Archive for 2023
CFG Merchant Solutions Closes $20 Million Corporate Note Financing
March 6, 2023NEW YORK, NY. March 6, 2023
– CFG Merchant Solutions, LLC (“CFGMS”), a technology-enabled specialty finance and alternative funding provider, announced the closing of a $20.0 million investment-grade rated corporate note financing from a group of leading U.S.-based institutional investors. The transaction was assigned a BBB rating by a nationally recognized statistical ratings organization.
Since its founding in 2015, CFGMS has a proven track record of asset performance and profitability, and has funded more than $1.0 billion to over 25,000 small and medium-sized businesses (SMBs) across diverse industries throughout the U.S. The Company plans to use proceeds from the issuance to refinance a portion of existing debt and support continued growth of the business.
“Across the U.S. there are millions of healthy SMBs looking for financing to grow. This sector, however, is increasingly under-served by traditional financial institutions,” said Andrew Coon, Chief Executive Officer of CFGMS. “This transaction will provide CFGMS with additional flexibility and enable the Company to continue to grow our business and deliver valuable capital to customers.”
Bill Gallagher, President of CFGMS, added, “Given the volatile capital markets, the successful closing of this transaction demonstrates that institutional investors have confidence in our platform and financial performance, and expect to see continued growth. This credit investment significantly increases our funding capabilities and enhances our ability to take advantage of potential market opportunities.”
Brean Capital, LLC served as the Company’s exclusive financial advisor and sole placement agent in connection with the transaction.
About CFG Merchant Solutions
CFG Merchant Solutions (“CFGMS”) is an independent, technology-enabled alternative funding platform focused on providing capital access to small and mid-sized businesses that have historically been undeserved by traditional financial institutions and may have experienced challenges obtaining timely financing. The Company uses its historical transactional data, proprietary underwriting, predictive analytics, and electronic payment technologies and platforms to assess risk, and provide access to flexible and timely capital.
For additional information about the Company, visit: https://cfgmerchantsolutions.com/.
Contact:
Name: Richard Polgar
Title: Chief Financial Officer
rpolgar@cfgms.com
Filling The Funding Gap for Canadian Borrowers
March 5, 2023
“Generally, capital availability is usually stronger in the U.S., but I would say Canadian businesses are definitely less serviced when it comes to options to be able to access capital,” said Cato Pastoll, Founder and CEO at Loop. “There’s just kind of less services or less products out there for companies so that definitely means that there’s going to be more demand for loan related products.”
One of the lingering challenges in Canada is that the big banks tend to hoard the data that would be valuable to fintechs to service more borrowers, hence the recurring call for open banking.
“If you’re a fintech and you don’t have access to that information, you have to figure out a way to access it from the banks that do hold it,” said Tal Schwartz, Senior Product Manager at Nomis Solutions and Writer at Canadian Fintech. What’s happened as a result is that a whole cottage industry has formed to figure out ways to relay data without APIs.
Cato Pastoll’s company, Loop, is among those that have come up with clever solutions to service Canadian customers. For example, Loop can help Canadian-based companies obtain loans in U.S. dollars to help them grow while also offering other services like expense management tools and cross-border payments.
“A lot of businesses have a hard time getting financing from the bank,” Pastoll Said, “so there’s definitely a few players that do provide different products to help companies be able to access growth capital, working capital, and many of them have been around as long as we have for the last five to ten years or so.”
“So, things that can probably improve in Canada are all related to competition, law, and kind of creating a more equal playing ground between banks and fintechs,” said Schwartz. Although those initiatives seem to be trending in the right direction, it’s been a very a slow march forward.
Funding Circle US Originates $393M in 2022
March 2, 2023The American arm of Funding Circle originated $393M in business loans in 2022, according to the company’s latest public financial statements, nearly quadruple the previous year.
The majority of Funding Circle’s loans are currently projecting annualized returns in the vicinity of US inflation levels. A graph of their loans by cohort is below:
Funding Circle US has a fairly diversified base of capital, having worked with eight forward flow funders in 2022, one of which was a credit union.
The UK still remains the overall company’s primary market. It originated £723M in business loans in 2022, not including those part of government support scheme programs.
