|12/11/2018||Velocity Capital Group secures $15M|
Kosher Guru Meets deBanked
Velocity Capital Group is bullish on crypto as a means of payment. Company President and CEO Jay Avigdor told deBanked that the company is officially incorporating cryptocurrency in two ways:
(1) Brokers can now choose to get paid commissions in cryptocurrency instead of cash.
(2) Merchants can now choose to get funded via cryptocurrency instead of cash.
In both cases, Avigdor touted the speed in which cryptocurrency can change hands versus waiting around for an ACH or a wire.
“Our goal since day 1 of VCG, was to give ISOs and merchants the ability to access capital as fast as possible,” Avigdor said. “With VCG’s proprietary technology, we have been able to change that mindset from ‘as fast as possible’ to ‘the FASTEST possible.'”
The company says it will use stable coins (USD Coin and DAI) to conduct these transactions “in order to limit market volatility” but that depending on the merchant or ISO relationship, they would be open to transmitting Bitcoin, Ethereum, etc.
Merchants getting funded with crypto would still have their future receivables collected via ACH so that part of the arrangement would not change. The underlying business is the same.
VCG alluded to there also being potential tax benefits of taking payment in crypto.
Avigdor believes that among industry peers, VCG is the first to offer commissions in crypto. He further explained that this is only one piece of the puzzle and that there are plans to integrate the company’s technology in a way that will allow merchants to access funding in less than 20 minutes from the time of submission to funds actually being received.
CEDARHURST, NEW YORK—DECEMBER 10,2018–Velocity Capital Group recently secured another $15 million in financing. This will strengthen their ability to provide assistance to more small businesses and organizations. While the name might be new to some, Velocity Capital Group is no stranger to the business world. Servicing small businesses for over 7 years, there have been more than 15,000 clients who’ve received the financial boost they needed due to the available funding from VCG.
CEO/Principle Jay Avigdor couldn’t be happier to reach this point. Jay started the business in a small room of his home with only a laptop, and in just a short period of time has transformed VCG into a large and highly respected financial group that services organizations with speed and dedication. With an aim to merge the finance industry with technology, VCG aims to leave funding at your fingertips. To date, VCG is making strides as one of the fastest growing finance companies in the industry.
When businesses have financial demands, their situation is urgent and must be addressed immediately. Going through a lengthy process that could end up in a loss would be a waste of time, but with Velocity Capital Group, the relationship is taken seriously from the onset. With a staff of over 20 employees, VCG strives to get you what you need when you need it. A few of the industries that Velocity takes pride in assisting include:
- Accounting & Collection Agencies
- Construction, Machinery, Mechanics, & Manufacturing
- Electronic & Media/Entertainment
- Healthcare Services & Rehab Center
- Religious Organizations
- Restaurants & Retail
- Technology & Wireless
- AND MORE!
The $15 million funding access will help VCG build solid foundations and partnerships. With Velocity’s breakdown of available funding ($5mil in series A round & a $10 million line of credit), they’re able to provide more funding for more businesses. In fact, many customers have already stated that the VCG team is “resourceful” and “always available.” Others have even said that they “love the charity aspect” of Velocity, because they give back to aiding organizations monthly. Their attention and consistency prove that they are more than just the average financial group; they’re family! Winston Churchill said it best: “From what we get, we can make a living; what we give, however, makes a life.” Velocity Capital Group takes pride in giving to others so they can ultimately help others make a life.
Companies and small businesses are urged to contact Velocity Capital Group today and see what financial options are available. With urgency and compassion, the knowledgeable staff of Velocity is ready to build your business or brand. The funding is there, the foundation is there; all it takes is one step. That one step can be the greatest decision for success in business.
Velocity Capital Group is ready and able to serve you. For additional information, visit our website at www.velocitycg.com, send an email to email@example.com, or call 833-VCG-FUND (833-824-3863). We’re also available on social media outlets.
As the crypto craze roars on, NFTs are starting to stake a claim in the finance world as a legitimate option for those looking to invest or stash money in a virtual space. The sports world recently took their swing at NFTs, and here at deBanked we minted NFTs of our own early this week. It seems that NFTs have sparked the interest of the media, athletes, and art enthusiasts— but in small business finance, the conversation is only in the early stages.
