Articles by deBanked Staff
New FCC Chairman Ajit Pai Has Been Critical of Serial TCPA Plaintiffs, Record Shows
January 24, 2017
FCC Commissioner Ajit Pai is the commission’s new chairman, thanks to President Trump. A republican who believes free markets are better for American consumers than highly regulated ones, Pai is likely to offer a sympathetic ear to companies besieged by serial TCPA plaintiffs, a problem that has reached epidemic proportions in the small business finance industry.
In 2015, when the FCC announced a broader definition of an autodialer under the TCPA, Pai strongly dissented.
Instead, the Order takes the opposite tack. Rather than focus on the illegal telemarketing calls that consumers really care about, the Order twists the law’s words even further to target useful communications between legitimate businesses and their customers. This Order will make abuse of the TCPA much, much easier. And the primary beneficiaries will be trial lawyers, not the American public.”
– Ajit Pai, 2015
If you’ve been threatened or sued by someone for violating the TCPA, you’re not alone. When we researched Smile, Dial and Trial, we reviewed dozens of lawsuits filed against small business finance companies and have since even discovered new ones filed since then.
The Top Small Business Lending Platform Finalists Named By LendIt
January 20, 2017The LendIt Industry Awards has named six finalists for the Top Small Business Lending Platform. They are:
- OnDeck
- Kabbage
- SmartBiz
- StreetShares
- Ascentium Capital
- iwoca
OnDeck you should know by now. They are publicly traded on the NYSE under ticker ONDK. We last sat down with them in October, shortly before they announced a $200 million credit facility with Credit Suisse.
Kabbage was one of the first online small business lenders to truly experiment with complete automation. In the last year the company has partnered with banking giants Santander and Bank of Nova Scotia.
SmartBiz ranked as the number one provider of non-Express, SBA 7(a) loans under $350,000 for fiscal year 2016. An online platform, they generated $200 million in funded SBA 7(a) loans through its bank lending partners during that period.
StreetShares has a strong focus on funding veteran small businesses. The company is also one of a very few to get approved for Reg A+ under the JOBS Act, which allows them to accept investments from unaccredited retail investors (with some limitations).
Ascentium Capital actually funded nearly $900 million to small businesses in 2016 and was acquired by PE firm Warburg Pincus just a few months ago.
iwoca is based in the UK but also operates in Germany, Spain, and Poland. They offer lines of credit to small businesses up to £100,000 with repayment terms of up to 12 months. Interest rates range from 2% to 6% per month. iwoca has raised £46 million through debt and equity.
According to LendIt, finalists for this category were awarded to the top small business lending platform based on a combination of loan performance, volume, growth, product diversity and responsiveness to stakeholders.
A similar category, the greatest Emerging Small Business Lending Platform also had six finalists. They include:
- ApplePie Capital
- Capital Float
- Credibility Capital
- Lendio
- Lendix
- Wunder Capital
More than 30 industry experts will judge and select award winners. You can view all categories, finalists and judges here.
You can also get 15% off the LendIt Conference registration with promo code: Debanked17USA.
The NYDFS Opposes Fintech Charter Proposed by the OCC
January 19, 2017New York State regulators are not happy with the OCC’s willingness to grant bank-like powers to non-banks in the fintech movement.
“NY DFS disputes the OCC’s claim that it has the authority under the National Bank Act for this proposed new charter,” a letter by Superintendent Maria Vullo states. “Nonbank financial institutions are not banks nor are they similar to the entities encompassed by the National Bank Act.”
The letter goes on to make many points, one of which is the reminder of New York’s state sovereignty and another is the argument that such a regulatory experiment would lead to a financial crisis.
The letter follows similar concerns by Democratic members of Congress.
MCA Company Files Suit Against Debt Settlement Company
January 16, 2017Plaintiffs Pearl Gamma Funding, LLC and Pearl Beta Funding, LLC (Pearl) aren’t happy with what a debt settlement firm is allegedly telling their customers, according to a complaint filed in the New York County Supreme Court in November.
“Creditors Relief LLC researches customers who have entered into Merchant Agreements with Pearl, solicits them throughout the country, and advises them to breach their contracts with Pearl,” plaintiffs allege. They also cite an example in which an employee of defendant allegedly told a customer “that Pearl was engaging in illegal activity and its Merchant Agreements were unenforceable.”
