|04/10/2020||IOU Financial applies for PPP lender status|
|03/06/2019||IOU Financial signs $50M facility|
|10/11/2018||IOU Financial surpasses $600M in loans|
|08/23/2018||IOU Financial Profitable, Again|
|07/08/2018||IOU Financial grants options to Ben Yi|
Potential Match Found in deBanked UCC Filer list
|Company Name||Phone number||UCC Alias 1||Alias 2||Alias 3||Alias 4||Alias 5|
|IOU Financial||866-217-8564||IOU Central Inc.|
Neuberger Berman, an investment manager with $374B under management, is acquiring a 15% stake in IOU Financial, a small business lender. As part of the deal, one of the firm’s funds has agreed to purchase up to $150M a year of IOU’s loans over the next two years.
“This investment by a Neuberger Berman managed fund represents a strong vote of confidence in the fundamental, long-term value of our business, and is a testament to IOU’s loan origination and servicing capabilities in addition to its capital markets capabilities” said Phil Marleau, CEO of IOU, in a public statement.
Additionally, Neil Wolfson, a former board member to rival OnDeck, is joining IOU’s board of directors.
IOU Financial approved the re-appointment of all of its current directors and auditors yesterday. The company, however, is currently experiencing challenges similar to other online lenders.
In late May, the company filed its Q1 financials and revealed that the COVID-19 pandemic had put them in an “over-advance position with its financing credit facilities.” At the time, the issue remained “uncured” and “the company received default notices subsequent to quarter end.”
“The Company and the financing credit facilities are working together to remedy the situation,” IOU reported. “Nevertheless, there is no assurance that these initiatives will be successful.”
IOU had furloughed 40% of its full-time employees and implemented a temporary 20% reduction in salary for all remaining employees commencing on April 1, 2020.
The company’s market cap has plummeted to CAD$7 million, down from $18 million in February. The company had previously been on a fairly positive trajectory until Q1 when they cranked up their provision for loan losses in anticipation of the fallout caused by the pandemic.
IOU Financial applied to become a PPP lender on Thursday, according to a note posted to social media by President and COO Robert Gloer.
“We are all hoping the SBA will be able to quickly get FinTech lenders up and running. We have helped thousands of Small Businesses Nationwide since 2009. We are built to deploy capital efficiently and expeditiously,” he added.
IOU Financial originated $41.4M in business loans in Q3, according to the company’s latest published financial statements. The figure is a modest increase over Q2’s $38.5M. IOU also kept up its trend of profitability with net income $1M.
Shares of IOU, which trade on the Toronto Stock Exchange, are valued at around (CAD) 14 cents and equate to a market cap of approximately (CAD) $14M.
IOU Financial originated $38.5M in loans in Q2, up from $32.8M the quarter before. The company said that the figure was actually a 31.8% increase over Q2 2018.
In a press release, IOU CEO Phil Marleau said, “IOU delivered strong loan origination and revenue growth in the second quarter of 2019 and continued to post positive earnings. We remain committed to our strategy of profitable growth which continues to deliver consistent and favorable results since its implementation.”
IOU is traded on the Toronto Stock Exchange and has a market cap of $19.3M.
“It makes you feel old, but I don’t feel that old,” is how Robert Gloer, President and COO of IOU Financial, describes what it’s like to have been in finance since the early nineties. With his career predating social media and the explosion of tech in the workplace that has marked the previous two decades, Gloer could be presumed to be behind the times with regards to digital resources, but the practices of IOU indicate otherwise.
Born from a chance meeting between Gloer and his business partner, Philippe Marleau, at Finovate in 2008, the two men combined their businesses to form IOU, Marleau bringing the tech support and Gloer providing the operations team. Beginning this venture together just before the economic collapse of ’08, the early days of IOU were rough, and it took them a year of operating before even making their first loan.
Saying that “you’re not a true entrepreneur until you’ve put payroll on your equity line,” Gloer now laughs about those first few years. And what’s not to laugh at? With offices in Atlanta and their headquarters in Montreal, IOU is operating in two markets with a staff of 50 employees and has funded $700 million since its founding, averaging just over $15 million a month via small business loans. And they’ve even gone public, claiming a place on the Canadian stock exchange – sans a flashy IPO announcement party.
Those initial years of graft seem to have paid off, and Gloer assures me that throughout their time operating, he and Marleau, the CEO and director of IOU, have stuck to those initial visions and core values they set out to practice upon founding the company: to provide secure loans to good quality debtors with the aid of technology.
In fact, it is the last aspect of this goal that Gloer is keen emphasize. The incorporation of technology in their lending process is the reason why the COO believes IOU competes at such a high level in the industry for a company of its size. Their B.E.S.T. system is an example of this, as it offers direct access to the small business loans world for every player in the ecosystem. Banks, business, suppliers, credit card and payment processors, and more can sign up to B.E.S.T. and shop around to see which party they’d like to deal with.
