1 00:00:09.540 --> 00:00:11.940 Johny Fernandez: I'm here in Miami, the land of fast cars, 2 00:00:11.940 --> 00:00:14.730 great food and beautiful beaches. But you know what else 3 00:00:14.730 --> 00:00:17.820 is here, the flourishing non banking finance industry. 4 00:00:18.180 --> 00:00:21.720 deBanked has held three major events right here in Miami, in 5 00:00:21.720 --> 00:00:26.640 2018 at the Gale, in 2019 at Eden Roc, and in 2020 at The 6 00:00:26.640 --> 00:00:29.970 Loews, but a lot has changed since January. So we're right 7 00:00:29.970 --> 00:00:32.700 back here in Miami to see how the industry is doing. 8 00:00:42.590 --> 00:00:44.930 Jordan Fein: My name is Jordan Fein. And I'm the CEO and 9 00:00:44.930 --> 00:00:48.410 founder of Greenbox Capital, I got into the industry in 2007. I 10 00:00:48.440 --> 00:00:50.570 started in credit card processing, and then I founded 11 00:00:50.570 --> 00:00:53.210 Greenbox Capital in 2012, we started to organize and put it 12 00:00:53.210 --> 00:00:56.780 all together and start servicing Canadian and US market and then 13 00:00:56.810 --> 00:01:00.170 just over eight years now in business. From 2012, we saw 14 00:01:00.170 --> 00:01:03.350 incredible growth, I mean, it was just very easy to close a 15 00:01:03.350 --> 00:01:06.860 deal and kind of starting to see that now reminding you back 16 00:01:06.860 --> 00:01:10.340 five, six years ago how it used to be. After COVID, you're 17 00:01:10.340 --> 00:01:13.010 getting a little bit of feeling of how it was back in the day. 18 00:01:13.010 --> 00:01:14.840 But it's quickly getting competitive, you're seeing a lot 19 00:01:14.840 --> 00:01:17.900 of funders come back online. And there's a lot less merchants and 20 00:01:17.900 --> 00:01:20.030 there's a lot more competition already in the last three or 21 00:01:20.030 --> 00:01:20.540 four weeks. 22 00:01:20.820 --> 00:01:22.410 Johny Fernandez: And specifically speaking regarding 23 00:01:22.410 --> 00:01:25.530 the market of Miami, go ahead and walk me through how you 24 00:01:25.530 --> 00:01:29.190 think COVID has impacted the Miami market, but also the 25 00:01:29.190 --> 00:01:31.350 future of the Miami market. 26 00:01:31.410 --> 00:01:32.820 Jordan Fein: I know I could speak for Miami, there's a lot 27 00:01:32.820 --> 00:01:35.760 of COVID fatigue happening, where people are just fatigued 28 00:01:35.760 --> 00:01:39.420 from overall COVID and the precautions like that, and you 29 00:01:39.420 --> 00:01:42.930 know, they want to be out there's places there's bars that 30 00:01:42.930 --> 00:01:46.320 are probably not supposed to be open, that are open. And people 31 00:01:46.320 --> 00:01:48.630 are out there doing, they're doing the restaurants, they're 32 00:01:48.630 --> 00:01:51.870 doing their bars, but they're doing their house parties. And I 33 00:01:51.870 --> 00:01:54.450 think that everyone wants to go back to normal life here. 34 00:01:55.530 --> 00:01:58.080 Craig Hecker: Craig Hecker and the company's called Bitty 35 00:01:58.080 --> 00:02:02.580 advance. I've been in specialty finance since 2007. And I 36 00:02:02.580 --> 00:02:05.250 started a company called Rapid Capital Funding that I 37 00:02:05.250 --> 00:02:09.570 ultimately sold. And I ended up acquiring Bitty Advance 38 00:02:09.840 --> 00:02:11.940 recently, in February of this year, 39 00:02:12.390 --> 00:02:14.070 Johny Fernandez: obviously, you've been in business for 40 00:02:14.100 --> 00:02:16.470 quite some years, but kind of walk me through the challenges 41 00:02:16.470 --> 00:02:18.450 that you've seen, because of COVID. 42 00:02:18.690 --> 00:02:20.880 Craig Hecker: So I think it taught us a lot. And I think 43 00:02:20.880 --> 00:02:26.160 that when you face challenges like, like this pandemic, it 44 00:02:26.160 --> 00:02:30.330 really pushes you to reinvent yourself or reinvent certain 45 00:02:30.330 --> 00:02:34.650 parts of your business that you never thought were possible. And 46 00:02:34.680 --> 00:02:37.710 one of the things that we've learned is that we have a lot of 47 00:02:37.710 --> 00:02:41.820 folks that prefer to work at home, they're actually more 48 00:02:41.820 --> 00:02:46.770 efficient working from home, they're not in any hurry to come 49 00:02:46.770 --> 00:02:50.970 back into the office setting. Of course, we have certain 50 00:02:51.150 --> 00:02:55.290 employees that you know, their their jobs require them to kind 51 00:02:55.290 --> 00:02:58.860 of be with other employees, etc. But I think it's really forced 52 00:02:58.860 --> 00:03:04.800 us to adapt, and to just embrace a new normal. 