Pearl’s causes of action against the defendant include tortious interference with contract, defamation and permanent injunction.
Creditors Relief, based in Englewood Cliffs, NJ, denied the allegations in their response but has asked the court to declare Pearl’s contracts with its customers unenforceable nonetheless.
Due to the nature of pending litigation, neither party was asked to comment.
The Small Business Lender Rankings (A preliminary peek)
January 4, 2017
Here’s a peek at how some of the industry’s largest alternative small business lenders were doing for the year in originations as they headed into the last quarter of 2016. This data should be considered an estimate and is obviously not comprehensive. Still, this should give you a clue where some players will end up:
| Lender | Q1 – Q3 2016 | FY 2015 | FY 2014 |
| OnDeck | $1,772,000,000 | $1,900,000,000 | $1,200,000,000 |
| PayPal | $1,000,000,000 | $850,000,000 | |
| Square | $550,000,000 | $400,000,000 | $100,000,000 |
| IOU Financial | $87,500,000 | $146,400,000 | $100,000,000 |
Other small business finance companies do more than just loans, with many doing merchant cash advances. And some companies work to get customers funded through other platforms when prospective customers don’t fit their risk box. The numbers below are origination approximations regardless of whether the customer was ultimately placed on their balance sheet or someone else’s and whether or not the transaction was a loan or MCA.
| Funder | Q1 – Q3 2016 | FY 2015 | FY 2014 |
| Bizfi | $415,000,000 | $481,000,000 | $277,000,000 |
| Yellowstone Capital | $350,000,000 | $422,000,000 | $290,000,000 |
| Platinum Rapid Funding Group | $135,000,000 | $100,000,000 |
Platinum Rapid Funding Group Originated $180 Million in 2016
January 3, 2017A social media post by Platinum Rapid Funding Group CEO Ali Mayar, revealed that the Long Island-based company had originated $180 million in deal flow in 2016. That’s almost twice their 2015 volume, and is a new record for the company.
In Mayar’s post, he wrote, “Thank you to everyone who’s a part of this unstoppable organization for an amazing year and the best is yet to come.”
CAN Capital Shareholder Files Lawsuit
December 25, 2016Add an aggrieved shareholder to the list of CAN Capital’s recent messes. On December 19th, Deborah Clearman filed a motion for summary judgment in lieu of a complaint in the New York Supreme Court, alleging that CAN had failed to comply with a settlement agreement that stipulated she be paid $150,000 by November 14, 2016.
Clearman, who has been a shareholder of the company since 2003, is the owner of 83,362 shares of CAN Capital preferred Series A-1 stock and 48,078 shares of CAN Capital preferred Series A-2 stock, according to the settlement agreement now visible to the public because of New York State’s open court system.
The original dispute between the parties precedes the latest events rocking the company, though the alleged non-payment could be related to liquidity woes. CAN was only just served the summons on Wednesday the 21st and has not yet filed a response to the allegations.
CAN recently suffered a Rapid Amortization Event with their $200 million securitization, has suspended the funding of new deals and has laid off nearly half of their employees.
The lawsuit is registered as case number 656603/2016 in the New York County Supreme Court
Citizens Bank to Use Fundation’s Tech and Services in 2017
December 21, 2016Fundation is back at it, this time announcing a deal with Citizens Bank to offer “digital lending capabilities to small business customers.”
According to a press release:
The added capability will enable small businesses to apply for loans and lines of credit through a simple online application at citizensbank.com. In most cases approval is provided within minutes, and loans are funded in as little as three business days. Additionally, Fundation will offer credit to some customers that do not meet Citizens’ credit guidelines, helping the bank to serve more of its small business customers’ credit needs.
Expected to go into effect in mid-2017, it should be a huge improvement to Citizen’s existing online loan application process, which doesn’t appear to even exist. A cursory review of their website indicates that business owners can at best, schedule a consultation with a banker over the phone.
Fundation has transformed this process for other banks in the past, Regions Bank for example, as we showed in a prior post. The partnership should be valuable for both Fundation and Citizens.
