Archive for 2018
StreetShares to Change Fee Policy
May 22, 2018StreetShares sent out an email on Monday saying that they will no longer automatically deduct origination fees from their loans to small businesses. Instead, according to the email, merchants will receive their full amount and it will be up to the merchant to decide whether they would like to pay off the origination fee immediately or include it in their weekly payment.
Kabbage Reveals Plans for a ‘Reverse Play’
May 22, 2018
When it comes to lending, the business models of Square and PayPal may be too good to ignore.
According to Reuters, Kabbage plans to launch its own payment processing service by year-end. “The monoline businesses have a hard time succeeding long term,” Kabbage co-founder Kathryn Petralia is quoted as saying.
While Square and PayPal started off in payments and added lending, Kabbage sees the value proposition of the reverse play, to start off in lending and add payments.
But another Square and PayPal rival may not. Back in October, deBanked questioned OnDeck CEO Noah Breslow during an interview about this very thing. At the time, Breslow responded that they were not going to sell merchant processing. “Never say never,” he said, “but not in the near future.”
Square and PayPal’s lending businesses differ from other online lenders in that they can solicit their existing payments customer base at virtually no cost. OnDeck, meanwhile, spent $53 million last year alone on sales and marketing to acquire loan customers.
Square’s acquisition of payments customers is not cheap, however. The company spent $253 million in sales and marketing last year. The advantage is in not needing to shell out additional cost to convert them into loan customers.
OnDeck still held the lead over both Kabbage and Square last year in loan originations at $2.1B vs $1.5B and $1.17B respectively. PayPal was not ranked.
Missed Broker Fair? Get the Kit and Presentations
May 21, 2018
If you missed Broker Fair, you can still get your hands on some of the gear and the presentations. Simply email info@brokerfair.org and ask to be shipped a copy of the Broker Fair Kit. The accessories, which will only be provided while supplies last, include a USB drive with the day’s presentations, a Broker Fair bag, a Broker Fair shirt, a deBanked magazine, a Broker Fair handbook, and more.
Also, don’t wait too late to REGISTER for deBanked’s half-day event in San Diego on October 4th. deBanked Connect: San Diego will connect funders, brokers, and folks from the industry for networking and cocktails!
Eaglewood Not Happy About World Global Financing Bankruptcy
May 21, 2018A new complaint filed by Eaglewood SPV I LP suggests they’re not happy with ailing merchant cash advance company World Global Financing (WGF). Eaglewood originally sued WGF on March 28th in the New York Supreme Court and secured an injunction on May 2nd to turn over the cash and proceeds from receivables owed to Eaglewood. According to Eaglewood, WGF proceeded to ignore the court’s order and Eaglewood hasn’t been receiving anything. On May 8th, WGF filed Chapter 11.
The new complaint alleges that WGF and the company’s owner have engaged in fraud and that Eaglewood has been damaged to the tune of $6.5 million.
Sneaky Debt Settlement Company Temporarily Restrained by Judge
May 20, 2018
A debt settlement company has sunk to new lows, according to a petition filed by Yellowstone Capital in Nassau County. Defendants SMCA, Inc. DBA Settle My Cash Advance, Thassos.com Corp DBA Thassos.com, and George Alexander, have been accused of fraudulently transferring funds owed to Yellowstone Capital to themselves while trying to mask the evidence in the process.
Unlike other purported debt settlement schemes, the Settle My Cash Advance defendants are alleged to have first actively coached a merchant to hide his money in new bank accounts rather than pay his judgment. This, according to emails attached as exhibits, included instructions by the defendants on how to cover up the paper trail so that the money could not be traced. Once this was successfully carried out, the defendants then absconded with the merchant’s money, leaving him broke and the judgment still unpaid.
According to the merchant’s sworn affidavit, Settle My Cash Advance lured him into believing that they not only had a relationship with Yellowstone but that they would also reduce the judgment entered against his business by 25% – 70%.
“SMCA (Settle My Cash Advance) told me to transfer all funds, as my business and I earned them, to SMCA to hold them for us so that Yellowstone could not collect on its judgment,” the merchant wrote. “The deal that SMCA represented to me was that SMCA would take the funds, hold them in trust, and use them to settle our obligations with Yellowstone for a small contingency fee.”
What happened instead is that the defendants ran off with the money held in trust and did nothing to help with Yellowstone, the documents say.
Presented with the facts laid out before it, the Court ordered that the funds held by Settle My Cash Advance be restrained pending a May 30th hearing.
