Archive for 2023
Lightspeed Capital Generated $8.1M in MCA Revenue Last Year
June 23, 2023
When Lightspeed announced it was expanding its MCA program to the United Kingdom, Australia, New Zealand and Quebec, one may have been wondering who they were. The POS e-commerce platform has actually been around since 2005 and has been slowly building up its MCA offerings. Indeed, last quarter deBanked pointed out that the company had been increasing its volume.
As of the company’s fiscal year-end of March 31, 2023, the company had an MCA receivable balance of $29.5M, up from $6.3M YoY. Altogether, Lightspeed generated $8.1M in revenue in FY 2022, amounting to only about 1% of its overall revenue. That means there’s still a lot more room for growth.
“We believe real-time access to capital is one of the largest challenges facing merchants today,” said JP Chauvet, Lightspeed CEO in a press release. “This expansion of Lightspeed Capital provides a simple, streamlined opportunity for our merchants to invest in their business. Our goal is to help turbocharge their operations … all through a single, integrated commerce solution.
Google Files Lawsuit Over Fake Business Profiles and Fake Reviews
June 21, 2023
Agroup of defendants with an alleged common owner have brought a whole new meaning to Search Engine Optimization. According to a lawsuit filed by Google, one Ethan Qiqi Hu set up more than 350 fraudulent business profiles and bolstered them with more than 14,000 fake reviews. Although this case has no tie to the financial services industry, it may be worth knowing how the scheme was carried out.
Defendants did not limit themselves to a niche. According to the complaint, they pretended to be repair shops, chiropractors, cleaning services, spas, painters, and more. They got around the verification step by skipping the mailed postcard and consenting to video chat inspections, in which defendants relied on movie-like sets and props to convince Google’s staff they were at whatever business in question. Once established, its alleged they relied on thousands of fake reviews from Bangladesh and Vietnam and then used the business profiles to either generate and sell leads or to sell the profiles themselves for a profit. Google said that the scheme undermines people’s faith in their products.
“In 2022, we protected more than 185,000 businesses from further abuse after detecting suspicious activity and abuse attempts,” Google said. “We also stopped 20 million attempts to create fake Business Profiles in 2022, and continue to invest in new technologies and processes to keep information on our products helpful and reliable.”
Google said that they took this legal action “against a bad actor for deceiving and scamming consumers.” It added that it hopes the lawsuit “builds awareness that we will not sit idly by as bad actors misuse our products.”
There’s a message here that one can’t rely on Google business profiles alone to authenticate legitimacy (looking at you underwriting) just as one may not be able to rely heavily on Google Maps.
Federal Legislators Jump on Commercial Financing Disclosure Bandwagon, Renew Push to Give CFPB Authority Over Industry
June 16, 2023
Feel like there’s a lot of state-level disclosure going around lately? Well now some members of Congress believe another layer is needed at the federal level. In a bill titled the “Small Business Financing Disclosure Act of 2023,” the language looks awfully familiar. There’s a Double Dipping clause in it, for example, which was a term first seen in a New York State law.
The federal bill, which was introduced by US Senator Robert Menendez and Congresswoman Nydia M. Velázquez, seeks to place the small business finance industry under the authority of the Consumer Financial Protection Bureau (CFPB). As part of that, the Director (currently Rohit Chopra) would be responsible for devising all the rules and formulas, according to the bill. Furthermore, with regards to sales-based financing, the bill specifically states:
1. The provider must disclose an APR.
2. The estimated term of repayment and periodic payments based on projected sales volume must be disclosed.
“Small businesses are the lifeblood of the American economy,” said Congresswoman Velázquez. “But for too long, predatory lenders have taken advantage of businesses in need of capital by offering loans and similar products with unclear terms and exorbitant interest rates.”
Supporters of the bill, including Senator Sherrod Brown and Senator Ron Wyden, also stated that the bill is aimed at “predatory lenders.”
In Senator Menendez’s press statement for the bill, it cites Funding Circle, a small business lending company, as a supporter.
“We believe a free and fair market operates most efficiently when there is transparency in pricing, terms and conditions,” said Ryan Metcalf, Head of U.S. Public Affairs at Funding Circle U.S. When a small business has all of the necessary information up front including the annual percentage rate (APR), they can comparison shop and make informed decisions that are best for their business. Funding Circle supports one national uniform small business financing disclosure law because it is in the best interests of small businesses and interstate commerce.”
The push for a small business financing bill is not new. A similar bill introduced by Velázquez last year did not move forward, nor did the one from 2021, nor the one from 2019. The difference is that previous versions focused on Confessions of Judgment and fairness in small business lending. The latest version takes on the air of disclosure while attempting to subjugate the whole industry to CFPB regulatory authority.
CFG Merchant Solutions Surpassed $1 Billion in MCA Originations in Q1 2023
June 15, 2023
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Interest Rate Cuts Unlikely For a Couple of Years
June 14, 2023
Just because the Fed decided to maintain interest rates where they are doesn’t mean that a turning point for future decreases is on the horizon. On the contrary, Fed Chair Jerome Powell said cuts are unlikely for a couple of years, citing persistent inflation.
Excerpted as:
“[rate cuts] will be appropriate at such time as inflation is coming down really significantly, and again we’re talking about a couple years out, I think as anyone can see not a single person on the committee wrote down a rate cut this year, nor do I think it is likely to be appropriate…”
Watch the full statement
Jerome Powell says the Fed is "talking about a couple of years out" for rate cuts https://t.co/ml1Kxoivxm pic.twitter.com/ayMJmqeViT
— Bloomberg Markets (@markets) June 14, 2023
Last Call for Early Bird Pricing to deBanked CONNECT San Diego
June 14, 2023
This is the LAST CALL for early bird pricing to deBanked CONNECT San Diego on September 21, 2023.
This will be deBanked’s third event in San Diego since 2018. Are you ready to connect with the industry on the west coast?!
New York Court of Appeals Dismisses Case That Challenged MCA Legality
June 13, 2023The New York Court of Appeals dismissed AH Wines Inc., et al. v C6 Capital Funding LLC. Its reasoning was brief.
“Appeal dismissed without costs, by the Court sua sponte, upon the ground that the issues presented have become moot,” the order says.
For a more complete understanding of the outcome, please contact an attorney.
Congressional Resolution Aims to Undo CFPB’s Small Business Lending Rules
June 12, 2023
After 13 years of regulatory debate and 888-pages of official rules finally ready to go into effect, some members of Congress have decided that the whole thing is all wrong. At issue is a section of a 2010 federal law that requires the CFPB to collect data from companies engaged in small business financing. However, for more than a decade the statute became a political football, creating delays and sowing confusion over who it is that is supposed to be covered. Lawsuits filed against the CFPB finally prompted it to move forward with its mandate which culminated in an 888-page rulebook that was published in March.
On May 31, however, members of the House and Senate introduced a Joint Resolution to invalidate the rules.
“Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Consumer Financial Protection Bureau relating to “Small Business Lending Under the Equal Credit Opportunity Act (Regulation B)” (88 Fed. Reg. 35150), and such rule shall have no force or effect.”
A hearing on the matter is scheduled to be heard on June 14 at 10am. As part of it, CFPB Director Rohit Chopra is expected to testify.
Update: Hearing is here:
It remains to be seen whether the Resolution will carry weight. There are 23 Republican co-sponsors of the bill and 0 Democrats.
