|05/13/2021||Video: deBanked went to ROK Financial|
On The Scene At ROK Financial
Great River, NY: ROK Financial, a leader in the alternative and commercial lending space is excited to announce their newest partnership with BNB Bank’s Cannabis division. This new partnership allows for ROK Financial to offer direct checking and savings to Cannabis businesses through BNB Bank.
“This new partnership is truly filling a void within the Cannabis industry” says James Webster, CEO of ROK Financial “Federal regulations make it near to impossible for Cannabis related businesses to utilize traditional banking methods. We’re proud to partner with a financial institution that sees the value and need within the industry.”
BNB Bank, headquartered in Bridgehampton, NY has 39 locations from Manhattan to Montauk. BNB Bank provides the resources of a strong financial institution, exceptional customer service, and access to a suite of leading-edge money management tools. They are publicly traded on Nasdaq (BDGE) and have a 5-star rating (Bauer Financial). Peter Su, Vice President – Private Banking BNB says: “This new relationship with ROK Financial allows us to service a wider variety of clientele. We’re excited to work with ROK Financials existing Cannabis clients as well as attracting new relationships through this partnership.”
A large majority of traditional institutions tend to shy away to offering traditional banking to the industry as a whole due to the lack of regulations and financial risk they may face. Banks also risk losing their master account with the Federal Reserve due to the ‘risk’ of the industry. “BNB Bank has a board approved Cannabis Banking Policy that we strictly abide to, and have established a compliance monitoring program providing seed to sale regulatory support to ensure we all are in compliance” says Su “We are happy to help provide needed resources to these thriving businesses.”
About ROK Financial
ROK Financial’s team committed to establishing ROK solid relationships with our clients, lenders, and partners. By providing the best financing solutions available to business owners while creating a positive association with business financing. Through our streamlined process, revolutionary technology and educated team of experts, we support business owner’s ability to create new opportunities. ROK Financial is proud to empower the heartbeat of our country, our small businesses.
Over the past several months the state of the economy has been by no doubt uncertain. With unemployment hitting record highs and Coronavirus cases still on the rise, business owners all across the country have been faced with many difficult decisions regarding their livelihood.
Finding business financing options during these uncertain times can be challenging and risky to not only business owners, but the banks and lenders they choose to work with.
ROK Financial truly understands the uncertainty a business owner feels during these current times. Having derived themselves from a company split back in August, the team is helping other business owners just like them navigate these unchartered waters.
“We have been working tirelessly with our lenders and partners over the past several months discussing different ways we can continue to better service our clients.” Says CRO, Patrick Manning of ROK Financial “The relationships we have built over the years allows us to become quite versatile with our product offering, in turn allowing us to better serve our business owners. That is why we are extremely excited to announce our exclusive partnership with Doug Hood, SBA Loan Consultant LLC. This unique partnership opens up direct SBA access to clients for SBA products $350,000 and above.”
Doug Hood has been facilitating SBA Loans for more than 35 years, resulting in more than $20 million in SBA Loans distributed to business owners annually. Hood said he connected with ROK via LinkedIn, “I’m on Linkedin way more than I should be, we connected at 10 or 11 o’clock at night, and we hit it off.” Says Hood. Excited at the fact that ROK offers short term financing that Doug himself would now be able to leverage in addition to his SBA Loan offerings for his clients was a win-win.
Doug now sits as the official SBA Loan Consultant under the ROK Financial umbrella for deals $350,000 and above. This unique relationship provides greater opportunities for business owners from purchasing existing businesses, refinancing existing debt, starting a business and much more.
“The worlds of Fintech and SBA have collided for the greater good” says Manning, “streamlining and modernizing a once antiquated process, which eliminates the frustration that comes along with long-term lending.”
Unfortunately, Deleting Your Business May Not Be An Option One Can Risk.
In March 2021, deBanked revealed that 7.5% of DailyFunder’s user base that had existed in March 2020, was lost during the pandemic. DailyFunder, of course, is the most widely used forum for small business finance brokers and the statistic offered one of the most compelling insights into the damage inflicted on the industry.
A loss was defined as a user whose email address ceased to exist. It was either deleted or the domain name was not renewed. It was a startling revelation. And yet, in a sign of optimism, DailyFunder added more new users in that 12 month time frame than were lost.
And yet, is anything ever truly deleted in the digital age? And how did it come to pass that the owners of these companies believed deletion to be a preferable outcome to transference? Surely as a thousand brokerages closed, there would have been an eager buyer to scoop them up, even if the sales price was for pennies?
