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United Capital Source CEO Jared Weitz Discusses The State of Small Business Finance

September 24, 2020
Article by:

Jared Weitz, the CEO of United Capital Source, recently sat down (virtually) for an interview with me to discuss the state of small business finance. During it, Weitz makes an alarming prediction, that pandemic related events will lead to 50% of all restaurants permanently closing. You can watch our full talk below:


United Capital Source CEO Jared Weitz Appeared on Fox News

April 21, 2020
Article by:

This week, Jared Weitz, CEO of United Capital Source, appeared on Fox News to talk about the PPP, EIDL, and small business lending. Video below:

Bizfi Alum Jared Weitz Reflects on Demise of Former Employer and Rise of UCS

October 9, 2017
Article by:

Jared Weitz United Capital SourceJared Weitz has come a long way since his earlier days as one of the original Bizfi employees. Today he’s at the helm of online funding marketplace United Capital Source (UCS), which has been on a tear since deBanked last spoke with Weitz a couple of years ago. The UCS founder and chief executive took some time to revisit with us about having to painfully watch the demise of his former employer, which is where he cut his teeth in this business, and the rise of his own company UCS as a funding marketplace.

In some ways, the more things change the more they stay the same. Since the last time Weitz spoke with us, the company’s location remains in the heart of Times Square in New York, and UCS has grown its staff by only four people including two sales reps. What has changed, however, is the amount of funding that the company has done and the size of the average transaction, all of which have blossomed.

“When we first spoke a few years ago we were doing $8 million to $10 million a month in funding volume. Now we are doing between $14 million and $16 million per month,” said Weitz.

He added that where the company differentiates itself is that while a few years ago the products they were selling were predominately in the sub-prime space now they sell other products, which allows merchants to “swim upstream” when they qualify for that.

The result has been bolstered partnerships and product offerings and an average loan size that has jumped from $30,000 to $40,000 per deal to a range of $500,000 to $2 million.

“We opened up the funnel to the kind of relationships we’re able to broker and the kinds of financings we’re able to offer. We’re playing in the field of SBAs, account receivables financing, lines of credit and asset backed loans. By offering these products our volume has jumped significantly and allowed us to talk to different referral partners.”

UCS does all of its own marketing and generates leads for their in-house sales reps. Those sales reps take a file from open to close and they analyze the small business owner’s needs on a consultative call.

“We understand their business and their pain points. The first question we ask isn’t how much do you need but what’s paining you in your business today that we can help you with?”

One such business owner recounted his experience with UCS to deBanked, saying that traditional banks were “an absolute pain” to secure funding. He spoke of the “very stressful” and time-consuming process of applying for a loan, saying he doesn’t have time to “jump through a million hoops to get a loan.”

Jared Weitz deBanked Magazine Cover United Capital Source

“When I was initially looking to curb my temporary cash flow problem, I searched online for the best alternatives to traditional bank loans. I read all the reviews on companies and decided to call UCS,” the business owner told deBanked, adding that he’s been a UCS repeat customer for a number of years and is especially fond of the ease at which the process is completed.

“I could literally call Jared today and have six figures in my account tomorrow. The best part is the pay back process. They only take funds when I run credit card transactions. So, in my slow months, I don’t have to stress and worry about repaying the loan. UCS is a perfect fit for me,” the business owner said.

Eye Opener

As the seventh or eighth employee of Bizfi, Weitz really has been part of the evolution of online funding. He says the rise and fall of Bizfi has been an “eye opener” for him.

“It caused a bunch of funding companies to be a little gun shy when it comes to funding. I told my guys this too shall pass. People are shaken and wondering if it’s a larger global issue. Thankfully it’s not a global issue. There are plenty of funding companies that are well backed that are still funding. My group is well able to pick it back up. We have signed up with more funding companies to increase our offerings and make sure we have no concentration issues,” said Weitz.

And although he left the company to eventually launch UCS, which has proven to be a prudent move, he has nothing but respect for his former employer.

“My history there is very deep and I’ve got a genuine love for the founders of the company. It’s where I cut my teeth. I was really sad the day I heard they’re not funding anymore.”

In fact, Bizfi was one of the funders that UCS counted among its partners.

“We had a good book there. We started to see problems and began to shift where our new business was going. Thankfully it didn’t affect me. But it showed me that you should sign up with more funding companies. If you think the mix should be X go 50% more and be super cautious. This approach has worked out for us,” he said.

Weitz has advice for other funders that might be looking to grow at lightning speed.

“Someone that’s growing so fast while they’re also innovating and looking to close larger transactions that bring them to a bigger place – that’s hard to do all at once. Driving at 200 MPH either works out well and takes you to the finish line or it doesn’t work out really well. It’s really unfortunate that it didn’t work out for them.”

jared weitzDeal Competition

For its part, UCS competes with the likes of LendingTree and other online marketplaces, but that seems only to add an ounce of perspective to Weitz and the UCS team, driving them to adjust and remain nimble so that they can get the next deal.

“Healthy competition is good for us. We welcome anything like that. Some of my best learning experiences have been when we were beat out on a deal. I call the merchant personally and say hey, who gave you the deal? Honestly, I want to sign up with them and offer those rates to my clients. We form a friendship with both the funder and the small businesses,” he said.

UCS also counts some high-profile funders among its partners.

