Ladies and gentlemen, thank you for standing by, and welcome to Newtek Business Services Corp. first quarter 2021 earnings conference call. At this time, our participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press the star then the one key on your touch-tone telephone. Please be advised that today's conference may be recorded. If you require operator assistance, please press star then zero. I would now like to hand the conference over to your speaker host today, Mr. Barry Sloane, President and CEO of Newtek Business Services Corp. Please go ahead, sir.
Thank you very much, operator, good morning, everybody, and welcome everyone to our first quarter 2021 financial results conference call. It seems like yesterday we were just doing our annual call. Obviously, the first quarter catches up pretty quick after we produce the annual results. With that, obviously, I want to put a special thanks out to our accounting team, led by Nick Leger, who will be joining me on the call today, Executive Vice President and Chief Accounting Officer. Did a tremendous job obviously in the transition with Nick picking up the responsibilities from Chris Towers and Elise Chamberlain, their entire team working very hard to get our results out and get us into the market with all of our filings. In addition, we're proud to report today's results, they're basically driven by a culture within the company of caring.
That culture is pervasive with respect to our clients, our channel partners, and all the associates that work at Newtek, either employed directly by the BDC, Newtek Small Business Finance, or employed by the portfolio companies in which we own, which total about 420 overall. For those of you listening in today, you can follow the presentation along on our website, NewtekOne, n-e-w-t-e-k-o-n-e.com. Go to the Investor Relations section and you'll see it in presentations. I'd like to point everyone's attention to the note on forward-looking statements on slide number one. Move forward to slide number two. Looking at our financial results, we do typically start off our presentations noting our equity performance. I think it's important just to note that we always say that investment in Newtek needs to be done with a guide towards long-term view, long-term vision with respect to what we do.
Obviously, we give annual guidance usually in November of the year preceding the guidance looking forward. We're not a quarter-to-quarter company. I use this expression a lot. We're not a slide rule company trying to figure out exactly what that slope is in the line and not deviating from it. We're certainly appreciative of the loyalty that our shareholders have provided us. As you could see, our 10-year return is 632%, five-year return is 256%, three-year return is 101%, one year return 124%. For this year, we're up 43.4%. We certainly appreciate how we've grown as Business Development Corporation since November of 2014, where I believe prior to the conversion, we had about an $80 million market cap. Today, we're $620 million, $630 million, $640 million, depending upon where the stock price falls out. Moving to slide number three.
Calendar year 2020, clearly one of the most challenging years in our 23 years of operating history. We're able to shift its business model quickly and efficiently. I think Newtek has proven to be systematically vital to the economy. When I say systematically vital, we've clearly provided financing to the all-important small and medium-sized business demographic. In addition to that, the tech solutions that we provide our clients are extremely important. We see clearly in the news with respect to what cybersecurity and cyber hacking can do to businesses. We work with businesses to help them make sure they're safe and secure. In addition to things like payment processing, we're seeing incredible lightning changes in how people are transacting the economy. Today, we announced that we're forecasting an annual record dividend. A record annual dividend, excuse me, of between $3 a share and $3.30 a share for 2021.
That's up from $2.40-$2.90 previous guidance. We have a track record of paying our distributions of dividends out of taxable income. Important to do so. Company is now firing on all cylinders. Look forward to a fruitful 2021. Definition of all cylinders going forward with PPP now ending with respect to taking in new applications. That being 7(a), 504 lending, non-conforming lending, which we're going to be relaunching, as well as the real nice growth that we're seeing in payments and tech. Company has many levers, many streams of income, a lot of diversification. We believe it's a terrific model. We'd like to say we're an overnight success. It just took 23 years to work out a lot of the kinks, and we're still working them out, but we work hard, and we paid a lot of attention.
We believe Newtek and its portfolio companies are very well-positioned to go into 2021, and we're going to provide a lot of forecasts and metrics in this presentation. Hopefully, we'll give you the same comfort. On slide number four, we talk about dividends. We address the increase in that forecast. That's a 53% increase over the midpoint of the 2020 annual dividend, which was $2.09. The dividend in 2019, I believe, was $2.18. You can see a nice significant increase. We're forecasting full-year 2021 7(a) fundings of between $580 million-$600 million. We're looking for a very strong second half there. Important to note, we are probably utilizing about 60% of our resources on PPP funding. That is shifting as we speak, as there are no new PPP applications being taken.
SBA 504 funding, we've had a real good fourth quarter of last year, and we're rolling very nicely forward in this business this year. This is a business that comes out of one of our portfolio companies, NBL. We're estimating $125 million of fundings and/or closings. We've got some good data to chat about that. The relaunch of the non-conforming conventional business. We'll chat about that with two partners. PPP loans. We're indicating here $600 million total. We'll probably go past that. We'll talk about that in upcoming slides. Slide number five. Company paid a first quarter 2021 cash dividend of $0.50 a share on March 31. On May 11th, with that being late yesterday, the board of directors declared a second quarter 2021 cash dividend of $0.70 to shareholders of record of June 15th, payable on June 30th, 2021.