And so I arrived at a theory, that companies that simply wound up and disappeared rather than sold themselves off, probably left behind a digital footprint that still drew in prospective customers, a path that ultimately led nowhere. A competitor might rejoice at that outcome but it’s not exactly a net gain because that customer may have decided to go somewhere else or nowhere else instead. Someone else’s loss wasn’t their win. Even the customer was a net loser. That could be resolved, of course, if the competition simply acquired the expired domain names of their fallen competitors, something that could be reasonably achieved for the price of ten bucks through any domain name registrar.
Outside of the small business finance industry, such tactics are commonplace. One can simply go on Godaddy’s domain auctions to see the never-ending revolving door of expiring domains which are often ranked and priced on the basis of how much traffic they stand to generate, mainly because of the past owners’ efforts.
According to WhoIsHostingThis, 70% of all web domains fail to be renewed 1 year after they’re purchased. “[41% of these expired domains] go on to be snapped up and registered by other users to potentially benefit and profit from,” they say. And there is nothing controversial about this. This is simply a standard of the world wide web. Your fallen online business is recycled as someone else’s marketing tool.
Applying that math to the small business finance industry at hand, that would mean that of 1,000 brokerage failures, 41% of the expired domain names are going to be acquired by someone else or they already have been. And if the expired domain only costs $10 (and they’re not all this cheap), then theoretically one could acquire the web traffic of 410 failed brokers for roughly $4,000.
The realization led me to conduct a controlled experiment, one in which I would try to prove this theory for a deBanked story.
I bought roughly twenty expired domains, intentionally leaning toward older ones, domains that had been expired for 2-10 years rather than recent casualties of the pandemic. Once completed, I jotted down my hypothesis, that these domain names probably produced some level of prospective customer traffic.
When my experiment concluded, I became alarmed, even sick, over what the results taught me. Deletion, I learned, is an outcome that no business, let alone a financial services company, can afford to surrender themselves to.
Among the first steps taken was to create a “catch-all” email account on each domain so that if a former owner of a domain came along and tried to contact me, I would get it no matter which address they tried and that I would be able to tell them that I had acquired it accordingly and even tell them my theory!
No marketing or anything was done for any of the domains. I simply acquired them and let them sit stagnant. I did not resurrect whatever their old websites were. And yet, I received thousands and thousands of emails, none from what I could tell were from former owners.
It’s important to state that I did not use these accounts to actually do anything, but that these vulnerabilities came to light by virtue of monitoring the inbound emails these domains accrued.
Some domain names still had control of social media accounts like business facebook pages and twitter accounts. Someone could not only acquire your old domain, but use it to resurrect and use dormant social media accounts, including being able to view all past private correspondence on them. Yikes.
Some domain names were still attached to active bank accounts, credit card accounts, or financial services. Correspondence regarding these accounts was still being transmitted to them. When you delete a domain, you need to make sure its access is revoked from every account you have, especially bank accounts. Some received NSF notices or were being subject to debt collection efforts.
Every domain name was subscribed to newsletters or communities or some service in which one could use to learn personal information or business information about the previous owner.
Unknown but likely is that some of these domains may have been the “lost password” email address of record for other accounts online, a particularly troubling thought.
As the litany of stroke-inducing vulnerabilities piled up, then came live correspondence. Lenders wanted to know where to send a still-owed commission, a borrower was reaching out for customer service, old business partners were trying to rekindle past relationships.
Presumably such domains could give someone access to portals or databases where previous customer data was held. This implies that not only is the old domain owner at risk but that business vendors that had not disabled access to their systems for the defunct users could also be at risk from nefarious actors now in control of email addresses belonging to former customers.
A nefarious actor could surely dream up still more ways to carry out compromising acts. I disabled incoming email altogether for the domains pretty soon into my aforementioned discoveries so that emails to those domains would simply bounce back and indicate to the sender that there’s nobody there anymore.
And my original hypothesis had been blown to smithereens. These domains generated no material web traffic of note, except for probing “bots” instead of human users. What I thought might be a hidden source of web traffic, a clever insight on internet marketing 101, instead turned out to be a glimpse into a business’s worst nightmare.
No matter how much one’s business has failed, control over the domain name should be preserved at all cost, that is unless, all of the above vulnerabilities are addressed first and completely.
Originally, the costs of this journalistic experiment were to be recouped by simply reselling the domains onto the public market for fair market value. Instead, they were simply cancelled, cast back in the sea anonymously, where anyone else could buy them and do whatever they want with them. I, however, made no effort to alert anyone’s attention to them.
