Archive for 2018
US Business Funding Will Retain Name & Special Sauce in Wake of Fora Deal
June 8, 2018Fora Financial’s announcement yesterday that it acquired a sizable stake in US Business Funding (USBF) will create one of the “largest, broadest reaching direct sales organizations in the small business alternative lending space,” the company said in a statement.
USBF is a direct sales and marketing company of about 40 to 50 people. Fora Financial founder and CEO told deBanked that his company started working with USBF to obtain leads two years ago and that this acquisition has been in the works for between 12 to 18 months.
Jared Feldman, CEO, Fora Financial“We were looking for a team that does direct sales and marketing that complements what we do,” Feldman said. “And they’re one of the best at [direct marketing] in the business.”
USBF is based in Santa Ana, CA, and has connected customers to financing since 2008, with an emphasis originally on equipment financing. In 2012, they started facilitating working capital deals and that now makes up 85 percent of the company’s business, according to its CEO Peter Ribeiro.
They provide financing solutions ranging from $10,000 to $10 million. Fora Financial, also established in 2008, is a New York-based funding company that funds MCA deals and provides small business loans up to $500,000.
Consistent with yesterday’s announcement, Feldman said that with Fora Financial and USBF combined, they will likely originate $400 million year. Feldman told deBanked today that, of this amount, about $300 million should come from direct sales.
“We’re more heavily weighted towards direct sales,” Feldman said.
Formerly a company of 100, the new entity will now include about 150 employees and will share resources like capital, technology and access to help with compliance, Feldman said. USBF will retain its name, location and all of its employees.
“We wouldn’t have done this deal unless Peter [USBF founder and CEO] and his team agreed to stay on,” Feldman said. “They have a fantastic brand and we want to avoid getting in their way. We just want to help them to continue doing what they do.”
Feldman said that while USBF will retain its name, “we’re now a combined entity with an east and west coast operation.”
Fora Financial acquired USBF because it did something unique, and Feldman said that Fora is looking for opportunities to acquire other companies that do uniques things in the financing space.
PeerIQ Report Shows Mixed Signs for Non-Bank Lending
June 7, 2018PeerIQ released its 2Q2018 Lending Earnings Insight Report today, presenting forward-looking insights into the FinTech & non-bank space.
The report said that CEOs and CFOs see tax reform as increasing consumers’ disposable income. However, “an increasing supply for credit and demand for credit, as well as re-normalization trends and increased competition are leading to higher charge-offs.”
Credit performance this quarter is mixed, the report says. The analysts observe improvements, yet also record low delinquencies from OnDeck, OneMain Holdings and FinTechs in particular. At the same time, LendingClub expects 31 bps lower charge-offs moving forward due to tighter credit standards. At Discover – which is typically a bellwether for personal loan performance – the net charge-off rate jumped 92 basis points year over year to 3.62 percent. This is the largest increase in several years.
According to the report, card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses moving forward. The report also notes that banks are either partnering with FinTechs or investing in ramping up their technology capabilities in payments, lending, digital banking and wealth management.
Lenders are taking actions to pass rising rates on to borrowers to protect margins and investor returns, the report says. Lenders are also trying to reduce all-in funding costs by reducing the credit spreads on their securitizations.
On the brighter side, the report said that “FinTech and Non-Banks overall posted good revenue growth [in Q1 2018] in the range of 7% to 25% and most expressed optimism about the exceedingly good credit environment we find ourselves in.” Enova, OneMain Holdings and OnDeck saw some of the lowest charge-offs, with Lending Club indicating that expected charge-offs across grades would be up to 31 bps lower, according to the report.
BlueVine Raises $60 Million in Major Equity Deal
June 7, 2018
BlueVine announced this week that it closed $60 million in equity funding, the company’s largest funding round to date. The series E round was led by Menlo Ventures and includes new investors, including SVB Capital. All major existing investors also participated.
This new financing will be used to expand the company’s current invoice factoring and business line of credit products, and to develop new products.
“Our vision is to let our customers guide us,” BlueVine Chief Revenue Officer Eric Sager told deBanked, with regard to what products might come next.
