Archive for 2017
Bond Street Has Stopped Lending
September 13, 2017
NYC-based small business lender Bond Street has stopped making new loans, according to sources who worked with them. The Wall Street Journal published a similar report earlier today. In addition, the WSJ reported that Goldman Sachs is hiring 20 of Bond Street’s employees.
Just seven months ago, Bond Street announced that they had closed a $300 million loan purchase agreement with Jefferies. The WSJ reported that an inability to raise additional equity is what threw a wrench in their future. The same situation happened to Bizfi just a few short months ago, who wound down after 10 years and shipped their portfolio off to rival Credibly to service.
Bond Street’s 1-3 year loans with APRs ranging from 8% – 25% were terms that many in the alternative business lending universe say is a fundamentally unprofitable model. The company now appears to be joining the ever growing purgatory of alternative small business finance companies. They join Dealstruck, Herio Capital, Bizfi, and Nulook Capital. CAN Capital was previously on that list but was recently restructured and revived.
Able Lending, another small business lender, denied that they were going out of business but admitted they were looking to be acquired.
Square is also reportedly in talks to hire Bond Street employees, the WSJ claims. When Bizfi closed, their employees were mainly picked up by rivals World Business Lenders, Strategic Funding, iPayment, 6th Avenue Capital, and others.
The SoFi Story Has Spun Into a Lurid Tale About Misbehaving Silicon Valley Startups
September 13, 2017
The SoFi story is slowly unraveling from a handful of unhappy employees seeking relief through the courts to a full-on Silicon Valley frat house anything-goes sexcapade scandal. If you haven’t been following along, below are links to help you catch up on how the story has unfolded:
8/11 – NY Times – Another Silicon Valley Start-Up Faces Sexual Harassment Claims
8/11 – California Superior Court – Read the complaint by former employee Brandon Charles
8/15 – deBanked – The Employee Suing SoFi Only Worked There for Three Months
8/19 – deBanked – SoFi Hit With Class Action Lawsuit Over Wage Issues
8/31 – California Superior Court – Former employee Brandon Charles amends complaint to include CEO Mike Cagney as a defendant and adds Defamation as a claim
9/1 – SoFi – SoFi hires third party to conduct internal investigation
9/11 – SoFi – A Note From SoFi CEO Mike Cagney
9/11 – NY Times – Chief Executive of Social Finance, an Online Lending Start-Up, to Step Down
9/12 – deBanked – SoFi’s CEO is Stepping Down
9/12 – SoFi – Responding to the New York Times
9/12 – Dealbreaker – SoFi Scandal Turning Quickly From “Nothing Was Sexual” To “Everybody Is Having Sex With Everybody”
9/13 – NY Times – ‘It Was a Frat House’: Inside the Sex Scandal That Toppled SoFi’s C.E.O.
9/13 – Vanity Fair – “IT WAS A FREE-FOR-ALL”: INSIDERS SLAM SOFI’S “FRAT HOUSE” CULTURE AS C.E.O. RESIGNS
In the last few months, the CEO & chairman, CFO, CRO, and a co-founder have all resigned.
Reaction to Lending Club’s New Credit Model
September 13, 2017The few retail investors discussing the recent change Lending Club made to their credit model weren’t exactly optimistic, according to comments on the Lend Academy forum. Of particular concern is grade inflation wherein borrowers who previously scored a C or lower may now find themselves in the A or B category.
“We expect loan volume to shift toward higher quality grades (grades A and B) because some borrowers will qualify for lower interest rates under the new model,” Lending Club stated in an email last week.
Retail investor sentiment may not be all that important, however, as capital from self-managed accounts on the platform has waned after peaking in the first quarter of 2016. In Q2 of 2017, self-managed accounts only accounted for 13% of the capital used to fund loans. The majority came from banks and institutions.
LeaseQ and ARF Financial Partner to Automate Hospitality Equipment Financing
September 12, 2017BOSTON (Sept. 12, 2017) – LeaseQ, an online marketplace connecting business owners, equipment sellers, and lenders to make selling and financing equipment fast and easy, today announced a national partnership with ARF Financial, the only FDIC-compliant financial lender that provides short-term, unsecured business loans and lines of credit for restaurant/hospitality business owners and retailers nationwide.
“We are unique in having our own sales organization, and LeaseQ gives our loan consultants around the country a lease product with instant quotes,” ARF Financial CEO Steve Glenn said. “Now we are a one stop lender offering additional products to satisfy our customers funding needs for their businesses.”
Innovations in the equipment finance industry will continue to increase flexibility and convenience for customers, according to the Equipment Leasing and Finance Association’s (ELFA) Top 10 Equipment Acquisition Trends for 2017. Automation fuels advances in instant quotes, soft credit pulls, same-day approvals, one-day funding and blockchain for secure, multi-party transactions – many of which are available today through LeaseQ and ARF Financial.
“You can finance a car in an hour, but not a walk-in freezer to start or expand a restaurant,” said Vernon Tirey, co-founder and CEO of LeaseQ. “One-day funding is a trendy thing to say in equipment financing, but when the restauranteur or hotel manager presses the button to get financing, it has to work. We’re advancing our technology and partnering with lenders like ARF Financial who understand the value of automation to make it happen.”
