Archive for 2023
Square Loans Adds Monthly Payment Option, Tops $1B in Loans in Q2
August 4, 2023Block’s Square Loan subsidiary is adding another business loan feature to its arsenal, a monthly payment option “to serve larger sellers who wanted more visibility into managing their cash flow.”
The company had a major quarter by making 119,000 loans for a total of $1.10 billion in originations. The company has consistently ranked among the top online small business lenders in the country.
Square Loans said that 25% of its fixed payment loan customers so far have been “mid-market sellers,” small businesses that process more than $500,000 in annual card payment volume.
Shopify Capital Continues to Gain Momentum
August 2, 2023Shopify Capital continues to gain momentum, according to the company’s most recent quarterly earnings call. Historically, the company has broadcast its precise business loan and merchant cash advance origination figures for each quarter but this time it held off from doing that. Instead, it emphasized that it had “$719 million in loans receivables and merchant cash advances outstanding on June 30, 2023.” As that figure came straight off the balance sheet, that could be compared to the $629M outstanding in the quarter before. So, receivables went up but originations was not disclosed.
Nevertheless, Shopify explained that Capital was among several business segments that were leading to some of highest cross-sell volumes they have ever achieved.
“The team is working tirelessly,” said Shopify President Harley Finkelstein. “They’re executing it really effectively.”
The New York Disclosure Law is Here
August 1, 2023
The New York commercial financing disclosure law has arrived. Are you in compliance with it?
The 53-page requirements can be viewed here.
While the law is similar to the one recently rolled out in California, there may be some key differences. Your best bet is to contact a lawyer that is equipped to help you with this very thing. If you need a recommendation for one, email me at sean@debanked.com.
If you have no idea what this disclosure law thing in New York is all about, you need to catch up ASAP! This law was passed in 2020 and went through a formal rule-making process that lasted years. The rules were finalized on February 1, 2023 and were mandated to go into effect six months from that date.
Here’s a map of what you should be paying attention to right now!
Former MBE Capital Partners, LLC CEO Sentenced to 4.5 Years in Prison
July 31, 2023
Rafael Martinez, the former CEO of MBE Capital Partners, LLC, is going to prison. The company was a PPP lender during covid but it was alleged it should not have been!
In March 2022, the DOJ said that “Martinez used false representations and documents to fraudulently obtain the approval of the SBA for his company, MBE Capital Partners, LLC, to be a non-bank lender through the PPP. Martinez then used that approval to obtain approximately $932 million in capital to issue PPP loans and earn over approximately $71 million in lender fees.”
Martinez then spent those funds on himself, purchasing a villa in the Dominican Republic, a Ferrari, and private jets.
He pled guilty to conspiracy to commit wire fraud exactly a year later. Last week he was sentenced to four and a half years in prison.
Leveraging ChatGPT for Maximum Productivity
July 28, 2023
“…It’s just been pretty impressive how we have this technology that came out that has literally changed everything, and it was almost overnight,” said Kareem Jernigan, CFO at Leasing Associates Inc.
Earlier this week the Black Equipment Finance Network (BEFN) hosted a webinar titled ‘Leveraging ChatGPT for Maximum Productivity’ for the equipment finance space. The panelists were Cheryl Tibbs, George Parker, and Kareem Jernigan.
Jernigan is already using ChatGPT in his daily work life. In one example, he said that he commonly uses it to analyze and find errors in spreadsheets. In another, he’s saving a lot of the time he normally spent on writing.
“…I also run HR, and so I have to craft communications and/or policies,” he said, “so, when you think of crafting a policy or a communication that you have to send out, before ChatGPT that would be something that would take 4 or 5 hours to do. […] That task today I could get that done in 30 minutes.”
Meanwhile, George Parker, Co-CEO at VenSource Capital, said “You can use ChatGPT with training staff. You can develop training material. You can give tests and quizzes. You can design training programs with time as an element, it can do all of that. You can even design courses with ChatGPT. You can tell ChatGPT to come up with a time frame for learning each part of a subject.”
