Archive for 2018
Kabbage, LendingPoint to Offer Real Time Funding Via Push Payments
April 9, 2018
Kabbage and LendingPoint each separately announced today that they will soon be able to get funds into their customers’ business accounts instantly and 24/7 via their pre-existing bank debit card. Hopes for this are not brand new. Last October, OnDeck announced a partnership with Ingo and Visa that would provide this convenience to borrowers, although this has not yet come to fruition, according to an OnDeck spokesperson. This is also not Kabbage’s first foray into real-time loan funding.
“We launched [a real-time loan product] through the debit network three years ago and we were really excited about the results,” said Kabbage co-founder Kathryn Petralia . “Our customers really liked it, [but] our challenge was that we couldn’t get broad enough coverage. Only a small percentage of our customers were able to use it…so we’re excited about our partnership with Ingo because it gives us the ability to broaden this to about 90 percent of our customers.”
Kabbage has entered into a relationship with Ingo and has plans to make this service available to customers this summer. One might wonder why, on a weekend, a merchant needs money and can’t wait until Monday?
“Our customers are always looking to expedite the process,” Petralia said, “not because they’re desperate for cash, but because they really are desperate for time, and they don’t want to spend a bunch of time reconciling their bank accounts [and] making sure the funds have arrived. This is a much cleaner way for them to get access to capital.”
Meanwhile, as part of an announcement by LendingPoint today, the company said that later this year it will be able to “instantly disburse loans to approved borrower accounts through their debit cards, 24/7/365.” This will be facilitated through the TabaPay platform, which also enables LendingPoint borrowers to use their debit card to make loan payments.
Ocrolus Announces $4 Million Investment at LendItFintech Conference
April 9, 2018
Sam Bobley, CEOOcrolus, which provides analysis of financial documents, announced today a $4 million Series A investment led by Bullpen Capital with participation from QED Investors, Laconia Capital Group, ValueStream Ventures and RiverPark Ventures. The company says that its lean RegTech technology analyzes bank statements and other financial documents with over 99 percent accuracy.
“We’ve proven our technology as a disruptive solution for bank statement analysis,” said Sam Bobley, co-founder and CEO of Ocrolus. “Customer demand prompted us to begin analyzing loan applications, tax documents, pay stubs and more. We’re thrilled to have the capital to quickly expand our team, and ideal strategic partners to help us scale the business.”
Orcolus’ technology has been embraced by alternative funders that want to expedite their underwriting process.
“Data entry is not a core component of our business,” said Sol Lax, CEO of Pearl Capital. “Ocrolus has become our trusted partner for bank statement reviews, allowing us to scale volume with a leaner underwriting staff.”
The New York-based company, which has 19 employees, was founded in 2014, but wasn’t launched until 2016. Bobley told deBanked that the first few years were devoted to research and development and he also told us a little bit about the company name.
“The core technology that we built the system on is called OCR, for Optical Character Recognition,” Bobley said. “So the idea is that Ocrolus is an expanded and modern version of OCR…which can read statements with 85 to 90 percent accuracy, [while] Ocrolus reads statements with 99 percent accuracy.”
InterNex Capital Fills Void in Higher End of Alternative Lending Market
April 6, 2018
New York-based Internex Capital is serving the higher end of the alternative lending market by providing revolving lines of credit from $250,000 to $5 million dollars, with an average deal size of roughly $1 million.
“We realized that there was not a revolving line of credit solution for small businesses,” said Simon Hermiz, a Fintech entrepreneur and one of the four founders of InterNex Capital. “This product does exist in the middle market and large corporate markets, but [didn’t] exist for small businesses.”
So the team of founders decided to fill this void, particularly in the lower-middle market, or for small businesses with revenues up to $50 million, but no less that $1 million, Hermiz told deBanked. Two members of the founding team, CEO Paul DeDomenico and COO Lin Chua, are former GE Capital veterans. The other two are Hermiz, who manages risk, and CTO Jim Miller, who has worked in credit technology for years.
Hermiz explained that there were essentially only three alternatives for small businesses in search of capital: cash advances, term loans and factoring. While banks have long provided credit to large companies based on the company’s assets, called “asset based line of credit,” there had not been a product like this for small companies.
“So what we want to do is craft an upper end kind of product in this market so that [small businesses] can feel bankable,” Hermiz said, “…because with our line of credit product, we’re not notifying all their customers that they sold their invoices. Because they’re not selling invoices.”
InterNex Capital does not do factoring, but its product resembles factoring.
“The important nuance is that we’re not buying the invoice, like a factor. We’re lending against it,” Hermiz said.
