Archive for 2018
Alternative Finance Bar Association Conference is Friday June 8th
June 4, 2018The 2nd Annual Conference of the Alternative Finance Bar Association is being held on Friday June 8th, from 9am – 5pm in New York City. To learn more about the event, contact Tiffany Diaz at Tiffany@LRohanlaw.com
Discussion/Session Itinerary:
• Updates in the Regulatory Landscape
• Updates on recent Case Law and the takeaways
• Cyber Security
• Credit Facilities 101: What an Alternative Finance Company can expect
• Syndication Relationships: Partner? Participant? Investor?
• Overview of Key Employment Issues in the Industry
• Bankruptcy Developments: The Rise of the Adversary Proceeding
• Collections: What you should know BEFORE you enforce
Gibraltar Capital Advance Rebrands as Wellen Capital
June 4, 2018
Chicago, IL – June 4, 2018. Today, Gibraltar Capital Advance announced they have changed their name to Wellen Capital, LLC. Following the successful sale of related company Gibraltar Business Capital, LLC in February of this year, parent company TZ Mountain Capital Holdings, LLC began the process of re-branding Gibraltar Capital Advance.
Wellen is a data-enabled direct funding source in the merchant and business capital advance market. Since its founding in 2012, the company has experienced robust and steady growth, establishing itself as a leader in the small business finance market.
“The Gibraltar name has been well-regarded as a leader in the alternative finance market for many years. We entrust it to our former colleagues at Gibraltar Business Capital, knowing they’ll successfully carry the brand’s tradition forward” said Jim Teppen, President of Wellen. “We look forward to continuing to serve our customers, sales partners, and investors under a new name that we think embodies the values and culture of our company” said Teppen.
Along with the announcement of the new identity, Wellen is announcing the launch of WellenScore – a custom machine-learning based system for quickly and consistently conducting diligence reviews of small business funding applications. “The WellenScore system allows us to accurately analyze hundreds of individual elements of an application, and provide a decision back to our sales partners much more quickly than ever.” said Ed Job, Wellen’s Chief Operating Officer. “Our process leverages automation and data-enabled decisions, but isn’t just a ‘black box’” said 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.”
About Wellen: Wellen Capital, LLC is a leading provider of working capital solutions to U.S. small businesses. Headquartered in Chicago, Wellen’s principal equityholders are Satori Capital, LLC of Dallas, TX and CCCC Growth Fund, LLC. of South Pasadena, CA.
Contact: Steven O’Connor
Phone: 224.374.1519
Email: soconnor@wellen.com
Yellowstone Capital Funded $64.5M in May
June 4, 2018Yellowstone Capital originated $64.5M in funding to small businesses in May, according to the company. The figure topped their previous month of $61M.
$15 Million Facility Allows for Growth of Breakout Capital Factoring Program
June 1, 2018
Breakout Capital announced that it obtained a $15 million facility on Wednesday, with a fund managed by Medalist Partners. While the facility is not earmarked for any single product, Chief Marketing and Sales Officer James Mendelsohn told deBanked that the facility will certainly help fund the company’s relatively new and popular FactorAdvantage product.
“With the [FactorAdvantage] program, we work in concert with the factor and the small business to maximize the small business’s access to capital,” Mendelsohn said. “We work with factors to enable a factoring relationship with a small business.”
Introduced in January of this year, Mendelsohn said that the FactorAdvantage program generally works in one of two ways, depending on the client. If the client is new to a factoring company and the client has a tax lien or something that prevents the factor from working with that client, FactorAdvantage will come in and help finance a consolidation or whatever it is to prepare the client to work with the factor.
The other common use of the FactorAdvantage product is for existing clients of the factoring company that want access to more capital. Factors will sometimes provide additional capital in what is called an overadvance. But when the factor is not able to, or not able to provide enough capital, FactorAdvantage will provide that additional capital.
“The access to more capital [will allow] us to grow,” Mendelsohn said. “We’ve had February, March, April and now May – each month, we’ve broken our own record for origination volume. We want to break that record every month going forward, so this [facility] will help us have plenty of dry powder.”