This second quarter dividend is a 25% increase over the prior year second quarter, 52% increase over 2019. When you look at the first half of the year, we're looking at a $1.20 in dividends. That's 20% increase over last year. Given the estimate that we have for the full calendar year, we are forecasting that we'll pay out another $1.90-$2 for the rest of the year from a forecast perspective. We always talk about paying that out of earnings. Slide number six, looking at the financial highlights for Q1. Shuffling down to the second bullet. $1.05 adjusted NII. The adjustments for those that are new to our story is primarily the addition of the capital gains or the gain on sale from 7(a) lending. This was a record adjusted NII for the first quarter, not for Newtek, but for the first quarter.
Big increase over the prior year, prior quarter, primarily due to the funding of PPP loans as well as the funding of 7(a) loans, which were disrupted due to the pandemic in the first quarter of 2020. We had growth in total investment income. Managed our debt-to-equity ratio very nicely at 1.27. Total investment portfolio increased. NAV also increasing nicely at 5.4% per share compared to the $15.45 on December last year. Slide we keep in, slide number seven, which when we sell loans that's settling over our quarter, it actually inflates our debt-to-equity ratio. Without that sales transferring over second quarter, we'd be a little bit of 1.23. Moving to slide number eight. Paycheck Protection Program. Most of you are familiar with this. We've been talking about this through various presentations, I won't spend too much time on the slide.
Important to note that we're going to get in excess of $1.8 billion of PPP loans in 2020 and 2021 from all the financings. Probably getting close to 24,000 loan units. We're impressed by this volume of PPP loans, obviously. In 2019, looking at all loans, 7(a) and 504, company did about $650 million. You look at what our forecasts are for 2021, $600 million PPP, $580 million-$600 million of 7(a). You put the 504, the NCL in there, you're looking at around $1.5 billion worth of loans. Important to note as you're trying to figure out what 2022 looks like, where do you create a baseline? How do you grow the business? I think it's real important to note you don't do $1.8 billion worth of loans without donating a significant amount of time, attention, and resources to it.
That time, attention, resources, and staffing will now be devoted to the other segments that Newtek has been actively involved in historically. I do want to point out, if you go back to 2019, without PPP, we did about $2.32, I think, of adjusted NII. We're two years further down the road. We're two years better. We've really got a lot more products, a lot more firepower. For those of you that are trying to figure out where are we without that business, we're pretty comfortable with it, and we're pretty comfortable where we are in the market with respect to business plan, share price, be able to deliver. Look for us to forecast 2022 as we get out probably in October, November. Let's go to slide number 10. Looking at our 7(a) highlights.
$104 million of 7(a) loans funded compared to $52.8 million in the year earlier, same quarter. Up from $97.8 million. I once again point out $97.8 million was done without any PPP. We were very busy with funding 7(a) and PPP at the same time using similar resources. Let's see. Last bullet, focusing on price, which we'll talk about also in a later slide. Company made a decision due to price stability and loan sales. We've held over about $40.3 million in guaranteed portions of 7(a) loans on the balance sheet. We have plenty of capital, not highly leveraged. Take advantage of that 96% coupon and earn additional interest income during the quarter. Slide number 12, baby bond issuance. In January, we closed $115 million public offering of 5.5% notes. These notes are investment-grade rated by Egan-Jones BBB+.
That's the rating of the holding company and the notes by Egan-Jones. These notes have a five-year term and are callable without any prepayment penalty after one to potentially take advantage of drop in rates or any other opportunities that we have to basically use increased leverage and grow our business model overall. Obviously, the capital raise creates a drag on ANII through the refinance, the acceleration of the refinance fee on the other notes, but the baby bonds lock in a lower financing rate for five years. That cost us about $1 million or $0.45 on trade of ANII in the first quarter. Let's see. Moving forward to slide number 12. Some additional lending highlights. $20.7 million of 504 loans funded in Q1. $31 million funded in the month of April.
First four months of the year, 33% of the year gone, funded about $52 million of 504 loans. We're pretty excited about our opportunities in NBL and 504 portfolio company. We're forecasting approximately $6 million of pre-tax income for the year. NBL did not dividend any earnings up. You'll see that in our Q. Nor did NMS, nor did NTS in the first quarter. Those independent boards elected to keep the earnings and the cash flow down at the portfolio company level. Slide number 13. Positive cost-cutting effects on COVID-19. We've obviously heard the story from others, and it's true with the Newtek, that one of the benefits of the pandemic was it really caused companies to focus on business, shift their business model, make changes that will be consistent going forward. Our real estate footprint continued to shrink.
We were able to get out of our New York City lease at one of our portfolio companies at no expense whatsoever. Our Irvine lease, we let go. That was a BDC expense. The Milwaukee lease, an NMS expense. We let that go. No longer affects us. San Antonio, Dallas, also portfolio company leases let go. Phoenix, the headquarters for Newtek Technology Solutions. We moved into the Aligned Data Center. We gave up our office square footage of around 8,000 sq ft and moved some office space into the Aligned Data Center for our staff to be when they need to be near our hardware and software.