“I think of it more not so much as a currency, but from what I’ve been reading, more of an investment vehicle,” said Noah Grayson, President of South End Capital, when asked what he thinks an NFT represents. “It’s a way for people to put tangible items in a digital format to get ownership from.”
Grayson says those in his industry have brought up the topic around the office, but it hasn’t made its way into any type of business practices yet. “It’s tough to see how [NFTs] would affect the lending industry at this time, cryptocurrency is something a little more probable in the long term.”
Grayson stressed how difficult small business lending can already be with dollars, and it seems as though the industry just isn’t ready to start conducting business in other types of currencies. “When you consider that many small business owners have no credit score and a large portion of those still pay for things in cash, I think it’s going to be a long time before the industry as a whole considers [crypto] an option to make loans with or compensate partners [with] as a whole,” he said.
“I’d describe it as a digital asset that can be purchased, owned, and used by an individual, giving that individual exclusive rights to the asset,” said James Webster, CEO and founder of ROK Financial when asked how he would define an NFT. “Like any other asset, the price can go up or down over time.”
Although his company has never created an NFT themselves, Webster won’t eliminate the possibility for one in the future. With the interest of the industry and his employees being focused around crypto as of late, Webster can’t keep the crypto and NFT talk out of the office.
“We have a [clever] and nimble-minded staff at ROK. NFTs and crypto like other tradable assets are always being discussed and invested in here,” said Webster. “The team has been buying crypto for years now and I don’t see that slowing down any time soon.”
Webster believes it’ll inevitably make its way into the business with positive effects. “I see it streamlining, as well as making lending and banking for that matter more efficient over time,” he said.
At Velocity Capital Group, crypto has already seeped into the business. The company began offering commission payments to brokers this past August with an immediate positive reception. Velocity Capital Group CEO Jay Avigdor attributes “speed” as the primary use-case of crypto in his business.
“The feedback has been fantastic!” Avigdor said.
With crypto on the minds of fintech gurus everywhere, it’s evident its interest comes from the ability to put the technology in practice. Until these types of things can be borrowed, used to buy goods, or seen as a means of collateral at a mainstream level, the small business finance community will continue to eye their development and evolve if necessary.
One month after Velocity Capital Group began offering broker commissions in crypto, CEO Jay Avigdor says it is taking off. It’s completely optional of course, but already seven of VCG’s ISOs have opted to get paid that way.
“The feedback has been fantastic!” Avigdor says.
In a previous interview with deBanked, Avigdor said that the initiative wasn’t about speculating on cryptocurrencies but instead about taking advantage of the transaction speed. Crypto can change hands faster than an ACH or a wire, for example, and VCG will send funds via a stablecoin so that there is no volatile exchange rate risk.
“Our goal since day 1 of VCG, was to give ISOs and merchants the ability to access capital as fast as possible,” Avigdor said. “With VCG’s proprietary technology, we have been able to change that mindset from ‘as fast as possible’ to ‘the FASTEST possible.’”
One broker attested on facebook that he received his commission from VCG within 5 minutes from the moment the deal funded via the DAI stablecoin.
Even a merchant requested that they be funded with crypto, according to Avigdor, which they accommodated. Payments back to VCG are still done via ACH debit, however.
The market cap of the cryptocurrency industry is currently at more than $2 trillion.
Elliot J Dabah, CEO of NYC-based Merchants Cash Partners, LLC, recently passed away. Known throughout the merchant financing industry, friends and colleagues began collecting kind words to reflect on his life to be able to share them here.
Elliot Ashkenazie, his business partner and best friend, said “Elliot Dabah would step up and help anyone in need whether that be his own employee, another ISO, or a complete stranger on the street. He didn’t keep any secrets so he would have an advantage over others, he simply paid it forward and helped the community as a whole benefit from it. Merchants Cash Partners will work tirelessly to carry on his legacy and his values.”
“Elliot Dabah was the heartbeat of the Financial District and he was an integrated part of my life, both professional and personal,” said Gigi Russo. “Not only did Elliot and I live three blocks from each other, but I first had the privilege and pleasure of meeting him while I was working for deBanked, at CONNECT San Diego. We quickly became close friends. He truly never took advantage of our tight knit friendship. His professional support was a reflection of his character— a respectable person that respected his family, friends and business associates. Elliot wanted everyone to succeed. He believed that friends and business colleagues should support one another to build a viable network.”
