Since: September 2015
Registered sales-based financing provider in VA
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Pearl Capital Business Funding LLC Resumes Merchant Cash Advances After Processing $1.75 B in PPP LoansNovember 5, 2020
JERSEY CITY, N.J. – November 5, 2020 — Pearl Capital Business Funding, LLC, a leading provider of direct financing to small and midsize businesses, today announced that it will resume funding merchant cash advances for U.S. small businesses after suspending funding for a period of time due to the COVID-19 crisis. The move comes after a seven month hiatus during which the company utilized its technology platform to process over $1.75 Billion in SBA Paycheck Protection Program (PPP) Loans.
Pearl Capital provides innovative alternative financial solutions, specializing in the underbanked and subprime business sector. Their financing solutions are available throughout the U.S. to businesses of virtually any industry that are unable to access sufficient traditional financing from banks and non-bank lenders. Pearl’s solutions are not dependent on the business owner’s FICO score and present a compelling solution to underwriting credit even during the current COVID-19 crisis. With the relaunch, Pearl’s ISO Partners can expect lighter stipulation requirements with fewer requested documentation than before and updated pricing. Virtually all business types are eligible for funding from Pearl including high risk industries like auto sales, real estate, home-based businesses, and insurance.
“When the COVID-19 pandemic hit last March, we weren’t sure what our future looked like. With so much uncertainty of the economic climate, like many other funders, we temporarily ceased funding. We pivoted and partnered with Cross River Bank and were able to transition our fully-automated processing and anti-fraud technology to process SBA Paycheck Protection Program (PPP) Loans.” Chief Revenue Officer, Jake Lerner, says, “Using our technology platform, we were able to process over $1.75 Billion in PPP loans for businesses affected by COVID-19.”The Paycheck Protection Program (PPP) was a SBA loan program established under the CARES Act to help small businesses keep workers on their payrolls during the pandemic. The program ended on August 8, 2020 but is likely to resume.
“We’re thrilled to have the ability again to continue to provide financing for companies during an especially difficult time for businesses across the country and give much needed financial support to businesses” CEO, Sol Lax, says, “Pearl did not default on its senior credit line due to its superior underwriting and has added $250 Million in committed financing to expand its activities. If you are a small business and you have survived COVID, you shouldn’t have to shut your doors because you have limited access to capital. We are going to be there for small business both in further iterations of PPP as well as MCA.”
About Pearl Capital
Pearl Capital was founded in 2012 and acquired by private equity firm Capital Z Partners in 2015. Since then, they have become a leader in the fintech industry specializing in short term capital advance solutions for under-banked and credit-challenged businesses, in just about every industry. Over the years, they have provided over 23,000 MCA financings to small businesses across the country, by working with their network of ISOs. Their advanced online application technology platform and machine learning SMB credit score allows them to provide flexible terms and some of the fastest response times in the industry for deals up to one-million dollars. Most recently, Pearl Capital partnered with Cross River Bank to process over $1.75 Billion in Paycheck Protection Program (PPP) loans.
Jake Lerner, Chief Revenue Officer
Pearl Capital was among the many small business finance companies that hit the pause button in 2020.
Now it’s BACK.
The company announced today that it was resuming funding MCAs after a long stretch of facilitating PPP loans, of which it processed more than $1.75B through a partnership it had with Cross River Bank.
“Pearl did not default on its senior credit line due to its superior underwriting and has added $250 Million in committed financing to expand its activities,” said company CEO Sol Lax. “If you are a small business and you have survived COVID, you shouldn’t have to shut your doors because you have limited access to capital. We are going to be there for small business both in further iterations of PPP as well as MCA.”
Pearl expects to resume at full speed rather than with limited capacity and highly restricted guidelines. According to the announcement, “Pearl’s ISO Partners can expect lighter stipulation requirements with fewer requested documentation than before and updated pricing. Virtually all business types are eligible for funding from Pearl including high risk industries like auto sales, real estate, home-based businesses, and insurance.
“We’re thrilled to have the ability again to continue to provide financing for companies during an especially difficult time for businesses across the country and give much needed financial support to businesses,” Lax said.
Pearl Capital Business Funding, LLC has closed on $15 million in financing from Atlanta-based Chatham Capital Management, according to the company. Pearl is a NY-based small business funder that was acquired in 2015 by Capital Z Partners, a private equity firm.