Clearly, we've developed other software systems to manage employees' efficiency working remotely through our Time Tracker program, which gives managers the ability to monitor what staff is doing 24/7 through looking at all text messages, recorded phone calls, inbound, outbound, time on the phone. Did a great job at helping us work with staff to make sure they're doing what we need them to do during the pandemic. It's shown in our results. Our staff worked extremely hard, really caring, and developed tremendous solutions for our clients that needed help with tech, payments, loans, et cetera. Our staff benefited tremendously from not having to commute, whether that's a half an hour each way, an hour each way. We're pretty well set up going forward. We most likely will adopt a hybrid model.
Continue to use our office space in key locations for meetings, cooperation, coordination, communication which we think is extremely important going forward. Slide number 15. As we look at our organization, we talked about this generally speaking, the solutions that we have, whether it's people needing help with their new insurance plans, adjustments in tech solutions, adjustments in e-commerce, needing additional capital for growth, whatever it might be, tremendous opportunities in challenging markets for all the Newtek business silos. We're very well-positioned for the future across the company. Slide number 15 is a slide that we leave in our deck for newbies to our company. For those of you that aren't familiar, we're the fourth largest 7(a) lender, including banks, largest non-bank. I've been in the business since 2003. We've done 10 rated securitizations of our insured pieces.
We have a diversified portfolio of uninsured loans on our books, 172,000 average, 6% coupon currently quarterly adjust, five plus two and three quarters. Slide number 16. Growth in loan referrals. Important slide for us as we continue to grow our business. First quarter, 177,000 loan referrals in units. We have a deep database of opportunities, cross-selling efforts being realized. We've been doing this over the course of 18 years. We do look forward to more normalized lending environment to focus all of our efforts and energies with those referrals and others on 7(a), 504, NCL, and secured line of credit. Slide number 17. Important for loan sale. We're clearly seeing excessive pricing in the government guarantee market. First quarterly average, 13.2% in net to us. Significant increase over historic prices and trends.
Prices will go back once the SBA eliminates, or I should say, replaces the 55 basis point fee, which was eliminated due to one of the COVID programs. That reduces the coupon we pass through to investors, which reduces the price. We do expect this to come back down to a more normalized level. Also prepayment speeds, as well as a whole SBA portfolio, are another reason why all of these securities have traded so well across the industry. We did make a comment previously that we held $40 million over in the first quarter to take advantage of the extra carry. Slide number 18. We always want to point out that we have a seasoned portfolio on our books. As of March 31, the uninsured portions or SBA loans, 37.4 months of seasoning.
We have a good piece of research in there that talks about the default curve. Understand that the pandemic may have changed some of this historic seasoning around, we do enjoy and like the fact that we've got a nice seasoned portfolio of business owners that have been with their business for quite a while. Slide number 19. Currency rates. You could see approximately 95%. We appreciate that currency rate. We do think it might potentially degrade as the year goes on, as we lose some weaker businesses that aren't fully able to recover through the pandemic. We're very pleased where we sit here today. I think an interesting data point, which some of you will be able to do a little research when you pull out the current Q.
If you go back and look at total gross dollars in our non-accrual portfolio marked at fair value, those were like $34.2 million in December 31, 2019, $29.4 million December 31, 2020, and then March 31, 2021, down to $27.2 million. We made a nice downward movement on our non-accrual portfolio. Many people look at our loans and they try to draw comparisons to a bank portfolio, to a credit card portfolio, or in the BDC world to a BDC portfolio. I'm telling you just can't. First of all, please take into account the fact that in many different jurisdictions, you still can't foreclose, particularly over the last year, that's been the case in many different areas. If you have non-accruals, it takes a long time to work them off.
We've had some really good experience, particularly with the valuation of real estate which are backing a majority of these uninsured loans. We had one instance of a motel in the hills of North Carolina, which we were able to liquidate, get all our cash back. One might not think that a hotel in a pandemic would do well. Well, we were able to recoup everything, including accrued interest based upon personal guarantees, other assets of the borrowers, and frankly, good property, good location, good business. The new owner, we wish them well. We certainly appreciate getting paid off in full. Slide number 20 and 21 are basic slides in our deck. I won't go into them, but it's indicative of cash created on a 7(a) loan for income and for cash. Let's move into our portfolio company review on slide number 23. We talked about 504 lending.
We talked about approximately $52 million of SBA 504 loans closed and funded through the end of April. We're real excited about that. We're real excited also that we've got two 504 facilities, $100 million facility with Deutsche Bank, $75 million existing facility with Capital One, which got renewed. This gives us the ability to, with a lot of confidence, go out and grow this business. The 504 business, extremely interesting. The 504 second debentures have a 2.85 rate currently. That gives our borrowers a tremendous opportunity between our first to blend it. We are big fans of the 504 business. 24 is a depiction of how you make a 504 loan. 25 talks about the return on equity of the business.
