Articles by deBanked Staff
Lendr Launches New Business Debit Card
April 9, 2018
Chicago-based Lendr is launching a new business debit card program, according to an announcement the company made at LenditFintech.
This will give them the ability to fund business owners in real-time via an instant access virtual Mastercard followed up with a traditional plastic card. This system is different than pushing funds to a merchant’s existing bank debit card, which fellow online lenders Kabbage and LendingPoint announced at LendIt.
“The idea is to offer a product that makes access to capital as easy as ‘1-2-3,’” CEO Tim Roach told deBanked. “We will have the ability to deposit funds on the Mastercard in real time, making the process seamless for our clients.”
Usury Suit By Higbee & Associates Made Null and Void By Judge
April 3, 2018
An attorney suing merchant cash advance companies in New York has once again been told by a judge that he was ineligible to file a lawsuit in the state.
Rayminh Ngo, of counsel with Higbee & Associates, a law firm that tries to sue merchant cash advance companies for usury, met his demise on Tuesday when the Honorable Kenneth L. Thompson, Jr. rendered the lawsuit before him null and void for violating Judiciary Law 470. §470 requires that the law firm have an office in New York in order to represent clients in New York.
Ngo and Higbee had no such office, a secret that was exposed in January when they were thrown off a case in Nassau County for being in violation.
In this latest case, Singlesource Communications, Inc. DBA Singlesource Communications, and Brian Miller v ABC Merchant Solutions, LLC (Index #28640/2017), Judge Thompson found Higbee’s violation and “lack of candor” so compelling that he rendered the entire lawsuit “a nullity” rather than direct the plaintiff to obtain new counsel.
Judge Thompson specifically brought attention to the fact that the Higbee law firm swore to having an office lease in New York City and in support of that Higbee had supplied a document that literally said this is “NOT A LEASE.”
Needless to say the judge was not impressed and the action was dismissed without prejudice.
Not mentioned was that Higbee & Associates had tried to withdraw their usury lawsuit entirely, just days after The Appellate Division of The First Department ruled that such MCA transactions like the one ABC Merchant Solutions engaged in, were not usurious at all. Even though Higbee’s usury claim was already doomed as a matter of law, they nonetheless had their case dismissed for their own noncompliance and lack of candor.
Christopher Murray of Stein Adler LLP was the attorney for the defendant that was successful in winning Higbee’s disqualification in this case. Murray was also responsible for Higbee’s previous disqualification in Platinum Rapid Funding Group, Ltd. v. H D W of Raleigh, Inc. d/b/a Pure Med Spa, a/k/a Pure Cosmetic and Surgical Center and Holly Donielle Wybel a/k/a Holly D. Wybel.
Caught! Backdoored Deals Leads to Handcuffs
April 2, 2018
A case of sneaking deals out the backdoor has resulted in another arrest at Yellowstone Capital.
According to someone familiar with the arrest and the events leading up to it, an employee was led out in handcuffs by police officers last week after Yellowstone’s management discovered she was diverting company deals to an outside party.
Yellowstone Capital would not offer comment on the matter, though last September, CEO Isaac Stern had told deBanked that “Yellowstone is investing tons of time, money, and effort to prevent data theft. We are doing everything in our power, everything, to address it, and we have even enlisted the assistance of an outside security firm.”
At that time, deBanked had obtained a photo of a female employee being led out by Stern and several police officers. That employee is said to have pled guilty to a felony theft charge after being busted for transmitting sensitive company deal data to a third party. It was the second such conviction deBanked is aware of that involved backdooring deals.
Though funding companies are generally reluctant to share the extent of their security methods, deBanked has learned that the level of technology being used by some players to detect data theft would probably come as a surprise to many perpetrators. Chances are that if you have engaged in it, it has been tracked or recorded.
“They think we don’t know, but we know the industry,” Stern told deBanked last year in reference to questions about security. “Ultimately we will catch you.”
Debt Relief Scammers’ Assets To Be Auctioned Off
March 20, 2018
A crew of debt relief scammers that carried out an $80 million fraud are having some of their assets auctioned off in Pompano Beach, FL this week. Among them a Tesla, BMW i8, Range Rover and custom luxury buses.
According to the FTC and the State of Florida in a lawsuit they filed against Jeremy Lee Marcus, Craig Davis Smith and Yisbet Segrea, the defendants “got people to pay hundreds or thousands of dollars a month by falsely promising they would pay, settle, or obtain dismissals of consumers’ debts and improve their credit. Over time, victims found their debts unpaid, their accounts in default, and their credit scores severely damaged – some were sued by their creditors, and some were forced into bankruptcy.”
A court ordered an injunction against the defendants last year.
In an even uglier twist to the scheme, “the defendants also called people who were already enrolled with debt relief providers claiming they were taking over the servicing of those accounts and falsely claiming they would provide the same or similar services. The defendants told these consumers to transfer their escrow money to defendants, and then debited up to $1,000 each month from the consumers’ bank accounts.”
All of the named entities subject to the court-appointed Receiver’s control can be found here.