The publication of this story was delayed as I, the journalist, had to weigh the merits of disclosing my findings. But as the data says, 41% of expired domains are going to get snapped up anyway. And true to form, I was actually outbid by other unknown buyers by some of the original domain names I had hoped to acquire for my experiment. A financial service company’s domain and all the vulnerabilities with it, were sold to bidders willing to pay $30, $40, or $50+ versus my $10-$20 or so budget. That seems a terrifyingly small cost. And I highly doubt they were journalists.
Perhaps those domains are generating web traffic, but if they’re not, one has to ponder why someone would want to acquire the lapsed domains of so many dead financial service companies. And post-pandemic, there are too many to count.
If the death of a thousand companies has taught me anything, it’s that even business failure needs a well thought-out security plan. Otherwise one risks death by a thousand cuts.
IOU Financial originated $12.1M in funding to small businesses last month, the company revealed. It was IOU’s biggest loan volume month since the beginning of the pandemic.
The figure was included in an announcement regarding the company’s intention to repurchase up to $2M of Convertible Debentures.
“The move to repurchase corporate debt comes after a year of strategic initiatives as part of IOU’s Pandemic Resilience Plan that focused on reducing corporate expenses while reaffirming commitments from its diverse portfolio of funding sources and capitalizing on new opportunities to continue to support small businesses in 2020,” IOU said.
“IOU’s response to the COVID-19 pandemic in 2020 (‘Pandemic Resilience Plan’) put the Company in a position of strength to consolidate its stake in developing the opportunities ahead,” said Phil Marleau, CEO. “We are proud to be able to stand with our network of brokers and small business owners as we prepare for the economic recovery with great optimism.”
Before the pandemic, IOU originated $154M in funding for all of 2019.
United Wholesale Mortgage (UWM) and Rocket Mortgage are still going at it, this week heating up to a new boiling point.
UWM announced on Facebook Live Thursday that it would not partner with brokers who work with Rocket Mortgage or Fairway Independent Mortgage Corp. CEO Mat Ishbia gave brokers until March 15th to sign a loyalty document to pledge their allegiance to the UWM team.
“If you work with them, can’t work with UWM anymore, effective immediately,” Ishbia said. “I can’t stop you, but I’m not going to help you, help the people that are hurting the broker channel, and that’s what’s going on right now.”
After competing Superbowl ads, it looked like the competitors were peacefully building broker networks, but now brokers have to pick a side. Rocket Pro TPO VP Austin Niemiec told the Housing Wire that UWM is attempting to manipulate the broker market.
“What UWM is attempting to do is really manipulate the market and have brokers swear allegiance to one company and literally give them financial penalties if they don’t listen to them,” Niemic said. “That harms their ability to compete, and it harms the consumer. Make no mistake about it, this was a move to benefit one company and one company alone, UWM.”
The feud comes after the stock price of Rocket Companies, Rocket Mortgage’s parent company, spiked in price. Founder Dan Gilbert briefly placed number 16 in Bloomberg’s Billionaire Index.
Maryland MCA Prohibition Bill Morphs Into MCA APR Limit, Broker Licensing, Double Dipping, Uniform Disclosure, and Go to Jail BillFebruary 18, 2021
Plans to enact “prohibition” in Maryland on merchant cash advance transactions abruptly came to a halt last year, but the legislature there has brought the issue back front and center in 2021, designing a system of prohibition while dropping the actual word from the name.
No MCA transacted in the state would be permitted to have an estimated APR that exceeds 24%, for example. The penalty for violating such a statute can be imprisonment for up to 3 years.
Newly introduced House Bill 664 (SB0532) would “prohibit a person from engaging in the business of making or soliciting a sales-based financing transaction unless the person is licensed by the Commissioner of Financial Regulation” and would require that an applicant “for a license having $20,000 in available liquid assets and to have demonstrated a sufficient level of responsibility to command public confidence and warrant faith in the honest operation of the business.”
The 26-page bill includes a laundry list of requirements and restrictions like specific disclosures, how to calculate a forward-looking estimated APR on an MCA, and a limitation of 24% on that APR.
The bill draws heavily from the recently passed law in New York, going so far as to copy and paste the section requiring MCA funders to disclose if there is literally any “double dipping” in the contract.
The Commissioner of Financial Regulation would retain sole authority to judge compliance with the law.
A year ago, millions watched as Rocket Mortgage and United Wholesale Mortage (UWM) went head-to-head with competing multi-million-dollar ads. This year, they will both return, but it looks like they might play nice after a grueling pandemic.