Tom Dool of Power Funding, said “Of all of the offices I’ve ever visited, I can honestly say that no other partner of mine compares to Merchants Cash Partners. From the moment I met both Elliots, they were inviting. I could tell right away that they had a special bond of shared enthusiasm, honesty, generosity, thoughtful, caring people.” He adds, “Elliot [Dabah] lived life with such a genuine love for people and getting to know people, discussing higher level ideas, sharing feelings. He was one of the best and I’ll never forget him.”
“Elliot was one of the most welcoming people I had the pleasure of knowing,” says Colt Kucker of Libertas Funding, “and always tried helping out whether it be a customer, myself, or anybody in need. He was a hard worker and will truly be missed by all he came across.”
Justin Friedman of Enova SMB, described Dabah, “Smart, strategic, urgent, generous and wise are a few words to describe Elliot. He was universally popular and a known professional in our industry, which isn’t common to come by. He cared about his customers and business relationships. Elliot’s presence in alternative lending was a positive one and he will be remembered for exactly that.”
Ben Lugassy of SOS Capital states that he was “Always smiling and enthusiastic, Elliot was the embodiment of joyful. A friend with tremendous respect and gratitude, he will always be remembered and in our prayers.”
Paul Boxer of Velocity Capital Group added, “Every-time I met Elliot he had the largest smile, always happy to talk shop and discuss the industry. He was very knowledgeable and had a wealth of information, he will surely be missed.”
Ken Peng of Elevate Funding recounts that Elliot, “was always great to work with. He was always very friendly and understanding when we did review any of his files. He will be missed.”
Gigi Russo, who was instrumental in putting this tribute together, further added that Elliot “treated everyone he came into contact with as a friend.” He has “a sincere, dignified, and affable reputation that will follow him after his passing. He will surely be remembered for supporting his colleagues, clients, business acquaintances, and network. The legacy Elliot has left behind is simple: Respect one another. Support one another. Honesty and hard work are necessities of success.”
Part of Elliot’s legacy is the company he built. Merchants Cash Partners, despite the pandemic, was so successful this year that it outgrew its office space.
“Elliot had a revolutionary style of making this industry a community,” says his partner Ashkenazie. “He referred clients and prospects alike to small firms and national firms, expecting nothing in return.”
Coincidence would have it that a photo of Elliot at a deBanked event was often used in event marketing promotions. As to how that picture came to be used so prominently, deBanked President Sean Murray said that “Elliot embodied the community we were trying to portray. A nice young business professional who radiated positive energy. Who is part of this industry? It’s guys like Elliot. That’s what we wanted everyone to know.
“Elliot totally noticed how often we were sharing his photo,” Murray said. “He told me that he thought that was pretty cool.”
Not even a full year in business, Velocity Capital Group announced that it has secured $15 million in financing; $5 million in a series A, plus a $10 million line of credit. The entire investment comes from a family hedge fund in California, according to Jay Avigdor, Velocity’s President and CEO. Twenty-six year old Avigdor started the company out of his home in February and now employs 18 people in an office in Cedarhurst, Long Island.
Avigdor told deBanked that he started Velocity earlier this year with $50,000 of his savings, having spent nearly five years working for Pearl Capital. Already, he said that Velocity, which finances MCA deals, has funded over $20 million. Avigdor said he started at Pearl shortly after finishing college when he was about 19. (He said he graduated early thanks to credits he used from studying abroad and because he started college at 16). At Pearl, Avigdor said he wanted to get on the phones immediately. But with only two days of training, they wouldn’t let him.
“I thought ‘screw it,’” he recalled. “I only had $16.25 to my name and I wanted [the opportunity] to make money.”
So he said he found an old yellow pages phone book, brought it to the office with his phone charger and just started making calls from his own phone. Shortly thereafter, from his own cold calling, he said he closed a $250,000 MCA deal with an auto dealer in California.
“When I went back to the office the following day, they had two computers set up for me,” Avigdor said.
While Velocity funds a variety of businesses, Avigdor said they most commonly fund medical, technology and construction companies.