One of the nice aspects of this business is you make a loan, you get taken out by the second debenture by the SBA, and you have a 504 first, which we've been selling readily and frequently, and you're left with no balance sheet. In some cases, you're able to retain the servicing when you sell the first, some are sold servicing released. We've had good success on that in this particular calendar year. Going to slide number 26, we talk about what we refer to as our non-conventional loan portfolio. Real good performer during the pandemic. It's funny, we sometimes have to answer questions. "Well, how does your portfolio do when you have a credit crisis?" We go like, "The one we just had?" Well, we've done very well. Our portfolio has really done well. We had a couple of loans pay off actually during the pandemic.
It's really been a very well-behaved portfolio. We are announcing today on slide number 27, as we have previously, that we've signed new joint venture agreements. One player we have the JV signed. It's a middle-market financing company. We're excited to get going on that. We're putting a leverage facility in place. Second entity, we have an agreement on the term sheet. We're close to finishing the JV agreement. Global money manager. These are important businesses which really have a real nice effect in 2022 and should produce some income in 2021 out of our JVs. As a reminder, all our JVs and control portfolio companies are taxable. Slide number 28, we talk about our merchant business.
A lot of information in our Q on the merchant business as it is a significant portfolio company, therefore we've got to give a material a lot more information from an SEC perspective. Equity fair value of $111 million. Enterprise value, $119 million. We're forecasting about a $14.5 million EBITDA. We also did not distribute any of our earnings in Q1 from this business. Looking at slide number 29, and looking at the value for NMS. We had a very significant increase in sales volume for the month of April 2021, which was the depth of the pandemic. Believe we were down 30%-35% in April 2020 versus April 2019. An increase of 51% obviously is a total increase pre-pandemic. A lot of stimulus in the economy. We anticipate continued growth in processing volumes. We're seeing some really nice numbers coming in from May.
A little too premature to forecast that, only 12 days in. When we look at our payments business, we believe we're a winner in this space as we've got the right software and product solutions. Our Instant Merchant Account, Newtek Payment Systems, Newtek Billing Manager, all great products. We have products for financial institutions like demand deposit opening, principal and interest payment. We're excited about our future for NMS, particularly with the addition of our new hiring staff. We have four new major executives joining the management team of Mike Campbell and David Devers. We refer to them as the class of 2021. They're adding a lot of oomph, structure, policy and procedure, and strategy to that business. We're excited about it. Slide number 30. We've historically talked about Newtek Payment Systems.
I would just suggest the easiest way to get your arms around Newtek Payment Systems, go to our website, newtekpaymentsystems.com. It's a great video. This is our point-of-sale system. It's a cloud-based system, processes payments present, integrates with e-commerce. In an inflation-adjusted world, if the cost of your fish, chicken, or steak is going up, you don't have to go to your web designer and change it. You just change it in the POS, automatically change it on the e-commerce site. It integrates with all food delivery services, integrates with general ledger accounting software, DoorDash, Uber Eats, Grubhub. Also integrates with Newtek Payroll Solutions, so the time and attendance function pushes right into payroll. This is a system that handles payroll, taxes, workman's comp, health insurance, 401, card present, and e-commerce.
For depositories, we can white label this in their name to give them total branding for the business, for the employees in the business, and for people that are going into restaurants at the table. With pay at the table solutions. Slide number 31. Our technology portfolio companies. We'll be fully merging them in at the end of June. We're really excited about the great rebound we've had in our tech business. We continue to state and say that this is the business or segment from a growth and multiple perspective we're most optimistic about. Not that we don't love all our children, but the amount of work that needs to be done managing hardware and software 24/7, particularly for the SMB market, is significant. We're forecasting an EBITDA of about $6 million for the calendar year. We've got the stated NAV at $7 million.
No dividend distributions were made by the portfolio company up from our earnings standpoint. They were all retained to invest in that business. Slide number 32, we talk about the purpose of the merger. Being able to provide hardware, software, professional services, and managed services, and be able to do that to major organizations, some of the biggest ones in the U.S., as well as small to medium-sized businesses 24/7. The merger consolidation reduced back office accounting and operational expenses that should drop right to the bottom line. Obviously, we talked about what we see as the huge opportunity in cloud services, whether it's infrastructure as a service, disaster recovery as a service, software as a service, secure email, hybrid cloud, storage as a service, public cloud. We can do it all. Slide 34, silo four and five. Our payroll business doing real well.
Insurance agency still polishing up our offering here, but getting better every day. We're excited about these two units as well as a total bundle. Looking at Newtek from a risk-reward standpoint, I think it's important to note, and we've clearly illustrated that in the presentation today. Our business model allows for alternative streams of reoccurring income, giving it many engines of growth and diversified sources of revenue. Our business model utilizes technology to acquire clients in the most cost-effective manner, process business remotely without brokers, bankers, branches, or BDOs, which we believe creates value, particularly in the current environment and in the environment going forward.
We believe that Newtek's homegrown technology with respect to its NewTracker system, its secure file vault, the solutions that it's creating in payments, will be used one day for resale to financial institutions, demonstrating its innate value, not too dissimilar from what Live Oak Bank has been able to do. We believe shareholders can realize long-term rewards due to our unique infrastructure and business methodology. Going to slide number 36. If you look for catalysts through a new 7(a) effort to resume joint venture activity with respect to conventional lending. Real good opportunity there. The growth of EBITDA in tech, which I think if you go back approximately three or four years, you look at these combined entities, they were probably flat. Now, $6 million of EBITDA and growing. We're excited about it. As well as the repositioning of our payments business. Going to slide number 37.
