Archive for 2018
OnDeck Funded $591M to Small Businesses in Q1
May 8, 2018
OnDeck’s originations were $591 million in Q1 of this year, according to their earnings report, up 3% year-over-year. 29% of that was generated by funding advisors, OnDeck’s term for brokers.
They reported a total net loss of $1.9 million.
Compared to the same quarter last year, OnDeck’s Cost of Funds Rate increased from 5.9% to 6.8%, the 15+ Day Delinquency Ratio decreased from 7.8% to 6.7%, the Net Charge-off Rate decreased from 14.9% to 10.9%, and their average APR increased from 44% to 46%.
During the Q&A, OnDeck CEO Noah Breslow said that they had a strong quarter with Chase originations and that their second major bank is on track to be announced later this year.
SBA 504 Loans Decline YoY 2017-2018
May 8, 2018
Funding of SBA 504 loans decreased by 26 percent from January through March 2017 compared to January through March of 2018, according to SBA (Small Business Administration) data. In the first three months of 2017, $1,326,601,000 of SBA 504 loans were funded compared to $987,896,000 of SBA 504 loans in the first three months of 2018. The number of companies that received SBA 504 loans also fell January through March year over year. There were 1,574 companies that took SBA 504 loans from January through March of 2017, compared to 1,290 companies over the same period this year, a decrease of 18 percent.
The SBA 504 loan is a government-backed loan that can only be used for commercial real estate or long-term machinery purchases. It differs from the more common SBA 7(a) loan, which is a general purpose loan that can be used for anything from working capital to business acquisition.
When contacted regarding the decline in the dollar amount volume of loans issued this year compared to last, the SBA submitted the following response from Bill Manger, Associate Administrator for the SBA’s Office of Capital Access:
“After a very strong FY17 of 504 SBA Lending, this year the program has performed on par with longer-term trends. We have also seen banks making more conventional loans without the SBA guarantee due to the strength of the U.S. economy and increased small business optimism brought about by the regulatory reforms and tax cuts championed by the Trump Administration. The SBA continues to work with our Certified Development Companies and Lending Partners to further strengthen the 504 Program and ensure it is helping create and grow U.S. small businesses. In addition to our 10 Year and 20 Year Debentures, last month the SBA implemented a 25 Year Debenture for 504 loans, offering fixed-rate financing for an additional 60 months to our small business owners. We believe this new product will be looked upon favorably by our stakeholders and borrowers by offering a longer term loan that will improve the cash flow of entrepreneurs utilizing the program.”
Hearing on Commercial Financing Disclosures Scheduled in California State Senate
May 7, 2018Update: Link to the LIVE stream is here
The Senate Judiciary Committee for the State of California will convene for a hearing on the commercial financing disclosures bill at 1:30 PST on May 8th. SB-1235, as its known, previously survived the Senate Committee on Banking and Financial Institutions when it was debated and contested on April 19th. (a video of that hearing is available here)
deBanked will attempt to stream the hearing or provide a link to it when it begins. Check back here for more details.
Judge Grants Restraining Order Against Deceptive Funding Company
May 6, 2018
JTT Funding, the company previously accused of having forged a Confession of Judgment, stands accused now of stealing the identity of a rival funding company. On May 3rd, New York Supreme Court Judge W. Franc Perry granted an injunction against JTT Funding from using the name, logo and likeness of Accel Capital from its marketing and contract materials.
Similar to the forged COJ suit (which was brought by FundKite), JTT Funding did not answer or contest the claims.
Plaintiff Accel Capital demonstrated in their papers that an agent of JTT was using a gmail address with “accelcapital” in the name and the company’s logo in its contracts. When a merchant funded by JTT Funding (who pretended to be Accel) inadvertently contacted the real Accel Capital, the scheme was revealed.
JTT Funding went on to ignore Accel’s Cease and Desist letter, court papers say, which led to the lawsuit and demand for an immediate injunction.
According to the Financial Times, JTT Funding is owned by Queens-born mixed martial arts fighter Jim “The Tyrant” Boudourakis. In his October 2017 interview with the publication, Boudourakis said, “There was a learning curve, going from being a fighter to a salesman. But I’m good with people.” FT also reported that his company had 18 full-time salespeople and was funding $4 – $5 million per month.
In the FundKite suit, it is alleged that Boudourakis’ first name Jim is an alias.
The Accel Capital suit can be found in the New York Supreme Court under Index Number: 153447/2018
Elevate’s Net Income Soared in Q1 Year-Over-Year
May 6, 2018
Elevate’s net income increased 459 percent from $1.7 million in Q1 2017 to $9.5 million in Q1 2018, according to the company’s Q1 financial statement released on April 30th.
“What you are now seeing is a business beginning to leverage its scale in a market that is almost boundless,” said Elevate CEO Ken Rees. “We are gratified by our strong start to 2018 and by the fact that we’ve done it offering what we believe are the most responsible credit products available to non-prime borrowers today.”
Elevate (NYSE: ELVT) provides funding solutions to non-prime consumer customers. They offer three products: RISE, a state-licensed online lender that offers up to $5,000 in unsecured installment loans and lines of credit, Elastic, a bank-issued line of credit, and Sunny, a short-term loan product for customers in the UK. RISE and Elastic serve the US market.