Avigdor said that while Velocity uses technology for efficiency, they also have a personal touch. For instance, he said they use an automated onboarding process for brokers, yet the actual underwriting and funding calls with merchants are done on the phone. At least that’s the way it works now.
“We crawl before we walk before we run,” Avigdor said.
He said that they give 10% of the net of proceeds on each file to a charity, which changes each month. Currently, it’s The Wounded Warriors.
Avigdor said tries to follow the advice of a rich, wise man he knows, who told him: “You won’t be remembered for how much gold you had, but for how many gold bars you’ve given away.”
When lending companies faced the tightest squeeze on capital since the great recession, many ran into trouble. Kapitus, having survived 08′, met 20′ with the same discipline that helped them navigate the pandemic.
“Our whole industry was put on a credit watch downgrade, and it’s very exciting that we were upgraded, reaffirmed to the original rating,” Kapitus CEO and founder Andy Reiser said. “Most of the companies, our peers defaulted and went into what’s called rapid amortization and did not make it through to keep their securitization.”
Reiser was happy to report that Kapitus received a rating affirmation from Kroll Bond Rating Agency (KBRA) on Friday. KBRA has removed the Kapitus securities from a Watch Downgrade.
Back in March, the businesses that Kapitus and their competitors funded across the country, faced state mandated shutdowns. Many customers were suddenly unable to make the loan, MCA, or equipment payments that they had been able to make for years.
For lenders that bundled and securitized the loans they made, the value of those loans was called into question.
On March 30, KBRA placed the ratings of 29 securitizations representing $2.1 billion from 10 SMB lending firms on a “Watch Downgrade” due to the economic downturn.
To overcome the warning, Kapitus reigned in and focused on helping their customers. Reiser cited the addition of Jeff Newman from Citigroup to manage the risk team as an example of how the firm has been focused on funding responsibly for years.
“We focused on strong business practices and keeping the portfolio strong, and it paid off,” Reiser said. “We never stopped, we were not lending at the same velocity that we did pre COVID, but we never had a day that we didn’t fund a new deal.”
Reiser said that during the pandemic’s height, the team took a lot of long nights working on new products. One was a “step renewal” that allowed clients to pay installments and build up to the full payment, to make sure they were not overwhelmed. Kapitus also offered extended periods for their healthcare loans, up to 36 months, Reiser said.
For companies like Kapitus, a questionable rating could lead to a rapid amortization event: a sudden call to liquefy the bonds and give back investor money. For some, an event like this will spell the end: most firms don’t keep hundreds of millions or even billions on hand to give back principals in a moment’s notice.
Reiser said out of the ten securities on credit watch, only one other was reaffirmed, due to a renegotiation of terms that bond investors had to agree on. Kapitus made no negation but was reaffirmed due to the success of their business practice, Reiser said.
The securitization was initially issued for $105 million in June 2018, and expanded to $160 million last December, in three classes with a senior class rating of “A.”
Reiser believes that the pandemic, like the ’08 recessions, will see some consolidation and strong companies prospering in a displaced environment.
“I think COVID will teach a lot of other players that were very aggressive in coming down to this market that it’s not so easy,” Reiser said. “I think some of the banks and the alternative lenders that were more eager to come into this market may not be so aggressive at least for a while.”
Nearly three months on from the beginning of the United States’ lockdown, the alternative finance industry is starting to feel a recovery. As states look to ease lockdowns, businesses seek to start back up, and offices are reopening, an element of normalcy, if it can be called that, appears to be returning. deBanked reached out to a number of businesses in the industry to find out how they were plotting their recovery, as well as what they thought of the future for the space and the American economy.
One such company was Everest Business Funding. After experiencing a strong start to 2020 in January and February, covid-19 and the economic shutdown that accompanied it came as a shock to Everest, CEO Scott Crocket explained.
“It’s difficult to imagine an exogenous event outside of our control that could more squarely impact an industry like this,” Crockett stated. “I mean, after all, we provide capital to small and medium-sized businesses all across the United States, all 50 states, every type of small business you can imagine. And we’re cruising along, we had a record 2019, we’re off to a great start with January, February, even the beginning of March … and we really saw it come on in the third week of March, the week that started with Monday the 16th. It started as a kind of a trickle in, but by the end of the week it was more of a tidal wave in terms of the number of small businesses in our portfolio that were calling in looking for some type of relief as a result of what was happening.”
