

Newtek Business Services, Inc. is a direct distributor of a wide range of business services and financial products to the small- and medium-sized business market under the Newtek™ brand. Since 1999, Newtek has helped small- and medium-sized business owners realize their potential by providing them with the essential tools needed to manage and grow their businesses, and to compete effectively in today’s marketplace. Newtek provides one or more of its services to over 88,000 business accounts, and has positioned the Newtek™ brand as a one-stop-shop provider of business services to the small- and medium-sized business market. According to the U.S. Small Business Administration, there are over 26.8 million small businesses in the United States, which in total represent 99.7 percent of all employer firms.

Newtek’s business service lines include:

• Electronic Payment Processing: Electronic solutions to accept non-cash payments, including credit and debit cards, check conversion, remote deposit capture, ACH processing, and electronic gift and loyalty card programs.

• Web Hosting: Full-service web host which offers shared and dedicated web hosting and related services including domain registration and online shopping cart tools.

• Business Lending: Broad array of lending products including SBA 7(a), conventional commercial real estate and SBA 504 loans, business lines of credit, and business credit cards.

• Insurance Services: Commercial and personal lines of insurance, including health and employee benefits in all 50 states, working with over 40 insurance carriers.

• Web Design and Development: Customized web design and development services.

• Data Backup, Storage and Retrieval: Fast, secure, off-site data backup, storage and retrieval designed to meet the specific regulatory and compliance needs of any business.

• Accounts Receivable Financing: Receivable purchasing and financing services.

• Payroll: Complete payroll management and processing services.

• Outsourced Digital Bookkeeping: Bookkeeping and financial information management solutions.

• Tax Preparation and Advisory Services: Expert tax planning and consultation for businesses.

• Business Plan Preparation: Professional business plan development.

Note Regarding Forward Looking Statements

Statements in this press release including statements regarding Newtek’s beliefs, expectations, intentions or strategies for the future, may be “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and other conditions which could cause Newtek’s actual results to differ from management’s current expectations are contained in Newtek’s filings with the Securities and Exchange Commission and available through http://www.sec.gov.

For more information, please visit www.newtekbusinessservices.com.

Contact:

Newtek Business Services, Inc.

Jayne L. Cavuoto

Director, Investor Relations

212-273-8193

jcavuoto@newtekbusinessservices.com

NEWTEK BUSINESS SERVICES, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007

(In Thousands, except for Per Share Data)

	2008			2007
Operating revenues	$	23,520		$	21,809
Operating expenses:
Electronic payment processing costs		12,225			9,865
Salaries and benefits		6,579			5,397
Interest		2,290			3,883
Depreciation and amortization		1,809			1,567
Other operating costs		4,652			5,287
Total operating expenses		27,555			25,999
Operating loss from continuing operations before minority interest, benefit for income taxes, and discontinued operations		(4,035	)		(4,190	)
Minority interest		102			124
Loss from continuing operations before benefit for income taxes and discontinued operations		(3,933	)		(4,066	)
Benefit for income taxes		1,238			1,372
Loss from continuing operations before discontinued operations		(2,695	)		(2,694	)
Discontinued operations, net of taxes		—			(205	)
Net loss	$	(2,695	)	$	(2,899	)
Weighted average common shares outstanding:
Basic and diluted		35,869			35,651
Loss per share from continuing operations:
Basic and diluted	$	(0.08	)	$	(0.07	)
Loss per share from discontinued operations, net of taxes:
Basic and diluted		—			(0.01	)
Basic and diluted loss per share	$	(0.08	)	$	(0.08	)

NEWTEK BUSINESS SERVICES, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, 2008 AND DECEMBER 31, 2007

(In Thousands, except for Per Share Data)