Once again, can't say it enough. We're a differentiated, diversified BDC model. For those of you that are going, "Gee, this is a huge premium to NAV." That is a measure. However, the standard BDC does not grow its earnings. It does not grow its dividend. Therefore, there shouldn't be much of a movement in NAV. That's just math. Stock prices are based upon future stream of income. Given that we're different from the standpoint that we can grow our dividend, grow our income, which we've historically been able to demonstrate, that's why we get a bigger multiple. It certainly makes sense to me. Well, it certainly makes sense to investors that have bought our stock over 10, five, three in the last year. With that, I'd like to turn the presentation over to Nick Leger, our Chief Accounting Officer.
Thank you, Barry, and good morning, everyone. You can find a summary of our first quarter 2021 results on slide 39, as well as a reconciliation of our adjusted net investment income or adjusted NII on slide 41. For the first quarter of 2021, we had net investment income of $15.2 million or $0.68 per share as compared to a net investment loss of $280,000 or negative $0.01 per share in the first quarter of 2020. This represents 126% increase on a per-share basis. Please note that the income related to the PPP is included in investment income in 2021. Adjusted net investment income, which is defined on slide 41, was $23.5 million, or $1.05 per share in the first quarter of 2021, as compared to $4.3 million or $0.21 per share for the first quarter of 2020.
Focusing on first quarter 2021 highlights, we recognized $34.7 million in total investment income, 119% increase over the first quarter of 2020's total investment income of $15.8 million. Interest income related to the fees from the PPP was primarily the driver for the increase. We recognized $24.2 million of income related to the origination of approximately $425 million of PPP loans during the first quarter of 2021. There were no distributions from portfolio companies for the first quarter of 2021 as compared to $4.4 million in the first quarter of 2020. Moving on to expenses. Total expenses increased by $3.4 million as compared to the same quarter in 2020 or 21%, which was mainly driven by an increase in the SBA 7(a) loan referral fees, compensation related costs, and a one-time loss on an extinguishment of debt. Moving on to realized gains.
Realized gains recognized from the sale of the guaranteed portion of SBA loans sold during the first quarter totaled $8.9 million as compared to $5 million during the same quarter in 2020. In the first quarter of 2021, we sold 107 loans for $57.8 million at an average premium of 13.3%, as compared to 67 loans sold during the first quarter of 2020 for $38.1 million at an average premium of 10.9%. The increase in realized gains was attributed to higher SBA 7(a) loan origination volume in the first quarter, combined with higher average premium prices when comparing to the first quarter of 2020. As I mentioned earlier, income related to the PPP is included in investment income, not in realized gains.
Realized losses on SBA non-affiliate investments for the first quarter of 2021 was $1.5 million as compared to $447,000 in the first quarter of 2020. Overall, our operating results for the first quarter of 2021 resulted in a net increase in net assets of $30.1 million, or $1.35 per share, and we ended the quarter with NAV per share of $16.28. Let's turn the call back over to Barry.
Thank you, Nick. Appreciate that. Operator, love to open it up for Q&A.
Thank you, ladies and gentlemen. If you'd like to ask a question at this time, please press the star then the one key on your touch-tone telephone. To withdraw your question, press the pound key. Please stand by while we compile the queue in earnest. Now, first question coming from the line of Paul Johnson. Your line is open.
Good morning, guys. Thanks for taking my questions. First question today. I'd just like to get maybe a little bit of commentary on just the lack of income from the control companies this quarter, and I guess just what drove that and whether that was due to retaining earnings or if that's something we could expect going forward. Any color there would be helpful.
Sure. Appreciate that, Paul. We stated in the presentation, there was no lack of income. There was just no distribution. The portfolio companies independently make decisions whether to distribute income and dividends or to retain the capital for other uses. We did forecast earnings from entities like NBL. We forecasted earnings on NMS. We forecasted earnings on Newtek Technology Solutions, which would be three of the larger entities that typically do dividend out. No, there was income, but those entities decided not to distribute.
Okay. Thanks for that. Maybe just get a little bit more, I know you touched on it a little bit, commentary on just your decision to hang on to some of the guaranteed loans that were originated this quarter. Do you think you'd expect to continue kind of doing that here in the quarters ahead, or is this more of a just sort of a one-time thing that you chose to do just given the strength of premiums?
Yeah, I would say, and that's a good question, Paul. We are classically originate and sell. We're in a market that isn't classic these days. A couple of things. One, we have excess capital and our belief regarding pricing, which is that these particular securities are very attractive, not highly likely to prepay quickly. The current price movements said, "Hey, just hang on to the coupon." I think although I can't forecast this with specificity, I think it's likely we will take advantage of the strong pricing that the 7(a) market will have all the way through September 30th. Where the 55 basis points which will get taken out of the coupon, okay, will ultimately reduce prices on October 1 versus September 30. That's about as best I can do. I think the important aspect of the question is we have not changed our methodology.
