|10/02/2020||Kapitus securitization rating affirmed|
|04/22/2020||Kapitus surveyed SMBs on PPP|
|12/20/2019||Kapitus closes $160M securitization|
|10/29/2019||DrChrono partners with Kapitus|
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.”
New York, NY – Kapitus, a leading provider of alternative financing to small and midsize businesses, announces the roll-out of auto-checkout – a fully automated funding process for qualified deals. The new process allows for not only a faster, more streamlined experience for its partners; but it also provides more flexible financing options, by providing multiple offers at once. At the same time, the new process provides merchants with secure and quick access to funds for their business.
Unlike competing models where only an “option of approval” or “conditional approval” is provided at the time of checkout, Kapitus is able to determine approval eligibility with only an application and bank statements without the need for multiple upfront stipulations to confirm bank information, ownership and identity. Utilizing proprietary machine learning models – eligible deals can be closed without any additional documentation.
“This is a true turning-point for us from a technology perspective and we’re very excited about it,” said Andrew Reiser, Chief Executive Officer at Kapitus. “With this new automated process, we’re able to provide our partners an extremely simple process with an exceptionally quick time-to-funding. At the same time, merchants are provided with a more seamless experience with enhanced security”
Major features in the roll-out include:
- True auto-check functionality with full approval at time of checkout
- Progress tracking and customizable notifications to follow merchants through the checkout process
- Intuitive user interface with precise, easy-to-understand instructions for both merchants and partners
- Simple, seamless secure checkout functionality for merchants
“This is the first of many technology advancements we will be rolling out over the next year,” adds Arun Narayan, Chief Product Officer. “We are committed to creating exceptional experiences for both our partners and merchants. Incorporating the right technology is paramount in building out the right environment and the best experience for all of our audiences.”
Founded in 2006 and headquartered in NYC, Kapitus is one of the most reliable and respected names in small business financing. As both a direct lender and a marketplace built with a trusted network of lending partners, Kapitus is able to provide small businesses the financing they need, when and how it is needed. With one application business owners can save time and money, while eliminating the stress that comes with applying to different lenders. At Kapitus, we believe that business owners should be able to focus on running their business, while we take care of the financing. Learn more at https://kapitus.com
CONTACT: Bernadette Abel
Today, Strategic Funding announced the launch of a new brand identity, including a name change. Strategic Funding will now be called Kapitus.
“We had a name that was very well respected,” said Kapitus founder and CEO Andy Reiser. “Everybody loved our name, quite frankly. They loved it so much, they all copied it. You can’t trademark ‘Strategic Funding.’ It’s too generic.”
Kapitus, spelled this way, is not a word in any language, which makes it easier to trademark.
“We wanted to separate ourselves in a way that is clearly identifiable,” Reiser said. “It’s an easy one-word name [that] symbolizes stability and strength. It’s ‘capital from us,’ if you want to break it down.”
Reiser said that the company has been relatively quiet over the last three years, but they have been advancing all along, and they are particularly proud of their brand new ISO portal. According to Reiser, the new portal helps ISOs better understand their book at Kapitus and allows brokers to generate a contract quickly without having to call them. The company has an in-house marketing team, but well over 50% of its business comes from the ISO channel.
Kapitus provides a variety of financial products, including equipment financing (they have an in house equipment leasing division) and factoring (they have a small internal factoring group). They also offer business loans, lines of credit and MCA deals. But the company’s largest portion of its business – more than 15% – comes from its Helix Healthcare Financing product, which finances healthcare practitioners like doctors, dentists and veterinarians.
Unlike other funders of healthcare practitioners that may offer financing terms up to 18 months, Kapitus offers terms of up to 10 years as long as the merchant satisfies its requirements. The company also funds a considerable number of healthcare-related businesses, like medical equipment providers. Otherwise, Reiser said that Kapitus has a diversified mix of merchants, from restaurants to manufacturers.
Reiser said that about 15% of Kapitus’s business consists of deals above $150,000 for which they have a seperate team. They do deals as high as $750,000.
When operating under the Strategic Funding name, there was a payment servicing division of the company, called Colonial Servicing. That entity will remain, but will be woven into the new Kapitus name.
Founded in 2006, Kapitus employs 240 people divided among three offices. The headquarters is in New York and there is an office with about 30 people in Arlington, VA, and a Dallas-area office with about 35 people working in collections and customer service.