	March 31, 2008			December 31, 2007
ASSETS
Cash and cash equivalents	$	20,230		$	25,372
Restricted cash		10,755			12,948
Credits in lieu of cash		86,186			92,781
SBA loans held for investment (net of reserve for loan losses of $2,226, and $2,196, respectively)		27,605			27,895
Accounts receivable (net of allowance of $442 and $321, respectively)		3,673			3,957
SBA loans held for sale		957			360
Prepaid and structured insurance		3,775			14,738
Prepaid expenses and other assets (net of accumulated amortization of deferred financing costs of $1,736 and $1,593, respectively)		10,607			9,789
Servicing asset (net of accumulated amortization and allowances of $3,432 and $3,160, respectively)		2,483			2,718
Fixed assets (net of accumulated depreciation and amortization of $7,339 and $6,616, respectively)		5,417			5,433
Intangible assets (net of accumulated amortization of $9,484 and $8,775, respectively)		8,316			8,829
Goodwill		12,996			12,996
Total assets	$	193,000		$	217,816
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued expenses	$	8,606		$	10,259
Notes payable		24,699			26,765
Deferred revenue		2,254			2,032
Notes payable in credits in lieu of cash		85,686			79,085
Deferred tax liability		7,038			17,880
Total liabilities		128,283			136,021
Minority interest		4,726			4,970
Commitments and contingencies
Shareholders’ equity:
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 54,000 shares, issued and outstanding 35,947 and 36,081, respectively, not including 474 and 583 shares held in escrow, respectively, and 473 held by an affiliate)		722			722
Additional paid-in capital		56,237			56,161
Retained earnings		3,223			20,245
Treasury stock, at cost (137 and 217 shares)		(191	)		(303	)
Total shareholders’ equity		59,991			76,825
Total liabilities and shareholders’ equity	$	193,000		$	217,816

Newtek Business Services, Inc.

2008 Guidance

Business Segments

$ Millions

	Electronic Payment Processing		Web Hosting		Small Business Finance				All Other				Corporate Activities
	Low	High	Low	High	Low		High		Low		High		Low		High
2008 Full Year
Revenue	65.5	66.1	18.0	18.5	10.5		11.0		2.5		3.0		3.5		4.0
Pretax Net Income	4.3	4.8	2.9	3.3	(2.0	)	(1.5	)	(3.2	)	(2.7	)	(8.7	)	(8.2	)
Interest Expense	0.1	0.1	0.0	0.0	1.8		1.8		—		—		—		—
Depreciation and Amortization	2.2	2.2	3.3	3.3	1.5		1.5		0.1		0.1		0.3		0.3
EBITDA	6.5	7.0	6.2	6.6	1.3		1.8		(3.1	)	(2.6	)	(8.3	)	(7.8	)
2008 2nd Quarter
Revenue	15.8	16.0	4.4	4.5	2.1		2.2		0.6		0.8		0.9		1.0
Pretax Net Income	1.0	1.1	0.7	0.8	(0.9	)	(0.8	)	(0.8	)	(0.7	)	(2.2	)	(2.1	)
Interest Expense	0.0	0.0	0.0	0.0	0.4		0.4		—		—		—		—
Depreciation and Amortization	0.5	0.5	0.8	0.8	0.3		0.3		—		—		0.1		0.1
EBITDA	1.6	1.7	1.5	1.6	(0.1	)	—		(0.8	)	(0.7	)	(2.1	)	(2.0	)
2008 3rd Quarter
Revenue	16.7	16.8	4.6	4.7	3.2		3.3		0.6		0.8		0.9		1.0
Pretax Net Income	1.1	1.2	0.8	0.9	(0.1	)	0.1		(0.8	)	(0.7	)	(2.2	)	(2.1	)
Interest Expense	0.0	0.0	0.0	0.0	0.5		0.5		—		—		—		—
Depreciation and Amortization	0.5	0.5	0.9	0.9	0.4		0.4		—		—		0.1		0.1
EBITDA	1.6	1.7	1.6	1.8	0.8		0.9		(0.8	)	(0.6	)	(2.1	)	(2.0	)
2008 4th Quarter
Revenue	18.2	18.3	4.7	4.9	3.7		3.8		0.7		0.8		0.8		1.0
Pretax Net Income	1.4	1.5	0.8	0.9	0.4		0.6		(0.7	)	(0.6	)	(2.2	)	(2.1	)
Interest Expense	0.0	0.0	0.0	0.0	0.5		0.5		—		—		—		—
Depreciation and Amortization	0.5	0.5	0.9	0.9	0.4		0.4		—		—		0.1		0.1
EBITDA	2.0	2.1	1.7	1.8	1.3		1.5		(0.7	)	(0.6	)	(2.1	)	(2.0	)

Totals may not add due to rounding

Newtek Business Services, Inc.