BlueVine also plans to use the funding to accelerate R&D hiring. BlueVine’s total funded volume since inception is expected to top $1 billion this year, according to the company’s press release.
“In just four years, BlueVine has scaled two major financing products,” said BlueVine CEO and founder Eyal Lifshitz.
Founded in 2013, the company started with a factoring product and later introduced a line of credit product. BlueVine provides business lines of credit up to $250,000 and invoice factoring lines up to $5 million. These maximum credit lines have been steadily increasing, with the factoring line of credit twice as large as it was at the beginning of the year, according to a deBanked story from February. And its business line of credit was $150,000 at the start of the year.
The company generates its revenue about 50-50 from its factoring and line of credit products, and about 50 percent of its factoring clients also use its line of credit product, Sager said.
This new $60 million investment follows a credit facility of $200 million with Credit Suisse last month.
“BlueVine has continued to impress us since we first invested in 2015,” said Tyler Sosin, a partner at Menlo Ventures, in a written statement. “The company has demonstrated dramatic, sustainable growth and has proven that there is enduring value in developing a comprehensive offering of credit products that small and medium sized businesses can use throughout their lifetimes.”
Headquartered in Redwood City, CA, BlueVine also has offices in New Orleans, Jersey City and Tel Aviv, and employs approximately 200 people.
SuperMoney Launches No-fee Financing Platform
June 7, 2018At the Finovate Spring 2018 conference, CEO Miron Lulic and CFO Jesse Stockwell presented the company’s new SuperMoney No-fee Financing platform, which allows merchants to obtain point of sale financing from online lenders and banks.
“The options for small business point of sale financing are embarrassingly archaic and painfully expensive,” Stockwell said during their presentation. “In the current market, consumers lose, merchants lose and most lenders don’t even get a chance to play.”
The new platform allows a small business merchant, like a furniture store, to create a free profile that is co-branded with SuperMoney. With the profile, the merchant can easily see when a customer has applied for financing and follow up.
In addition to a sales boost for small businesses that can now offer financing to customers for free, Stockwell said that customers also win by being able to compare financing options. And he said that it’s a boon for lenders as well, as a high quality loan source.
According to a Forrester Consulting study on SuperMoney’s website, businesses that offer point of sale financing enjoy an average increase in sales of 17 percent and an average increase in order value of 15 percent.
The No-fee Financing platform is an expansion of SuperMoney’s core business as a financial services comparison platform. The platform will at first provide point of sale financing to three industries: home improvement, medical and trade schooling.
In May, Stockwell said that the company, which was founded in 2013, had signed up 250 merchants in a closed beta program.
“Now we’re ready to blow the cover off this thing and sign up 10,000 more [merchants] in the next year alone,” Stockwell said.
$400M A Year: Fora Financial / US Business Funding Deal to Make Fora an Originations Leader
June 5, 2018
Fora Financial’s newly acquired stake (a significant one) in US Business Funding will put them on track to originate $400 million a year, the company said. Those numbers will place them on the list with industry titans like BFS Capital, Strategic Funding and National Funding.
The co-founders of Fora were previously featured on deBanked’s Jan/Feb 2016 magazine issue.
US Business Funding (USBF), who is based in Santa Ana, CA facilitates different financing products for small businesses including vendor programs, capital equipment loans, and leasing solutions.
“This is an exciting time for all of us at US Business Funding,” said USBF CEO Peter Ribeiro in a published statement. “We have rapidly built one of the top sales organizations in the industry, and now we have the opportunity to leverage the expertise and resources of Fora Financial to fuel our growth even further. Jared and Dan have established Fora Financial as one of the top lenders in the space, and we are motivated to build on our terrific relationship with them to create even more opportunities for our companies to succeed.”
Study Reveals Positivity and Concerns of Small Business Owners
June 5, 2018According to a survey conducted by SmartBiz Loans and released today, almost 57 percent of small business owners said their outlook on business growth over the next 12 months was “fairly positive” or “positive.” And 35 percent of respondents reported that the new tax plan has already caused them to make changes in their business, with ten percent reporting that they are actively investing in new equipment or staffing.
“This positivity points to the resiliency of small business owners,” said CEO of SmartBiz Evan Singer. “They know circumstances are changing, and they’re adapting as needed.”