“We’ve worked with some funders forever and it’s been great. But we really had to also find folks that offer certain products but at a cheaper rate,” said Weitz, pointing to the scenario of a merchant having a few of those loans under their belt and improved credit as a result. “They are being solicited by depository banks and can qualify for that rate. We don’t want to lose the relationship. My thought process is sign up with similar folks with that product and when the time comes we can swim the merchant upstream.”

For instance, not all funders offer SBA loans but UCS has been doing so for the past two years. “It’s really kind of taken off for us over the last year. The same thing with accounts receivable and future order financing.”

UCS acts as both a broker and investor in their own deals, so they have a vested interest in the underwriting standards. “Investing with some of our funding partners on the syndication side allows us to have buying power and to take an actual interest in the merchant we’re dealing with,” said Weitz, adding that UCS takes a hybrid approach offering both a fully automated underwriting process for those merchants who want it but also having the capability to talk to the business owners, which is what the large majority of business owners prefer.

Meet the Source: How Jared Weitz and United Capital Source became one of the industry’s fastest growing shops

October 23, 2015
Article by:

This article is from deBanked’s September/October magazine issue. To receive copies in print, SUBSCRIBE FREE

Jared Weitz came from humble beginnings and nearly settled for a humble fate. But associates say an ordinary, uneventful life wouldn’t have suited him – he works too hard and figures things out too quickly.

Almost ten years ago Weitz, 33, was parking cars to earn money for community college. After finishing at St. Johns University, he almost made plumbing his career. But now he’s CEO of United Capital Source LLC, an alternative-finance brokerage with deal flow of between $9 million and $10 million a month and an annual growth rate of over 65 percent.

Business associates, former bosses and his small cadre of employees all seem to revere Weitz for his honesty and straightforwardness. They consider him a personal friend. They say he continues to grow as a businessman and as a human being while taking pleasure in helping others do the same.

Jared Weitz United Capital Source deBanked Magazine

Geographically, Weitz has the good fortune to know where he belongs – the city of New York is in his DNA. “Every time I fly back,” he said, “I’m so happy to land.”

His love affair with the city began in Brooklyn. He was born there and raised in a Brighton Beach apartment in the shadow of Coney Island. When he was 16, the family moved to Oceanside on Long Island.

As the second of six children, Weitz had to come up with the money for college on his own. “My older sister and I had to pay our way,” he said. “Everybody else, my dad was able to cover.” He started school at Nassau Community College, selling cell phones and parking cars at night.

brighton beach brookynBut then came an abrupt change. Once Weitz saved enough money, he transferred to Tulane University in New Orleans to pursue a relationship with a woman who was finishing her studies there. He attended classes part-time, worked as the athletic director at the Jewish Community Center, tended bar in a Mexican restaurant and served summonses for a law firm.

The relationship with the woman fizzled, but Weitz made lasting friendships during his days down south. His old roommate in New Orleans, who now practices law in Atlanta, serves as counsel for United Capital Source.

When Weitz had been in New Orleans for two years, Hurricane Katrina struck. He evacuated to Houston, where he stayed in a Holiday Inn for two weeks before realizing he wouldn’t be able to return to southern Louisiana anytime soon. The magnitude of the devastation was just too great.

Shouldering the duffel bag of belongings he had managed to pack on his back during the evacuation, he returned to New York, enrolled in St. John’s University and began working in sales for Honda Financial Services and parking cars.

Weitz had started school expecting to become a teacher. He had grown up with younger siblings and liked leadership roles, which convinced him teaching would be a good fit.

Still, many of his college jobs had required him to sell. As a bartender, for example, he promoted drink specials. As an athletic director he convinced people to sign up for classes. “Everything that I took to naturally wound up being in the sales, marketing and finance arena,” Weitz observed.

When he was nearly finished at St. John’s, Weitz was parking a car for an acquaintance who offered him a job as a union plumber. Suddenly, he was making $27 an hour and had health benefits. “It was a big breather for me,” Weitz recalled.

He quit his three jobs and labored as a plumber from 7 a.m. to 3 p.m. School started at 3:30 p.m. for him and stretched into the evening. But when he finished his degree, working as a teacher for $35,000 to $40,000 a year no longer seemed attractive.

Besides, his plumbing work didn’t center on toilets. On typical commercial plumbing jobs he did things like install air, medical and gas lines in hospitals. He was reading blueprints and bidding for jobs. A promotion to foreman didn’t seem that far off.

At about the same time, near the end of 2006, a friend, Mike Caronna, landed a job at Bizfi, formerly known as Merchant Cash and Capital (MCC), The company, which had just started and had only a few employees, was looking for underwriters.

New York City

As fate would have it, Weitz fell into a conversation with a fellow union plumber, one who had been on the job for 30 years. The older man reminded him that his wages would never climb much higher than they were right now. The veteran plumber then showed the younger man his hands, bent from decades of holding tools. “That got me thinking,” Weitz said.

He asked his friend Caronna to arrange a job interview at MCC. He got an offer and took a 90-day leave from his plumbing job to give the world of finance a try. “After about two weeks, I knew it was for me,” he said of the alternative-finance industry. It was by then the beginning of 2007.

Weitz excelled as an underwriter, and the company CEO, Stephen Sheinbaum, picked him and four others for a sales contest. Sheinbaum gave them some leads and turned them loose. Weitz won the competition but asked his boss to help him gain experience in business development and operations before taking on a sales position.

Sheinbaum was happy to comply. “He is one of the best and the brightest in the space,” he said of Weitz.