The RISE product has performed well, likely buoyed by the hiring of Tony Leopold a year ago to build on the product. Elevate is still new as a public company. It recently celebrated its one year anniversary on the New York Stock Exchange in April.
According to the Q1 earnings report, the total number of new customer loans for the first quarter of 2018 was approximately 70,000, an increase of 32.1 percent compared to approximately 53,000 new customer loans in the first quarter of 2017.
Founded in 2014, the Fort Worth, TX-based company has originated $5.5 billion to 1.9 million customers. The company also has offices in Dallas, TX, San Diego, CA, and in the UK, in London and Bury St. Edmunds.
Class Action Lawsuit Filed Against Ripple For Sale of Unregistered Securities
May 4, 2018
Ripple’s digital token XRP is a security, a class action lawsuit filed in the Superior Court of California contends. The 32-page complaint brought by XRP investor Ryan Coffey, says the defendants, who include Ripple CEO Brad Garlinghouse, engaged in the sale of unregistered securities, highlighting that they earned over $342.8 million through XRP sales in the last year alone, securities that were created out of thin air.
“Defendants have since earned massive profits by quietly selling off this XRP to the general public, in what is essentially a never-ending initial coin offering (“ICO”). Like the better known initial public offering (“IPO”), in an ICO, digital assets are sold to consumers in exchange for legal tender or cryptocurrencies (most often Bitcoin and Ethereum). These tokens generally give the purchaser various rights on the blockchain network and resemble the shares of a company sold to investors in an IPO. Unfortunately, these ICOs have become a magnet for unscrupulous practices and fraud.”
The complaint alleges that Ripple executives have engaged in pumping schemes meant to increase the price of XRP through attempted bribes, rumors they’ve started, and hype on social media.
The attorney representing the lead plaintiff, James Taylor-Copeland, is no stranger to cryptocurrency. His twitter username is @TCryptoLaw and he runs the website cryptolaw.net.
At LendIt Fintech last month, Ripple co-founder & chairman Chris Larsen said that the company was anti-ICO. “I think it’s a bad thing to get involved with from the founder’s perspective,” he said on stage during an interview with Jo Ann Barefoot, “because, you know, if you’re a founder and you can raise money many ways today, do you really want to do something where you’re going to have the SEC, you know, kind of threat hanging over your head for 10 years with strict liability? You just don’t want that. You know, that’s a problem.”
Newtek Funds $91 Million in 7(a) loans in Q1
May 3, 2018
Newtek (Nasdaq:NEWT), a provider of business and financial solutions, funded $91.4 million of SBA 7(a) loans in the three months ending March 31, 2018, according to the company’s Q1 2018 earnings report released yesterday. This is an increase of 16.2 percent year-over-year from $78.6 million funded in SBA 7(a) loans in the three months ending March 31, 2017.
On this morning’s phone call, CEO Barry Sloane was particularly pleased to announce Newtek’s loan referral growth of 86.9 percent from Q1 2017 ($2.6 million) to $4.8 million in Q1 2018.
“It gives us the ability to make selection on opportunities that come to us directly from business owners,” Sloane said, “without the use of brokers, and pick the best credits available.”
Newtek also closed on $3.9 million in SBA 504 loans for the three months ending on March 31, 2018. SBA 504 loans provide approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization.
The New York-based company was founded in 1998, went public in 2000, and has been a BDC (Business Development Company) for three and a half years. BDCs are publicly traded companies that make investments in private companies in the form of loans or equity securities. And the structure provides certain tax advantages, according to Solar Capital.
Newtek acquired United Capital Source in October 2017, which is still led by its original CEO Jared Weitz, who was featured in deBanked’s September/October 2015 issue.
Newtek had a net investment loss of $2.8 million for Q1 2018.
Aside from the company’s headquarters in Lake Success, NY, Newtek also has loan processing offices in Orlando, FL and Boca Raton, FL.
Square Funded $339M to SMBs in Q1
May 2, 2018
Square’s small business funding arm, Square Capital, made over 50,000 business loans for a total of $339 million in Q1, according to the company’s latest earnings report. That figure is a 35% increase year-over-year and puts them on pace to break last year’s $1.177B total. OnDeck, by comparison, who is arguably their top rival, made $2.11B in business loans last year.
“[..] they just don’t have another way to get access to that sort of capital. And when they get it, they invest in their business,” Square CFO Sarah Friar, said of their merchants during the earnings call. “They’re buying inventory, they’re hiring new employees, they may be taking any lease hold and opening that second location. And when they do that, their business grows and hence our business grows. So, we still think we have a unique product that no one else can really follow us into.”
Square also earned $34 million in revenue from bitcoin, thanks to the Cash App they launched in January that allows users to buy and sell bitcoin. Bitcoin was mentioned an eye-opening 37 times in their quarterly shareholder letter, while their loan program is only referenced 7 times.
Overall, the company brought in $669 million in revenue and recorded a $24 million loss. They also entered into an agreement to buy Weebly, a company that helps people build professional websites and online stores.
“Weebly will expand Square’s customer base globally and add a new recurring revenue stream. Weebly has millions of customers and more than 625,000 paid subscribers,” the company wrote.
