Archive for 2023

Lending Industry Expert Joe Valeo Appointed President of SmallBusinessLoans.com

NEW YORK SmallBusinessLoans.com (SBL) is pleased to announce the appointment of Joe Valeo as its new President. With over 35 years of experience in finance and sales, Valeo brings a breadth of knowledge to his executive leadership role at SBL, where he is committed to making the “right fit” lending solutions more accessible to small business owners.

In his previous positions, Valeo gained strategic development and consumer/business lending experience, serving financial services organizations such as LendingPoint, where he held the position of EVP/GM for POS merchant lending and direct-to-consumer loans. Before that, at Capital Access Network, he led sales strategy and management. His extensive background in payment services to merchants at First Data Corporation and Citicorp, managing e-commerce, ISOs, and franchises, as well as his experience managing acquirer and issuer relationships with key financial institutions at VISA, uniquely positions him to lead SBL to new heights.

Valeo’s vision for SmallBusinessLoans.com is straightforward and ambitious. His growth strategies include connecting with his deep finance industry network and implementing financial and business solutions to meet SMBs’ needs.

With his leadership, SmallBusinessLoans.com is positioned to:

• Be the preeminent destination for small businesses seeking financing and related business services digitally. The SBL platform cuts out time-consuming research and matches small businesses with trusted lenders who offer a variety of financing to suit every business need.
• Provide a simple, efficient application journey to help small businesses qualify for the right product and solution, ensuring easy access to financing and business services.
• Assist business owners in meeting immediate financing needs, helping them thrive in the long run. SBL serves various industries, including agriculture, commercial trucking, construction, landscaping, medical practices, and more.

Known for his problem-solving skills and quick thinking, Valeo is excited about leading a team of dedicated bridge-builders who will connect businesses and consumers to the funding they need to build their businesses and improve their lives. His commitment to customer-centric solutions makes him an ideal fit for SBL.

Valeo expressed his enthusiasm for his new role, “I strongly believe we’re doing something special, different, and market leading. Our mission is to provide a simple and easy way for businesses to access financing and business solutions.”

As passionate advocates for small businesses, Valeo and the SBL team are eager to converse with potential partners and business owners seeking small business financing and operations solutions.
For more information and to connect with us, please visit us at: www.SmallBusinessLoans.com.

About SmallBusinessLoans.com (SBL)
SmallBusinessLoans.com (SBL) helps small business owners connect with their best financing solution. With a commitment to simplifying the lending process and making it easy for business owners to find trusted, reliable lenders, the SBL platform matches business owners with lenders who offer fast funding, flexible terms, personalized options, and more to help small businesses thrive. SBL aims to become the go-to digital destination for small businesses seeking financing and business services. For more information, go to www.SmallBusinessLoans.com
Contact:
Susan Almon-Pesch
sue@speschialpr.com
858-205-0516

With Fraud on the Rise, AI Can Fill in the Gaps

In today’s dynamic world of fraud detection, technology, and artificial intelligence (AI) are allies. The insights of industry experts, Yinglian Xie, a technology veteran with a background at Microsoft Research and CEO at DataVisor, Sandip Nayak, President at Fundation, and Andrew Davies, Global Head of Regulatory Affairs at ComplyAdvantage, discuss the transformative role of AI in fraud prevention.

When DataVisor started, it primarily offered advanced machine learning solutions, through an unsupervised approach. In other words, their programs can spot fraud without needing a loss or training labels; they can automatically identify suspicious activities. Xie explains that AI’s ability to make rapid decisions during real-time transactions depends on the amount of data available for this process. To achieve a proactive response, it must be synchronized with real-time data, as opposed to a manual or “supervised machine learning” approach.

“We need to kind of switch the traditional approach looking at fraud being very much kind of an isolated case, like a manual approach, and into something we need technology for, said Xie. “And we need to essentially be able to make decisions instantaneously as well.”

In addition to unsupervised learning algorithms, Xie explains that generative AI falls into another category of fraud detection. This method describes the data and communicates information back in human-like responses. Xie gives an example that as customers, some may not understand why a transaction was rejected and that’s where generative AI comes to rationalize the reason behind the rejection.

Echoing Xie, Nayak described solutions where traditional techniques fail, one of them being unsupervised learning algorithms. These algorithms can use techniques like anomaly detection to actually hone in on “the needle in a haystack problem.”

“Number two, the automated and advanced nature of AI can really solve the shortcomings of rules based and human based approaches in detecting fraud and can also self-calibrate itself as the nature of fraud evolves with time,” said Nayak.

Meanwhile, Andrew Davies pointed out that one of the biggest challenges faced by banks and financial institutions is “they are constantly playing catch-up.” With the accelerated pace of money movement and real-time settlement, he emphasized that fraudsters capitalize on this by being swift and innovative, continuously seeking out new vulnerabilities to exploit.

“Banks must update their legacy technology which leaves too many weak points in the control environment,” said Davies. “Additionally, as money moves more quickly and is subject to finality, fraud detection must be done in real time.”

And as the digital landscape continues to evolve, Nayak envisions the adoption of these technologies will be beneficial to the lending industry. Embracing different strategies not only reduces fraud losses but also enhances capital efficiency, paving the way for increased profitability and security in lending, according to Nayak.