Mendelsohn also said that a boon of the FactorAdvantage program is that “the tickets are much bigger.” The maximum financing on Breakout Capital’s other products is $250,000, while the maximum for the FactorAdvantage product is $500,000. Breakout Capital was founded in May of 2015 and also provides Business loans, SBA loans, Lines of credit, Equipment leasing and Merchant cash advance, among other financing products. The bulk of the company’s volume comes from their distribution partners, including brokers, ISOs, and more recently, factoring companies.
Based in McLean, VA, Breakout Capital employs almost 50 people.
Commercial Financing Disclosures Bill Approved in the CA Senate
May 31, 2018The use of an annualized cost metric on loan and non-loan contracts alike is now one step closer to becoming the law in the State of California. On Thursday, SB 1235 was approved on the Senate floor. The bill calls for commercial finance companies to disclose an Estimated Annualized Cost of Capital. In previous hearings, the bill’s author, Sen. Steve Glazer (D), stated that it was his intention that this apply to merchant cash advances as well.
“This estimate includes all charges and fees incurred for the financing, assuming you make all payments when scheduled and adhere to the terms of the agreement. This number is based on the estimated term. If the actual term is shorter than estimated, the annualized cost of capital may be higher than shown. If the actual term is longer than estimated, the annualized cost of capital may be lower. This is not an Annual Percentage Rate (APR).”
Here is how to calculate the Estimated Annualized Cost of Capital as set forth in the bill:
(1) Divide the total dollar cost of financing by the total amount of funds provided.
(2) Multiply the result in paragraph (1) by 365.
(3) Divide the result from paragraphs (1) and (2) by the term or estimated term of the financing in days.
(4) Multiply the result from paragraph (3) by 100.
(5) The result from paragraph (4) shall be labeled “The Estimated Annualized Cost of Capital.”
In addition, commercial finance companies will also have to disclose the total dollar cost of the transaction and the total amount of money the merchant will receive net of all fees.
The bill must now pass through the solidly Democrat-controlled Assembly and be signed by the Governor to become the law.
Report Demonstrates How Online Lenders Benefit Economy
May 31, 2018
A report on “The Economic Benefits of Online Lending to Small Businesses and the U.S. Economy” was released yesterday, using data from 180,000 U.S. small businesses that represented nearly $10 billion in funding from 2015 to 2017.
The report used data from five online lenders, including OnDeck, Kabbage and Lendio, and was sponsored by the Electronic Transactions Association (ETA), the Small Business Finance Association (SBFA) and the Innovative Lending Platform Association. The report was researched by three economists at NDP Analytics, an independent research firm.
One of the key findings was that the ten billion dollars funded from 2015 to 2017 by five of the top alternative small business lenders generated $37.7 billion in gross output and created 358,911 jobs and $12.6 billion in wages.
“I think the most important takeaway from this study is that small businesses are benefiting from a wide variety of choices in lending products,” said Jason Oxman, CEO of the ETA. “And, in particular, the online small business lenders have provided really a remarkable amount of working capital to small businesses in this country.”
Oxman told deBanked that he was surprised to learn from the report the percentage of borrowers that operate extremely small businesses. According to the report, 24 percent of online business borrowers operate businesses that have less than $100,000 in annual sales. And two-thirds of online business borrowers had less than $500,000 in annual sales.
“These are clearly small businesses,” Oxman said. “These are companies that obviously have capital needs and are getting those needs met by online small business lenders.”
New York State was a focus of part of the research. According to a press release for the report, data extracted from it indicated that “overall, the small business loans provided by online lenders [from 2015 to 2017] generated $2.5 billion in gross output and created 20,154 jobs with over $795 million in wages” for communities in New York State.
“We [organized the report] with New York in mind,” said Steve Denis, Executive Director at the SBFA. “We wanted to send a message to show how much of an impact the online lending industry had on the state.”
