Articles by deBanked Staff
Time to File Your Annual Commercial Financing Report in California
February 27, 2025March 15th is the deadline for covered commercial financing providers to file their first annual report with the State of California. According to the DFPI, “any person engaged in the business of offering or providing commercial financing or another financial product or service to a small business, nonprofit, or family farm whose business activities are principally directed or managed from California” is required to file the report.
Per the state on exemptions:
Covered providers, as defined in California Code of Regulations, title 10, section 1060(e), are required to file this report. If you are not a covered provider under section 1060(e)(2) because you conduct all commercial financing under the authority of your CFL license, you are not required to file this report.
To determine if your company is or is not required to file a report, please consult with an industry knowledgeable attorney. If you need a list of potential attorneys in this field, please email info@debanked.com.
Square Loans Originated $5.7B in Business Loans in 2024
February 25, 2025Block subsidiary Square Loans had a huge Q4, originating $1.54 billion in business loans. That brought the year-end total to $5.7 billion, enough to continue their streak as the largest online business lender that deBanked tracks. Enova is #2.
Square Loans customers typically experience growth when taking the funds. Block CEO Jack Dorsey said this of the program in the previous quarter:
“In 2013, we began offering capital to sellers because we saw a meaningful gap in the market: small businesses were often denied access to credit, in the same way they were once denied access to accepting credit cards. We utilized our deep understanding of the seller and their business to build a technology that invited them to accept a loan with transparent rates, and pay back simply by making sales to their customers. We called it Square Capital (which is now known as Square Loans).
Since then, we’ve underwritten more than $22 billion in loans globally, with aggregate loss rates below 3%. And we’ve proven we can expand access: 58% of Square Loans are to women-owned businesses, and 36% are to minority-owned businesses, both of which are higher than the benchmark we track If our sellers grow, we grow – and we believe Square Loans has a direct impact on our sellers’ growth. Sellers who take out a Square Loan grew on average 6% faster than sellers who did not take out a loan.
Many financial products trap borrowers in cycles of revolving debt. We don’t allow customers to take on new loans if they have an overdue balance. And repayment is built into how our products work: Square sellers repay loans through a fixed percentage of their revenue, creating a manageable-real-time payment flow.
On credit risk management, we have a long history of maintaining stable loss rates and these products act as working capital, which means they are usually short in duration. What that means for us is that a dollar used on our balance sheet can turn multiple times, driving capital efficiency while providing us with high-quality data to continually refine our technology-driven underwriting.”
-Jack Dorsey
Court Leans Toward CFPB in MCA Section 1071 Lawsuit
February 19, 2025A federal magistrate judge found that the CFPB did not overstep its authority when it subjected MCA transactions to the Small Business Data collection rule slated to go into effect this year. The lawsuit was filed a little over a year ago by the RBFC. The RBFC has the opportunity to file an objection within 14 days. For an analysis of the findings, you should consult with an attorney. It can be downloaded here.
This course of events is not related to the recent headwinds the CFPB is facing otherwise.
Upstart: 91% of loans fully automated
February 19, 2025AI-based online consumer lending company Upstart just wrapped up a strong year, generating a tiny $2.8M net loss on $219M in revenue. Upstart was known for AI in the fintech industry before AI became the buzzword it is now. Ninety-one percent of the company’s loans in 2024 were fully automated with no human involvement, and 93% of instant approvals converted to funded loans.
Notably, a significant amount of their loan volume is generated by direct mail.
“Whenever our models get better, we tend to get more volume from partners, DM — direct mail converts better so that we can actually increase the amount of direct mail we send,” said CEO David Girouard.
While the company halted its earlier plans to add small business loans to its product mix, it still estimates the size of the market in its quarterly presentations. And according to that it’s an $895 billion market annually.
Analysts on the call liked what they heard about Upstart’s 2024 performance.
“2024 was a year of rapid quarter by quarter improvement for Upstart, and the fourth quarter clearly took the cake,” said Girouard. “Considering the weak environment we faced at the beginning of the year, we couldn’t have asked for a stronger finish. In Q4, our business grew dramatically across all our product categories on a sequential basis, delivered Adjusted EBITDA at levels not seen since the first quarter of 2022, and came within a whisker of returning to GAAP profitability.”
Industry Event Schedule at a Glance
February 17, 2025Here’s what in store for 2025:
2/20/25: deBanked CONNECT MIAMI – Miami Beach, FL
5/19/25: Broker Fair – New York, NY
10/28 & 10/29/25: B2B Finance Expo – Las Vegas, NV
What to Look Out For in Back-up Servicing
February 17, 2025
“There is a misconception that back-up servicing is merely an Insurance Policy,” states Larry Chiavaro, Chairman of Paramount Servicing Group, in a recently released White Paper on the subject. “That is not the case in today’s rapidly changing markets. Fluctuating interest rates, the creation of many new asset classes, and emerging technology have created many new opportunities for all.”
The 12-page paper on back-up servicing dispels many myths while educating lenders about what to look out for when choosing a servicer. It is clear that the selection process should not be an afterthought and can be very consequential for one’s business. Chiavaro breaks it down well. You can download the paper here.
The CFPB is Now Investigating the CFPB
February 13, 2025The new CFPB, one in which the office is closed and its workers can’t work, has now refocused its attention to investigating itself. A new tip line has been set up for people being pursued by CFPB enforcement or supervision staff to report them as being in violation of a stand down order. That’s because Acting Director Russell Vought has ordered its employees not to work while an audit conducted by the Department of Government Efficiency takes place. This tip line is designed to root out employees ignoring the order.
Vought confirmed the tip line on Thursday.
Shopify Capital Originates ~$3 Billion in Merchant Funding in 2024
February 11, 2025
Shopify Capital originated ~$3 billion worth of MCAs and business loans in 2024, up by 50% over the prior year. For the sake of comparison, online small business lender Enova originated $4 billion in 2024. Shopify is an e-commerce platform first, however, and is growing on all fronts
“2024 was a stand-out year for Shopify,” said Shopify President Harley Finkelstein. “We seized every opportunity to fuel our growth and it showed in the results quarter after quarter. Heading into 2025, we are committed to making entrepreneurship more common and further establishing Shopify as the go-to commerce platform for businesses of all sizes. With our proven track record, the agility of our platform, and our relentless focus on merchant success, we like our odds in this evolving technology landscape, and are excited about the opportunities it brings for Shopify and our merchants.”
