Businessweek

hat have been hurt by a reduction in the availability of credit from banks and independent lessors sidelined by the credit crisis. It finances essential-use equipment for mid-sized businesses nationwide. The Equipment Finance group offers a variety of direct finance leases with various end-of-term options to fund a range of equipment types, including manufacturing, technology, healthcare, and telecom equipment. It also offers lease lines to meet customers’ needs for planned capital expenditures. The company focuses on companies across an array of industries, including business services, healthcare, telecommunications, financial services, education, retail and manufacturing. Loans and Other Debt Products First mortgage: The company’s first mortgage loans are provided by its Real Estate group and are secured by a mortgage bearing a first lien on the real property serving as collateral. Senior Secured Asset-Based: The company’s senior secured asset-based loans are provided by its Business Credit group, and by its Leveraged Finance group, and are secured by a first-priority lien on tangible assets and have a first-priority in right of payment. Senior Secured Cash Flow: The company’s senior secured cash flow loans are provided by its Leveraged Finance group. The company underwrites these loans based on the cash flow, profitability and enterprise value of the borrower, with the value of any tangible assets as secondary protection. These loans are generally secured by a first-priority security interest in the borrowers’ assets and, in certain transactions, the pledge of their common stock. Other: The company’s Other loans and debt products are categorized as senior subordinated asset-based (which are equal as to collateral and subordinate as to right of payment to other senior lenders), senior subordinated cash flow (which are equal as to collateral and subordinate in right of payment of principal and interest to other senior lenders), second lien (which are second liens on a borrower’s assets, and in some cases, junior in right of payment to senior lenders), and mezzanine/subordinated (which are subordinated as to rights to collateral and right of payment to senior lenders). Regulations The company is in the process of registering as an investment adviser under the Investment Adviser Act of 1940 (the ‘Advisers Act’) as a result of the Securities and Exchange Commission (SEC) rules promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the ‘Dodd-Frank Act’). The Advisers Act imposes numerous obligations on such registered investment advisers, including fiduciary duties, disclosure obligations and record-keeping, operational and marketing requirements. The SEC is authorized to institute proceedings and impose sanctions for violations for the Advisers Act, which may include fines, censure or the suspension or termination of an investment adviser’s registration. History NewStar Financial, Inc. was founded in 2004.