“We understand that despite personal credit issues, many small business owners have triumphed in building successful businesses,” said Pearl CEO Solomon Lax. “Locked out of the traditional bank financing channels, those small business owners turn to Pearl Capital Business Funding to enable their dreams. By partnering with Chatham, we are able to make those dreams a reality.”
Chatham has invested in other companies such as iPayment, Vitamin Shoppe, DirectTV, QVC, Neiman Marcus, and 5-hour energy, according to their website.
Pearl also secured $20 Million from Arena Investors, LP in July of last year.
NYC-based Pearl Capital has secured $20 million from Arena Investors, LP.
In their official company announcement, Pearl CEO Solomon Lax said, “With the support of our outstanding financial partners we can continue to expand our mission of supplying funding to any small business with the desire for capital and ability to thrive.”
Pearl Capital was acquired by Capital Z Partners last year.
It’s a change of scenery, insiders at Fundry subsidiary Yellowstone Capital say about their new office.
The company has officially relocated from 160 Pearl Street in Manhattan to 1 Evertrust Plaza in Jersey City. On their first day in the new location, Jersey City Mayor Steven Fulop made an appearance and posed for a photo with company executives Isaac Stern and Jeff Reece to celebrate their arrival. Aside from outgrowing the NYC office that they operated from for years, Yellowstone was wooed to the State by the New Jersey Economic Development Authority to create jobs in the area in exchange for a tax incentive. The hundreds of employees they bring with them to the neighborhood now will also serve to stimulate Jersey City’s burgeoning economy.
The company originated close to half a billion dollars in funding for small businesses in 2015.
Just one stop from the Path Train’s World Trade Center station, Yellowstone’s new office environment makes it feel as if the company has been transported a million miles away. deBanked was given a tour of the new space, which at 25,000 square feet, was easy to get lost in. One employee said the upgrade from their previous location felt so immense, that it felt like they had moved to Japan.
A clear view of NYC’s Freedom Tower from many of the floor’s windows assures them that they are not that far.
According to Business Facilities Magazine (BF), NYC-based Yellowstone Capital is considering a move to Jersey City and was approved for up to $3.3 million in Grow NJ tax credits over 10 years.
Grow NJ is a New Jersey job creation program that is designed to give the state a competitive economic edge against surrounding states.
BF says that Yellowstone Capital would create 45 jobs.
The move would loosen the grip that Manhattan’s financial district has on the fast growing alternative business financing industry. Currently located at 160 Pearl Street, just steps away from Wall Street, Yellowstone surprised many industry insiders several months ago when their lifetime funding figures of $1.1 billion were published on the industry’s leaderboard.
A move to the Garden State would not be surprising in the midst of all the infrastructural improvements the company has made in 2015.
An anonymous source inside NYC-based Yellowstone Capital revealed the company had recently reached two milestones. One was that they had funded more than 50,000 deals since inception. The other was that they had funded just a hair shy of $40 million in the month of July, a new internal record.
The monthly figure puts them on pace with their competitor Merchant Cash and Capital, who announced having funded $115 million across the second quarter of this year.
Yellowstone’s $1.1 billion+ funded since inception raised eyebrows at the recent AltLend conference in NYC when Lendio’s Brock Blake put deBanked’s industry leaderboard up on the big screen during the event’s opening presentation.
Since then, other funders have shared their figures through public announcements. Coral Springs, FL-based Business Financial Services officially joined the billion dollar club just a few days ago.
Yellowstone’s continued rise can likely be attributed to the expansion of their risk box from high risk to moderate risk. Back in March, company CEO Isaac Stern led a management buyout backed by a private family office that brought on a new executive team. Private equity turnaround expert Jeff Reece came on as the company’s President. Reece is a former Director of Cogent Partners, a boutique, private equity-focused investment bank and advisory firm.
The company is also reportedly on a massive hiring spree after having leased another floor at 160 Pearl Street in Manhattan.
Yellowstone has a strategically diverse business model that allows them to either fund small businesses in-house (on their own balance sheet) or broker them out to other funders. My source says that the 50,000 lifetime deals funded figure includes both.