53 00:03:10.930 --> 00:03:13.780 Justin Leto: My name is Justin Leto, and I'm the CEO of Idea 54 00:03:13.780 --> 00:03:14.440 Financial. 55 00:03:14.830 --> 00:03:17.500 Larry Bassuk: Larry Bassuk, I'm the president of Idea Financial. 56 00:03:17.620 --> 00:03:19.900 Justin Leto: Idea Financial is a small business lender, we got 57 00:03:19.900 --> 00:03:23.800 our start back in early 2017. Larry and I are not from the 58 00:03:23.800 --> 00:03:26.500 financial services industry. We're both trial lawyers by 59 00:03:26.500 --> 00:03:29.980 training and by vocation prior to doing this. And we spent 60 00:03:30.220 --> 00:03:33.550 almost two decades as trial lawyers, and about five years 61 00:03:33.550 --> 00:03:36.130 prior to this as law partners. We have an entrepreneurial 62 00:03:36.130 --> 00:03:38.860 spirit, so to speak. And we had invented and started other 63 00:03:38.860 --> 00:03:42.190 companies prior to Idea Financial. And then we had this 64 00:03:42.190 --> 00:03:45.820 opportunity to start this business. And we took it back in 65 00:03:45.850 --> 00:03:49.900 early 2017. And so for a while we sort of balanced the practice 66 00:03:49.900 --> 00:03:53.050 of law with what we were doing here. And now we're fully 67 00:03:53.050 --> 00:03:54.730 committed. This is what we do full time. 68 00:03:55.000 --> 00:03:56.920 Johny Fernandez: What do you think your approach has been 69 00:03:56.920 --> 00:04:00.250 from businesses and people here in Miami regarding the COVID 70 00:04:00.250 --> 00:04:03.490 crisis, and how has it impacted the business here, specifically 71 00:04:03.490 --> 00:04:04.030 in Miami? 72 00:04:04.360 --> 00:04:06.520 Justin Leto: Miami, I think is going to continue to deal with 73 00:04:06.610 --> 00:04:09.220 some significant issues related to COVID, especially now that 74 00:04:09.220 --> 00:04:11.590 schools are reopening, and people are starting to get out 75 00:04:11.590 --> 00:04:14.770 and about. However, the good thing I've seen about this city 76 00:04:14.770 --> 00:04:18.490 is, over the last three, three months or so Miami has really 77 00:04:18.490 --> 00:04:21.100 started to become compliant as a community with some of the 78 00:04:21.100 --> 00:04:23.260 things that are necessary to stop the spread of this virus. 79 00:04:23.530 --> 00:04:25.360 And I think that's been really positive and it's kept our 80 00:04:25.360 --> 00:04:27.910 numbers down. And we hope that will continue. And we take a lot 81 00:04:27.910 --> 00:04:30.460 of precautions here in the office as well, as far as hand 82 00:04:30.460 --> 00:04:33.940 sanitizer, socially distant people wearing masks, you know, 83 00:04:33.970 --> 00:04:35.920 everything that you're supposed to do to make sure that we keep 84 00:04:35.920 --> 00:04:36.430 things safe. 85 00:04:36.580 --> 00:04:39.130 Johny Fernandez: So during the COVID crisis, how has that 86 00:04:39.130 --> 00:04:40.390 impacted the business? 87 00:04:40.840 --> 00:04:43.120 Larry Bassuk: I think that we've been consistent in our risk 88 00:04:43.120 --> 00:04:46.750 management approach from the beginning. When we first 89 00:04:46.780 --> 00:04:49.990 surveyed the alternative lending space to see where we thought 90 00:04:49.990 --> 00:04:53.530 the best opportunity was for Idea Financial, we decided to 91 00:04:53.530 --> 00:04:57.640 focus on the higher credit quality segment of the market. 