“I do expect the lending industry, especially the ones who adopt the latest technologies of fraud detection, will have a competitive advantage compared to those who don’t,” said Nayak. “And what that will do is it will help them preserve more of their capital in the current tough macro environment by helping the overall unit economics…”

Unsupervised machine learning and generative AI are strategies reshaping fraud prevention. The ability to make rapid, data-driven decisions, adapt to evolving fraud tactics, and provide human explanations behind alerts has become a cornerstone in modern fraud detection.

Survey: Factoring Sector of Finance Industry Shows Resilience Despite Decreased Volume

Secured Finance Network Releases Mid-Year Report

NEW YORK, NY, Oct. 16, 2023 ─ The factoring sector began 2023 on a positive note and has continued to show resilience in an uncertain economy, according to the MidYear Factoring Industry Survey, released by the Secured Finance Network (SFNet). The survey included the Factoring Confidence Index, which found that despite a lingering threat of recession, member organizations are optimistic about the demand for new business and portfolio performance. General business conditions and industry employment levels, meanwhile, were predicted to remain the same.

“The overall outlook for the U.S. economy has improved in recent months due to strong consumer spending and easing inflation,” the report said. “The odds of a ‘soft-landing’—a further easing of inflation without a recession—have increased somewhat, but recession risks remain.”

Factoring is the process by which a buyer—a non-bank lender or bank affiliate referred to as a “factor”—purchases the accounts receivable of a client, at a discount. Clients are typically companies involved in textiles, apparel, business services, shipping, transportation and other industries that want to improve cash flow, according to SFNet.

Factoring activity

This industry, like many others, continues to feel the pressures of a post-pandemic economy. Overall factoring volume in the first half of this year decreased by 13.5% compared to the same period in 2022, the report said. U.S. volume was down 13.3% and international volume fell by 23.7%. Apparel/textiles remained the top client industry for volume at 30.2% after holding a similar position in SFNet surveys in recent years.

“The number of factoring clients edged down by 0.3% from H1 2022 to H1 2023,” the report said, “with U.S. clients dropping by 0.4% and international clients increasing by 5.7% over the same period. Banks and brokers were the top two sources of client referrals, accounting for over half of all referrals during those periods.”

Regionally, there was little change year-over-year in factoring volume and clients, the report said, but the distribution of volume was notably different from the distribution of clients. The Northeast had the highest share of volume in the first half of this year (58%), but the Southeast had the highest share of clients (27%).

“Non-recourse factoring continued to comprise the vast majority of total volume (85.9%) while full recourse factoring comprised the majority of clients (81.8%),” the report said. “Notification factoring comprised a slight majority of volume (51.1%), with its share of volume declining steadily from H2 2021 (77.0%). Notification factoring still comprised the vast majority of clients (96.5%) and was relatively unchanged.”

More factoring survey highlights:

• Average loan turnover saw a slight increase to 47.8 days in the first half of 2023 and average days sales outstanding also rose, to 50.7.
• For portfolios, write-offs were up slightly from the same period in 2022 as a share of volume, from 0.04% to 0.11%. Provisions for loan loss accounted for 0.44% of volume.
• Factoring revenues decreased by 26% from midyear 2022, with net interest revenue holding steady at 58%. The share of service fees, meanwhile, saw a slight increase.
• Average return on assets rose 4.2% while average return on equity increased 15.2%, the report said. Survey respondents reported pre-tax income at 0.63% of volume in the first half of this year.
• The number of employees in factoring grew from the previous two quarters, but not by much: 1.2%.

Details

Follow the link for more publicly available information on the MidYear Factoring Industry Survey. SFNet members have access to additional data and detailed reporting.

About Secured Finance Network

Founded in 1944, the Secured Finance Network (formerly Commercial Finance Association) is an international trade association connecting the interests of companies and professionals who deliver and enable secured financing to businesses. With more than 1,000 member organizations throughout the US, Europe, Canada and around the world, SFNet brings together the people, data, knowledge, tools and insights that put capital to work. For more information, please visit SFNet.com.

Media Contact:
Michele Ocejo, Director of Communications
Secured Finance Network
mocejo@sfnet.com, 551-999-5283

ISO Arrested by FBI

A merchant processing ISO was arrested by federal agents this week for his alleged role in a business loan fraud scheme. Paul Paredes, who owns J&E Business Consulting LLC in Rochester, NY, allegedly used the identities of his merchant processing clients to obtain business loans for himself.

“Small businesses provide J&E with their financial information, such as the owner’s identifying information, including driver’s license, social security number, and email, as well as bank account information,” the Assistant US Attorney said.

According to the complaint, between May and November 2022, Paredes fraudulently submitted approximately 42 loan applications using the identities of approximately 31 individuals, enabling him to obtain millions of dollars. He used the money to pay off one victim, pay other loan companies, and he used it on personal expenses such as credit cards, travel, and vehicles.

Paredes is also facing a related civil lawsuit over the matter. According to public records, his company has also used and defaulted on several merchant cash advances from as far back as 2016 to as recent as this year.

“Although a comprehensive analysis of all known accounts has not yet been completed, the financial transactions in the [bank] accounts appear to be consistent with Paredes laundering the fraudulent loan proceeds obtained from the lender companies, which are proceeds of a Specified Unlawful Activity, namely wire fraud, in a similar fashion to a ‘Ponzi scheme’ and inconsistent with the operations of a legitimate business enterprise,” an FBI agent said in an affidavit.