So, at age 25, Weitz found himself building a business development department by cultivating relationships with ISOs and persuading them to send business to MCC. “It was amazing,” he said of those days. “That was a big opportunity.”

“AFTER ABOUT TWO WEEKS, I KNEW IT WAS FOR ME,” HE SAID OF THE ALTERNATIVE FINANCE INDUSTRY.

Weitz learned the mechanics of the business. He found that the right ISO can originate good deals and a bad ISO can ruin deals. He learned the politics of when to talk, when to remain silent and when to let someone vent.

Then Weitz and a good friend at MCC, Anthony Giuliano – who’s now managing partner of Sure Payment Solutions – worked out how they could improve the MCC sales effort. They pitched Sheinbaum on the idea of having a second internal sale force, and that led to the birth of Next Level Funding (NLF), a division of MCC.

Weitz and Giuliano each owned 10 percent of NLF, and MCC owned 80 percent. “I’m 26, about to be 27, and I’m like, ‘You did it, Man,’” Weitz said as he looked back.

After about four months, NLF absorbed MCC’s original sales division. Next, Giuliano and another executive, Paul Giuffrida, decided to leave MCC. Weitz felt torn. He felt an allegiance to Giuliano and respected Giuliano’s knowledge of programming – a subject that was alien to him. Yet Sheinbaum had provided Weitz a series of opportunities.

Weitz stayed at MCC but felt he deserved to become chief sales officer. When that didn’t happen, he sold his shares back to the company at a dramatically reduced price to extricate himself from a non-compete clause and set off to start United Capital Source (UCS).

With a five-figure investment, Weitz and his then partner, started UCS in January of 2011 in a 250-square-foot office in Long Beach, L.I. Weitz invested about 90 percent of the money he had saved while working at MCC.

Jared Weitz United Capital SourceJon Baum left NLF with Weitz and became the first UCS employee. Within a week or two, Danielle Rivelli, left NLF to join UCS, and Weitz put the remaining 10 percent of his savings into the business to meet the expanded payroll. Today, Baum and Rivelli are UCS sales managers.

The first month UCS was open, it funded $240,000 in deals. “It just felt good to be on my own and start funding deals,” Weitz said. From the beginning of UCS, he won praise from funders for bringing them the right kind of deals with merchants who were likely to repay.

“He really has the pulse of the marketplace and what a lender is looking for,” said Todd Sherer, who handles business development for Entrepreneur Growth Capital. “He doesn’t waste time giving you transactions that don’t fit in your box.”

That’s because doing things right means a lot to Weitz. “He is one of the most straightforward, honest, high-integrity people I have met in the industry,” said Steven Mandis, adjunct associate professor at the Columbia University Business School and chairman of Kalamata Capital LLC.

He’s won the OnDeck seal of approval. “OnDeck has a rigorous and extensive background check process as part of our broker certification process,” said Paul Rosen, OnDeck’s chief sales officer. “Jared Weitz and United Capital have passed our screens and process and are currently active brokers for OnDeck.”

And with time, Weitz has learned patience. He was sometimes short with funders when he started his company but has matured into a pleasant person to deal with, said Heather Francis, CEO of Elevate Funding. “I’ve seen that growth with him,” she said.

All of those good qualities soon came together to help UCS succeed. Within four months of its launch, the company rented a 1,500-square-foot office in Garden City and hired two more people. Next came a 3,200-square-foot office in Rockville Centre and three more employees.

“The company was growing and gaining traction,” Weitz recalled. “I bought out my original partner.” Since then, Vincent Pappalardo has invested in UCS and become a minority partner.

Meanwhile, the lease was expiring on Long Island, and Weitz felt the time had come to move to Manhattan. That would enable the company to draw employees from throughout the region and not just Long Island.

“We decided to bite the bullet and pay the excess money to move to the city because we believed it would be better for the business,” Weitz said. He added two people and rented a 5,500-square-foot space near Penn Station in the Garment District in September of 2014.

36th and 8th AvenueWithin three months of making the move to Manhattan, business doubled. “Being in a faster-paced environment caused the business to go through another growth phase,” he said. After nine months in the city, UCS is now taking over a whole 8,500-square-foot floor of the same building.

UCS remains a small shop in terms of headcount with 21 people, but the company’s funding numbers equal the output of many brokerages five times its size. Twelve of the UCS employees work in sales, with the others engaged mainly in underwriting, operations and customer service.

Less than 2 percent of UCS’s funding volume comes from broker business. “We self-generate all of our business,” Weitz said, declining to elaborate too much on his company’s marketing efforts.

“My salespeople – bar none – are the best in the industry,” he claimed. “Much like the Navy has the SEALS and the Army has the Rangers, there are groups in the industry that can do triple or quadruple what other people do because that’s just the way they are.” His people fund an average of $750,000 per month per person in new business, while his renewals reps fund well into the 7-figure range per person.

UCS salespeople achieve their results because they have detailed knowledge of the industry, Weitz said. The staff’s understanding of alternative finance doesn’t end with sales but also includes underwriting and finance, he noted. “That’s what makes you a very good and knowledgeable sales rep,” he maintained.

His salespeople don’t just tell a client what he or she wants to hear. They take the time to understand the client’s financial situation. “They know how to read a profit and loss statement, a balance sheet and tax returns,” Weitz said.

“MY SALESPEOPLE – BAR NONE –
ARE THE BEST IN THE INDUSTRY”

While 90% of Weitz’s sales team has a college degree, most of the salespeople have come from outside the industry, he said, noting that one was with Sleepy’s, the mattress company. Another was selling memberships at a gym, one worked for a credit card processing company, two were barbers and one had just graduated from college.