92 00:04:57.700 --> 00:05:00.940 Our credit standards reflect that, our risk management 93 00:05:00.940 --> 00:05:04.180 principles reflect that, and quite frankly, our product 94 00:05:04.180 --> 00:05:07.600 reflects that. So during the COVID crisis, when it was very 95 00:05:07.600 --> 00:05:12.760 acute in March, April, May, we got to see in real time, how our 96 00:05:12.790 --> 00:05:16.570 risk mitigation principles were, were functioning, it was a real 97 00:05:16.570 --> 00:05:20.170 test of all the theory that we had put in place, leading up to 98 00:05:20.170 --> 00:05:24.130 the COVID crisis, during the COVID crisis, we got to see 99 00:05:24.130 --> 00:05:27.340 things shake out, and we got to see things being proven. A lot 100 00:05:27.340 --> 00:05:30.070 of assumptions that we had made, a lot of standards that we were 101 00:05:30.070 --> 00:05:34.420 very strict on, really helped us manage the crisis. Going 102 00:05:34.420 --> 00:05:38.020 forward, we see that we're going to be doubling down on those 103 00:05:38.020 --> 00:05:40.330 risk management principles, doubling down on how we 104 00:05:40.330 --> 00:05:43.090 underwrite and keeping a very close watch on how the 105 00:05:43.090 --> 00:05:46.060 businesses perform pre COVID, during COVID, and then 106 00:05:46.060 --> 00:05:47.110 hopefully, post COVID. 107 00:05:47.840 --> 00:05:50.150 Jordan Fein: I'd be lying to you, if I told you that, well, 108 00:05:50.150 --> 00:05:52.280 it was it was fine for us, it wasn't and it was, it wasn't 109 00:05:52.490 --> 00:05:55.700 fine for anybody, we got hit pretty hard, I'd say that 110 00:05:57.530 --> 00:06:04.970 anywhere between 20 to 24% of our Canadian and about 25 to 28% 111 00:06:04.970 --> 00:06:10.340 of our US market got wiped out. And we shut down funding from 112 00:06:10.370 --> 00:06:14.750 mid March to the end of April. And we started funding again in 113 00:06:14.750 --> 00:06:17.510 early May. And we've just increasingly been bringing back 114 00:06:17.510 --> 00:06:20.480 people from furlough and getting getting our legs back under us. 115 00:06:20.480 --> 00:06:22.280 And now I think we're really cooking right now. 116 00:06:22.759 --> 00:06:24.359 Craig Hecker: It has been interesting, to say the least, 117 00:06:24.809 --> 00:06:29.459 you know, we paused our funding, beginning of April, when things 118 00:06:29.459 --> 00:06:33.359 were looking, you know, very, very uncertain. And, you know, 119 00:06:33.569 --> 00:06:38.249 everyone was kind of in panic mode. But then, you know, as 120 00:06:38.279 --> 00:06:41.909 things started to unfold, and we, you know, really had a lot 121 00:06:41.909 --> 00:06:46.829 of faith and belief in the small business customer, and their 122 00:06:46.829 --> 00:06:50.909 ability to, you know, survive, sustain, you know, reinvent 123 00:06:50.909 --> 00:06:55.169 themselves, you know, and they've come back pretty strong. 124 00:06:55.529 --> 00:06:58.649 And we've seen, you know, better, better credit quality 125 00:06:58.649 --> 00:07:01.589 from customers, we've seen customers that are, you know, 126 00:07:01.589 --> 00:07:04.589 they were pausing payments for, you know, a brief period of 127 00:07:04.589 --> 00:07:09.569 time, you know, during that, you know, mid March to, you know, 128 00:07:09.569 --> 00:07:12.569 end of April period, but, but those businesses for the most 129 00:07:12.569 --> 00:07:15.719 part, have, you know, resumed payments and, you know, come 130 00:07:15.719 --> 00:07:16.499 back online 131 00:07:17.000 --> 00:07:19.990 We asked locals what the experience has been like for 132 00:07:19.990 --> 00:07:20.410 them. 133 00:07:20.500 --> 00:07:22.720 Speaker: This area, this you know, you can't beat it I mean, 134 00:07:22.720 --> 00:07:24.700 people are gonna come somewhere, we're gonna get rid of this 135 00:07:24.700 --> 00:07:28.900 COVID stuff. You know, if, if Joe Biden wins, COVID's gone, 136 00:07:28.930 --> 00:07:31.330 you know, Trump wins, we got COVID for four more years, but 137 00:07:31.330 --> 00:07:33.760 then after that, I'm sure everything will be good. You 138 00:07:33.760 --> 00:07:36.880 know what I mean? The people got to come somewhere where we're 139 00:07:36.880 --> 00:07:37.240 gonna go? 140 00:07:37.240 --> 00:07:39.760 Yea I mean, it's always been like a party place