|02/22/2021||LoanMe,Liberty Tax to take on Enova, Intuit|
|09/24/2018||Meet LoanMe in San Diego on Oct 4th|
Keeping it Real With LoanMe
LoanMe Acquisition, Big League Advance, & more - Ep. 35
The Canadian SPAC deal to merge LoanMe with Liberty Tax was finally completed last month after being announced in February.
The combined entity, NextPoint Financial, trades on the Toronto Stock Exchange under the ticker NPF.
“In just over a year from establishing this SPAC, we have closed two acquisitions that immediately create a financial services company with scale and opportunities for synergistic growth,” said Andy Neuberger, Chairman of NextPoint Financial. “With a management team and board comprised of proven executives and operators across the financial services, digital and retail sectors, we have very quickly created an organization that is set to impact how financial services are delivered to North America consumers and small businesses.”
The deal is especially significant in the small business finance space since it will place LoanMe’s small business loan and merchant cash advance products into 2,700 Liberty Tax storefronts throughout North America.
NextPoint Financial will combine LoanMe’s business, consumer, and mortgage lending with Liberty Tax’s tax preparation business, according to merger announced on Monday. Liberty’s “2,700+ locations in the US and Canada” will become consumer and SMB loan shops.
The new firm will also offer Merchant Cash Advances; LoanMe launched MCA funding in January and expects to fund $15 million in MCAs in 2021. Based on the acquisition prospectus, NextPoint will be a tax readiness firm, with the added suite of financial products as a value and growth builder.
Ramping up consumer, installment, and MCA lending, paired with the third-largest tax-prep business in the U.S, NextPoint expects to compete directly with Intuit, H&R Block, Enova, and Elevate.
Fintech firms are setting themselves apart from the competition as one-stop shops for everything a business needs, including MCA products. Why branch into financial services now? NextPoint found that this year alt lenders have outperformed the S&P500 three times over.
“We are a one-stop financial services destination empowering hardworking and credit-challenged consumers and small businesses,” the investor presentation reads. “To get to the next point in their financial futures.”
Intuit offers a variety of financial products, like business loans through Quickbooks Capital, alongside their popular, 60%+ market share of tax prep software. H&R began offering small $1,000 lines of credit this year, but not much more.
The team leading the new company, NextPoint Financial, will feature execs like Brent Turner as CEO, Mike Piper CFO, both keeping their previous Liberty Tax positions. Jonathan Williams, former president and founding shareholder of LoanMe, will become president of lending.
The combined company will be called NextPoint Financial.
NextPoint will acquire LoanMe at an enterprise value of approximately US$102 million, US$18 million of which is payable in cash, approximately US$49 million of which is payable in NextPoint common stock equivalents and with the balance of which reflects the assumption of existing corporate net debt at LoanMe.
“We are a one-stop financial services destination empowering hardworking and credit-challenged consumers and small businesses to get to the NextPoint in the financial futures,” the company said of its newly formed self.
The company says that LoanMe had originated $2 billion since inception, 340,000+ borrowers since inception, and has a $200 million loan portfolio. Liberty Tax, meanwhile, processes 185,000+ SME tax returns, 1 million+ US consumer tax returns, and 400k+ Canadian tax returns.
Combined, the company projects $317M in revenue in 2021.
“NextPoint has obtained a commitment for a new US$200 million revolving credit facility, advances under which may be used for NextPoint’s general corporate purposes, including to fund the Liberty Tax and LoanMe cash purchase prices, and to fund potential future acquisitions,” the company said in a public release.
LoanMe is a sponsor of deBanked CONNECT San Diego. The half-day event for funders, lenders, brokers and industry professionals is being held at the Andaz on October 4th!
In the past week and a half it appears as if six months of panic, reaction, and preparation have taken place. With the coronavirus having transformed from a subconscious worry at the back of our minds to a global pandemic that is leading industries and nations to be reshaped, uncertainty and a lack of information may lead to further confusion and anxiety.
As such, deBanked reached out to a number of funders within the alternative finance space to gauge how they’re feeling on the pandemic and understand what measures they are taking at this time.