UCS doesn’t make double-digit commissions because the company isn’t over-charging merchants, Weitz maintained. The company does not obtain excess funding that a customer can’t afford or increase the factor rate to dangerous levels, he noted.

“You’re not really helping the merchant” by providing too much capital, Weitz asserted. “You’re sucking the blood out of him before he goes away. That’s not why I’m in business.”

A clean record will also prove beneficial when federal regulation comes to the industry, he said. Integrity in the workplace can also spill over into other parts of a person’s life, Weitz believes.

Jared Weitz on Cover of deBanked MagazineAs UCS grew larger and Weitz grew older, he saw his employees rent their first apartments and then buy their first homes. He learned then that he had taken on more responsibility than was apparent to him at first.

To accommodate the employees he added a human relations department and commissioned a company handbook. He’s also started marketing, finance, operations and other departments.

He’s lost only four employees because he pays them well, respects their time and doesn’t view their youth as a liability.

Meanwhile, talking daily to merchants and hearing about their heartaches and triumphs has humbled and matured Weitz. Seeing how the merchants’ choices panned out or fell short also shaped him and helped him grow up a little, he said.

Weitz has found time in his 70-hour workweek to meet his future bride. They’re planning to wed next year, and he plans to invite his entire staff. “It wouldn’t feel right without them,” he said.

Weitz has skipped the Ferrari, Rolls Royce and mansion because he didn’t feel he needed them. But even without those status symbols, it’s clear that Weitz has avoided settling for a humble fate.

As for what comes next, UCS is said to be developing an online marketplace to take their business to the next level, though Weitz declined to provide specific details about how it will work. “We’re on pace to do more than $100 million worth of deals a year,” Weitz said. “And as far as we’ve come, I feel like this is still just the beginning.”

This article is from deBanked’s September/October magazine issue. To receive copies in print, SUBSCRIBE FREE

United Capital Source CEO Jared Weitz is deBanked’s September / October Cover

October 10, 2015
Article by:

Jared Weitz came from humble beginnings and nearly settled for a humble fate. But associates say an ordinary, uneventful life wouldn’t have suited him – he works too hard and figures things out too quickly.

Almost ten years ago Weitz, 33, was parking cars to earn money for community college. After finishing at St. Johns University, he almost made plumbing his career. But now he’s CEO of United Capital Source LLC, an alternative-finance brokerage with deal flow of between $9 million and $10 million a month and an annual growth rate of over 65 percent.

Business associates, former bosses and his small cadre of employees all seem to revere Weitz for his honesty and straightforwardness. They consider him a personal friend. They say he continues to grow as a businessman and as a human being while taking pleasure in helping others do the same.

Geographically, Weitz has the good fortune to know where he belongs – the city of New York is in his DNA. “Every time I fly back,” he said, “I’m so happy to land.” His love affair with the city began in Brooklyn. He was born there and raised in a Brighton Beach apartment in the shadow of Coney Island. When he was 16, the family moved to Oceanside on Long Island.

As the second of six children, Weitz had to come up with the money for college on his own…

To read the FULL 4-page exclusive, you’ll need to subscribe to deBanked!

United Capital Source Jared Weitz deBanked Magazine

In this September/October issue, payments and finance journalist Ed McKinley explored the story behind United Capital Source, one of the industry’s fastest growing shops and what it took for its 33-year old CEO to get there.

For current subscribers, this edition will be dropped in the mail on Tuesday the 13th. deBanked’s Sean Murray will have a limited amount of extra copies with him at Lend360 in Atlanta and Money2020 in Las Vegas if you’re interested to get your hands on one in person.

Why Funders Are Investing in Real Estate As Their Side Hustle of Choice

January 25, 2021

house on cash

This story appeared in deBanked’s Nov/Dec 2020 magazine issue.

house for saleAfter five years in finance, Peter Ribeiro decided to strike out on his own and start US Business Funding in 2008, providing equipment leasing and financing for businesses. But when the housing market collapsed four months later, Ribeiro saw a second major business opportunity emerge. Earlier that year, he had purchased a $250,000 home in southern California that appraised for $355,000 at the time he bought it. Within seven months, the home’s value plummeted to $95,000. “I told myself I knew the area really well, so I might as well start buying some properties.”

At that point, Ribeiro’s fledgling company still wasn’t generating much revenue. “I thought, ‘Man, I just can’t get a lot of loans done right now. I only have three or four employees.’ That’s how I got into the real estate industry.” Twelve years later and at the height of a global pandemic, Ribeiro is simultaneously running two thriving ventures —US Business Funding, and a portfolio of hundreds of rental properties he now owns.

At a time when fintech startups and other industry innovators are looking for investors, alternative lending execs like Ribeiro are instead choosing to put their money in real estate to beef up their investment portfolios. Although some execs shy away from talking publicly about their real estate dealings, citing the fact that they don’t want too much exposure, the consensus is that there’s a lot of money to be made in buying, selling and renting property – if you know what you’re doing.

peter ribeiro“I think real estate is lucrative because when you look at the history of investments, there are two or three ways to really make money: You can put your money in the stock market, or you can put it in bonds. And the other one guaranteed to go up in value is real estate,” Ribeiro says.