Strategic Funding Source Announces Launch of New Brand Identity; Unites its Funding Arm and Servicing Arm Under the name KapitusJanuary 15, 2019
New York, NY – January 15, 2019 – Strategic Funding Source, a veteran of the small and medium-sized business alternative lending space, today announced the launch of a new corporate brand identity, including a new name. As part of this rebrand, the funding division and servicing division will be united under the name Kapitus. The unification of these two divisions will allow for an improved experience for both clients and partners.
Since its inception in 2006, Strategic Funding Source has provided over $2 billion to almost 40,000 businesses in hundreds of industries across the U.S. Over the past two years, the organization has been proactively building out its executive team, bringing in a wealth of experience to transform its risk model, underwriting processes, lending capacity and product line, technology capabilities and customer experience.
With these and other planned advancements, the company required a new brand that better reflected the company’s commitment to be a reliable source of capital to all small and mid-sized business owners.
“The small business lending landscape is consolidating around a few strong and reputable companies. Over the last several years, Kapitus has experienced tremendous growth both in its product offerings to small and medium-sized businesses and in the total number of businesses it serves” said Andy Reiser, CEO of Kapitus. “We chose a name and identity that represents our strength and stability as well as our promise to be a responsible and fair source of capital to small and medium-sized businesses nationwide.”
Along with the name change there will be a new logo, tagline (“Let’s Grow Together”) and domain name (kapitus.com). The rebrand is the first step in the company’s strategy to grow its own financing product line, add to its marketplace of 3rd party lenders and create a foundation for new partnership opportunities. The new brand also represents the company’s commitment to keep the human touch throughout the financing process, while improving customer experience through technology to aid the decisioning process and improve speed to funding.
“This is an exciting change for us,” added Reiser. “This new branding builds upon our history and pays allegiance to our standing as a leader in a fast-evolving industry, opening the door for future opportunities for us, our clients and our partners.”
Founded in 2006 and headquartered in NYC, Kapitus is one of the most reliable and respected names in small business financing. As both a direct lender and a marketplace built with a trusted network of lending partners, Kapitus is able to provide small businesses the financing they need, when and how it is needed. With one application business owners can save time and money, while eliminating the stress that comes with applying to different lenders. At Kapitus, we believe that business owners should be able to focus on running their business, while we take care of the financing. To learn more, visit www.kapitus.com.
“Work hard, don’t ask questions, and good things will happen to you,” Frank Ebanks described his keys to success in the MCA world. “Being Positive, working hard, and keeping my eyes open: If I hadn’t been looking for opportunities at 2 am in the morning on Craigslist, I would have never known about this industry, but it’s huge, it’s such a big industry.”
Ebanks started what would become Spartan Capital shortly after seeing an ad calling for startup investors in an industry Ebanks had never heard of, called Merchant Cash Advance.
It was around 2016. Ebanks was up late in the NYU university library, putting himself through an MBA while working as a reactor operator at the Indian Point nuclear power plant in Westchester.
Despite the job security Ebanks enjoyed, he said he wasn’t happy with his career, wasn’t getting the satisfaction he wanted. He had already made it a long way— starting before the millennium as a Cuban immigrant, immigrating to the Dominican Republic in 1998 and then Florida in 2002 with empty pockets. Shortly after arriving, Ebanks enlisted.
“I spent some time in the army; I wanted to put in some time,” Ebanks said. “I said: ‘I’m a new immigrant, what’s the best thing that I could do to reward these opportunities?’ To serve in the army, give the country a couple years, and payback in advance for this opportunity that I knew I was going to have.”
Ebanks said he learned early on to take every opportunity seriously. He served for two years and then became an engineer and contractor for the army, working on the Patriot Missile defense system. He went through college at NJIT, graduating in 2009, and following in his father’s footsteps to become an electrical engineer.
After working with South Jerseys PSE&G, Ebanks took the opportunity to work full time shifts at the the nuclear power plant, and by 2016 he was pursuing an MBA and looking for ways to grow what he called “my empire.” Used to investing in small businesses already, discovering MCA fit right within his world.
