Idea Financial’s Co-Founders Weigh In On Their New $84M Credit Facility and Future

Miami-based Idea Financial closed on an $84 million warehouse facility with the Specialty Finance Division of Synovus Bank and Hudson Cove Capital Management. Co-founders Larry Bassuk and Justin Leto said the funds are going right toward financing their pandemic proof SMB line of credit product and supporting their one-of-a-kind litigation insurance and plaintiff-lawyer financing.

“We’re still firing on all cylinders with our flagship line of credit products with small businesses, and Synovus and Hudson Cove are going to allow us to use these facilities to finance the litigation cost finance product,” Leto, who serves as the CEO, said.

The two former lawyers will draw from their experience in insurance, their legal backgrounds, and SMB underwriting to create a product that serves contingency lawyers called Level Esq. Often overlooked, the founders said law firms are just like other small businesses.

“Not only our experience as lawyers but also our experience as fintech lenders; we’re bringing all that expertise to bear here, and this is the culmination of our experience in finance, law, and insurance,” Bassuk, president of Idea Financial said. “Not only is our product going to be revolutionary and the best in market, but the customer experience is going to mirror the experience that our small business customers have.”

They focus on contingency firms — cash-dependent practices where lawyers invest their own money to back plaintiffs in injury and compensation cases. If there is no victory, there is no payout, so their other company, Level Insurance, offered protection for lawyers left holding the bag in the case of failure.

“Larry and I invented a first and only-of-its-kind insurance product that allows plaintiffs lawyers to protect all of their cost investment for their case,” Leto said.

The new brand coming soon, Level Esq., will offer a loan upfront to finance cases, while Level Insurance has lawyers’ backs with insurance if cases fall through.

“We’re providing an actual line of credit, loans, or small business loans for the lawyers themselves, so they finance their case costs. It’s a pretty revolutionary product and we’re doing it the way we financed small businesses,” Leto said. “Lawyers will be able to tap into that fintech side of our business. If it currently takes weeks if not months to get this type of financing, you’ll be able to do it in hours or days.”

In general, Bassuk said the warehouse closing is a sign that the hard work during the pandemic paid off, and Georgia-based Synovus Bank and Jersey-based Hudson Cove noticed.

“Over the last year, 18-months-plus since the beginning of Covid: our underwriting methodologies, our risk management, management strategies, and our operations were validated,” Bassuk said. “And I think that’s also something that Synovus and Hudson Cove noticed is that our business model, our portfolio performed exceptionally well under stress and during Covid, and I think that’s another contributing factor that led us to where we are.”

Leto and Bassuk recently starred in a deBanked TV docuseries about doing business in Miami.

Outside the Box: Idea Financial’s Unusual Path to Alternative Finance

From left: CEO Justin Leto, President Larry Bassuk, COO Michael Zevallos

How many lawyers does it take to start up an alternative finance company? Two, according to Idea Financial’s Co-founders, Justin Leto and Larry Bassuk.

Idea, a Miami-based company which offers lines of credit to SMB owners, is the product of Leto and Bassuk’s partnership over the course of years, the latter told deBanked. “We took a leap of faith and left our practices and we began developing this business out of the conference room of our own firm.” But before that, the pair worked together as both lawyers and entrepreneurs.

Beginning in 2011, they met when Leto was already running his own practice and Bassuk was working as an associate for a different firm on the same floor. What started as a chance meeting developed into talks of what’s missing from their industry, which ultimately led to their early ventures together: their own legal firm, Leto | Bassuk, and Level Insurance.

While the former of these is no longer operating, due to their focus shifting to Idea, Level is still providing services to those looking for a niche form of insurance. Established in 2016, the company offers Litigation Cost Protection which covers those lawyers who work on contingency, this being the agreement of them being paid a percentage of the assets they recover for the client, thus earning nothing if the client loses.

Born from Leto and Bassuk’s own experiences as attorneys, Level Insurance provided that initial entrepreneurial step outside of a law firm. And while it afforded the comfort of overlapping with the legal industry, their decision to go into alternative finance brought with it a new marketplace as well as new challenges.

Although it was founded in March 2017, Idea Financial’s first year in business was largely spent working out of Leto | Bassuk’s conference room, figuring out strategies, technology, and credit models; as well as making key hires and developing their product. In fact, it wasn’t until January of 2018 that Idea made their first loan. Initially backed with $20 million by Warsaw-based Idea Bank, which specializes in servicing small businesses, Idea Financial has since secured another $70 million from the fintech bank, Cross River Bank, and has funded $50 million to nearly six hundred businesses.

Now at 35 employees and with a new office beyond the walls of the old conference room, Leto asserts business is going well despite the odds having been stacked against them. “Some would have called [Idea Bank] crazy because they gave two people who were from outside the space this kind of money to build a business and lend money without any strict covenants. So, Larry and I were left to make our own rules.”

And looking forward, Bassuk is confident of their future, lauding much of the company’s strength to the diversity of their workforce, with recruits from Montenegro, Russia, Colombia, and Venezuela, and their unique backgrounds. “We’re all about recruiting top talent, all about diversity of thought.”

“We’re not from the finance space, we’re not from the alternative lending space either, we came at this opportunity with a different approach.”