We had a lot of excess capital, and a 6% coupon is better than keeping it at zero.
Sure. Yeah, it's understandable. Lastly, I'd maybe just like to get your sense of the borrowers in your portfolio and possibly also just companies or loans that you've looked at here recently. Have you noticed, especially for small businesses that are more labor intensive, have you noticed any sort of inflation or wage pressures on these businesses cropping up, again, within your portfolio or sort of across the landscape of borrowers that you look at?
I think that we definitely hear and see. Part of it is you hear it and see it on TV, right? The reality of it is it's true. Labor is tight right now, which is kind of odd because there's a reasonably high unemployment rate. I do believe this is a short-term phenomenon. When I say a short-term phenomenon, we got another couple of months to go through it. I think people are figuring it out. I think that, to be frank with you, some of these owners, although they're not going to say it on TV, will wind up paying their staff off the books rather than on the books to make things work. The one thing about our customer base, they are resilient, and they don't go down very easy.
There's no question there is a bit of a labor shortage, but I think 90 days down the road, that goes away as these unemployment benefits unwind.
Thanks for that. It is helpful. Those are all my questions.
Thank you. I appreciate that. Thank you.
Our next question coming from the line of Robert Dodd with Raymond James. Your line is open.
Morning, guys. Congratulations on the quarter with or without PPP, frankly. Just going back kind of to Paul's question on the dividends from the portfolio companies. I understand the point that they elected not to distribute in Q1. You've given us some earnings outlooks for those which will flow through into NAV or dividends. It's just different places where it shows up. Do you have any color you can give us on whether you expect the dividend non-distribution pattern to continue for a long period, maybe all year? Sounds like they've got a lot of investment opportunities. Is that just your expectation? Maybe they don't distribute this year and they do again next year, or give us any color then a little longer term.
Robert, it's a great question, and we probably won't know that for sure until we keep moving through the quarter. However, from your perspective, I always think history is a reasonable guide to look at. From that perspective, I think you could think about, number one, we've laid guidance out there. That's important for us to be able to deliver in our current format between $3 and $3.30 of dividend out of income. I think historically, those companies have distributed their income. Right now, some of them are looking at reinvesting in new loans, like an NBL. There's some very interesting technologies that are available in some of these entities. The M&A side of things has clearly loosened things up. There are winners and losers. I think looking at history as a guide would be good for you going forward. I can't determine that.
It's a great question, and I understand what you need to do on your side of it, as you relook at the company and reforecast. I would use history as a guide. I think you'll be okay with that.
Okay. I appreciate that. Thank you on that front. On the conventional lending JVs. I'm sorry, I don't have the presentation, et cetera, in front of me. Are these expected to be 50/50 JVs? Are you going to give us any high-level view on what you expect the structures to be? I just don't have that kind of information in front of me. If it's in the presentation, I don't even know it's in there. Can you give us any color? Because obviously you gave us the it's going to grow, but what's the rough economics share wise?
Sure. The 50/50 structure, which was our original structure, and this is I'll just say publicly available, we could talk about it on deal that got inked. It's identical. The JV that is live in action, it's a 50/50 JV. Let me make this one comment. All the JVs that are done are 50/50 with respect to a true partnership. That means all decisioning are split with the JV partner, which is why it's important that we pick really good partners that we have the same viewpoint and same vision on. We're stuck to each other. The economics, everything is 50/50 on that JV that got printed. Yes.
Got it. Thank you. One more, if I can. On the 504s, your guidance is $125 million for the year. You've done $52 million already through April. Is this a counter-seasonal business? 7(a) loans tend to be more back-end loaded. Is the 504 more front-end loaded or more even distribution, or is the $125 million just a very conservative number?
Yeah. I think it's a fair question. Here's my angst sitting in this seat. If you look at what we did in April versus I did more loans in April, fundings and closings, than I did in the first quarter.
Right.
I really think if you stick to the $125 million, you'll be good.
Okay. Fair enough.
Yeah.
Fair enough. That April was the genesis of the question after all.
Yeah. It's very hard to gauge the 504 business because in the 7(a) business, we have full delegated underwriting. In the 504 business, the CDC's got to approve it, the SBA's got to approve it, and then you're good to go. Depending upon supply and demand, that stuff could get tied up, slowed down. It messes up all your numbers. Yeah. That's why having these differentiated business lines and models has enabled us to do okay. Things are moving around. I think if you stick to the $125 million, it's a very good guess.
Okay. Got it. I appreciate it. Thank you. Again, congrats on the quarter.
Thank you, Robert. Thank you very much.
As for my ladies and gentlemen, to ask a question, please press the star then the one key on your touch-tone telephone. Our next question coming from the line of Richard Greenspan with UBS. Your line is open.
Thank you. Good work, Barry. How are you doing?
Thanks, Rich. Thank you.
I wanted to just ask, how important are the portfolio companies as a contributor to total earnings, say, versus the SBA 7(a) lending?