2008 Guidance

$ Millions

	Total Business Segments				CAPCO Segment				Intercompany Eliminations		Total Current Accounting				Total
	Low		High		Low		High				Low		High		Low		High
2008 Full Year
Revenue	100.0		102.6		6.1		6.1		(4.6	)	100.5		103.1		101.5		104.1
Pretax Net Income	(6.7	)	(4.3	)	(5.3	)	(5.3	)	—		(19.3	)	(16.9	)	(12.0	)	(9.6	)
2008 1st Quarter
Revenue	22.1		22.9		1.5		1.5		(1.2	)	22.2		22.9		22.4		23.2
Pretax Net Income	(3.0	)	(2.5	)	(1.4	)	(1.4	)	—		(6.3	)	(5.7	)	(4.4	)	(3.8	)
2008 2nd Quarter
Revenue	23.7		24.5		1.5		1.5		(1.1	)	23.9		24.6		24.2		24.9
Pretax Net Income	(2.2	)	(1.6	)	(1.3	)	(1.3	)	—		(5.3	)	(4.7	)	(3.5	)	(2.9	)
2008 3rd Quarter
Revenue	26.0		26.6		1.6		1.6		(1.1	)	26.2		26.8		26.5		27.0
Pretax Net Income	(1.2	)	(0.6	)	(1.3	)	(1.3	)	—		(4.3	)	(3.7	)	(2.5	)	(1.9	)
2008 4th Quarter
Revenue	28.1		28.8		1.6		1.6		(1.1	)	28.3		28.9		28.6		29.2
Pretax Net Income	(0.3	)	0.4		(1.3	)	(1.3	)	—		(3.4	)	(2.8	)	(1.6	)	(1.0	)

Totals may not add due to rounding

EX-99.2

Newtek Business Services, Inc.

NASDAQ: NEWT

First Quarter 2008

Financial Results Conference Call

May 8, 2008, 4:15 PM

Hosted By:

Barry Sloane, CEO and Chairman

Seth A. Cohen, CFO

Investor Relations Contact:

Jayne L. Cavuoto

212-273-8193

jcavuoto@newtekbusinessservices.com

Exhibit 99.1

2

Safe Harbor Statement

The

statements

in

this

slide

presentation

including

statements

regarding

anticipated

future

financial

performance,

Newtek's

beliefs,

expectations,

intentions

or

strategies

for

the

future,

may

be

"forward-looking

statements"

under

the

Private

Securities

Litigation

Reform

Act

of

1995.

All

forward-looking

statements

involve

a

number

of

risks

and

uncertainties

that

could

cause

actual

results

to

differ

materially

from

the

plans,

intentions

and

expectations

reflected

in

or

suggested

by

the

forward-looking

statements.

Such

risks

and

uncertainties

include,

among

others,

intensified

competition,

operating

problems

and

their

impact

on

revenues

and

profit

margins,

anticipated

future

business

strategies

and

financial

performance,

anticipated

future

number

of

customers,

business

prospects,

legislative

developments

and

similar

matters.

Risk

factors,

cautionary

statements

and

other

conditions

which

could

cause

Newtek’s

actual

results

to

differ

from

management's

current

expectations

are

contained

in

Newtek’s

filings

with

the

Securities

and

Exchange

Commission

and

available

through

http://www.sec.gov

Also

we

need

to

point

out

that

our

Capcos

operate

under

a

different

set

of

rules

in

each

of

the

8

jurisdictions

and

that

these

place

varying

requirements

on

the

structure

of

our

investments.

