Articles by deBanked Staff
Wells Fargo-supported Fund Aims to Refinance MCAs
October 8, 2026Sixty-one percent of all deals funded by Founders First Capital Partners went toward refinancing merchant cash advances. That’s intentional, according to the company, which just announced a capital raise of $19 million for one of its small business financing funds. Investors in the fund include Wells Fargo Foundation, Deutsche Bank Americas Foundation, Sunrise Banks, Community Reinvestment Fund USA, and others.
Founders First offers revenue-based financing, term loans, and hybrid loans that combine both. The company says borrowers that refinance their MCAs with Founders First experience an average effective APR decrease of 15 percentage points.
“To help meet that demand [of refinancing MCAs], Wells Fargo contributed $500,000 to Founders First, fiscally sponsored by Realize Impact,” a press release said.
Founders First does not advertise its own APRs, but according to a hybrid loan contract it originated in 2023 that deBanked obtained, it said that amounts collected from the revenue-based financing component of the loan should be excluded from interest and interest rate calculations and should not be considered when determining whether the loan exceeds a state’s maximum allowable interest rate.
Many of the company’s case studies tout the benefits of revenue-based financing. In one case, a borrower received $500,000 and grew revenue by 90% over 12 months. Founders First said that “revenue-based financing was ideal as the payments were increased during stronger revenue months.”
The company has deployed more than $20 million in capital, and 70% of its customers have increased their revenue. Its financing has also contributed to the hiring of more than 2,700 new full-time employees. Businesses can obtain funding of up to $2 million. In Founders First’s 2025 Impact Report, the company says its financing is better than SBA loans because borrowers do not need strong credit or assets. It also touts how more than half of its portfolio consists of refinanced MCAs.
True Food Kitchen Had $2.2M MCA Balance With Parafin Before Bankruptcy
October 7, 2026FRC Balance, LLC, which owns the True Food Kitchen restaurant chain, filed for bankruptcy this week. According to the company, True Food Kitchen has closed 12 restaurants, whose final day of service was Sunday, October 4. The company’s remaining 34 restaurants across 14 states are open and serving guests as usual.
Among the company’s listed creditors is Parafin, with an outstanding merchant cash advance balance of $2,206,502 reported in one of the bankruptcy filings. There is no indication that the MCA added to the company’s financial pressure (True Food Kitchen owes millions just to its food vendors alone, for example, and they cited organizational issues as the root cause). The balance is notable, however, for its size and for how the arrangement originated: through DoorDash Capital. deBanked was one of the first to discover DoorDash’s entry into MCAs in January 2022.
True Food Kitchen has been a poster child for DoorDash Capital since last year. In July 2025, DoorDash published a feature about the restaurant chain’s use of merchant cash advances. Titled How True Food Kitchen Used DoorDash Capital to Fuel Expansion, it opens by saying: “In September 2024, Peter Koumas, True Food Kitchen’s CFO, found DoorDash Capital while exploring the restaurant’s Merchant Portal, right as True Food Kitchen was in the middle of an exciting expansion phase, opening two new locations in Scottsdale, AZ, and Raleigh, NC.”
At the time, 10% of True Food Kitchen’s overall revenue came through DoorDash. The feature also noted that DoorDash Capital MCAs were provided by Parafin. In its bankruptcy filings, True Food Kitchen also listed a $1.8 million “MCA” balance with Rewards Network and a $7.1 million balance with InKind Credit, alongside debts to more traditional creditors.
Just a week ago, Parafin announced that it had been sold to Stripe for an undisclosed amount. It also revealed that it had originated $3 billion in funding since its inception in 2021. Until then, the scale of Parafin’s funding activity had been largely unknown. The True Food Kitchen bankruptcy now offers a glimpse of how large its exposure to a single client could be.
Counsel for the debtors said during a bankruptcy court hearing that they planned to reject Parafin’s contract and the payments towards it. True Food Kitchen blamed a combination of management turnover, changes in expansion strategy, failed investments, and product/branding issues as the reasons for its predicament.