Last year, Rocket appeared for their third consecutive Super Bowl, but then in an upset came the #BrokersAreBetter ad campaign. UMW called out their biggest competitor: “Playing with rockets is great when you’re a kid, but when it’s time to get a mortgage, you quickly realize a rocket is complicated and expensive,” and promoted FindAMortgageBroker.com.
It was a jab that earned millions of tweets, but this year Rocket has a chance to reply, and “double down” with two ads, this time highlighting local brokers as well. Rocket Companies today launched a national mortgage broker directory on its website.
“The directory not only includes the 43,000 individual loan officers who work with us but every mortgage broker in the country,” said Austin Niemiec, the executive vice president of Rocket Pro TP, in a statement. “This new resource is not about us; it’s about giving consumers more choice and assuring they know how an independent loan officer in their community can help them.”
UWM is also running an ad showing an imaginary tinder-swiping house hunting app, again featuring the FindAMortgageBroker.com directory.
“We believe we’re the one genuine partner of mortgage brokers nationwide,” said Sarah DeCiantis, chief marketing officer of UWM, in a statement. “We thought this ad would not only be relatable and entertaining given the pandemic’s acceleration of online dating but also educate consumers that brokers are their number one resource for finding a mortgage that fits their financial situation.”
Both firms are deciding to buy ads while other major brands are pulling out; For example, Budweiser’s decision to put ad money toward covid vaccine distribution. These brands will be saving money, as a 30-second spot during the Super Bowl runs for an estimated $5.5 million, the AP reports.
Next year’s Super Bowl 56, will be played in SoFi Stadium.
In Part 2, we’re going to focus on 3 major areas:
(1) What is Factoring and How Does it Work?
(2) What Are the Costs?
(3) How Do You Qualify?
We’re also going to touch on HOW TO find factoring funders.
What is Factoring and How Does it Work?
Factoring actually dates back to 2000 BC but got going in the US during the 1600s when colonists sought “advance payments” on tobacco, cotton, etc., shipped across the Atlantic to England. Today, it’s a TRILLION DOLLAR INDUSTRY worldwide, involving commercial banks, asset-based lenders, Fintech companies, and private hedge funds all over the world. And a million years later the purpose of factoring is the same; speed up cash flow by leveraging receivables, while waiting to get paid.
In a nutshell, much like an MCA, factoring is an advance against “future invoice proceeds.”
However, unlike an MCA where the advance is largely based on bank statements, with factoring, advances are based on the number of confirmed invoices the merchant has outstanding with their approved B2B customers. The invoice(s), which is the asset, serves as COLLATERAL.
So, while an MCA funder “looks backwards” at bank statements to help determine eligible amount, the factoring funder “looks forward” to determine eligible amount based on approved invoices.
Factoring advance rates typically range from 70% to 90% of the invoice face value, and are based on volume, industry type, etc.
There are two major elements required for factoring to work. The first is the merchant must be doing business with a credit-worthy B2B customer. Approval isn’t based on the financial strength of the merchant, but on their customer, i.e. the company paying the bill.
The second major element is that, in addition to being credit-worthy, the customer must agree to send invoice payments DIRECTLY to the funder. This provides the funder with an assurance of payment and substantially reduces the risk of re-payment or default.
So, unlike an MCA where payment is on a daily or weekly basis, the factoring advance has NO PAYMENTS, and actually pays itself off once the invoice has been paid. The funder then deducts the advance along with their fee and wires the balance to the merchant.
With no payments and invoice proceeds automatically paying off the advance, I refer to this as a “SELF LIQUIDATING LOAN”. It’s also “ELASTIC”, which means the more confirmed invoices the merchant has outstanding, the more funding they are eligible to draw. It’s like having a revolving LOC with no payments………of course unless the customer doesn’t pay, right? Good question!
So, here’s the answer: There’s actually two types of factoring; (1) RECOURSE FACTORING, which means if a customer doesn’t pay the invoice, the Merchant is financially responsible for the advance, and (2) NON-RECOURSE FACTORING, which means they’re not.
Here’s the process in a nutshell: Merchant submits app and doc checklist for preliminary underwriting approval. Funder issues term sheet, and if accepted by Merchant, underwriting and due diligence is completed. A closing and funding docs package are submitted to the merchant, and upon execution, the funder is prepared to start confirming and funding invoices.