Because banks also lend against invoices, Hermiz said that the company, of 15 employees, competes with banks for business. They work mostly with ISOs, but they also have an internal sales team that handles client relations.
Founded in 2015, InterNex Capital’s proprietary platform is called Velocity and was designed in large part by the company’s partner, Genpact, a public company that was incubated in GE.
Liquid FSI Adds Key Board Member
April 5, 2018
Liquid FSI, a direct lender and creator of the Convert2Pay platform, which provides on-demand payment for medical invoices, added Barry Blecherman to its Board of Advisors.
While a few recent graduates of the NYU Tandon School of Engineering were helping the Liquid FSI team with some algorithms for their technology platform, they mentioned Blecherman, a professor of Finance and Risk Engineering at the Tandon School.
“I looked him up and I contacted him and he turns out to be one of the leading guys for risk [and] financial engineering in the country,” said Frank Capozza, CEO of Liquid FSI. “We had a bunch of lunches, and at one of the lunches [Blecherman] said to me, ‘Don’t even give me a presentation. My wife is a pediatrician. I’m on board.’ He totally got it.”
Why did Blecherman relate more quickly to Liquid FSI given that his wife is a pediatrician? Because the company’s main product, Convert2Pay, allows medical practitioners, such as doctors, to get paid early for their medical claims that can otherwise take insurance companies months to pay. This sounds like factoring because it is like factoring. However, there are some significant differences.
“There are a number of things in factoring that we wanted to disrupt,” Capozza said.
The first is notification to the payer that someone else now owns the invoice. In the case of a doctor, that means notifying the insurance company that Liquid FSI now owns the doctor’s invoice.
“We said ‘that’s an insult to the doctor,’” Capozza said. “The doctor thinks, ‘I want to sell these claims, but I don’t want the insurance company to know that I’ve assigned them to someone else.’”
Capozza said that practitioners, which also include medical labs or hospice care companies, are less likely to sell their claims if they know that the insurance company will be notified.
In addition to not notifying, Capozza said that Liquid FSI differs from a traditional factor in that they will generally end up paying a medical practitioner more of what they are owed because they have access to more precise information. Liquid FSI calculates how much money the practitioner will likely receive by analyzing data from medical billing companies, whereas Capozza said that traditional factors will take the anticipated amount and give the practitioner 75% of it, to cover for potential underpayment.
Practitioners, who pay Liquid FSI a transaction fee and an origination fee, are not the company’s only clients. In fact, other lenders make up a big percentage of the business. Lenders pay a licensing fee to Liquid FSI to use its proprietary software.
Until the Convert2Pay platform was launched in November 2016, Capozza maintains that, given the complexity of the medical billing system, lenders had a big dilemma.
“A lender says ‘Well, we don’t really know how much this [claim] is worth,” Capozza said. “That’s number one. Number two, ‘We don’t know whether the medical billing company is doing their job properly. And if they mis-code [the claim], it’s going to go back into the system and could be delayed another 30 days.’”
Founded in 2014 and based in New York, Liquid FSI gets its practitioner clients through partnerships with companies that sell consumer products to doctors’ and dentists’ offices. While a salesperson is pitching a product, they will also mention Liquid FSI’s on-demand payment product.
Capozza is no stranger to the funding business. In fact, he is among the original players in the MCA industry and was the first to bring the MCA concept to Europe.
Broker Fair 2018 On Pace for Major Success
April 4, 2018
Broker Fair 2018 is on pace to be a major success!
Companies still wishing to become a sponsor of Broker Fair 2018 have until Friday, April 6th to do so. After that, no additional sponsors will be accepted.
The coming May 14th conference in Brooklyn, NY has already sold out of funder/lender and general admission level tickets. Only ISOs, brokers and those employed by them can continue to register!
The inaugural event has lined up dozens of awesome speakers and sponsors from around the MCA and small business lending industry. In addition to the 31 confirmed speakers and 50 sponsors, TV sales celebrity Ryan Serhant will be the keynote speaker of the event and will offer the audience sales tips. Serhant’s new TV show, Sell It Like Serhant premieres on April 11th.
Salespeople will also be in for a treat with the Be A Better Closer panel featuring Jared Weitz (United Capital Source), Joe Camberato (National Business Capital), Ed Tucker (Yellowstone Capital), Evan Marmott (CanaCap), and Justin Bakes (Forward Financing) as Moderator and the Marketing Your Business panel with Jennie Villano (Kalamata Advisors), Adam Stettner (Reliant Funding), and Tom Gricka (Babylon Solutions).
