1
00:00:00.225 --> 00:00:02.245
Amazon and its in-house lending program.

2
00:00:02.865 --> 00:00:05.725
So they also announced that they are gonna end that.

3
00:00:05.825 --> 00:00:07.445
So the in-house lending program

4
00:00:07.475 --> 00:00:09.365
with Amazon, we spoke about it.

5
00:00:09.705 --> 00:00:11.965
I'm pretty sure it was the last, the last time we were on

6
00:00:11.995 --> 00:00:15.165
here that the, the reports showed that like United,

7
00:00:15.165 --> 00:00:17.405
it had been going steady, but they also announced

8
00:00:17.405 --> 00:00:19.045
that it's closing its doors.

9
00:00:19.505 --> 00:00:22.645
And that email came out last week, March 6th.

10
00:00:22.675 --> 00:00:23.965
What day it March. Alright.

11
00:00:23.965 --> 00:00:25.765
So yeah, that came out earlier in March.

12
00:00:26.385 --> 00:00:28.605
Um, but it's, it's still gonna continue to work

13
00:00:28.605 --> 00:00:30.045
with its different party lenders

14
00:00:30.155 --> 00:00:32.085
with three different party lenders and funders.

15
00:00:32.505 --> 00:00:34.845
Uh, and again, they've started this back in 2011.

16
00:00:35.545 --> 00:00:38.725
Um, we started reporting on it in 2013.

17
00:00:39.265 --> 00:00:41.445
But overall, that news coming out too,

18
00:00:41.835 --> 00:00:43.085
does that surprise you at all?

19
00:00:43.205 --> 00:00:45.405
I mean, we, we had talked about Amazon before

20
00:00:45.425 --> 00:00:48.085
and, you know, everything was kind of staying steady.

21
00:00:48.825 --> 00:00:50.445
So does the news surprise you at all?

22
00:00:51.885 --> 00:00:53.565
I don't know if I'm surprised by the news.

23
00:00:54.245 --> 00:00:56.245
I have mixed feelings about it.

24
00:00:56.385 --> 00:00:57.685
So first of all, you know, you said

25
00:00:57.685 --> 00:00:58.725
they're closing their doors.

26
00:00:58.795 --> 00:01:00.805
It's more like they're discontinuing their

27
00:01:00.805 --> 00:01:02.245
in-house underwriting.

28
00:01:02.745 --> 00:01:04.485
So if you are an Amazon seller

29
00:01:04.745 --> 00:01:07.085
and you need capital, you had several options.

30
00:01:07.345 --> 00:01:10.725
One was the term loan you could get from Amazon directly.

31
00:01:10.795 --> 00:01:12.365
They actually had their own underwriters

32
00:01:12.585 --> 00:01:14.885
and their own program that you could get a loan

33
00:01:14.885 --> 00:01:17.725
through Amazon Direct if

34
00:01:18.315 --> 00:01:20.925
that program was not something you were eligible for.

35
00:01:21.625 --> 00:01:25.005
Or maybe they had too many that were, uh, too many loans

36
00:01:25.645 --> 00:01:26.685
relative to applicants.

37
00:01:26.685 --> 00:01:28.365
They had third parties that they worked with.

38
00:01:28.785 --> 00:01:33.525
Uh, industry paraffin sellers, phi, the three primary ones

39
00:01:34.035 --> 00:01:37.525
that do a variety of different types of alternative programs

40
00:01:37.545 --> 00:01:39.285
to Amazon's in-House program.

41
00:01:40.265 --> 00:01:42.365
Now we've been tracking all of the above

42
00:01:42.945 --> 00:01:45.005
and Amazon has been very shy about the

43
00:01:45.005 --> 00:01:46.085
origination of figures.

44
00:01:46.085 --> 00:01:48.325
Their own in-house underwriting their own in,

45
00:01:48.325 --> 00:01:49.725
in-house business loan program.

46
00:01:50.155 --> 00:01:51.685
They haven't really gone out every quarter

47
00:01:51.705 --> 00:01:53.805
and said, here's how many loans we made.

48
00:01:53.835 --> 00:01:55.325
They don't really talk about it. Mm-Hmm.

49
00:01:55.785 --> 00:01:57.045
And so what we've had to do,

50
00:01:57.065 --> 00:01:58.805
or what I've had to do is sort of try

51
00:01:58.805 --> 00:02:01.325
to figure out a backend way to figure out

52
00:02:01.385 --> 00:02:02.165
To figure it out. Yeah. Figure

53
00:02:02.165 --> 00:02:03.165
Out what the numbers are.

54
00:02:03.305 --> 00:02:05.325
And they've typically in the last year

55
00:02:05.325 --> 00:02:08.925
or so, have had 1.3, I think $1.3 billion

56
00:02:09.265 --> 00:02:11.245
or so in receivables due to them,

57
00:02:12.095 --> 00:02:14.045
which it doesn't really give you an idea

58
00:02:14.045 --> 00:02:16.005
of origination figures per se,

59
00:02:16.105 --> 00:02:18.885
but allows you to determine that they're fairly large,

60
00:02:19.025 --> 00:02:20.405
at least within the top 10,

61
00:02:20.575 --> 00:02:23.885
maybe within the top five small online small business

62
00:02:23.885 --> 00:02:24.925
lenders in the us.