Built with the ethos of quality over quantity, IOU charges a relatively low entry fee for B.E.S.T., as Gloer asserts that he’d “rather make $1 from one million people, than $1 million from one person.”
Comparing his company’s adoption of technology to the infamous story of how Blockbuster CEO John Antioco turned down an offer to buy Netflix in 2000, Gloer claims that the key to long-term success is a company culture that both looks to the future to see incoming trends and incorporates a willingness to change and adapt new developments within the field.
And it is just that which IOU is doing in Canada. Explaining that the alternative finance scene there is still in its “infancy,” Gloer is anticipating what’s to come as an opportunity to implement the lessons learnt in the American market before the mistakes that yielded them are made. Listing COJs specifically as an example of something so muddled that he’d like avoid them north of the border, Gloer believes Canada offers a chance to build an industry cleanly, without as many of the growing pains he’s contended with throughout his decades-long career.
And with business going well, as well as IOU’s recent entry into a $50 million credit facility with Credit Suisse, it looks like Gloer’s, as well as his company’s, time in alternative financing is set to continue.
Robert Gloer is also speaking on a risk management panel at deBanked CONNECT Toronto on July 25th alongside Merchant Growth CEO and President David Gens.
IOU Financial originated $29.2 million during Q2 2018, according to the company’s quarterly financial statement released today. This is an increase of 11.6% compared to the same period last year, and an increase of 19.1% over originations of $24.5 million from last quarter. This is also IOU’s third consecutive quarter with positive earnings.
“It’s the contribution from our team, our account executives, broker partners [and] product expansion,” IOU CEO Phil Marleau told deBanked as an explanation for the company’s growth.
Marleau said that over the past year IOU has been originating loans for larger amounts and for longer terms, like longer than 12 months. He also said IOU has been expanding into new industries.
Benjamin Yi, who leads IOU’s Capital Markets & Corporate Development efforts, characterized the company’s results as a “mini version of OnDeck,” alluding to OnDeck’s profitable 2018 Q2 earnings report.
Additionally, provision for loan losses (net of recoveries) decreased by 61.2% to $900,000 for the three month period ending June 30, 2018. Marleau said this is largely because the company has been using a more aggressive litigation strategy against businesses that default on their loan obligations.
And the principal balance of IOU’s servicing portfolio (loans being serviced on behalf of third-parties) amounted to approximately $44.1 million compared to $24.1 million in 2017. Marleau said that servicing loans is part of IOU’s business model and that this near doubling of its servicing portfolio in a single year is simply a reflection of the overall growth of the company.
Most of IOU’s revenue comes from making loans, of up to $300,000, to American small businesses. According to the company website, almost half of IOU’s merchants use the business loans to purchase equipment. Other loans are used for business expansion and temporary cash flow. To date, IOU has originated $563 million in loans.
Despite the focus on the American market, the company’s headquarters is in Montreal and its stock is listed on the Toronto Stock Exchange. While IOU’s footprint in the Canadian market is still very small, Marleau expects that to change and is looking forward to expanding in Canada.
“We’re part Canadian,” Yi said.
Marleau, who is Canadian, met cofounder and IOU President Robert Gloer at a fintech conference in San Francisco, and the company’s first loan was made in 2009. Gloer had ties to Atlanta, which is why IOU’s U.S. office is located there. While the company’s headquarters is in Montreal, the Atlanta office is larger and is where the company’s sales operations take place. The company has about 40 employees, but only about ten work at the Montreal headquarters.
IOU Financial reported a net income of $797,198 (CAD) in Q1, according to their latest quarterly financial statements. Despite primarily lending to US-based small businesses, IOU is headquartered in Canada, where the company is listed on the TSX Venture Exchange. IOU’s market cap at the market’s close on Friday, was less than $15 million. For comparison’s sake, rival small business lender OnDeck, currently has a market cap of $438 million.
IOU originated $24.5M (CAD) in loans in Q1, up $2.5M from the same period last year. $21.8M of those loans were sourced “via relationships with third-party business loan brokers,” according to their report.
The company proudly noted a 50% reduction in their provision for loan losses. “This decrease is primarily attributable to lower defaults by borrowers as well as by the smaller size of the loan portfolio,” the report said. “The improvement in the provision for loan losses (net of recoveries) is a result of changes made in 2017 in the Company’s lending policies and in the loan servicing and collection process, which includes an aggressive litigation strategy against businesses who default on their loan obligations.”
In a published statement, IOU CEO Phil Marleau said, “Following the positive results in the fourth quarter of 2017, IOU has delivered even stronger results in the first quarter of 2018. This is a testament to the measures taken to bring down loan defaults and control costs. IOU expects to continue to grow loan originations and generate profits over the coming quarters.”
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