To Ribeiro, real estate offers a few major advantages: It’s a tangible asset. You can leverage it as it appreciates in value. Deductions make it so you pay very little in taxes. And it offers significant cash flow. “It’s the best investment you can make,” he says.

What makes real estate an especially good fit for alternative lending and fintech execs is that they possess the skills, resources and financial literacy to succeed at it.

best investment you can make

“Real estate is a long-term gain,” Ribeiro says. “The industry we’re in is a cash-flow cow. People who are doing well are printing money. But what can you do with that money? You can put it in the stock market, but you won’t control much. Then you pay capital gains on it.”

paul riandaAttorney Paul Rianda, who represents both cash advance clients and real estate investors, says it makes sense that real estate investing appeals to alternative lenders – especially amidst the uncertainty of COVID-19.

“If you’re a cash advance guy and COVID happened, then you’re not doing very well,” he says. “If you diversified your assets by doing real estate and cash advance, you’re able to weather these downturns a lot more easily than you would otherwise.”

Rianda has not yet counseled any of his own cash advance clients on real estate matters. But based on his insights from working with both areas, he says real estate would be a logical move for MCA executives, and he’s seen some of his clients in the bankcard industry buy up properties.

“One of my clients had a portfolio of merchants and sold it for a few million, then flipped over to real estate. So it’s a means (to an end),” Rianda says.

‘Snowball effect’

Ribeiro has relied on a simple strategy to steadily build his portfolio of residential properties: Buy. Fix. Leverage. Repeat.

“I feel like the portfolio is doubling every couple of years. It’s just a snowball effect,” he says.

After Ribeiro buys a home, he waits about six months before he has it appraised and fixes it up in the meantime.

“If you go to the bank within the first six months of purchasing it, they’re going to give you the actual market value of whatever you purchased the house for,” he says. “If you wait six months, they’ll reappraise the home and give its true market value, which could be another 40, 50 or 60 percent. And so now you’re going to have a lot more equity in the house, and you’re going to get a lot more money when you leverage that home to go buy the next one.”

Ribeiro says he sees lots of people making the mistake of buying a home, and then going to the bank a week or two later for a loan.

buy fix leverageConstantly maintaining a positive cash flow is Ribeiro’s number one rule of real estate investing. “Your best friend is depreciation,” he says.

Depreciation refers to one of the key tax benefits of real estate. Since owning a rental property is technically a type of business because it generates income, the property is considered a business asset. The IRS allows you to deduct the cost of acquiring that asset – the property – over the span of its useful life. For residential properties, the IRS sets a standard depreciation period of 27.5 years.

So if you buy a $100,000 property with a $20,000 land value, $80,000 of the asset is considered depreciable. Over the course of 27.5 years, you can take an annual deduction of just over $2,900 a year.

The trick, Ribeiro says, is to stick to lower-priced properties with an 80/20 home-to-land value. Most of his properties are single- and multifamily homes between southern California and Las Vegas.

Like Ribeiro, Rianda’s investor clients concentrate on one geographic area to find the best properties. “They look at the area for a long time, understand the area,” he says. “In my neighborhood, three blocks can make a 50 percent difference in the price of a house. You need to focus on a particular geographic area and do a lot of transactions in it.”

Small portfolio, big impact

Jared WeitzReal estate investing has provided a way for Jared Weitz to earn more money while being able to focus on his primary job as CEO of New York-based United Capital Source Inc., the company he founded.

“For me, it’s just a really good second income stream and a way to have a secure return of 4.5% to 6.5% a year,” he says.

Growing up, Weitz got a feel for real estate by watching his uncles invest in multifamily properties. At one point, Weitz’s uncle owned 15 different multifamily homes, and Weitz would help do the maintenance on them.

Eight years ago, Weitz invested in his first two-family home and has fixed and flipped eight properties since then. He currently owns two two-family homes and invests primarily in multifamily homes in Long Island, Brooklyn and Queens. Over the next five years, he plans to pick up at least two more four- or eight-family properties. Working with a small portfolio of residences in his home state has allowed Weitz to have full control over managing his properties and to turn a good profit.

“I think for me, it just offers more liquidity,” he says. “It’s an asset I can sell and liquidate at any time. That’s really important for me.”

Ideally, Weitz would like for his investment to build generational wealth that he can pass down to his son. With many people in the U.S. unable to qualify for mortgages, Weitz sees real estate investing as an opportunity to help the economy by giving renters a place to live and put down roots. “Depending on the neighborhood, you can put yourself in a situation where you have good renters for 20 to 30 years. They want to raise their families and have their kids grow up there,” he says.

Litigation among the pitfalls

Even though Ribeiro has had success with his business model, he cautions that there’s considerable risk involved with real estate.

“I love the industry. It’s a passion. It’s beyond my wildest dreams of the size of the portfolio and how well it performs,” he says. “But don’t think it’s all cupcakes and unicorns. There’s a lot to the madness. That’s why not everyone can replicate the model.”

landlord tenant law“Professional litigators” and multiple lawsuits from renters are a major downfall that Ribeiro points to. He sees at least one substantial suit each year and tries to settle outside of court whenever possible.

As an attorney, Rianda says his real estate clients call on him not just for the purchase of the property, but for various issues that occur during the ownership period.

Here’s one scenario: A property owner has a tenant who isn’t paying rent, so the property owner sues the tenant. But while the lawsuit proceedings are under way, the tenant declares bankruptcy, which puts a stall on further litigation.