63
00:02:24.985 --> 00:02:26.765
So they are, they are sizable. Yeah.

64
00:02:26.765 --> 00:02:28.645
It's worth talking about. And they're Amazon,

65
00:02:29.865 --> 00:02:32.045
but of course they also worked with partners, paraffin,

66
00:02:32.525 --> 00:02:33.805
industry sellers, phi.

67
00:02:34.545 --> 00:02:35.805
What's happened now is

68
00:02:35.805 --> 00:02:38.325
that they're no longer doing their in-house lending program.

69
00:02:38.325 --> 00:02:39.605
They're taking that off the table

70
00:02:39.665 --> 00:02:41.565
and Amazon has been very clear, Hey,

71
00:02:41.695 --> 00:02:43.605
we're still offering the alternatives.

72
00:02:43.695 --> 00:02:45.245
We're still working with the third parties.

73
00:02:45.745 --> 00:02:46.845
You can still get a loan

74
00:02:46.945 --> 00:02:49.125
or some type of funding for your business.

75
00:02:49.425 --> 00:02:51.765
It just won't be from our in-house underwriting team.

76
00:02:51.825 --> 00:02:53.045
You asked me if I was shocked.

77
00:02:53.245 --> 00:02:55.685
I feel like I don't know if I have any, I don't know if,

78
00:02:55.765 --> 00:02:57.245
I don't know if I was shocked or,

79
00:02:57.245 --> 00:03:01.525
or surprised more just like intrigued by the timing of it

80
00:03:01.525 --> 00:03:03.725
because it coincided with the funding circle

81
00:03:04.005 --> 00:03:05.005
Announcement. Yeah. So that's what I

82
00:03:05.005 --> 00:03:05.285
was gonna say.

83
00:03:05.285 --> 00:03:07.045
I was like, 'cause both of these, you know, they,

84
00:03:07.045 --> 00:03:08.885
they happen relatively close to each other.

85
00:03:09.345 --> 00:03:12.565
Do you think there is a coincidence there?

86
00:03:14.185 --> 00:03:17.005
That's that's, do you think that I'm, I'm intrigued.

87
00:03:17.385 --> 00:03:20.925
Do you think that it's something, you know, should we,

88
00:03:21.225 --> 00:03:23.045
is there something to like look more into like,

89
00:03:23.045 --> 00:03:26.285
is this like a, a, a signal for like, hey, like, you know,

90
00:03:26.285 --> 00:03:27.605
like is this something we should

91
00:03:27.795 --> 00:03:28.925
look into and be worried about

92
00:03:29.325 --> 00:03:30.325
Ultimately? I don't know.

93
00:03:30.325 --> 00:03:31.365
You know, you know, uh,

94
00:03:31.995 --> 00:03:33.765
correlation is not causation,

95
00:03:33.865 --> 00:03:35.765
so we don't really know necessarily if it

96
00:03:35.885 --> 00:03:36.925
means anything just yet.

97
00:03:36.925 --> 00:03:39.405
Like I said, I'm, I'm intrigued by the,

98
00:03:39.625 --> 00:03:42.045
the coincidental timing of it with funding Circle.

99
00:03:42.195 --> 00:03:44.085
Perhaps they're both seeing something in their

100
00:03:44.085 --> 00:03:45.285
own portfolios Mm-Hmm.

101
00:03:45.365 --> 00:03:47.525
You know, that say, hey, it's not really economically viable

102
00:03:47.745 --> 00:03:50.365
for us to be doing this on our own anymore.

103
00:03:50.785 --> 00:03:52.685
As of this moment. I don't know if there's anything in

104
00:03:52.685 --> 00:03:56.325
particular that anyone can take away Yeah.

105
00:03:56.325 --> 00:03:58.965
From, from the news other than it is big news. Mm-Hmm.

106
00:03:59.045 --> 00:04:02.085
These are, these are large companies. Uh, funding circles.

107
00:04:02.085 --> 00:04:05.485
Annual origination volume was one sixth of Unova. Mm-Hmm.

108
00:04:05.905 --> 00:04:08.845
So it's big, it's not humongous. Yeah. Yeah.

109
00:04:08.845 --> 00:04:10.405
But it's definitely big, you know,

110
00:04:10.405 --> 00:04:12.645
I think it puts them at least in the top 10 in terms

111
00:04:12.805 --> 00:04:13.965
of online business lenders.

112
00:04:13.965 --> 00:04:16.565
Yeah. This is one in circle and Amazon was in that boat too.

113
00:04:16.655 --> 00:04:17.685
Let's say the top 10.

114
00:04:18.305 --> 00:04:19.685
And if you say, hey, two

115
00:04:19.685 --> 00:04:21.205
of the top 10 are saying, Hey, we don't wanna,

116
00:04:21.425 --> 00:04:22.285
We don't wanna be. Yeah.

117
00:04:22.705 --> 00:04:26.405
Um, I think it, it should, uh, definitely give you, uh,

118
00:04:26.415 --> 00:04:29.205
cause to go and investigate are they, you know,

119
00:04:29.585 --> 00:04:31.645
is there anything you're missing in your own portfolio

120
00:04:31.675 --> 00:04:32.725
that maybe they saw?

121
00:04:32.785 --> 00:04:34.405
And that's all anyone should take away from it.