LeaseQ and ARF Financial offer automated, flexible equipment financing for hospitality merchants who are frustrated with the time it takes to get a bank loan, or who cannot get a bank loan at all, including those:
- Expanding a facility
- Upgrading equipment
- Adding a location and renovating the property
- Managing working capital, and more
There are currently 150 lenders on the LeaseQ platform serving 28 vertical markets. Learn more at www.leaseq.com.
About LeaseQ
LeaseQ is an online marketplace connecting businesses, equipment sellers, and equipment finance companies to make selling and financing equipment fast and easy. The LeaseQ platform is a free, cloud-based SaaS solution with a suite of on-demand software and data solutions for the equipment leasing industry. LeaseQ provides business process optimization (BPO) and information services that streamline the purchase and financing of business equipment across a broad array of vertical industry segments. Learn more at www.leaseq.com.
About ARF Financial
ARF Financial LLC is a California licensed lender that sources short-term business loans and lines of credit for restaurant/hospitality and retail merchants nationwide. Since 2001, ARF has filled the void between traditional bank financing and less attractive venues of obtaining capital, giving merchants the ability to maintain control of their business, be more profitable and meet their financial goals. The company is managed and staffed by industry veterans with extensive experience in restaurant finance and small to medium retail industries.
For more information on their services, visit their website at www.arffinancial.com. You may fill out their contact form at www.arffinancial.com/contact, call 1-866-702-4430, or send an email to funding@arffinancial.com for inquiries.
Senate Banking Committee to Hold Hearing on Fintech
September 12, 2017The US Senate Committee on Banking, Housing, & Urban Affairs held a hearing entitled “Examining the Fintech Landscape” on Tuesday morning at 10 AM.
You can watch it below
The witnesses include:
Mr. Lawrance Evans
Director, Financial Markets
U.S. Government Accountability Office
Mr. Eric Turner
Research Analysis
S&P Global Market Intelligence
Mr. Frank Pasquale
Professor of Law
University of Maryland Francis King Carey School of Law
SoFi’s CEO is Stepping Down
September 12, 2017
SoFi’s long slow grind towards an IPO is coming to a screeching halt. Mike Cagney, SoFi’s CEO, is reportedly stepping down as chairman effective immediately and will be resigning from his CEO position later in the year. The hope is that this will relieve outside distractions such as pending lawsuits, the WSJ and NY Times report.
SoFi co-founder Dan Macklin and SoFi CFO Nino Fanlo both stepped down in May. Meanwhile the company’s Chief Revenue Officer, Michael Tannenbaum, left the company in July. In the Spring, SoFi announced that with an IPO in limbo, employees could begin to sell their vested stock.
It’s an inauspicious time given the battle the company is gearing up for to secure an industrial banking charter. Among the lawsuits bearing down on the company are allegations of sexual harassment and unpaid wages, while the NY Times reports Cagney “may have been overaggressive in expanding SoFi’s business, skirting risk and compliance controls” while also possibly having inappropriate relationships with SoFi employees.
Tom Hutton, a board member, will immediately replace Cagney as chairman.
Only a month ago, Cagney reportedly suggested that IPO plans were back in the works.
Lending Club Launches Its Most Advanced Credit Model Ever
September 11, 2017Lending Club is feeling pretty good about its newest credit model, according to an email that circulated to retail investors this morning. A copy of it is below:
We have launched the most advanced and predictive credit model ever used on the LendingClub platform. It’s the latest in LendingClub’s long history of innovation on behalf of borrowers and investors.
The new model leverages machine learning and 10 years of LendingClub data to better assess and price credit risk. LendingClub has helped 1.5+ million borrowers since 2007; each borrower provides unique insight that we can use in our next decision.
What investors need to know about the new credit model:
• It’s 24% better at differentiating the likelihood of a borrower charging off than the fourth-generation model, and is more predictive than a borrower’s FICO score alone.
• It’s built on a wealth of proprietary data, incorporates more data points for each borrower, uses best-in-class modeling techniques, and uses dozens of new custom attributes that are predictive in assessing risk.
• We expect loan volume to shift toward higher quality grades (grades A and B) because some borrowers will qualify for lower interest rates under the new model, and other higher-risk borrowers, who may have received an offer previously, will be screened out.
• We continue to see lower delinquency rates across grades and terms in the existing loan portfolio than in the second and third quarters of 2016.
We see this credit model as the latest innovation in our continuous enhancement cycle, and one that helps us continue to provide investors with solid risk-adjusted returns. See here for more on what makes the model unique.
Alternative Finance Bar Association Event is Wednesday
September 10, 2017If you’re interested in going, the Alternative Finance Bar Association event on Wednesday is open to both funding company executives and industry attorneys. The New Regulatory Challenges Facing Small Business Lending: Navigating the New Frontier will feature Joann Needleman, Esq., Jane Luxton, Esq. & Tommy Brooks, Esq. from Clark Hill PLC in the NYC Bar Association Offices on 42 West 44th Street in New York City.
To register or for more information, contact Tiffany Diaz at Tiffany@LRohanlaw.com.
The original announcement can be accessed here.