“There are people who understand the system and can make it difficult for you to get them out (of the property),” Rianda says, adding that it’s important to have legal counsel readily available. “You need someone who has really done this a lot and knows how the system works to get that person out of the rental property as quickly as possible.”

To minimize liability, Ribeiro has divided his properties into about 10 different business entities – each with a separate umbrella insurance policy.

Rianda sees his own real estate investor clients follow this strategy by grouping multiple homes under the name of an LLC. “If you personally own all these various assets, there’s the potential that if something catastrophic happened at one, it could bleed into all your other properties and potentially put them at risk,” he says.

Dual careers

Ribeiro’s real estate investments and finance company both serve as full-time occupations for him. Some years, he’ll focus more on one area than on the other, depending on market conditions. He spent more time on real estate between 2008 and 2013; then his business needs flip-flopped when real estate prices started going back up. This past year, he’s directed more attention to the finance company because of COVID, which necessitated some operational changes and a need to help clients who had been trying to get PPP loans. But he’s also started investing in commercial real estate, which has taken a hit because of companies forgoing office space to save overhead costs while employees work remotely.

Ribeiro expects to start seeing more mortgage defaults on lower-level homes in 2021 and 2022, after forbearance periods are over. And he’s been leveraging his assets to start buying more properties around the second quarter of the new year. “I think it will be a good time to start buying heavy again,” he says.

An attractive investment vehicle

With the pandemic weakening business portfolios, secondary investment options might sound like just what the doctor ordered.

small business financing growthWhen COVID first hit, some of Rianda’s clients started pursuing other investments like personal protective equipment (PPE). Most of his cash advance clients closed up shop for a few months.

“As time goes on, I’m starting to see my clients go back into their lending,” Rianda says.

Even as clients start to recoup their business, Rianda sees the wisdom in other investments and says cash advance executives are well suited for real estate. “It’s just a way that people who have been successful and spin off a lot of cash for their businesses see as a safe way to diversify their income,” Rianda says. “It’s something I find that people who are doing well in their business do, regardless of what business they’re in. So cash advance guys are just following the things people have done for years.”

Ribeiro cautions that people who get into real estate should look at it as a 10-year investment minimum, and not just a two- or three-month stint.

“It’s not a lottery ticket, and it’s not an overnight race,” Ribeiro says. “This is a long-term gain. But it’s a very lucrative gain from a cash-flow perspective and a tax perspective. I don’t think there’s a more attractive vehicle than real estate.”

Good Internet Connection: A Recap of Broker Fair Virtual’s Debut

June 17, 2020
Article by:

Broker Fair 2020 VirtualLast week’s Broker Fair Virtual was the first of its kind for the industry. The day-long event offered talks and networking, just like the in-person event, albeit without the catering service and open bar. Offering a digital space that included a virtual auditorium, networking lounge, expo hall, and individual company booths, the event attempted to recreate the experience of connecting and mingling with the rest of the industry, as much as was possible.

Kicking off with a Matrix-inspired introduction to the virtual space led by alternative finance’s version of Neo’s mentor, Mur-pheus (Murray as Morpheus), the show then went in numerous directions, with panels and talks covering a variety of topics and sectors.

Funding Metrics’ David Frascella took to the virtual stage to talk about how his company and the industry at large have been getting through the pandemic; what’s to come for America was up for discussion with Scott Rasmussen, the veteran pollster, who elaborated on how business could be effected by the upcoming presidential election; the future of combining people with data was debated by figures from Become, Elevate Funding, and Ocrolus; Canada’s lending situation and prospects were talked through in Covid and Canadian Credit;The new normal was discussed by NYC’s Fintech Women; and John Henry, an entrepreneur and star of VICELAND’s ‘Hustle,’ spoke of his experience running businesses and what made his story a success.

As well as this selection of talks, another standout was the cannabis panel. Led by a number of industry veterans, which broke down the difference in funding marijuana-based companies compared to other deals, and what could be down the road for the industry as more states consider legalization.

National Funding’s CRO, Justin Thompson, held an extended Q&A session, fielding queries about how National has been faring through these times and what its approaches are as the economy begins to open back up.

How long-term is long-term for the coronavirus’s impact? Are SBA deals the way to go? Does the industry need to go further with its adaption to this new normal? All these questions were asked and answered in The Great Debate, a panel made up of industry figures from various backgrounds.

And brokers’ futures were considered by Lendio’s Brock Blake, United Capital Source’s Jared Weitz, National Business Capital & Service’s James Webster, and The Watson Group’s Gerald Watson. Here, the idea of a recovery, how each struggled through March and April, and PPP were all debated by the panelists, with perspectives of what’s to come leaning both ways.

There’ll be an evolution of new industries and how we do business,” Gerald Watson noted in his closing words, “just look at this conference for example.”

There was no lobby to find brokers and funders hashing out deals in relative privacy away from the expo hall, instead this was replaced by private messages exchanged. Rather than line up for some chicken wings, people chowed down to whatever was in their home on that day. And instead of gathering around a bar and finishing the day after the final talk, attendees cracked something at their desk and chatted it up in the networking lounge, recalling previous events and what was once taken for granted: the ability to connect effortlessly.

The coronavirus continues to physically keep people apart, but for one day last week the industry was able to come together and network, make deals, and gain insight; albeit in a different way, internet connections providing.