Eighty Percent of Bluevine’s Customer Service Inquiries Are Resolved By AI Agents
October 6, 2026One striking detail emerged from Valley Bank’s acquisition of Bluevine: AI agents resolve 80% of inquiries to Bluevine’s Customer Care Center.
Many companies have touted their use of AI. For Bluevine, it also supports a key customer acquisition strategy: bundling business software into its banking platform.
“…we pack into the account a whole lot of software,” said Eyal Lifshiftz during the Valley Bank acquisition call. “So think about a small business that needs a lot of software to run their business: bill pay, invoicing, accounting, all of that. We just pack more and more software as part of the platform. So as a small business, instead of needing to rely on multiple sort of SaaS or online services, you’re able to integrate it all at once and everything magically works together.”
Opening a Bluevine account takes just five minutes, and AI now generates most of the company’s code.
“The majority of Bluevine’s code is AI generated today and approximately 80% of inbound client inquiries are resolved by AI,” said Valley Bank CEO Ira Robbins. “The team has built its own credit model, its own fraud, its own AML model, all supported by a single data layer that connects core banking and payment systems.”
Parafin Funded Over $3 Billion to Merchants in Five Years
October 1, 2026One of the key details revealed in the Stripe acquisition of Parafin is that Parafin originated $3 billion in funding since the company first started originating in 2021. Parafin supplied the financing infrastructure for platforms such as: DoorDash, Amazon, Gusto, SpotOn, Fullsteam, Jobber, and dozens more. Assuming the company experienced a normal growth curve, the company likely exceeded $1 billion in originations over the last 12 months, putting them roughly on pace with what Stripe’s own funding business was producing. deBanked previously estimated that Stripe Capital originated $1 billion in funding in 2025.
When the deal finally closes and Stripe Capital combines with Parafin, the resulting funding entity will rank among the largest online small business lenders in the country. Only Quickbooks Capital, Shopify Capital, OnDeck, and Square Loans will continue to be significantly larger, at least among the companies tracked by deBanked.
Valley Bank CEO Interviewed on CNBC About Bluevine Deal
September 29, 2026Following the Bluevine acquisition announcement, Valley Bank CEO Ira Robbins was a guest on CNBC where he was asked about the deal. Watch below:
5G Funding and its Owner Sued By SEC Over “MCA” Business
September 29, 20265G Funding represented that it had a profitable MCA business. But according to a lawsuit filed against the company and its CEO by the SEC, that was far from accurate. “The Portfolio was never profitable,” the lawsuit says. “5G Funding collected the full amount due on only about 30 of the 184 merchant cash advances.”
5G Funding formed in 2021 and by mid-2023 was insolvent. The company had raised $4.5M from 23 investors. Much of those funds are alleged to have been misappropriated by 5G’s owner and were used to “pay a down payment on a home, to pay his personal gambling expenses, and to purchase cars and watches.”
The SEC has sought relief on two securities fraud counts.
Bluevine CEO on Being Acquired by a Bank: “You’re seeing a lot of fintechs becoming banks right now.”
September 28, 2026Valley National Bancorp is acquiring Bluevine for $340M in a 75% cash, 25% stock transaction.
During a company conference call discussing the announcement, Valley CFO Travis Lan said that “the transaction does not require traditional bank regulatory or shareholder approval and is expected to close early in the first quarter of 2027.”
Veterans of the fintech industry may recall Bluevine’s early days doing invoice factoring and lines of credit, but the company has long since pivoted primarily toward small business banking. And that’s what interested Valley, according to the bank’s chief executives, particularly the deposits.