Other interesting data from the report include:
— 75 percent of U.S. businesses have less than 10 employees.
— 22 percent of small business owners use their personal savings to expand
— Online lenders offer loans to companies in all stages of their life cycle and the distribution of company age is relatively uniform.
“[Alternative small business lending] is creating a lot of economic activity,” Denis said. “We’re helping to create jobs, and we need to protect this tool. It’s a valuable resource for businesses…and this [report] demonstrates how important it is to the economy.”
Uplyft Updates Logo and More
May 31, 2018
Uplyft Capital announced the launch of its new branding yesterday, including a new logo and website.
“We were looking for a sleek, stylish icon that would have brand recognition in the industry as simple and fun, but also uplifting,” said CEO Michael Massa.
The rising purple arrow represents growth for small businesses, “looking to get out of the current box they are in,” according to the press release.
“All of our online portals have been revamped and redesigned,” Massa said, “our client, investor and partner portals.”
Massa prides the company he founded in 2012 for its innovation. Uplyft, which provides cash advance exclusively, uses Artificial Intelligence for underwriting and signing up new ISO partners electronically.
“We need to evolve in order to keep up with demand,” he told deBanked.
Uplyft has a direct sales team of about 25 people and roughly 500 ISO sales partners, according to Massa. Headquartered in Miami, the company employs about 45 people altogether with a small office of three people in New York.
Breakout Capital Announces New $15MM Credit Facility with Medalist Partners
May 30, 2018Leading innovative fintech lender announces $15MM credit facility to further fuel its growth in small business lending
McLean, VA May 30, 2018 – Breakout Capital, a technology-enabled small business lender, announced today the launch of a new, $15MM credit facility with a fund managed by Medalist Partners. The new facility will enable Breakout Capital to continue the rapid expansion of its small business lending programs, including the award-winning FactorAdvantage℠ program, across the country.
“Medalist is an ideal partner to support our growth,” said Carl Fairbank, Founder & CEO of Breakout Capital. “They appreciate the tremendous value that FinTech lenders offer to small businesses through timely access to capital, and its vital role as a growth engine for our entire economy. And just as importantly, they are aligned with our values of innovation, transparency, and advocacy for small business.”
The facility will support Breakout Capital’s growth across traditional business loans, Breakout Bridge loans, and FactorAdvantage℠ program loans. In the patent-pending FactorAdvantage℠ program, Breakout Capital complements traditional A/R factoring with a hybrid business loan, enabling consolidations or overadvances.
“We believe the combination of strong underwriting, product innovation, and a top-notch management team is a great recipe for success,” said John Slonieski, Director of Private Credit for Medalist Partners. “We are excited to add this credit facility to our portfolio of high quality asset-based lending programs.”
Throughout 2018, Breakout Capital has continued to grow its origination volume, breaking records each month for new funding volume. In parallel, the company has continued to innovate in its technology program, with notable advances in machine learning, artificial intelligence, and use of the blockchain to support lending operations.
“We are privileged to have Medalist as a partner on our growth journey,” said Fairbank. “This new credit facility is key to our bringing more of our great products, together with our partners, to more small businesses.”
About Breakout Capital
Breakout Capital is a leading financial technology company, leveraging best-in-class technology to provide a wide range of credit solutions to small businesses across the country. Built on three pillars of transparency, education, and advocacy for small business, the company is one of the fastest-growing direct lenders in the space, and leads a world-class technology innovation effort. Breakout Capital is a Principal Member of the Innovative Lending Platform Association and an original advocate for the SmartBox™ standard for transparency and cost disclosure.
To learn more about Breakout Capital, please visit www.breakoutfinance.com.
About Medalist Partners
Medalist Partners is an SEC registered investment manager with approximately $900 million of assets under management as of May 1, 2018. The New York based firm manages strategies in specialty finance and structured credit. The business and track record was started within Credit Suisse and Candlewood Investment Group, LP prior to being spun-out as an independent, partner-owned firm in 2018.
To learn more about Medalist Partners, please visit www.medalistpartners.com.