Yeah. Look, I think that for the long-term investors and holders of Newtek, hopefully it's readily apparent that we believe in all five silos. Historically, as a percentage of the dividend income, the portfolio companies have contributed, with the exception of last year, which I'll go into for a second, somewhere between 35% and 30% of the income that wound up being distributed. That's beneficial because that income is taxed. In the distribution, that income comes through as qualified. For those holding the stock in a taxable account, it's beneficial. For those in a retirement account, it's irrelevant. Those businesses are real important. We're going to continue to dedicate ourselves to growing them, making them pertinent. That's what perspectively increases the net asset value of the company amongst other things, in addition to growing the dividend.
I think for investors that are trying to figure out on a going-forward basis, I would suggest we go back to the 2019 numbers. Take a look at where we were where there was no PPP. We're two years down the road. We're two years better. Our technology's better. Our human capital is better. Our alliance partners are better. It's a good base to begin to forecast where we might be without PPP. We have exciting futures ahead for payments, tech, and ultimately payroll and insurance. I appreciate the question, Rich. Thank you.
All right. Thanks, Barry.
Thanks.
Our next question coming from the line of Scott Sullivan with Raymond James . Your line is open. Scott Sullivan, your line is open. Please check your mute button.
Sorry, I had mute on there. Apologies.
That's the 2021 version of a conference call question, Scott.
Exactly. User error. My question also centers around where you see Newtek after the windfall PPP business. Can you give us some color on the improved resources in some of the other areas for 2022 and beyond?
Sure. Scott, I think that we've mentioned this in the presentation. In 2020 and 2021, 24,000 units processed close to $1.8 billion in PPP-funded loans. That's a lot of wood burning. That's a lot of management time. That's a lot of software development. That's a lot of closing. That's a lot of conversations with clients, in addition to the fact that we've got 24,000 new units with clients that we process. To do the 24,000, I'm going to say we must have spoken to 60 or 70 and maybe took a lot more data in on a lot of others. Those resources are going to get shifted. They're going to get shifted to 7(a). They're going to get shifted to 504. They're going to get shifted to non-conforming because all that stuff comes in in the front end of the funnel.
In addition, the management resources of myself, the accounting department, the legal department, the sales and marketing department will now shift to all the five silos so that we will be able to, God willing and prospectively, grow payments, grow tech, grow insurance, grow payroll, sharpen up our NewTracker system, develop new alliance and channel partners. I think that we're very excited about where we are. We don't have any new PPP loans coming through. We've probably got a good amount to still process left. There's still a window to get these things funded. Forgiveness, we've done, I think, a really good job in automation to automate the forgiveness process with clients that have stepped up to the plate. We're working on that from a servicing standpoint. I feel pretty good about our ability to sustain attractive levels of income without PPP.
Once again, I go back to that 2019 adjusted EBIT number of $2.31, which obviously is going to be markedly different than this year. I go, okay, now we're looking out next year. The 2021 under our belt with a run rate, particularly with NCL coming on, I think we're going to be just fine. I'm excited about it. I think when you look at us versus other BDCs, it's night and day.
Oh, yeah, totally agree. That's very helpful. Given the impressive growth metrics in what I like to call the fintech side of your company, how scalable is this model? In other words, would it be an attractive thing potentially to M&A? Separately, what is the greatest post-PPP opportunity?
I think that from our standpoint, we got to do what's best for all of our stakeholders, and I think that we've built a model business that works great in the BDC construct, but it could also work well in other constructs. That's why, when everybody else is doing five-year, fully locked out notes, we're willing to give up some coupon to have that flexibility.
Right.
I just think that we owe that to people, to do what's best for everybody that's involved. Relative to when you look at what we're involved with, and it's funny, you mentioned the word fintech. I don't think we're a fintech. I think we're a Newtek. I like to use that word because I don't know what the fintechs are doing, to be honest with you, and I say that euphemistically, but I know what Newtek is doing. In Newtek, what we do is we take real smart technologies and apply them to tried-and-true principles. Let's be clear. You could do payroll by going to Quicken or QuickBooks, not talking to anybody, putting in a little bit of data, and getting some kind of a result. God forbid, if you've got a question or a problem or a concern, you got nothing to do.
The same thing, I guess, you can go buy an insurance policy from Lemonade and go online. You have nobody to talk to. For that matter, you can try to go online and get a loan from LendingClub, and you might get a personal loan. I don't know whether they're doing business or not, but there's nobody to talk to. Our business model is there to provide technology and a human being associated with the solution because our business clients, particularly the larger ones, and I say the larger ones. We service two-employee companies, we service 20, we service 200, we service 2,000. We're there for all of them. In many instances, the two or five-person company ultimately grows significantly larger, and we're able to keep them and retain them. We're very excited about our business model, how we're positioned, where we sit today.
We've got the right capital structure. Our equity is in good shape. Our liquidity is in good shape. Boy, what a difference a year makes, right?
Amen. Absolutely. Well, that's great. Thank you again, and congratulations.
Thank you. Appreciate it, Scott. Thank you very much.
Our next question coming from the line of Merrill Ross with Compass Point. Your line is open.
Hi. Good morning. Congratulations. It was a good quarter. I am new to this story, so I may ask a question that is very naive, but do you provide those business services to customers that are not applying for credit?
