Articles by deBanked Staff
Checking in On Stripe Capital
April 15, 2024
Everyone is well aware that Square does revenue-based financing loans, but lesser talked about is that Stripe does too. Stripe has been offering financing to merchants since at least 2019. Valued at more than $65 billion with IPO rumors swirling, Stripe has the potential to become one of the largest online small business lenders in the United States.
Stripe’s loan program is big enough to leave a trail of discussions across the web about their product, including on Reddit where some users have discussed getting loans well into the six figures. In February, one tech founder shared on X that a Stripe Capital loan had been very beneficial for his business.
Originally, Stripe offered a merchant cash advance but has since switched to doing revenue-based loans. In both cases, merchants pay by Stripe withholding a percentage of their card sales in what’s known industry-wide as a split.
Brokers: Attend This Open Bar in NYC
April 14, 2024
Broker Fair’s Pre-show party sponsored by Triton Recovery Group takes place on May 19th from 7-9pm at Somewhere Nowhere NYC. The Pre-show requires a separate ticket from the main event taking place the following day at The Metropolitan Pavilion.
You can register below for one or both! OR do it on the main site at brokerfair.org.
The Status of the Legal Situation in New York
April 8, 2024| A lot has transpired on the legal front in New York State over the last month. If you’re a broker, funder, or lender that does business in New York, you cannot afford to miss this session at Broker Fair on May 20 in NYC. Come and learn about the current status and future outlook of the industry from this panel of knowledgeable attorneys. Your success is dependent on being informed. Take advantage of this opportunity!
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Peter Ribeiro to Speak at Broker Fair 2024
April 8, 2024Brokers, get ready to learn from one of the industry masters. Peter Ribeiro, well known for his ability to build and scale a very successful broker shop, will be speaking at Broker Fair 2024 on May 20 in NYC. If you’ve ever wanted to hear how it’s done from him in person, this is your chance to do it!
Ribeiro also announced just last week that he has become CEO of Capital Gurus.
Revisiting Splits and Payment Methods in the Funding World
March 31, 2024
As most people are aware, ACH debits are only one method used in the small business finance industry to facilitate performance of a deal. Here are some other common ways:
Split Funding
This method has been in use since at least 1998 and is still used by many funding companies today.
See: CC Splits Still Make Profits, Payments Knowledgeable Funders Benefit
Lockbox
A lockbox gives you the protection and visibility of a split but may require additional setup steps. This method was very common in the 2008 – 2012 era and is still available.
Variable ACH
The variable ACH system, made famous by MCC starting circa 2009, is still in use around the industry.
See: Homegrown Software Enables FundKite to Reconcile MCAs Daily Rather Than Monthly
Business Loans Up, But Environment Not Great
March 29, 2024
Survey results revealed by the Federal Reserve show some positive figures but a mixed backdrop. While small business commercial and industry (C&I) loans increased by 9.3% over the previous quarter, overall credit quality of applicants continued to decline as did loan demand. Approval rates also dipped at large and mid-sized banks down to 49% and 66% respectively.
However, the startling statistic comes from small banks which experienced an increase in approval rate up to 89%! (Hard to believe?)
Credit line usage also went up for the third quarter in a row, of which 89% of these lines carried a variable rate.
“On net, respondents indicated that all loan terms tightened,” the report concluded. “About 85 percent of respondents cited less favorable or more uncertain economic outlook as a somewhat important or very important reason for the tightening. Other commonly cited reasons were worsening of industry-specific problems and reduced tolerance for risk.”
Controversial Search Engine Marketing Tactic Targeted by Google
March 24, 2024
When company domain names expire, some investors snatch them up to take advantage of the residual benefits left behind. That is that if the company had a significant footprint in search engines before going out of business then it can pay big money to bring that domain name back to life and monetize its organic search traffic.
But Google hasn’t become too fond of this strategy since it’s apparently often used in a deceptive manner.
“Expired domain abuse is where an expired domain name is purchased and repurposed primarily to manipulate search rankings by hosting content that provides little to no value to users,” wrote Google as part of its new policy. “Expired domain abuse isn’t something people accidentally do. It’s a practice employed by people who hope to rank well in Search with low-value content by using the past reputation of a domain name. These domains are generally not intended for visitors to find them in any other way but through search engines. It’s fine to use an old domain name for a new, original site that’s designed to serve people first.”
Google also made changes to its core algorithm that is reducing “unhelpful, low-quality, unoriginal content in its search results by 40%.”
Once upon a time Google organic search traffic could be make or break for a company but today there are so many platforms that people are using (Think the Amazon Echo, ChatGPT, TikTok, and more) that it is merely one channel out of many on the internet to acquire customers.
New York State Bill Aims to Recharacterize Factoring, Leasing, Revenue Based Financing, and More
March 22, 2024
A proposal to amend a New York State statute that governs how the rate of interest is computed “upon a loan or forbearance of any money, goods, or thing in action” seeks to broaden its application to an all encompassing umbrella of loan and non-loan products defined as a “financing arrangement” and then subject them all to usury caps.
And yes, it applies to commercial financing.
According to Assembly Bill 9585, a financing arrangement will be defined as “to include loans, forbearance of any money, goods or things in action, and all other transactions that involve the lending or advancing of money, goods or things in action for an amount charged, taken or received, and all transactions that operate as substitutes for such products, including but not limited to retail installment contracts, merchant cash advances, invoice financing, revenue-based financing, earned wage access or similar wage advance transactions, lease- or rent-to-own arrangements, rental-purchase agreements as defined in subdivision six of section five hundred of the personal property law, buy-now pay-later transactions, financing for litigation or legal settlements, income-sharing agreements and financing for education.”
And once that rate of interest is computed, “any rate exceeding twenty-five per centum per annum” in accordance with how the rate is allowed to be calculated, will be considered a Class E Felony of Criminal Usury.
This is just a bill. It hasn’t passed anything yet. It can be read here. It was introduced by Assemblywoman Helene E. Weinstein.