In

some

cases,

particularly

in

Louisiana,

and

New

York

we

don’t

control

the

equity

or

management

of

a

qualified

business,

but

that

cannot

always

be

presented

orally

or

in

written

presentations

3

Q1 2008 Conference Call Agenda

Financial Results Snapshot

Newtek’s

Value Proposition

Adoption of SFAS No. 159

Reduction in Cash Borrowings

Momentum in EPP Segment

Web Hosting Initiatives

Small Business Finance Initiatives

Insurance Agency Initiatives

Cost Reduction Measures

Financial Review

2008 Outlook

4

Q1 2008 Financial Results

Q1 2008 v. Q1 2007 core operating segment revenue

increased 10%

Electronic Payment Processing:

$15.2 million -

up 21% over

Q1 2007

Web Hosting:

$4.3 million -

up 10% over Q1 2007

Small Business Finance:

$1.9 million -

down (38)% over Q1

2007

Q1 2008 pre-tax loss of $3.9 million

In line with previously stated guidance

Depreciation and amortization non-cash expense of $1.8

million in Q1 2008

Lending segment put pressure on Q1 2008 earnings

Maintaining quarterly and annual guidance with SFAS 159

5

Financial Strength & Liquidity

Financial strength (at March 31, 2007)

$30.9 million in cash and cash equivalents, and restricted

cash

•

Equates to $0.86 cash per share

Very little quantifiable debt

Liquidity (at March 31, 2007)

GE line of credit: $50 million total capacity for small business

lending

North Fork Bank revolving credit facility: $10 million total

capacity

Wells Fargo line of credit: $10 million total capacity for

account receivables financing

Currently have unused capacity in these lines

6

Newtek™

Business Service Suite

7

Newtek™

Insurance Portal

8

Adoption of SFAS No.159

Adopted Fair Market Value (FMV) accounting for Capco

segment as of January 1, 2008.

SFAS 159 became effective for financial statements issued

for fiscal years beginning after November

15, 2007

Realigns revenues and expenses, enabling us to

significantly reduce the expected non-cash losses in the

Capco

segment in 2008 and thereafter

One-time $14.3 million non-cash reduction to retained

earnings

Reduces the deferred tax liability by $9.6 million

Enables us to simplify our financials and to more accurately

depict our operating businesses

Improves the transparency of the financials

9

-0.645

-0.303

0.012

0.102

0.076

-$10.0

-$8.0

-$6.0

-$4.0

-$2.0

$0.0

$2.0

Capco Non-Cash Loss

Adoption of SFAS No.159

-$8.3

-$6.3

-$4.3

-$2.7

-$1.4

$9.4*

-$10.0

-$8.0

-$6.0

-$4.0

-$2.0

$0.0

$2.0

Capco Non-Cash Loss

Without the Adoption of SFAS

159

Pro-forma Non-Cash Loss

Assumes Adoption of SFAS 159

Capco

Non-Cash Loss Expectation

Without Adoption of SFAS 159

With Adoption of SFAS 159

*Actual Capco

non-cash loss in 2007

2008

2009

2012

2010

2011

2008

2009

2012

2010

2011

2007

10

Deferred Tax Liability

Reduced deferred tax liability by $9.6 million.

Deferred tax liability created through mismatch of GAAP

and tax earnings

11

Reduction of Cash Borrowings

For the year ended March 31, 2008, total cash borrowings

were reduced by $6.8 million

Paid TICC Note: $1.0 million

Paid down payables: $1.0 million

Paid AI Credit: $4.8 million

12

Momentum in EPP Business

Increase in processing volume and active processing

merchants over Q1 2007

Added over 2,000 new processing merchants in the previous

six-month period (October 2007-March 2008)