Yeah. Thank you, Merrill. I appreciate you picking up coverage on us. 100%, absolutely yes. I think it's important to note that there is no, zero, requirement to take two products. Very important. We don't tie. Many of our clients that are dealing with us in payroll or tech don't borrow any money at all. That's actually almost more the rule. There is no rule on it. I mean, we like them to do multiple things. In many cases they do, but no, there's no tie between the two at all.
Okay. If you were to look at the opportunity to continue to deepen your client list, it's not tied to the referrals to your credit programs.
Not at all. The one skill we need to get better at, which we've recognized, is the ability to outbound into the existing customer base and introduce. Many times we will speak to our clients, "God, I didn't know you did that."
Right.
This is the one skill set that we're currently not very good at, but it is a target focus, and I greatly appreciate the question.
Okay. This question is truly the question of a novice, but you're looking at a rapid ramp in the second half of the year. You mentioned that the net premiums will go down at the end of September, and the two kind of work against each other. Aside from the dividends from the portfolio companies, what gives you the confidence that the year will end with a higher dividend run rate?
Well, yeah. It's a good question. I guess the first thing is 23 years or other experience with the model where we're comfortable. From a pricing standpoint, we clearly will seek to get whatever can get sold through September 30th sold. In addition to that, the 7(a) market and one of our slides sort of has what it's been over the last five or six years. First of all, anything can happen. We don't expect it to go from 113 and change down to 109. For argument's sake, let's say, for example, it goes to 111 and a half. All of this is factored into our own internal forecasting. What we've already assumed in our own modeling, when we go out and give dividend guidance, that we'll probably not have as an attractive price in the fourth quarter.
The other thing, Merrill, too, to think about is the 90% guarantees will convert to a 75% guarantee post September. All of that is factored into our forecasting and modeling, in addition to the fact that we think most likely, this happens every single year, it's happened for 17 years. The biggest loan volume hits in Q4. I wish it were different, but that's.
No, it's the seasonality of small business, right?
Exactly.
The budget process.
I can't make them borrow a fund in September when they want to fund in December.
Right. Well, thank you. I appreciate that.
Thank you, Merrill. All right.
Our next question coming from the line of Paul Johnson from KBW.
Yeah. Hey, guys. Thanks for taking my questions again. I just had sort of one modeling follow-up for you guys. I was just wondering about sort of like G&A expenses, comp expenses, just quarter-over-quarter, year-over-year are obviously up. You guys are coming off a pretty successful year, maybe no surprise there. I'm just curious from this level, four and a half million dollars this quarter for salary and comp expense. Should we kind of expect this sort of level from here going forward? Is there any kind of one-time items in there that would maybe come down to more of a normalized level in the quarters ahead?
Yeah, Paul, I'm glad you brought that up because that is something to think about. It also gives you insight into our thought process. That is, we think that this particular calendar year given PPP, given the economy, given the way our staff has worked incredibly hard, we felt it important to reward them. Now, the comp expense, I don't think it's broken out this way, but it was very bonus related, and it was also offered what I'll call a meritocracy. In addition to our shareholders benefiting and our creditors benefiting and our suppliers benefiting, we wanted to make sure that our staff benefited. I think that it's reasonable to assume, not on a straight line basis however, that we'll have an elevated level of comp in 2021 versus 2020.
You won't see that going out unless it's sort of commensurate with what we're doing. I don't know if that was helpful. I didn't put numbers around it, but I think it's an important note that our comp jumped. It's not because my total salaries jumped by, say, 50%. It was that we wanted to make sure that our other stakeholders, which is our staff, equally benefited because they wound up producing the results at the end of the day. That's where that's coming from. I don't know if that's helpful, but hopefully somewhat.
Yeah. No, that's helpful for me. Thanks for taking my questions again, and congrats on the good quarter.
Thank you again. Operator, I've got one more analyst who was not able to make the call because he was doubled up. Mickey Schleien. I'm going to read his questions off. Mickey Schleien from Ladenburg. First question, the outlook for 7(a) pricing and why has it been so strong? That has to do with the 55 basis point government guarantee fee that will get reintroduced post September 30, which will reduce the coupon. How can Newtek advantage given that the fourth quarter tends to be the strongest? Generally, we can't, except that we will try to pull as much loan closings as we can into the third quarter. The last question was from Mickey to give a sense of the pro forma results without PPP and my suggestion which I guess that's the, unfortunately Mickey got to go last.
I think using the 2019 base, assuming we've grown significantly from that, looking at historic distributions from all different entities with the growth rate should be able to get you there and give you a base and be able to pull this out. Also please do so with the fact that it takes a lot to do $1.8 billion worth of loans in 24,000-25,000 units. Really appreciate the questions, the thoughtfulness, the investment, and look forward to producing great results through the rest of the year and beyond. I'm assuming operator, there's no more questions?
I'm showing no further questions on the phone lines.
Thank you very much, everyone. Have a great, healthy day.
Ladies and gentlemen, that does end our conference for today. Thank you for your participation. You may now disconnect.