2020 and Beyond – A Look Ahead

March 3, 2020
Article by:

This story appeared in deBanked’s Jan/Feb 2020 magazine issue. To receive copies in print, SUBSCRIBE FREE

Looking AheadWith the doors to 2019 firmly closed, alternative financing industry executives are excited about the new decade and the prospects that lie ahead. There are new products to showcase, new competitors to contend with and new customers to pursue as alternative financing continues to gain traction.

Executives reading the tea leaves are overwhelming bullish on the alternative financing industry—and for good reasons. In 2019, merchant cash advances and daily payment small business loan products alone exceeded more than $20 billion a year in originations, deBanked’s reporting shows.

Confidence in the industry is only slightly curtailed by certain regulatory, political competitive and economic unknowns lurking in the background—adding an element of intrigue to what could be an exciting new year.

Here, then, are a few things to look out for in 2020 and beyond.

Regulatory developments

There are a number of different items that could be on the regulatory agenda this year, both on the state and federal level. Major areas to watch include:

  • Broker licensing. There’s a movement afoot to crack down on rogue brokers by instituting licensing requirements. New York, for example, has proposed legislation that would cover small business lenders, merchant cash advance companies, factors, and leasing companies for transactions under $500,000. California has a licensing law in place, but it only pertains to loans, says Steve Denis, executive director of the Small Business Finance Association. Many funders are generally in favor of broader licensing requirements, citing perceived benefits to brokers, funders, customers and the industry overall. The devil, of course, will be in the details.
  • Interest rate caps. Congress is weighing legislation that would set a national interest rate cap of 36%, including fees, for most personal loans, in an effort to stamp out predatory lending practices. A fair number of states already have enacted interest rate caps for consumer loans, with California recently joining the pack, but thus far there has been no national standard. While it is too early to tell the bill’s fate, proponents say it will provide needed protections against gouging, while critics, such as Lend Academy’s Peter Renton, contend it will have the “opposite impact on the consumers it seeks to protect.”
  • Loan information and rate disclosures. There continues to be ample debate around exactly what firms should be required to disclose to customers and what metrics are most appropriate for consumers and businesses to use when comparing offerings. This year could be the one in which multiple states move ahead with efforts to clamp down on disclosures so borrowers can more easily compare offerings, industry watchers say. Notably, a recent Federal Reserve study on non-bank small business finance providers indicates that the likelihood of approval and speed are more important than cost in motivating borrowers, though this may not defer policymakers from moving ahead with disclosure requirements.

    “THIS WILL DRIVE COMMISSION DOWN FOR THE INDUSTRY”

    If these types of requirements go forward, Jared Weitz, chief executive of United Capital generally expects to see commissions take a hit. “This will drive commission down for the industry, but some companies may not be as impacted, depending on their product mix, cost per lead and cost per acquisition and overall company structure,” he says.

  • Madden aftermath. The FDIC and OCC recently proposed rules to counteract the negative effects of the 2015 Madden v. Midland Funding LLC case, which wreaked havoc in the consumer and business loan markets in New York, Connecticut, and Vermont. “These proposals would clarify that the loan continues to be ‘valid’ even after it is sold to a nonbank, meaning that the nonbank can collect the rates and fees as initially contracted by the bank,” says Catherine Brennan, partner in the Hanover, Maryland office of law firm Hudson Cook. With the comments due at the end of January, “2020 is going to be a very important year for bank and nonbank partnerships,” she says.
  • “…I’M NOT SURE THEY GO FAR ENOUGH”

  • Possible changes to the accredited investor definition. In December 2019, the Securities and Exchange Commission voted to propose amendments to the accredited investor definition. Some industry players see expanding the definition as a positive step, but are hesitant to crack open the champagne just yet since nothing’s been finalized. “I would like to see it broadened even further than they are proposed right now,” says Brett Crosby, co-founder and chief operating officer at PeerStreet, a platform for investing in real estate-backed loans. The proposals “are a step in the right direction, but I’m not sure they go far enough,” he says.

Precisely how various regulatory initiatives will play out in 2020 remains to be seen. Some states, for example, may decide to be more aggressive with respect to policy-making, while others might take more of a wait-and-see approach.

“I think states are still piecing together exactly what they want to accomplish. There are too many missing pieces to the puzzle,” says Chad Otar, founder and chief executive at Lending Valley Inc.

As different initiatives work their way through the legislative process, funders are hoping for consistency rather than a patchwork of metrics applied unevenly by different states. The latter could have significant repercussions for firms that do business in multiple states and could eventually cause some of them to pare back operations, industry watchers say.

“While we commend the state-level activity, we hope that there will be uniformity across the country when it comes to legislation to avoid confusion and create consistency” for borrowers, says Darren Schulman, president of 6th Avenue Capital.

Election uncertainty

The outcome of this year’s presidential election could have a profound effect on the regulatory climate for alternative lenders. Alternative financing and fintech charters could move higher on the docket if there’s a shift in the top brass (which, of course, could bring a new Treasury Secretary and/or CFPB head) or if the Senate flips to Democratic control.

If a White House changing of the guard does occur, the impact could be even more profound depending on which Democratic candidate secures the top spot. It’s all speculation now, but alternative financers will likely be sticking to the election polls like glue in an attempt to gain more clarity.

Election-year uncertainty also needs to be factored into underwriting risk. Some industries and companies may be more susceptible to this risk, and funders have to plan accordingly in their projections. It’s not a reason to make wholesale underwriting changes, but it’s something to be mindful of, says Heather Francis, chief executive of Elevate Funding in Gainesville, Florida.