How long does it take from start to finish? Depends on how much hair there is on the file. A clean file can take as little as 5 to 7 business days. A file with a lot of hair can take much longer. We actually had a $13 million file funded in 48 hours! That guy was pretty happy and so was I. It was an acquisition with a deadline. So, here’s what to tell your merchants with regards to timing: “funding is not calendar-related, but event related”. In other words, once the required events are completed then funding can occur.”
What Are the Costs?
There are several major factors that determine cost, rate, terms. volume, invoice size and funding frequency, industry type, risk, etc. Every funder has their own respective rate and fee schedule. Some charge application/due diligence fees while others don’t. Some charge origination and/or admin fees, while others don’t.
Some funders base their pricing on APR, with rates as low as Prime + 3 to 5%, while others have all-in rates typically ranging from 1.5% to 3% per month. After the first 30 days, monthly rates are typically broken down in 10 or 15 day increments (pro-rating). As a result, the ACTUAL COST of factoring in dollars and cents, is based on the amount of time the advance is outstanding, from the funding date to the date the invoice payment is received by the funder.
Here’s an alternative perspective on cost: Factoring is like “renting money on a daily basis,” where the funder essentially takes “equity in the transaction” versus equity in the business. Comparing the bottom-line cost with the bottom-line benefits is the key. But at the end of the day, “the highest price you pay for money is the price you pay for the LACK of it”.
Just like with MCAs, make sure you understand the rate structure, terms, and fees charged by your factoring funder, and how to calculate the cost in dollars and cents as well.
How Do You Qualify?
Factoring approvals have 3 components: The first is the merchant. Again, every funder has their own approval criteria and document checklist. Some require minimal info, while others ask for EVERYTHING including a pint of blood. While most only require one month bank, approval is not based on deposits, or how well they manage their account. Remember their primary focus is on assessing the quality of the receivables, determining if they have sufficient gross profit margins, ensure they are in good standing, and address any “deal killers”, i.e. tax liens, judgments, or UCC filings in first position, which is where they need to be, in most cases. (We actually have funding partners who will factor in second and third positions)
The second factoring approval is the merchant’s customer(s), typically referred to as the debtor. This is determined by the funder who looks at things like D&B, PAYDEX Scores, and other proprietary industry databases. In some instances, a lack of secondary financial/credit information on the customer can be offset through their payment history with the merchant. In other instances, the funder may require bank and trade references if no history exists. Candidly speaking, best practices by the merchant says they should already be doing the same thing; i.e. credit qualifying their customers, whether they need funding or not, unless it’s a large, well established company or government agency. The fact is, extending terms to someone you don’t know can be risky because ‘all businesses may not be good businesses.’ Let’s face it, it’s all about getting paid, right?
Ever heard this horror story; “I need an MCA because I got burned by one of my customers who strung me out and never paid me!” Too bad. They should have picked up that $100 bill off the street! Just kidding!
The third factoring approval is on the deal itself, i.e. the purchase order or contract the merchant has with the debtor. There are over 15 different things the funder will look at to identify existing or potential funding issues. Here’s an example. I recently got a referral for a client who had 63 different purchase orders going to 63 different locations for the same large customer, but BEFORE he started shipping, half the orders had already passed the CANCELLATION DATE! What do you think the chances are of the deal being approved for funding? Don’t know yet. Will let you know when I get to part 3 of the series. Keep your fingers crossed and so will I.
Typical things the funder looks at are payment terms, default clauses, customer signature, offset clauses, just to name a few. If you’d like a complete list, just shoot me over an email.
How to Find Funders
Finding factoring funders is easy. Just google FACTORING and you’ll get a whole bunch. What’s NOT so easy is determining the “best fit” for YOUR merchant because one size does not fit all. Over the years, some of the biggest horror stories I’ve heard from both funders and clients was a relationship that went bad because it was not the best fit. But remember this; “just because you picked the wrong spouse doesn’t mean getting married is a bad idea.” Determining the best fit is one of the key functions for your factoring brokerage business.
Some funders you will find specialize by industry, i.e. transportation, medical, staffing, construction, while others don’t. Some can move quickly while others take two weeks. Some are more flexible than others. Some focus on A-credit Merchants and have the lower rates, while others work with start-ups. Always find out UPFRONT their approval criteria and constraints. Shoot over an email and I’ll send our list of the Top 10 Questions to Ask Before Selecting a Factoring Funder.
Loan Broker-Remote Sales...
rok financial is looking for sales representatives nationwide to join our team. work remotely as an independent contractor, aggressive commission stru...
Rok Financial is a new site sponsor...
please welcome rok financial as a new site sponsor. to learn more, visit: :cool::):cool:...