A Glimpse At How Big Fintechs Are Approaching The Small Business Loan Market
March 1, 2023| Company Name | Status | Notes |
| Square Loans | Just recorded its biggest originations year ever. $4.07B funded in 2022 | |
| Enova/OnDeck | Seeing tremendous demand. Focusing on diversification. $2.97B funded in 2022 | |
| Shopify Capital | Reporting strong renewals. Just had its biggest originations year ever with $1.66B funded in 2022. | |
| Upstart | Suspended business loan originations only 6 months after it started them. | |
| LendingClub | Has suspended its equipment financing and commercial real estate lending divisions. | |
| SoFi | Not interested in joining the small business loan market at this time. |
Square Loans Completes Monster Funding Year
February 26, 2023
Square Loans rose to the top of deBanked’s small business loan originations leaderboard last year after announcing $1.16B in originations in Q4. That brought the company, which is a subsidiary of Block (formerly Square), to over $4B funded for the year total, spread out across 461,000 loans.
In its annual shareholder letter, Block said that “Square Loans achieved strong revenue and gross profit growth during the fourth quarter of 2022.” Demand for loans has been steady and loss rates have stayed consistently within historical ranges.
Square Loans typically approves merchants for less than 20% of a merchant’s expected annual Square gross payment volume, is repaid by withholding a percentage of credit card sales, and enjoys a borrower base that pays off its loans in less than 9 months on average.
Block’s business is so large and now has so many components that Square Loans did not even come up in Block’s Q4 earnings call. Overall, the company generated $5.7B in revenue in 2022.
The small business loans originations leaderboard contains a lot of blanks. That’s because several public companies have attempted to obscure their business lending figures or non-public ones have opted to not disclose their figures. If you want your company’s figures to be added, email info@debanked.com.
New Commercial Financing Disclosure Bills Emerge in Several States
February 24, 2023Several states have resumed efforts to pass a commercial financing disclosure bill this year, following successes that have already taken place in other states. Below are three on the table so far:
- Illinois – Small Business Truth in Lending Bill
- Maryland – Consumer Credit Commercial Financing Transactions
- Connecticut – An Act Requiring Certain Financing Disclosures
Illinois Introduces Small Business Truth in Lending Bill
February 23, 2023
Illinois introduced a Small Business Truth in Lending bill last week, which one would correctly infer is about… disclosures. The language is similar to the law recently enacted in California and includes an APR requirement.
Give Him a Try. “He’s a Good Guy”
February 23, 2023
He may be a good guy, but does he pay his loans on time? The infamous, he’s a good guy line circulates in this business daily. Citing what an admirable individual they are should require a bit more verification than that. And trusting a reliable source in the industry may not always unfold the way it’s supposed to. Therefore, is pushing for a merchant, company, or any party based solely on personal traits enough to create a depiction of who they are?
“This phrase is interesting in that it often serves as a shortcut for assessing the character of a person or company in the industry, and its prevalence is understandable given the amount of trust that is necessary for successful financial transactions,” said Tony Borchello, General Manager at Finance It Forward. “At the same time, this phrase should not be taken as a full assessment of someone’s character or a complete substitute for due diligence. While it can be helpful in certain contexts, relying too heavily on this phrase can lead to bad investments or other costly mistakes.”
Ultimately this phrase is not meant to be negative, but one’s relationship with a person or company may not replicate the experience for someone else. Finding great partners in the industry plays a role in this too. Without building credible connections to be used for future references, it can be difficult to take anybody’s word.
“You always have people on the outside that are looking out for each other in this industry, which is great, don’t get me wrong,” said Amanda Kingsley, Director of Marketing and Development at Merchant Marketplace. “But everybody is so quick to just use that one phrase to make it seem like ‘Oh he’s a good guy,’ okay I’ll trust you. I’ll do it because you said that.”
Key words are useful to look out for as well when relying on a reference. For example, “promise” may not have the impact intended, Kingsley described. If someone is promising to pay back a loan on behalf of another person, it could actually heighten the risk of it falling through.
“As soon as you hear the word promise, you know that they’re going to break a promise,” said Kingsley.
A person’s credibility in the business should not justify an automatic approval all on its own. While referrals are an obvious and necessary part of the business, doing a thorough examination on the backend is key.
“It’s important to remember that ‘He’s a good guy’ should not be the only factor that’s considered when making a financial decision,” said Borchello. “Instead, this phrase should be used in conjunction with other sources of information such as research, reviews, and interviews, in order to get a more complete picture.”