One such company was BFS Capital. With its headquarters in Florida, CEO Mark Ruddock explained that he and his employees are used to preparing for crises. “It’s prime hurricane land. So we have a capability to operate without a single human head in the office. We have 100% capability for all of our team to work remotely regardless of whether they have work laptops or not.”
Communication is at the heart of this ability, with offices in Toronto, Omaha, New York, Chelmsford in the UK, and outsource partners in Guatemala, BFS relies on software like Microsoft Teams and Zoom to ensure smooth contact is maintained between its employees across the world.
And this mindset has recently been further enforced with regards to company-customer relations, Ruddock explained, noting that in that wake of the coronavirus, BFS has amped up its outreach to existing customers.
“Instead of just waiting for active inbound communication from our merchants, we actually now have an active outbound calling program. We’re trying to reach out to many of our merchants and understand how their businesses are doing, understand what sort of support and help they’re looking for. We’re trying to draw from this not only information about the specific merchant, but also information about that merchant’s geography, sector, and so on. And all of that is being fed back into a real-time dashboard internally.”
Beyond BFS, merchant outreach was a trend amongst the companies deBanked talked to. With funders reporting that they have teams trained to discuss future funding options with businesses if their finances suffer from a decrease in customers.
At the same time, some funders have decided to focus their efforts on tightening underwriting and funding channels, applying a conservative approach to which industries and locations will be served.
Velocity Group USA shared an internal memo to its ISOs with deBanked which detailed some instructions to brokers. Among these was the prompt for “our ISO’s to place more focus on essential businesses.” Non-essential businesses being categorized as community and recreation centers; gyms, including yoga, spin, and barre facilities; hair and nail salons and spas; casinos, concert venues, and theaters; bars and liquor stores; sports facilities and golf courses; most retail facilities, including shopping malls.
Placing a limitation upon funding like this has been a hot topic amongst the alternative finance community within recent days. A thread on the online discussion forum DailyFunder featured speculation and arguments over who is and isn’t funding anymore.
With so much of this being hearsay and rumor, deBanked found that asking funders directly whether or not they were funding currently to be the best remedy to this uncertainty. As of the time of publication, deBanked found that LoanMe had suspended funding until April 1 and that 1st Merchant Funding suspended further funding temporarily, with Vice President of Credit Risk Dylan Edwards saying that it would be “completely irresponsible” to continue funding.
In regards to how funders have been dealing with the coronavirus in their immediate surroundings, many, such as RDM’s CEO Reuven Mirlis, have noted that their employees have been offered the option of working from home, while others have made it a mandate to work from home. BlueVine’s CCO Brad Brodigan explained that this decision was part of their Business Continuity Plan and that prior to this they took extra measures so that their office was thoroughly disinfected and that social distancing was practiced within meetings of 5+ people.
Meanwhile Velocity Group USA has brought in Pat Gugliotta, the Commissioner of the business’s local fire department, to help establish contagion prevention protocols, based upon the screening processes practiced in JFK Airport. Explaining that this includes daily interviews with every staff member in the morning which look for trends relating to where they’ve been, who they’ve been in contact with, and how they’re feeling. As well as this, employee vitals are documented, with infrared thermometers being employed to monitor temperatures. “I’m trying to mirror our program to that program because I know the program works,” Gugliotta mentioned in a call.
While this may sound extreme, it must be remembered that this is an unprecedented crisis, meaning most strategies are untested and many funders are open to exploring novel precautions and solutions.
“This is an unprecedented event, which in its own right means you have to look at it differently,” BFS’s Ruddock explained. “I think it’s the sheer scope and speed that we have to cope with here. Scope meaning that this isn’t a hurricane which hits a region for a period of time and causes economic distress, which requires rebuilding, this is something that is international. This is not something that, like a recession, creeps at you over months and weeks and sometimes even signals orders. This is something that is happening with alarming speed. So in that way, these are unprecedented times now.”
This article will continue to be updated with funders who announce and disclose to us changes in their services, so check back to stay updated. Please do reach out if you would like to discuss the status of your company and how the coronavirus is affecting your business.
Get inspired by Brian Holloway’s Total Market Domination, find out how much your company is worth, and learn how to make the dough from the pros in 2020.
Still need a ticket? Register here!
Get deals done, sign up a new vendor, network and more at deBanked CONNECT MIAMI on January 16, 2020