Crockett said that they paused all new funding the following week, out of concern for the company’s ability to generate business while there was a national economic shutdown in place. Since then however, Everest has been slowly getting back to what it was, with employees now returning to the office in waves and discussions being had over when exactly to start funding again, be it late June or early July.
Another firm that halted its funding operations was the New York-based PIRS Capital. Similarly, it was mid-March when the pressure was first felt, and PIRS didn’t return to funding until May 15th. PIRS COO Andrew Mallinger chalked this up to the company’s lack of reliance on automated underwriting processes, saying that although “the industry was leaning towards automatic funding and all these models and 20-second approvals, we weren’t fully invested in that yet. So it was good to see that the old-school approach is back and working again, interfacing with these brokers and really understanding their deals and what they’re bringing to the table.”
Mallinger is also confident going into the rest of 2020. Saying that while the company is maintaining a cautiously optimistic outlook, PIRS is working off the assumption that there will eventually be growth this year and that it is set to continue working from home for however long that may be, on the basis that New York may be one of the last states to return to offices.
Also looking forward is Velocity Group USA’s Trace Feinstein, who believes there will tough times ahead for many in the industry, but who also holds that there are opportunities for those who can make it through.
“Anyone who can weather this storm is going to come out 10 times better than they did going in.” The Chief Syndication Officer said in a call. “It’s an adjustment for our economy, it’s an adjustment for our country, and I think it’s an adjustment for our industry on top of that. So there’s a lot of different changes and things are going to be happening, but I think it’s going to be very good for the ones who make it out of it.”
Feinstein, who said that most of Velocity’s workers are back in its offices, noted that it approached underwriting during the pandemic with thoroughness. Daily underwriting meetings entailed going through each state, looking at what was happening there with infection rates, and discussing how various industries could be affected.
Reporting that applications following the lockdown were actually cleaner than before, with average credit scores going up to be between 650 and 750, Feinstein explained that he pushed underwriters to rely on common sense rather than overthinking their decisions and to treat these deals like they would any MCA application.
And while many funders have struggled through the lockdown period, another part of the industry, collection agencies, have been doing well after an initially tough stretch.
Shawn Smith of Minneapolis’ Dedicated Commercial Recovery has claimed to have grown the company’s portfolio by 100% in 60 days despite a particularly trying period in mid-April. Explaining that the company was two weeks away from having to bring in strict measures to keep things going, Dedicated began getting calls again just in time, with its clients mostly phoning in about MCA deals.
Looking ahead, Smith is anticipating a busy summer and fall as businesses, funders, and the courts come back, but he is worried about a second wave and the alternative finance industry not putting in the precautions needed to stave off the economic impacts this next time around.
“Anyone can lend out a lot of money or put out a lot of money on the street, but your ability to get it back is going to be very important, and you want the fire extinguisher in place before the house is on fire … what you’re seeing in the MCA industry is because it’s just not as aged as the equipment leasing and banking industries … the MCA companies just didn’t have 20-30 year veterans in collections and legal … we’re so concerned with how to write more deals and get more money out there, and not about how to get it back and not about having strong enough underwriting standards and things like that. So when it got stress tested, the pain came back real quick.”
Likewise, Kearns Brinen & Monaghan’s Mark LeFevre claimed that after having a rocky road during the earlier stages of the pandemic and switching to a “plan B” for the year, the collections company is optimistic about going forward. Having weathered what may be the worst stretch without having had to furlough or lay-off anyone, KBM now has brought most of its workers back after a reworking of the office space. A pre-return fumigation, sneeze guards, and temperature-taking upon re-entry to the office building have all been employed after KBM’s employees asked to return to the workplace.
“The industry is changing literally day to day,” explained the President and CEO. “Some of the laws that are passed by the House and by the Senate are changing quicker than I’ve ever seen. I’ve just never seen it before. But I think it’s for the better and we’re starting to see the comeback of the economy, the stock market, employment. The unemployment numbers are really good and, in my opinion, [the numbers will] continue to go down from what we’re seeing in our industry.”
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