Panelists Share Marketing Advice at Broker Fair
May 20, 2018
Jennie Villano, Vice President of Business Development at Kalamata Advisors, opened Broker Fair’s “Marketing Your Business” panel by stressing the importance of being personable on LinkedIn. She said that while LinkedIn is certainly a professional platform, warmth and congeniality go a long way. And so does thinking creatively by presenting yourself outside of your professional box.
For instance, about two months ago, Villano started a cooking show video series on her LinkedIn page called “Cooking with Kalamata,” in reference to her company’s name. In each video, she invites a different guest to cook something with her in an informal home kitchen setting.
Villano acknowledged that cooking has nothing to do with lending. But it doesn’t matter, she said. The cooking shows allow potential clients to see her in a casual, non-business environment so that even if she hasn’t met many of her LinkedIn contacts, they can feel like she’s a personal friend. And people want to do business with their friends, she said.
The “Cooking with Kalamata” video posts, which are two to four minutes long, have received thousands of views and Villano said that she has seen an increase in business in just the few months after she started making these videos.
Tom Gricka, founder and president of Bablyon Solutions, a marketing and technology company that services the alternative lending industry, spoke about the importance of communication among different teams within a company.
If a company has a bad month, Gricka said that often brokers will blame the marketing team for bad leads and the marketing team will blame the brokers for not selling well. Gricka said that usually neither party is correct. Instead, he said that brokers should be communicating with lead generators about what they’re hearing on the phone and what kinds of leads they would like to be getting more or less of. Likewise, marketers/lead generators need to listen to what the salespeople are saying so that they can produce more targeted leads.
Finally, CEO of Reliant Funding Adam Stettner spoke about the importance of testing marketing efforts online. And he said to make sure that you’re only testing one variable at the same time.
Reliant Funding started by using direct mail marketing, but Stettner said that if he had to do it over again, he would have started with online marketing. And he recommended starting out with online marketing particularly for companies or individuals with small budgets because online marketing is less expensive and can be more easily adjusted.
Andrew Smith Named Director, FTC’s Bureau of Consumer Protection
May 20, 2018
On Wednesday, Andrew Smith, former partner of the law firm Covington & Burling, was named the Federal Trade Commission’s Director of the Bureau of Consumer Protection.
This is not Smith’s first role in government. From 1997 to 2000, Smith worked as a lawyer for the Securities and Exchange Commission. And from 2001 to 2005, he worked as a lawyer for for the Federal Trade Commission (FTC), where he will now be returning.
Since leaving the FTC, Smith served as a partner at Morrison & Foerster and most recently at Covington & Burling. Smith’s recent appointment garnered criticism from government officials who pointed out that Smith has represented egregious offenders of consumer rights. Of the five FTC commissioners, the two Democratic commissioners voted against his appointment.
But a recent New York Times article, which stressed the fact that Smith has represented violators of consumer rights, also acknowledged that he is “regarded as a hard-working and knowledgeable lawyer even by critics.”
Chairman of the FTC Joe Simons, who appointed Smith, expressed dismay over his colleagues’ rejection of Smith.
“I am disappointed that two of my new colleagues have chosen to turn Mr. Smith’s appointment into a source of unnecessary controversy,” Simon said in an FTC statement. “I am highly confident that Mr. Smith will be an effective leader of the Bureau of Consumer Protection. He is widely respected as one of our country’s best and most experienced consumer protection lawyers.”
Smith has recently represented Facebook, Uber and Equifax, all companies with cases before the FTC. Because of this, it is most likely that Smith will recuse himself from these cases. Critics of Smith’s appointment, including Democratic U.S. Senators Elizabeth Warren, Richard Blumenthal and Brian Schatz believe that this makes him unfit to be director of the bureau. But Simon strong disagrees.
“When a political appointee is recused, the Commission relies even more heavily on these seasoned career professionals to allocate resources and tee up recommendations for the Commissioners, who are the ultimate decision makers,” Simon said in an FTC statement. “When Mr. Smith is recused on a matter, I know [the bureau’s] career managers and staff will ensure that American consumers are still well protected.”
Broker Fair 2018 Story Continued
May 18, 2018A continuation of Broker Fair 2018 through photos:
We’ll publish the entire cache of them in the coming weeks.
JOIN US OCTOBER 4TH IN SAN DIEGO AT THE ANDAZ FOR A SPECIAL HALF-DAY INDUSTRY NETWORKING EVENT
Couldn’t find yourself in any of our photos? We’ll publish the full album in the following weeks.