Industry captains will also teach you how they underwrite deals and tips for ISOs to succeed. Attorneys will walk you through the ins and outs of telemarketing law and legal advertising. There’s more of course, like networking with the funders, tips to raise capital, debates on industry issues, and checking out industry CRMs.
Afterwards, all attendees are invited to network upstairs at Westlight sponsored by RapidAdvance, while enjoying free food and drinks. Westlight offers full views of the Manhattan skyline from Brooklyn’s William Vale.
To date, there’s never been anything like it. I hope to see you at Broker Fair.
Usury Suit By Higbee & Associates Made Null and Void By Judge
April 3, 2018
An attorney suing merchant cash advance companies in New York has once again been told by a judge that he was ineligible to file a lawsuit in the state.
Rayminh Ngo, of counsel with Higbee & Associates, a law firm that tries to sue merchant cash advance companies for usury, met his demise on Tuesday when the Honorable Kenneth L. Thompson, Jr. rendered the lawsuit before him null and void for violating Judiciary Law 470. §470 requires that the law firm have an office in New York in order to represent clients in New York.
Ngo and Higbee had no such office, a secret that was exposed in January when they were thrown off a case in Nassau County for being in violation.
In this latest case, Singlesource Communications, Inc. DBA Singlesource Communications, and Brian Miller v ABC Merchant Solutions, LLC (Index #28640/2017), Judge Thompson found Higbee’s violation and “lack of candor” so compelling that he rendered the entire lawsuit “a nullity” rather than direct the plaintiff to obtain new counsel.
Judge Thompson specifically brought attention to the fact that the Higbee law firm swore to having an office lease in New York City and in support of that Higbee had supplied a document that literally said this is “NOT A LEASE.”
Needless to say the judge was not impressed and the action was dismissed without prejudice.
Not mentioned was that Higbee & Associates had tried to withdraw their usury lawsuit entirely, just days after The Appellate Division of The First Department ruled that such MCA transactions like the one ABC Merchant Solutions engaged in, were not usurious at all. Even though Higbee’s usury claim was already doomed as a matter of law, they nonetheless had their case dismissed for their own noncompliance and lack of candor.
Christopher Murray of Stein Adler LLP was the attorney for the defendant that was successful in winning Higbee’s disqualification in this case. Murray was also responsible for Higbee’s previous disqualification in Platinum Rapid Funding Group, Ltd. v. H D W of Raleigh, Inc. d/b/a Pure Med Spa, a/k/a Pure Cosmetic and Surgical Center and Holly Donielle Wybel a/k/a Holly D. Wybel.
Accord Business Funding Makes New Marketing Hire
April 3, 2018
Houston-based Accord Business Funding recently hired Aldo Castro to lead its marketing efforts. His title is Vice President of Sales & Marketing.
“We are excited to have Aldo join our team,” Adam Beebe, co-founder of Accord Business Funding, told deBanked. “Aldo comes to us with over twenty years of experience in business-to-business sales and marketing experience… [and he] will use his experience and feedback from the ISO community to help Accord find new ways of adding value to our partners’ businesses.”
Prior to Accord Business Funding, Castro worked as a strategic marketing consultant and co-founded two digital marketing agencies in Texas. Founded in 2013, Accord is a B paper funder with terms between four to eight months and merchants that include auto dealers and trucking and construction businesses, among others. The company of 20 employees is entirely driven by ISOs.
“Accord offers our ISO associates a unique combination of integrity, speed, and flexibility, helping them close their deals faster and easier,” Beebe said.
Caught! Backdoored Deals Leads to Handcuffs
April 2, 2018
A case of sneaking deals out the backdoor has resulted in another arrest at Yellowstone Capital.
According to someone familiar with the arrest and the events leading up to it, an employee was led out in handcuffs by police officers last week after Yellowstone’s management discovered she was diverting company deals to an outside party.
Yellowstone Capital would not offer comment on the matter, though last September, CEO Isaac Stern had told deBanked that “Yellowstone is investing tons of time, money, and effort to prevent data theft. We are doing everything in our power, everything, to address it, and we have even enlisted the assistance of an outside security firm.”
At that time, deBanked had obtained a photo of a female employee being led out by Stern and several police officers. That employee is said to have pled guilty to a felony theft charge after being busted for transmitting sensitive company deal data to a third party. It was the second such conviction deBanked is aware of that involved backdooring deals.
Though funding companies are generally reluctant to share the extent of their security methods, deBanked has learned that the level of technology being used by some players to detect data theft would probably come as a surprise to many perpetrators. Chances are that if you have engaged in it, it has been tracked or recorded.
“They think we don’t know, but we know the industry,” Stern told deBanked last year in reference to questions about security. “Ultimately we will catch you.”