to like, 141 00:07:39.790 --> 00:07:43.000 there's a lot of like, people outside walking the streets like 142 00:07:43.030 --> 00:07:45.970 I've gone to Wynwood and it looks like a ghost town, like, 143 00:07:47.050 --> 00:07:50.590 more people are staying at home kind of thing. So if for sure, 144 00:07:50.590 --> 00:07:53.950 it's not the same, like vibe being here. 145 00:07:54.350 --> 00:07:57.020 I just think it's gonna take a while, I really think it needs 146 00:07:57.020 --> 00:07:59.690 to take a while you got a lot of hotels we're absorbed by hotels, 147 00:07:59.690 --> 00:08:01.400 I just don't know how many people are going to come back 148 00:08:01.400 --> 00:08:05.960 and, you know, and flood the hotels and the restaurants and 149 00:08:06.020 --> 00:08:09.830 whatever we have here. I mean, a locals are, there's locals here. 150 00:08:09.830 --> 00:08:12.320 But there's not a huge amount locals who were really using 151 00:08:12.350 --> 00:08:15.710 these facilities and we really need the economy to come back to 152 00:08:15.710 --> 00:08:19.040 fulfill these to fill the spaces the void that we're having. 153 00:08:19.100 --> 00:08:21.560 Johny Fernandez: So what happens from here on out? What does the 154 00:08:21.560 --> 00:08:25.370 recovery process look like for the industry here in South 155 00:08:25.370 --> 00:08:25.940 Florida? 156 00:08:26.020 --> 00:08:28.630 Jordan Fein: For the industry to recover? I think what needs to 157 00:08:28.630 --> 00:08:32.740 happen is I do think the government needs to continue to 158 00:08:32.740 --> 00:08:36.160 provide stimulus, right, I really, really do. Because they 159 00:08:36.160 --> 00:08:39.040 need to, they need to, they need to protect against the loss of 160 00:08:39.040 --> 00:08:41.770 demand, there's still a massive loss of demand, when you talk 161 00:08:41.770 --> 00:08:45.460 about consumer spending, because of their lack of willingness to 162 00:08:45.460 --> 00:08:49.360 be out, be social, take trips, to travel, not to mention the 163 00:08:49.360 --> 00:08:52.120 high loss, high unemployment rate, right. And I think that's 164 00:08:52.120 --> 00:08:54.640 going to take time to recover. So I think that the government 165 00:08:54.640 --> 00:08:58.870 stimulus needs to start to decrease but still be there to 166 00:08:58.870 --> 00:09:01.750 provide support. And I think that the industry will recover 167 00:09:01.750 --> 00:09:04.900 and will recover strong. And I also think that our industry 168 00:09:04.900 --> 00:09:09.130 plays a big role in this. Because if you notice anything, 169 00:09:09.130 --> 00:09:11.800 any funder will tell you this, you're still seeing a lot of 170 00:09:11.830 --> 00:09:14.350 Treasury deposits in these small businesses, it tells you that 171 00:09:14.350 --> 00:09:17.830 small businesses truly were not being served. In the beginning, 172 00:09:17.830 --> 00:09:19.810 there's a big, big, small businesses or whatever they were 173 00:09:19.810 --> 00:09:21.610 serving, you know, you heard some of these, like the Lakers 174 00:09:21.610 --> 00:09:23.950 got money or whatever. But you're starting to see that the 175 00:09:23.950 --> 00:09:25.930 real small business in this country are actually getting 176 00:09:25.930 --> 00:09:29.020 money in the last 60 days, 90 days. So that's super, super 177 00:09:29.020 --> 00:09:29.860 important to continue. 178 00:09:29.900 --> 00:09:33.020 Craig Hecker: So I see the industry moving forward in a in 179 00:09:33.020 --> 00:09:37.250 a fairly positive way. I mean, clearly, there's been quite a 180 00:09:37.250 --> 00:09:40.880 bit of fallout, as you would imagine, you know, with with 181 00:09:40.880 --> 00:09:43.940 different funders being, you know, paused for extended period 182 00:09:43.940 --> 00:09:50.660 of time, extended period of time and with their customer base 183 00:09:50.660 --> 00:09:54.440 being, you know, maybe more impaired. It depends on the 184 00:09:54.440 --> 00:09:58.280 asset class that you're in, you know, we're funding small, 185 00:09:58.400 --> 00:10:02.810 small businesses with an average revenue of