Archive for 2020
ODX Introduces New Contact-Free Banking Platform
August 26, 2020
ODX, a banking originations platform, announced the launch of a new service this week—a Digital Account Opening (DAO) experience. With billions of dollars in successfully facilitated loans, the subsidiary of OnDeck made a move beyond origination; to offer banking account solutions.
Announced Tuesday, the new platform marks another addition to the ODX digital suite that enables financial institutions to reach customers digitally. DAO helps both customers and banks set up checking and savings accounts, filling the need for contactless banking in today’s market.
Brian Geary, the President of ODX, said the DAO’s release is a culmination of over a decade of customer experience merging with the company’s robust technology platform.
“We’re basically hosting the application experience, either web-enabled or mobile-enabled, as well as the workflow platform that is automating and streamlining,” Geary said. “So things like anti-fraud, compliance checks, ID verification, and in the lending case, credit decisioning, all happens on our platform.”
The new platform goes hand-in-hand with the already in place Know Your Customer (KYC) and Anti-Money Laundering (AML) programs proprietary to ODX.
This addition comes at a time when the niche of digital banking has become a necessity. Geary said in the past six months the long laid plans of financial institutions to transition their experience into digital solutions were accelerated by COVID-19. Now institutions and consumers alike are widely adopting contactless commerce.
“When branches closed or were limited in some of their face-to-face interactions, it accelerated that move to digital as well,” Geary said. “So from the customer side there was changing preferences and adoption of digital channels, and from the bank side, they are accelerating investment into digital.”
QuickBooks Capital Has Already Funded $683M in Cumulative Business Loans
August 26, 2020
QuickBooks Capital has funded $683 million in cumulative small business loans since Intuit launched the program in late 2017. This excludes the $1.2 billion in PPP loans the company facilitated, according to the latest quarterly earnings report.
Showing optimism, Intuit recorded revenue of $1.8B in Q4 and $7.7B for the fiscal year, up 13 percent.
Among Intuit’s leading products is TurboTax, which experienced its strongest customer growth in four years. Growth was also strong with QuickBooks online payments, QuickBooks Online payroll and TSheets.
Intuit announced that it was acquiring Credit Karma for $7.1B in cash back in February.
Sketchy Virginia SBA Loan Brokers Indicted
August 26, 2020Ronald A. Smith and Terri Beth Miller, owners of Virginia-based Business Development Group (BDG), an SBA loan brokerage, were indicted this month over an advance-fee scheme in which many customers are alleged to have paid money to obtain SBA loans but did not in fact get them.
As part of the scheme, defendants are alleged to have made many false and misleading representations to prospective borrowers including that:
- BDG was a large, multi-state company
- BDG was headquartered at the Trump Building in New York City and had an additional business in Las Vegas
- BDG has assisted certain named companies in obtaining SBA loans
- BDG was a business established in 2005 or earlier
- BDG was affiliated with the SBA
- BDG had relationships with banks across the nation that allowed it to facilitate the loan approval process with SBA lenders in a customer’s area by utilizing a “Lender Linker” made up of the most preferred SBA lenders in the country
- BDG had a program that included a “Powerful Online Grant Writer Interface Service” that was directly connected to the federal government and “handled everything from A to Z in Finding, Writing, Submitting and Securing Grants”
- BDG offered a money back guarantee
- BDG won the 2016 Best of Manhattan Business Award for Business Development Software and Services
BDG was really just an internet-based business whose goal was to obtain money through fraudulent pretenses and promises, prosecutors contend.
A copy of the grand jury indictment can be obtained here.
Section 1071 is Back and The CFPB Wants to Know How Much It Will Cost You to Comply
August 25, 2020
At some point in this century, small business finance companies will be expected to comply with Section 1071 of the Wall Street Reform and Consumer Protection Act that was passed in 2010.
In the wake of the ’08-’09 financial crisis (remember that?!), lawmakers passed the above act that has become colloquially known as Dodd-Frank. Section 1071 gave the Consumer Financial Protection Bureau the authority and the mandate to collect data from small business lenders (and similar companies).
The costs, risks, and challenges with rolling out this law have been discussed on deBanked for 5 years, yet little progress has been made to finally implement it. But it’s starting to move along and the CFPB would now like to know how expensive it will be for businesses to comply.
If you are engaged in small business finance, you should seriously consider submitting a response to their survey. The CFPB is specifically cataloging responses from merchant cash advance companies, fintech lenders, and equipment financiers.
CEO Of Online Lender Arrested For PPP Fraud
August 19, 2020
Sheng-wen Cheng, aka Justin Cheng, the CEO of Celeri Network, was arrested on Tuesday by the FBI. Celeri offers business loans, merchant cash advances, SBA loans, and student loans.
Cheng applied for over $7 million in PPP funds, federal agents allege, on the basis that Celeri Network and other companies he owns had 200 employees. In reality he only had 14 employees, they say.