When the banks say ‘no,’ alternative financing companies are saying ‘yes,’ sometimes. While costs may run high, there is still a limit on risk that a lender like OnDeck Capital and their competitors can accept.
In January of 2011, Kabbage stated their approval rate on volume-eligible applicants was only 55%. In February of this year, they said it’s about 80%. And a year ago, CAN Capital CEO Dan DeMeo told Forbes their approval rate was almost 70%. Similarly, a Biz2Credit report estimated the approval rate for alternative lenders in 2014 to be around 64% on average.
This indicates that approximately 20% – 35% of small businesses are being declined yet again. These are America’s exiles and they don’t fit into the neat little underwriting boxes that alternative lenders have crafted. Being declined by an alternative lender does not necessarily mean the business isn’t healthy or viable, but rather it could be because they exhibit some characteristic that today’s risk algorithms disqualify. Volatile sales activity, short time in business, poor credit, and atypical SIC codes are just a few of the reasons that a business could be rejected by a lender like OnDeck.
Consequently, an entire Plan C market has sprung up to service the small businesses that have been cast aside by the algorithms. And it’s huge. At the center of it all is Yellowstone Capital, a New York City-based merchant cash advance provider that has carved out its own niche. Founded in 2009, Yellowstone was one of a handful of pioneers that introduced ACH payments to an industry that relied entirely on split-processing.
Yellowstone does not publish their annual funding volume, but according to insiders not authorized to speak on the record, the numbers dwarf many industry behemoths including Square Capital, a company that funded more than $100 million in the last twelve months. And there’s some interesting changes happening there behind the scenes.
Last year, Yellowstone gave up an equity stake to a New York-based hedge fund in exchange for capital. Just recently however, Yellowstone CEO Isaac Stern led a management buyout to reportedly better position themselves for growth.
As part of the arrangement led by Stern and backed by a private family office, the hedge fund has been bought out and Stern is the only remaining company co-founder to retain an equity stake.
Additionally, private equity turnaround expert Jeff Reece has come on as President. Reece is a former Director of Cogent Partners, a boutique, private equity-focused investment bank and advisory firm.
Josh Karp is remaining the company’s Chief Operating Officer.
Jake Weiser is staying on as General Counsel.
Above all, the changes are more than just a few new faces in management. Yellowstone has already rented an additional floor at 160 Pearl Street, bringing the total floors they occupy there now to three.
Notably, the company has endured some negative press in the past of which they are well aware, but they have no shortage of supporters. I contacted two ISOs that claim to have worked with them and asked for their opinion on the Yellowstone experience.
Len Gelman of Allied Capital Corp couldn’t say enough good things about his account manager there, “He fights for every deal I submit, no matter how small or how difficult it may be to get done,” said Gelman. “He always takes my calls and responds to my emails and texts no matter how late it may be.”
And Arty Bujan of Cardinal Equity said, “Working with Yellowstone opened a door of business for me that really wouldn’t have existed without their unique approach to funding what some may call less desirable merchants.”
With a new management team and strong capital backing, Stern and Reece appear to be laying the groundwork to scale.
According to company insiders, Yellowstone is also working to expand their box beyond just high risk businesses and plan to service the middle market risk class. That would in effect also make them a Plan B option.
Their new underwriting depth could spare business owners from that second ‘no.’
pearl capital, rapidfinance, rdm capital funding, , bfs capital, principis capital - no new originations, quicksilver capital, the smarter merchant - mixed sentiment whether or not they are currently funding, , other funders that mentioned they will entertain weekly:, 24 capital, clearfund solutions, east shore equities, irm capital, lending valley, queen funding, tvt capital, unique funding soluti...
pearl capital, rapidfinance, rdm capital funding, , bfs capital, principis capital - no new originations, quicksilver capital, the smarter merchant - mixed sentiment whether or not they are currently funding, , other funders that mentioned they will entertain weekly:, 24 capital, clearfund solutions, east shore equities, irm capital, lending valley, queen funding, tvt capital, unique funding solutions, vitalcap fund...
pearl capital, rapidfinance, rdm capital funding, , , bfs capital, principis capital - no new originations, knight capital funding - no weekly due to covid, quicksilver capital, the smarter merchant - mixed sentiment whether or not they are currently funding...