“I’ve always been active, throughout my professional career I had businesses in real estate, I owned several businesses such as laundromats, a lot of retail cell phone stores and things like that,” Ebanks said. “So at one or two am in the morning, I’m working on how to build my empire. I was on Craigslist looking for opportunities, seeing what’s out there, and somebody wanted an investment, to partner up and start a company in a new industry.”
He took a meeting and learned a ton. Although he did not end up going into business with that person, he was hooked on the concept.
“I looked at that ad, and $10,000 later, we had a company,” Ebanks said.
He learned what he needed and ended up opening his own MCA business shortly after in New Jersey, finding he loved setting up syndicated MCA deals.
“I did some research, opened an office in New Jersey, secured a manager to run the operation, and we started brokering deals and learning about syndication.”
He worked with SFS Capital, now called Kapitus. He fell in love with the immediate gratification feedback of making deals, seeing returns on account receivables, and watching renewals come in. The business grew, but things were not always a straight climb to success.
“There was a point where things were not going well and I had to start a new company, find new parters and investors with a funding direct-only focus, and moved into my basement- my wife was unhappy with that. I started hiring people, processors, underwriters, and ISO managers in my basement,” Ebanks said. “At one point, she said, ‘Okay, this is enough. Ten strangers are coming into my house every day, you’ve got to get an office,’ so we secured an office in New York. And that’s when things took off in 2017.”
At that point, Ebanks had shifted his business model from securing deals to funding them all his own, using capital he raised. Ebanks said that being a broker partnered with Kapitus was great, but he wanted to grow and run his business entirely. The best way to do that was through ISO management, Ebanks said. Ebanks let the direct sales team phase out and he hired ISO managers, learning the ISO business as he went.
“So fast forward now: We have over five ISO managers, and we’re funding about $12 million a month,” Ebanks said. “It’s been a phenomenal journey and the most rewarding thing I’ve ever done in my life; I’m not shy to share how exciting every day is to me, and how other than my family and my kids and God, this is the most important thing my life.”
For brokers looking to get started in the industry, Ebanks has this advice to share: Don’t settle.
“Don’t settle, look for growth, and invest your money,” Ebanks said. “I always invested everything I could, 95%, every penny on the business. It matters especially at the beginning, the more you invest, don’t let it sit.”
That investment should go toward your business, your staff, and hiring. Ebanks said the more you invest, the bigger the bag, the more your firm would grow, and your employees will grow with you. Helping employees will mean they will eventually leave, but in Ebanks’ experience treating employees right creates partners.
“Some of them now are partners, and the employee-employer relationship is always more partnership,” Ebanks said. “Some of them own their own companies now, and we help each other out. If they have a big deal, they say: ‘Frank do you want to take $50,000 out of this deal?’ I say yea I trust you. I’ve known you for years.”
Now that he’s on track to grow with recurring customers, seeing some merchants come back to renew twenty times since 2016, Ebanks sees a possible bright future for Spartan Capital: becoming a chartered online bank.
“It is an alternative lending space but to offer the best products to people,” Ebanks said. “I think at the end of the day, and we need all the resources we can get, the next chapter is to apply and secure an online bank charter, it’s the future of the fintech industry.
“Why do people like doing business with us versus a bank? Some of them can do business with banks, but they choose to use us because they have direct access to us after 6 pm, they could call us Saturday, they can call us on a Sunday,” Ebanks said. “A great relationship that they can never get from a bank. I want to bring what we do in MCA to the banking industry to serve people that want banking products, but I want to give them that MCA experience.”
After Yardline Capital burst into the growth capital space for e-commerce sellers, two fintech vets have recently announced a move to the company.
Seth Broman, formerly Senior Vice President of Business Development at Kapitus, announced he had become Chief Revenue Officer of Yardline Capital.
Dennis Chin, formerly in capital markets for OnDeck, announced on LinkedIn that he had become Head of Strategic Initiatives for Yardline Capital.
On LinkedIn, Broman wrote, “Over the last 14 years, I have seen SMB lending and alternative financing grow and adapt time and time again. Innovation and technology have transformed the industry and continue to do so daily. I have seen firsthand billions and billions of dollars propel SMBs and along with the growth of those companies, the industry itself continues to evolve. With that, I’m very excited to share with my friends, family, colleagues and network that I have joined Tomo Matsuo and Ari Horowitz to build Yardline – providing value-added capital solutions for ecommerce sellers to work smarter & grow faster.”
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