Parker added that ChatGPT can be used for brainstorming, articles, planning, meeting content, customer service responses, and more.
Even in the finer details of equipment financing itself, the panelists said that ChatGPT can produce credit assessment profiles and analysis, analyze and summarize financial data, and scrutinize contracts,
Of course, all of this only works if one understands what to put in and takes the care to evaluate what comes out. It’s all about the proper “prompt.” One example offered of a prompt that wouldn’t work is: “teach me credit analysis.” Something like that would be too vague and would result in a response that was too broad. Part of the reason there are panels and webinars about ChatGPT to begin with is so the industry can learn how to leverage it for maximum productivity.
Enova Originated $712M in Small Business Loans in Q2
July 27, 2023
Enova originated $712M in small business loans in Q2, according to the latest earnings report, up slightly YoY and down slightly QoQ.
Overall, the company says it has been taking a cautious approach even as it continues to grow. There is plenty of demand while the competitive environment remains fairly weak in their opinion.
“During the quarter, we closed our first ever facility secured exclusively by small business lines of credit,” Enova CEO Steve Cunningham said. “The two-year $287 million secured warehouse was priced at SOFR plus 420 basis points. Additionally, last week, we reentered the term securitization market with our first OnDeck deal since 2021. The rated three-year fixed rate $227 million term transaction priced with the blended coupon of 7.7%, demonstrating our confidence in the continued strength of our business relative to our current valuation.”
NMEF Offers to Purchase IOU Financial
July 25, 2023JULY 25, 2023, NORWALK, CT – North Mill Equipment Finance LLC (“NMEF”), a leading independent commercial equipment lender located in Norwalk, Connecticut, announced today that the following letter was sent yesterday to the Special Committee of the Board of Directors of IOU Financial Inc. (“IOU”). NMEF’s proposed acquisition is at a 27% premium to the price per share agreed to by IOU and a group of inside shareholders representing 46.1% of the issued and outstanding shares of IOU announced on July 14, 2023. “We are offering to all IOU shareholders a far superior price to the value of the Company presented by the inside shareholders that was accepted by the Special Committee in a sweetheart deal for those insiders,” said David C. Lee, Chairman and CEO of NMEF. “Our offer is not subject to any financing contingency nor access to confidential information.”
About NMEF
NMEF originates and services small to mid-ticket equipment leases and loans, ranging from $15,000 to $2,000,000 in value. A broker-centric private lender, the company accepts A – C credit qualities and finances transactions for many asset categories including construction, transportation, vocational, medical, manufacturing, printing, franchise, renovation, janitorial and material handling equipment. NMEF is majority owned by an affiliate of InterVest Capital Partners. The company’s headquarters is in Norwalk, CT, with regional offices in Irvine, CA, Dover, NH, Voorhees NJ, and Murray, UT. For more information, visit www.nmef.com. One of NMEF’s controlled affiliates, BriteCap Financial LLC, is a leading non- bank lender providing small businesses with fast, convenient financing alternatives such as working capital loans since 2003 from offices in North Hollywood, CA and Las Vegas, NV. For more information, visit www.britecap.com.
Amex: Organic Growth of Small Businesses Has Slowed
July 25, 2023
“…when we look at small business, I think the biggest thing there from a small business perspective is really the organic growth. I think organic growth has slowed,” said Amex CEO Steve Squeri in the company’s Q2 earnings call. Squeri said that this wasn’t just something that Amex was seeing but more of an industry phenomenon.
“…what you saw through the pandemic, is you saw small businesses continue to add and add and add, and you got to remember small businesses use a card to run their entire business,” Squeri said, “and so, there was a lot of buying ahead from a goods and services perspective, from an inventory perspective.”
Delinquencies have been flat at Amex, however, and still remain below pre-covid levels, a feat attributed to the company having made proper adjustments from a risk management perspective.
Squeri said he believes the organic growth will eventually rebound.
“…after the slowdown comes the recovery,” he said.
Business Blueprint, the rebrand of the Kabbage business it acquired, was not mentioned by name in the company’s earnings presentation or 10-Q.