“[Bluevine has] about $130 million of on-balance sheet loans today,” said CFO Lan. “However, they have a variety of forward flow agreements, and they sell a lot of their production for a gain. We assume that remains fairly constant. So the growth in on-balance sheet loans is fairly modest. We’ll continue to sell some of the production into the forward flow agreements that are in place today. So that will support fee income. The risk-adjusted returns on the loans have been very strong historically, but this is certainly a deposit play, not on-balance sheet loan play.”
Bluevine, for example, has 175,000 small business banking customers while Valley only had 9,000. The impact to Valley is a 20x increase in its small business customer base. Valley said that it does not really intend to ramp up its small business loan originations as a result, however.
“While the [Bluevine] loans are attractive from a risk-adjusted return perspective, I mean, obviously, we have our credit appetite that will continue to drive the majority of the loans that we would on balance sheet across the franchise,” said Lan. “So as we’ve talked about historically, loan growth is not a problem for Valley. It’s funding that loan growth. And so while the loans that will come from Bluevine is modest in size and we’re willing to continue, it will not become an outsized part of the portfolio in aggregate.”
The economics of Bluevine loans were offered later in the call:
“The average FICO on [Bluevine] loans is around 720,” said Lan. “So it’s fairly high quality. The loss rates, as you’d imagine, for small business are somewhat higher than what we’re used to, but the portfolio is very small. And the loss rates have improved actually in the last couple of years. So they have, I think, average annual losses are running kind of low to mid-single digits. They have an 11% allowance against it today. We’ll add to that allowance at acquisition, and that’s kind of the approach that we’ll preserve going forward.”
Analysts wondered why Bluevine chose to sell.
“You’re seeing a lot of fintechs becoming banks right now,” said Bluevine CEO Eyal Lifshitz, who will become Head of Small Business Banking at Valley as a result of the deal. “It makes a lot of sense, both the economics, the regulatory certainty, just the ability to control your destiny, the infrastructure and so on. And so there’s different paths to get there, de novo, acquire a bank, and get acquired by a bank. And so for us, when we looked at the options in front of us, this felt like for us, the best option to accelerate our vision of building our small business franchise.”
Three years ago, Bluevine was mulling over an IPO, according to an interview with Axios. At the time, it quoted Lifshitz as saying the company was not profitable but that it could become so.
“When you look at our scale and the pace of growth, and as we approach going public, I think we would be in a position where we could become profitable,” it quotes him as saying. It further said that the company’s valuation was less than a billion dollars at the time.
The vast majority of Bluevine small business banking customers today are not signing up to borrow. They’re signing up for the easy process and user experience of business banking. Their KYC process is much more cost-effective than Valley’s and their use of AI superior.
“When Bluevine does its enhanced due diligence on some of their AML and KYC clients, they do at a cost of about $20. It cost us about $500,” said Valley CEO Ira Robbins. “80% of the clients that reach out to their customer care center at Bluevine are resolved by AI agents. To put that into perspective, that’s around 2% at Valley.”
In an interview Lifshitz did with deBanked in 2017, the interviewer made a remark about the Bluevine vision: “It sounds like the beginnings of a bank.”
How to Pay Off an MCA With an SBA Under The New Rules Effective Oct 1
September 23, 2026The SBA has provided new guidance on its approach toward refinancing merchant cash advances: if you convert one to a term loan, you’ll have to wait a very long time to refinance it with an SBA.
According to the most recent Standard Operating Procedures that go into effect on October 1, “Sales-Based Repayment Agreements (e.g.; Merchant Cash Advances) are only eligible for refinancing if the original agreement has been converted to a term loan, has amortized for at least 24 months, and no additional Agreements have been implemented since the conversion of the prior agreement(s).” If there’s any uncertainty as to what that means, they go a step further and say “If the Sales-Based Repayment Agreement is still active, it is not eligible for refinancing.”
This is slightly different from last year’s SOP that said “merchant cash advances and factoring agreements are not eligible for refinancing.”
The new language was perhaps put in place to close a potential loophole where an MCA is converted to a term loan and then immediately refinanced by an SBA.