2017 Small Business Financing Leaderboard
March 14, 2018Thanks to several companies filing their annual earnings statements and Funding Circle disclosing their USA origination figures for 2017, we’ve been able to put together a leaderboard in the small business financing space. This list is not comprehensive and omits key players like PayPal Working Capital and Amazon Lending.
| Company Name | 2017 Originations | 2016 | 2015 | 2014 |
| OnDeck | $2,114,663,000 | $2,400,000,000 | $1,900,000,000 | $1,200,000,000 |
| Kabbage | $1,500,000,000 | $1,220,000,000 | $900,000,000 | $350,000,000 |
| Square Capital | $1,177,000,000 | $798,000,000 | $400,000,000 | $100,000,000 |
| Yellowstone Capital | $553,000,000 | $460,000,000 | $422,000,000 | $290,000,000 |
| Funding Circle (USA only) | $500,000,000 | |||
| BlueVine | $500,000,000* | $200,000,000* | ||
| National Funding | $427,000,000 | $350,000,000 | $293,000,000 | |
| Strategic Funding | $393,000,000 | $375,000,000 | $375,000,000 | $280,000,000 |
| BFS Capital | $300,000,000 | $300,000,000 | ||
| RapidAdvance | $260,000,000 | $280,000,000 | $195,000,000 | |
| Credibly | $180,000,000 | $150,000,000 | $95,000,000 | $55,000,000 |
| Shopify | $140,000,000 | |||
| Forward Financing | $125,000,000 | |||
| IOU Financial | $91,300,000 | $107,600,000 | $146,400,000 | $100,000,000 |
*Asterisks signify that the figure is the editor’s estimate
What’s a Broker To Do? Industry Execs Offer Their Insight
March 12, 2018
Below are excerpts from separate interviews with four industry executives when asked for tips or advice for brokers:
“I would just say to be in it for the long haul. Play the long game. Be the kind of quality partner that you would want in return. There are some brokers and referral sources in this space who see merchants only as a commission check, not as the going concern and business entities that they are. Some brokers are playing the short game, which is unfortunate, because brokers can be in a very powerful position with their clients (merchants) – they need to use that power wisely. If one were to carefully look at a business and its working capital challenges, and then tried to do what was in the best interest of that business in the long run, a broker could be creating a revenue stream for a longer period of time – on a healthier business – and in return creating a more sustainable brokerage platform for themselves. Be open and transparent – sometimes losing a deal due to full transparency can lead to many multiples of that volume with a loyal funding partner.”
– Bill Gallagher, President and Managing Partner, CFG Merchant Solutions | Read full interview
“Choose industries that you excel in—and own them.
Concentrate your marketing efforts on your core customers and target those that meet a lender’s criteria. It’s not the quantity of leads you deliver, it’s the quality—and that will save you time and money. Look for customers in growth stages, not those that are desperate for funds to stay afloat. This will also result in more renewals.
And find a lending partner with a strong brand, as this opens doors to new customers.”
– Michael Marrache, CEO, BFS Capital | Read full interview
“It is not an easy business and not for everyone. It takes quite some time – years – to either build an organization or to become a seasoned pro that truly understands the space. It is also very fast paced and ever changing, so you have to really commit and take the space seriously if you want to be successful.”
– James Webster, CEO, National Business Capital | Read full interview
“Brokering is a tough marketplace right now. I don’t want to say [it’s] saturated, but it’s getting pretty close…Everyone’s getting a million phone calls and mailings and the marketing is going crazy, and the expense is going up. So you really have to find a way to differentiate yourself.
That’s really the biggest thing about being a broker, besides quality service. It’s more: What kind of niche can I get into? How can I break into the market without having to spend like a million dollars a month on marketing? The biggest thing is: What can you do differently?”
– Evan Marmott, CEO, CanaCap | Read full interview
John Oliver Preaches Caution and Responsibility On Cryptocurrency
March 12, 2018HBO Talk Show host John Oliver showed restraint while taking down cryptocurrencies Sunday night. Although he criticized alleged ponzi schemes like Bitconnect and poked fun at the absurdity of EOS’s valuation, his overall message was to approach the technology with caution.
Bitconnect was an easy target now that the company has shut down and a judge has issued an order for their assets to be frozen.
Oliver appeared to be talking to the masses who could fall victim to an otherwise obvious scam simply due to their own fear of missing out.
What do you think?
Enova’s TBB Did $15M in Merchant Cash Advance Revenue in 2017
March 12, 2018International online lending conglomerate, Enova, generated $843.7 million in revenue last year, according to their recent annual report. More than $15 million came from merchant cash advances (MCAs) made through The Business Backer (TBB), a small business financing company they acquired in 2015. That’s down from $18.6 million in MCA revenue generated in 2016.
Though MCA revenue may be down, TBB began offering an installment small business loan product in 2017. They’re available in 10 states, according to the company.
Enova refers to MCAs as RPAs in their reports, short for Receivable Purchase Agreements. “Small businesses receive funds in exchange for a portion of the business’s future receivables at an agreed upon discount,” they state.”A small business customer who enters into a RPA commits to delivering a percentage of its receivables through ACH or wire debits or by splitting credit card receipts until all purchased receivables are delivered.” That is a textbook explanation of MCAs.
Their average “RPA” customer averages $1.5 million in annual sales and has 10 years of operating history.