Cash flow positive business

EBITDA margin of 10.8% for Q1 2008

Significant operating leverage

Potential to increase market share

NewTracker™

client acquisition and processing model

works well with EPP

2008 EPP segment EBITDA forecast:

$6.5 to $7.0 million

EPP segment does not have any debt

13

Web Hosting Initiatives

Continue to invest in Web Hosting segment to support

future growth

Continue to evaluate expenditures versus productivity,

particularly in marketing, in the Web Hosting segment

seeking additional cost savings where applicable

Currently at 50% capacity in our data center

Anticipate launch of wholesale outreach in Q3 2008

2008 Web Hosting segment EBITDA forecast:

$6.2 to $6.6 million

Web Hosting segment currently does not have any debt

Great marketing channel to target

IT partners and web developers

14

Small Business Finance

Q1 2008 revenue decreased by 38% to $1.9 million over Q1 2007

primarily as a result of:

Decrease in loan originations due to tighter underwriting standards

Sold fewer guaranteed loans in Q1 2008 vs. Q1 2007

In Q1 2008, the average premium received on the sale of guaranteed loans

decreased from Q1 2007 levels

•

Q1 2008 average premium of 8.57% versus Q1 2007 average premium of

9.90%

CDS consolidation accounts for approximately $200,000 of the Q1 2008

pre-tax loss of $1.5 million in the lending segment

Taking longer to originate required amount of loans to outweigh fixed

costs

No capital market dependence in lending segment

Long-term loan portfolio performance

•

Loan portfolio performing tacking better than in Q1 2007, and continues to

be in line with expectations

•

Adequately reserved

15

Small Business Finance Initiatives

Recruiting new lending personnel

Reevaluation of primary loan origination sources

Increasing alliances and lending partners

Actively bidding on both performing and non-performing

loan portfolios

SBA lending expertise and in-house SBA servicing

capabilities

Ability to purchase SBA loan portfolios and servicing from banks

exiting this area of lending and provide new outsourced funding

solutions

Expect to participate in government-guaranteed USDA

loan program by Q3 2008

16

Value of USDA Loan Program

USDA loans are primarily not

agricultural loans; program to

support the rural community

USDA loans will allow us to expand our product offering

beyond solely SBA loans

Greater flexibility than under the 7a program

Offer loans up to $25 million

Offer multiple rate options for clients other than a floating rate

Potential for additional income

Fee income (processing/application fees) are allowable under

this program

Premium fee income on the sale of the guaranteed portion of

these loans as:

•

Guaranteed pricing is currently higher for these loans than 7a

pricing

•

Loans in this program have an 80% guarantee versus 75%

guarantee in the 7a program

17

Insurance Agency Initiatives

Currently have alliance partner relationships with brand-

recognized-names such as AIG, Navy Federal Credit Union and

CEFCU

Actively exploring new major alliance deals

Constantly reevaluating and upgrading our processing capabilities

NewTracker™

works well with the Insurance Agency

0%

5%

10%

15%

20%

Oct

Nov

Dec

Jan

Feb

Mar

Closing Ratio

0

200

400

600

800

1,000

1,200

1,400

Oct

Nov

Dec

Jan

Feb

Mar

Referrals

Increase in Insurance Referrals

From October to March

Increase in Closed Insurance Referrals

From October to March

18

Cost Reduction Measures

Continue to reduce headcount and salary-related

expenses at the Holding Company (Newtek Business

Services, Inc.)

Plan to review other segments to recognize additional

cost reductions

Seek to close and consolidate certain company facilities

throughout the U.S. to realize additional cost reductions

19

Financial Review

Seth A. Cohen -

CFO

20

Q1 2008 Actual vs. Q1 2007 Actual

(3.539)

(1.383)

1.636

1.636

CAPCO

Revenue

Q1 2008

Actual

Revenue

Q1 2007

Actual

Pretax Net

Income (Loss)

Q1 2008

Actual

Pretax Net

Income (Loss)

Q1 2007

Actual

EBITDA

Q1 2008

Actual

EBITDA

Q1 2007

Actual

Electronic

Payment

Processing

15.211

12.557

1.080

0.921

1.642

1.369

Web Hosting

4.282

3.888

0.614

0.929

1.448

1.715

Small Business

Finance

1.866

3.011

(1.502)

(0.118)

(0.690)

0.793

All Other

0.661

0.823

(0.556)

(0.099)

(0.525)

(0.036)

Corporate

Activities

1.073

1.126

(2.186)

(2.160)