Cheng succeeded in obtaining $2.8M in PPP funds but rather than use them for their intended lawful purpose, he bought a $40,000 Rolex watch, paid $80,000 towards a S560X4 Mercedes-Maybach, rented a $17,000/month condo apartment, bought $50,000 worth of furniture, and spent $37,000 while shopping at Louis Vuitton, Chanel, Burberry, Gucci, Christian Louboutin, and Yves Saint Laurent.
He also withdrew $360,000 in cash and/or cashiers checks and transferred $881,000 to accounts in Taiwan, UK, South Korea, and Singapore.
This, of course, is all according to the FBI. Statements made to Law360 indicate that Cheng maintains his innocence.
A press release published by Celeri late last year said that the company had raised $2.5M in seed funding that valued the company at $11M.
Fintech Companies Settle “True Lender” Lawsuit With Colorado Attorney General
August 19, 2020
Avant, Marlette Funding, and several banks consented to a settlement with the Colorado Attorney General earlier this month to close the books on litigation that has gone on for more than three years.
The lawsuits alleged that Avant and Marlette, who enjoyed bank partnerships, were themselves not covered by federal bank preemption and that they had violated the Uniform Consumer Credit Code of the state by among other things, charging excessive costs to consumers.
After a lengthy battle, Avant, Marlette, WebBank, and Cross River Bank entered into a joint settlement agreement with the Colorado Attorney General that prohibits the fintech companies from charging more than 36% APR in the State of Colorado, along with requiring that the fintech companies maintain a state lending license and engage in a long list of new and redundant measures of compliance.
Lendified Is Still Trying To Pull Through
August 18, 2020
On June 29th, deBanked ran a story titled Canadian Small Business Lender Looks Doomed In Wake of COVID-19. It was about Lendified. Several of the company’s top executives had recently resigned and its financial situation was dismal.
“Lendified is in default in respect of credit facilities with its secured lenders,” the company disclosed at the time. “Forbearance and standstill agreements are being discussed with these senior lenders, with none indicating to date that any enforcement action is expected although each is in a position to do so, however, no formal agreements in this regard have been concluded as of the date hereof.”
Among the company’s last ditch plans to recapitalize was the raising of equity through a private placement. But that was made impossible by the Ontario Securities Commission who entered an order prohibiting any such transaction for “failing to file certain outstanding continuous disclosure documents in a timely manner.” The filing failures, of course, were due to the issues they were facing. This order just compounded them.
The Commission partially revoked the order on August 14th, paving the way for the private placement to continue. Lendified is only seeking up to $1.4M, the proceeds of which would be used to “pay, among other things, outstanding fees owed to the Company’s auditors and other service providers, public and filing fees, legacy accounts payable as well as for general working capital purposes.” The company further said that “Completion of the Private Placement will help the Company in its efforts to prepare and file the outstanding continuous disclosure documents with the applicable regulatory authorities.”
Lendified offers no guarantees that the private placement will be successful. The company sold off a subsidiary, JUDI.AI, in July.
Where Fintech Ranks on the Inc 5000 List for 2020
August 12, 2020Here’s where fintech and online lending rank on the Inc 5000 list for 2020:
| Ranking | Company Name | Growth |
| 30 | Ocrolus | 7,919% |
| 46 | Yieldstreet | 6,103% |
| 351 | Direct Funding Now | 1,297% |
| 402 | GROUNDFLOOR | 1,141% |
| 486 | LoanPaymentPro | 946% |
| 534 | LendingPoint | 862% |
| 539 | OppLoans | 860% |
| 566 | dv01 | 830% |
| 647 | Fund That Flip | 724% |
| 1031 | Fundera | 449% |
| 1035 | Nav | 447% |
| 1053 | Fundrise | 442% |
| 1103 | Bitcoin Depot | 409% |
| 1229 | Smart Business Funding | 365% |
| 1282 | Global Lending Services | 349% |
| 1360 | CommonBond | 327% |
| 1392 | Forward Financing | 319% |
| 1398 | Fundation Group | 318% |
| 1502 | Fountainhead Commercial Capital | 293% |
| 1736 | Seek Capital | 246% |
| 1746 | PIRS Capital | 244% |
| 1776 | Braviant Holdings | 240% |
| 1933 | Choice Merchant Solutions | 218% |
| 2001 | Fundomate | 212% |
| 2257 | Lighter Capital | 185% |
| 2466 | Bankers Healthcare Group | 167% |
| 2501 | Fund&Grow | 165% |
| 2537 | Central Diligence Group | 162% |
| 2761 | Lendtek | 145% |
| 3062 | Shore Funding Solutions | 127% |
| 3400 | Biz2Credit | 110% |
| 3575 | National Funding | 103% |
| 4344 | Yalber & Got Capital | 76% |
| 4509 | Expansion Capital Group | 70% |