“Any election year is going to be a little bit volatile in terms of how you operate your business,” she says.

Competition

The competitive landscape continues to shift for alternative lenders and funders, with technology giants such as PayPal, Amazon and Square now counted among the largest small business funders in the marketplace. This is a notable shift from several years ago when their footprint had not yet made a dent.

This growth is expected to continue driving competition in 2020. Larger companies with strong technology have a competitive advantage in making loans and cash advances because they already have the customer and information about the customer, says industry attorney Paul Rianda, who heads a law firm in Irvine, Calif.

It’s also harder for merchants to default because these companies are providing them payment processing services and paying them on a daily or monthly basis. This is in contrast to an MCA provider that’s using ACH to take payments out of the merchant’s bank account, which can be blocked by the merchant at any time. “Because of that lower risk factor, they’re able to give a better deal to merchants,” Rianda says.

“THE PRIME MARKET IS EXPANDING TREMENDOUSLY”

Increased competition has been driving rates down, especially for merchants with strong credit, which means high-quality merchants are getting especially good deals—at much less expensive rates than a business credit card could offer, says Nathan Abadi, president of Excel Capital Management. “The prime market is expanding tremendously,” he says.

Certain funders are willing to go out two years now on first positions, he says, which was never done before.

Even for non-prime clients, funders are getting more creative in how they structure deals. For instance, funders are offering longer terms—12 to 15 months—on a second position or nine to 12 months on a third position, he says. “People would think you were out of your mind to do that a year ago,” he says.

Because there’s so much money funneling into the industry, competition is more fierce, but firms still have to be smart about how they do business, Abadi says.

Meanwhile, heightened competition means it’s a brokers market, says Weitz of United Capital. A lot of lenders and funders have similar rates and terms, so it comes down to which firms have the best relationship with brokers. “Brokers are going to send the deals to whoever is treating their files the best and giving them the best pricing,” he says.

Profitability, access to capital and business-related shifts

Executives are confident that despite increased competition from deep-pocket players, there’s enough business to go around. But for firms that want to excel in 2020, there’s work to be done.
Funders in 2020 should focus on profitability and access to capital—the most important factors for firms that want to grow, says David Goldin, principal at Lender Capital Partners and president and chief executive of Capify. This year could also be one in which funders more seriously consider consolidation. There hasn’t been a lot in the industry as of yet, but Goldin predicts it’s only a matter of time.

“A lot of MCA providers could benefit from economies of scale. I think the day is coming,” he says.

He also says 2020 should be a year when firms try new things to distinguish themselves. He contends there are too many copycats in the industry. Most firms acquire leads the same way and aren’t doing enough to differentiate. To stand out, funders should start specializing and become known for certain industries, “instead of trying to be all things to all businesses,” he says.

Some alternative financing companies might consider expanding their business models to become more of a one-stop shop—following in the footsteps of Intuit, Square and others that have shown the concept to be sound.

Sam Taussig, global head of policy at Kabbage, predicts that alternative funding platforms will increasingly shift toward providing more unified services so the customer doesn’t have to leave the environment to do banking and other types of financial transactions. It’s a direction Kabbage is going by expanding into payment processing as part of its new suite of cash-flow management solutions for small businesses.

“Customers have seen and experienced how seamless and simple and easy it is to work with some of the nontraditional funders,” he says. “Small businesses want holistic solutions—they prefer to work with one provider as opposed to multiple ones,” he says.

Open banking

This year could be a “pivotal” year for open banking in the U.S., says Taussig of Kabbage. “This issue will come to the forefront, and I think we will have more clarity about how customers can permission their data, to whom and when,” he says.

Open banking refers to the use of open APIs (application program interfaces) that enable third-party developers to build applications and services around a financial institution. The U.K. was a forerunner in implementing open banking, and the movement has been making inroads in other countries as well, which is helping U.S. regulators warm up to the idea. “Open banking is going to be a lively debate in Washington in 2020. It’ll be about finding the balance between policymakers and customers and banks,” Taussig says.

The funding environment

While there has been some chatter about a looming recession and there are various regulatory and competitive headwinds facing the industry, funding and lending executives are mostly optimistic for the year ahead.

“If December 2019 is an early indicator of 2020, we’re off to a good start. I think it’s going to be a great year for our industry,” says Abadi of Excel Capital.



Found on DailyFunder:

11-13-2019

The Way of the Funding Pro...
jared weitz in the article., , , , its all about the customer experience., , , , what does that really mean?, , , , hubspots 2016 sales experience survey found these results when asking what can sales reps do to make their experience positive?, , , , 69% listens to my needs, , , , 61% is not pushy, , , , 61% provides relevant information, , , , 51% responds or gives information in a timely manner, , , , 49% provides a range of options even byond his/her business offering, , , , 45% cares about the success of my business project, , , , 37% details the ways s/he can help me succeed, , , , what have you found to be effective for being that trusted advisor to your clients?, , , , -fundingstrategist, , https://fundingstrat.com, , https://fundingstrat.com/the-way-of-the-funding-pro/...
05-02-2019

See Post...
jared weitz is not only the chairman of the small business finance council (sbfc), but has also been an active participant within nearly every industry tradeshow and event. he is a known and respected figure within the space, with a firm producing around $2...
05-02-2019

See Post...
jared weitz is not only the chairman of the small business finance council (sbfc), but has also been an active participant within nearly every industry tradeshow and event. he is a known and respected figure within the space, with a firm producing around $2...