(2.089)

(2.061)

Intercompany

Eliminations

(1.209)

(1.232)

Total

23.520

21.809

(3.933)

(4.066)

In millions of dollars

21

Q1 2008 Guidance vs. Q1 2008 Actual

(1.383)

(1.4) –

(1.4)

1.636

1.5 –

1.5

CAPCO

Revenue

Guidance

Revenue

Actual

Pretax Net

Income (Loss)

Guidance

Pretax Net

Income (Loss)

Actual

EBITDA

Guidance

EBITDA

Actual

Electronic

Payment

Processing

14.8 –

15.0

15.211

0.9 –

1.0

1.080

1.4 –

1.6

1.642

Web Hosting

4.2 –

4.4

4.282

0.6 –

0.7

0.614

1.4 –

1.5

1.448

Small Business

Finance

1.6 –

1.7

1.866

(1.5) –

(1.4)

(1.502)

(0.7) –

(0.6)

(0.690)

All Other

0.5 –

0.7

0.661

(0.9) –

(0.8)

(0.556)

(0.9) –

(0.7)

(0.525)

Corporate

Activities

1.0 –

1.1

1.073

(2.1) –

(2.0)

(2.186)

(2.0) –

(1.9)

(2.089)

Intercompany

Eliminations

(1.2) –

(1.2)

(1.209)

Total

22.4 –

23.2

23.520

(4.4) –

(3.9)

(3.933)

In millions of dollars

22

Cash Flows from Operating Activities

Cash Flows from Operating Activities by Segment

For The Three Months Ended March 31, 2008

23

Going Forward: 2008

Barry Sloane -

CEO

24

2008 Segment Guidance

*Note: totals may not add due to rounding

In millions of dollars

Electronic

Small

Payment

Web

Business

All

Corporate

Processing

Hosting

Finance

Other

Activities

Low

High

Low

High

Low

High

Low

High

Low

High

2008 Full Year

Revenue

65.5

66.1

18.0

18.5

10.5

11.0

2.5

3.0

3.5

4.0

Pretax Net Income

4.3

4.8

2.9

3.3

(2.0)

(1.5)

(3.2)

(2.7)

(8.7)

(8.2)

Interest Expense

0.1

0.1

0.0

0.0

1.8

1.8

-

-

-

-

Depreciation and Amortization

2.2

2.2

3.3

3.3

1.5

1.5

0.1

0.1

0.3

0.3

EBITDA

6.5

7.0

6.2

6.6

1.3

1.8

(3.1)

(2.6)

(8.3)

(7.8)

2008 2nd Quarter

Revenue

15.8

16.0

4.4

4.5

2.1

2.2

0.6

0.8

0.9

1.0

Pretax Net Income

1.0

1.1

0.7

0.8

(0.9)

(0.8)

(0.8)

(0.7)

(2.2)

(2.1)

Interest Expense

0.0

0.0

0.0

0.0

0.4

0.4

-

-

-

-

Depreciation and Amortization

0.5

0.5

0.8

0.8

0.3

0.3

-

-

0.1

0.1

EBITDA

1.6

1.7

1.5

1.6

(0.1)

-

(0.8)

(0.7)

(2.1)

(2.0)

2008 3rd Quarter

Revenue

16.7

16.8

4.6

4.7

3.2

3.3

0.6

0.8

0.9

1.0

Pretax Net Income

1.1

1.2

0.8

0.9

(0.1)

0.1

(0.8)

(0.7)

(2.2)

(2.1)

Interest Expense

0.0

0.0

0.0

0.0

0.5

0.5

-

-

-

-

Depreciation and Amortization

0.5

0.5

0.9

0.9

0.4

0.4

-

-

0.1

0.1

EBITDA

1.6

1.7

1.6

1.8

0.8

0.9

(0.8)

(0.6)

(2.1)

(2.0)

2008 4th Quarter

Revenue

18.2

18.3

4.7

4.9

3.7

3.8

0.7

0.8

0.8

1.0

Pretax Net Income

1.4

1.5

0.8

0.9

0.4

0.6

(0.7)

(0.6)

(2.2)

(2.1)

Interest Expense

0.0

0.0

0.0

0.0

0.5

0.5

-

-

-

-

Depreciation and Amortization

0.5

0.5

0.9

0.9

0.4

0.4

-

-

0.1

0.1

EBITDA

2.0

2.1

1.7

1.8

1.3

1.5

(0.7)

(0.6)

(2.1)

(2.0)

25

2008 Segment Guidance

In millions of dollars

Note: Totals may not add due to rounding.