about 13 to 15,000 a 186 00:10:02.810 --> 00:10:06.620 month. So I think some of the funders that were funding much 187 00:10:06.650 --> 00:10:11.120 larger transactions, their customer base, definitely a 188 00:10:11.120 --> 00:10:14.240 little bit more impaired, you know, certain regions, certain 189 00:10:14.240 --> 00:10:17.450 areas of the country, you know, certain restaurants that are 190 00:10:17.450 --> 00:10:22.970 slower to come back because of a lot of the rules imposed on them 191 00:10:23.000 --> 00:10:26.960 in their different communities. But I think, I think the 192 00:10:26.960 --> 00:10:30.800 business is going to come back strong, and I think it's causing 193 00:10:31.070 --> 00:10:35.330 the better operators to have the best opportunity. And that's 194 00:10:35.330 --> 00:10:37.610 kind of how I see the business moving forward. 195 00:10:37.780 --> 00:10:40.810 Larry Bassuk: I think that we are going to double down on our 196 00:10:40.810 --> 00:10:44.380 strategy of focusing on the higher credit quality segment 197 00:10:44.380 --> 00:10:48.280 within the market, continuing to provide our flagship line of 198 00:10:48.280 --> 00:10:52.270 credit product to well qualified businesses, we believe that 199 00:10:52.270 --> 00:10:56.350 there's going to be more demand than ever for capital and, and 200 00:10:56.410 --> 00:10:59.740 most likely, the banks, the traditional banking system, 201 00:10:59.770 --> 00:11:02.980 again, is not going to be able to keep up with that demand. So 202 00:11:02.980 --> 00:11:06.010 that's where we see a lot of opportunity in the market for us 203 00:11:06.010 --> 00:11:09.250 to continue growing, riding that. And I think that the 204 00:11:09.250 --> 00:11:12.190 experience that we've gained as a team, so obviously, we have, 205 00:11:12.340 --> 00:11:15.730 it's not just the two of us, we have a very, very talented and 206 00:11:15.730 --> 00:11:18.940 very strong team working here at Idea Financial, and all of us 207 00:11:18.940 --> 00:11:23.050 together have learned a lot during this crisis. And a lot of 208 00:11:23.050 --> 00:11:26.230 those lessons are going to continue to be applicable to 209 00:11:26.230 --> 00:11:28.900 what we do in the future, to allow us to underwrite better, 210 00:11:29.170 --> 00:11:31.900 certain things that we've decided to take into 211 00:11:31.900 --> 00:11:34.420 consideration when we're underwriting a deal, we're going 212 00:11:34.420 --> 00:11:37.510 to continue to do that. And it's a very dynamic environment right 213 00:11:37.510 --> 00:11:40.900 now, everybody's kind of waiting and seeing to what's going to 214 00:11:40.900 --> 00:11:43.660 happen, is there going to be another lockdown? Or is there 215 00:11:43.660 --> 00:11:45.850 going to be a second spike, what's going to happen with flu 216 00:11:45.850 --> 00:11:48.700 season, what's going to happen when schools open? So this is a 217 00:11:48.700 --> 00:11:52.150 very challenging time to help small businesses, but we're 218 00:11:52.150 --> 00:11:55.330 staying true to our mission. And again, we're small business 219 00:11:55.330 --> 00:11:58.720 owners, we always will behave and think like small business 220 00:11:58.720 --> 00:12:01.750 owners. So we believe very strongly in our mission to 221 00:12:01.750 --> 00:12:05.230 provide capital to the small and medium sized businesses in the 222 00:12:05.230 --> 00:12:08.950 United States that are going to continue to be the driving force 223 00:12:08.950 --> 00:12:09.730 of this economy. 224 00:12:10.420 --> 00:12:12.700 Johny Fernandez: Here in Miami, there is optimism in the air 225 00:12:12.730 --> 00:12:16.030 despite the hardships people faced this year. Now, we can't 226 00:12:16.030 --> 00:12:19.090 say when things will go back to normal, but I have seen 227 00:12:19.090 --> 00:12:23.140 firsthand why the FinTech spirit here in Florida is full of 228 00:12:23.140 --> 00:12:26.080 sunshine. I'm Johnny Fernandez with deBanked News. And we'll 229 00:12:26.080 --> 00:12:28.750 see you right back here in person when the industry 230 00:12:28.750 --> 00:12:29.470 returns.