As for concerns, according to the survey, 31 percent of respondents said that securing lower cost financing was a priority concern. Twenty-two percent of small business owners “agree” or “strongly agree” that access to credit has become easier in the last few years, however 49 percent of small business owners “agree” or “strongly agree” that the cost of credit has increased.
Regarding non-credit related concerns, 53 percent of small business owners named the cost of providing health insurance for employees and a key business consideration. And 49 percent said that finding and hiring quality employees was a top concern.
Nine out of 10 small business owners said they value experience over education in new hires, while 31 percent said they were willing to hire candidates who lack some qualifications and train them. In what the report described as a “difficult hiring environment,” in order to retain employees, 51 percent of owners said they were offering more flexible work arrangements and 33 percent said they were increasing wages.
LeaseQ Partners with SEFA
June 5, 2018
LeaseQ, an online marketplace for equipment financing, announced a partnership yesterday with SEFA, a non-profit association of leading supply and equipment dealers in the food industry.
“SEFA is a group of 62 companies that work together like a big family to add value wherever they can,” said Vernon Tirey, founder and CEO of LeaseQ. “Unlike many buying groups, value-add is very important to them [and] that’s why we’re so excited to be part of the team.”
Tirey expressed enthusiasm about working with SEFA to develop financing solutions to meet the individual needs of each of SEFA’s members. LeaseQ has three kinds of clients: businesses seeking equipment financing, equipment dealers (like members of SEFA), and funding companies. LeaseQ earns money by charging a processing fee to funding companies for financing deals, Tirey told deBanked. But the funding company rolls LeaseQ’s fee into its fee to the borrower, so the fee is ultimately paid by the borrower. Typically, for a five-year lease, LeaseQ’s fee is under two percent.
Aside from the benefit of LeaseQ getting new business from SEFA members, SEFA members will benefit by receiving certain perks from LeaseQ . For instance, Tirey said that LeaseQ has introduced a kiosk program for SEFA members where, among other offerings, SEFA members will be able to receive instant funding for transactions under $15,000.
LeaseQ facilitates equipment finance in over 20 different vertical markets, including agriculture, construction, oil and gas, medical devices.
Founded in 2012, the company is based in Burlington, MA, and employs 27 people.
How Gibraltar Capital Advance Became Wellen Capital
June 4, 2018
Gibraltar Capital Advance announced today that it has changed its name to Wellen Capital. The company had been a sister company of Gibraltar Business Capital, but since that company was acquired in March of this year, Gibraltar Capital Advance has operated independently.
“The Gibraltar name has been well-regarded as a leader in the alternative finance market for many years,” said Jim Teppen, President of what is now known as Wellen Capital. “We entrust it to our former colleagues at Gibraltar Business Capital, knowing they’ll successfully carry the brand’s tradition forward.”
Wellen is no one’s surname at the company, according to Chief Revenue Officer Steve O’Connor.
“One of the things that makes us unique in the capital advance space is that we’re from Chicago,” O’Connor said. “We’re a midwestern company, and the way that we crafted this name had a lot to do with words and phrases and images that were midwestern, even though it’s not obvious.”
O’Connor also noted that Wellen is easy to say and easy to type. In addition to the name change, the company also announced today the WellenScore Application Scoring System, Wellen’s proprietary, data-driven system for evaluating applications.
O’Connor acknowledged that alternative finance companies have been using algorithms to make funding decisions for years, with varying degrees of success.
“Our approach was always to gather enough data first to make sure that we had enough information to inform a data enabled decisioning model,” O’Connor said of Wellen, which was founded in 2012. “And that’s not the kind of thing you can just do overnight.”
The company has been using this system now for more than six months. This doesn’t mean that Wellen now relies exclusively on computers to make funding decisions.
“Our process leverages automation and data-enabled decisions, but isn’t just a ‘black box,’” said Wellen Chief Operating Officer Ed Job. “Good funding decisions are made by working with our sales partners to gather needed data and decide how to best structure a capital solution for our customers.”
Wellen, which provides merchant cash advance exclusively, is based in Chicago and employs 30 people.