Total

Business

CAPCO

Intercompany

Segments

Segment

Eliminations

Total

Low

High

Low

High

Low

High

2008 Full Year

Revenue

100.0

102.6

6.1

6.1

(4.6)

101.5

104.1

Pretax Net Income

(6.7)

(4.3)

(5.3)

(5.3)

-

(12.0)

(9.6)

2008 2nd Quarter

Revenue

23.7

24.5

1.5

1.5

(1.1)

24.2

24.9

Pretax Net Income

(2.2)

(1.6)

(1.3)

(1.3)

-

(3.5)

(2.9)

2008 3rd Quarter

Revenue

26.0

26.6

1.6

1.6

(1.1)

26.5

27.0

Pretax Net Income

(1.2)

(0.6)

(1.3)

(1.3)

-

(2.5)

(1.9)

2008 4th Quarter

Revenue

28.1

28.8

1.6

1.6

(1.1)

28.6

29.2

Pretax Net Income

(0.3)

0.4

(1.3)

(1.3)

-

(1.6)

(1.0)

26

Questions & Answers

27

Addendums

28

(0.690)

0.310

0.502

(1.502)

Small Business Finance

(0.525)

0.031

-

(0.556)

All Other

Pretax Income

(Loss) for Q1 2008

Interest Expense for

Q1 2008

Depreciation and

amortization for Q1 2008

Q1 2008 EBITDA

Electronic Payment

Processing

1.080

-

0.562

1.642

Web Hosting

0.614

0.016

0.818

1.448

Corporate Activities

(2.186)

0.019

0.078

(2.089)

0.793

0.277

0.634

(0.118)

Small Business Finance

(0.036)

0.063

-

(0.099)

All Other

Pretax Income

(Loss) for Q1 2007

Interest Expense for

Q1 2007

Depreciation and

amortization  for Q1 2007

Q1 2007 EBITDA

Electronic Payment

Processing

0.921

-

0.448

1.369

Web Hosting

0.929

0.077

0.709

1.715

Corporate Activities

(2.160)

0.039

0.060

(2.061)

EBITDA Reconciliation

EBITDA Reconciliation to Net Income (Loss)

For The Three Months Ended March 31, 2008

In millions of dollars

EBITDA Reconciliation to Net Income (Loss)

For The Three Months Ended March 31, 2007

In millions of dollars

29

Non-GAAP Financial Measures

In evaluating its business, Newtek considers and uses EBITDA as a supplemental measure

of its operating performance.  The Company defines EBITDA as earnings before interest

expense, taxes, depreciation and amortization.  Newtek uses EBITDA as a supplemental

measure to review and assess its operating performance.  The Company also presents

EBITDA because it believes it is frequently used by securities analysts, investors and other

interested parties as a measure of financial performance.

The term EBITDA is not defined under U.S generally accepted accounting principles, or U.S.

GAAP, and is not a measure of operating income, operating performance or liquidity

presented in accordance with U.S. GAAP.  EBITDA has limitations as a analytical tool and,

when assessing the Company’s operating performance, investors should not consider

EBITDA in isolation, or as a substitute for net income (loss) or

other consolidated income

statement data prepared in accordance with U.S. GAAP.  Among other things, EBITDA does

not reflect the Company’s actual cash expenditures.  Other companies may calculate similar

measures differently than Newtek, limiting their usefulness as comparative tools.  Newtek

compensates for these limitations by relying primarily on its GAAP results and using

EBITDA only supplementally.

EX-99.3

Exhibit 99.3

Newtek Business Services Adopts Fair Market Value Accounting for Capco Segment

New York, N.Y. - May 5, 2008 - Newtek Business Services, Inc. (NASDAQ: NEWT) (www.newtekbusinessservices.com), a provider of business services and financial products to the small- and medium-sized business market, today announced it has adopted SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”) in connection with certain of the financial elements of the Capco segment, commencing January 1, 2008.

Barry Sloane, chairman and chief executive officer of Newtek Business Services, Inc. said, “The adoption of SFAS 159 will realign our revenues and expenses, enabling us to significantly reduce the expected non-cash losses in the Capco segment in 2008 and thereafter. Additionally, in accordance with the adoption of this pronouncement, we will experience an approximate one-time $13.9 million after-tax reduction to our retained earnings and a $9.3 million reduction in our deferred tax liability. We firmly believe that reducing the expected non-cash losses in the Capco segment will simplify our financials and enable us to more accurately depict our operating businesses, which we anticipate will better communicate Newtek’s value to the investment community.”

In February 2007, the FASB issued SFAS 159 which permits companies to choose to measure many financial instruments and certain other items at fair value. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company’s adoption of SFAS 159 will have a material non-cash effect on the Company’s statement of operations and financial position. The adoption will result in a decrease in future non-cash losses associated with the Capco segment and a one-time reduction of the Company’s retained earnings.

The unaudited table below for the Capco segment illustrates the Capco note related non-cash losses (income from tax credits less Capco note interest expense and amortization of prepaid insurance without giving effect to taxes) projected for 2008 through 2012 both without and with the adoption of SFAS 159.

(In thousands):	2008			2009			2010			2011			2012
Without adoption of SFAS 159: Projected non-cash loss	$	(8,320	)	$	(6,283	)	$	(4,323	)	$	(2,692	)	$	(1,387	)
With the Adoption of SFAS 159: Projected pro forma non-cash (loss) income		(645	)		(303	)		12			102			76
Improvement from SFAS 159 adoption	$	7,675		$	5,980		$	4,335		$	2,794		$	1,463

About Newtek Business Services, Inc.

Newtek Business Services, Inc. is a direct distributor of a wide range of business services and financial products to the small- and medium-sized business market under the Newtek™ brand. Since 1999, Newtek has helped small- and medium-sized business owners realize their potential

by providing them with the essential tools needed to manage and grow their businesses, and to compete effectively in today’s marketplace. Newtek provides one or more of its services to over 87,000 business accounts, and has positioned the Newtek™ brand as a one-stop-shop provider of business services to the small- and medium-sized business market. According to the U.S. Small Business Administration, there are over 26.8 million small businesses in the United States, which in total represent 99.7 percent of all employer firms.

Newtek’s business service lines include:

• Electronic Payment Processing: Electronic solutions to accept non-cash payments, including credit and debit cards, check conversion, remote deposit capture, ACH processing, and electronic gift and loyalty card programs.

• Web Hosting: Full-service web host which offers shared and dedicated web hosting and related services including domain registration and online shopping cart tools.

• Business Lending: Broad array of lending products including SBA 7(a), conventional commercial real estate and SBA 504 loans, business lines of credit, and business credit cards.

• Insurance Services: Commercial and personal lines of insurance, including health and employee benefits in all 50 states, working with over 40 insurance carriers.

• Web Design and Development: Customized web design and development services.

• Data Backup, Storage and Retrieval: Fast, secure, off-site data backup, storage and retrieval designed to meet the specific regulatory and compliance needs of any business.

• Accounts Receivable Financing: Receivable purchasing and financing services.

• Payroll: Complete payroll management and processing services.

• Outsourced Digital Bookkeeping: Bookkeeping and financial information management solutions.

• Tax Preparation and Advisory Services: Expert tax planning and consultation for businesses.

• Business Plan Preparation: Professional business plan development.

For more information, please visit www.newtekbusinessservices.com.

Contact:

Newtek Business Services, Inc.

Director, Investor Relations

Jayne L. Cavuoto

212-273-8193

jcavuoto@newtekbusinessservices.com