Articles by deBanked Staff
PayPal’s Business Loan Biz: ‘Looks Pretty Steady Right Now’
April 29, 2025During the Q1 earnings call, PayPal was asked about the state of its business loan and working capital business given the potential disruptions with tariffs and the economy.
“…when you look at just general consumer health, coming into what could be a more uncertain time, is looking pretty healthy and pretty good,” said PayPal CFO Jamie Miller. “And then with respect to SMB, good continued consistent performance there too. And on the merchant lending side, as we monitor that, honestly pretty consistent with what I’d say about consumer charge offs also improving. And obviously we’re monitoring the whole thing very, very carefully, but it looks, looks pretty steady right now.”
Later, an analyst asked the management team: “I’m just wondering if you’ve made any changes to underwriting, or how you would think about changes to underwriting in the face of merchants facing kind of cash flow strains on the back of sort of supply chain dynamics, tariffs specifically, and if you guys have any way of sort of dimensionalizing like what sort of cash flow strains your merchants may experience if tariffs do go into effect in terms of things like importing, importing inventory and things of that nature?”
That yielded this reply from Miller:
“I think it’s difficult to answer the latter part of your question, but if we go back to the merchant lending part of it, this is a portfolio that is actively managed, and it’s something that a year ago when [——] came in and really reconstituted the team, they’re very focused on how we can help our small businesses really navigate growth. And so the portfolio has a couple of different things in it. One is just really helping small businesses with working capital and inventory buy and we monitor that and underwrite it, you know, with an eye towards credit, towards cash flow. And when you look at this, these are things where we’ve got cash sweeps with sales as sales come in. It’s just a very well constructed portfolio from both an underwriting and from a risk management perspective. And the other side of it is PayPal Business Loans, which are cash flow based, they’re typically personally guaranteed. And again, these are things that we monitor, all the different indicators of the portfolio, and we adjust as we go. I mean we did make some adjustments in March to tweak and fine tune and make our underwriting slightly more conservative, but it’s something the team is all over. And I think we can react very quickly in a changing environment.”
Small Business Finance Leads at Broker Fair
April 23, 2025We’ll be talking about small business finance leads on May 19th in NYC at Broker Fair 2025. Come attend this session and many more on top of great networking, food & beverages, etc. This is the industry’s largest annual conference in NYC.
SBA Places Restrictions on Use of Proceeds to Refinance Merchant Cash Advances and Factoring Agreements
April 22, 2025The Small Business Administration has made some notable changes to its Standard Operating Procedures that go into effect on June 1. For instance, the new guidance specifically says that “merchant cash advances and factoring agreements are not eligible for refinancing” for Standard 7(a) loans, 7(a) Small loans, SBA Express loans, Export Express loans, and International Trade loans.
The new SOP is here. This was the previous SOP that did not mention MCAs.
Virginia’s Sales-Based Financing Provider List
April 21, 2025
Virginia updates its list of registered sales-based financing providers on a weekly basis. The current list can always be accessed via THIS LINK HERE. It has also been available on DailyFunder since March 2023. At last tally, there were 202 registered providers, which is not that many more than the 150 that were on the list two years ago.
Both funders and brokers are required to be registered if they plan to do any MCA business with VA-based merchants.
If you need help with registration, contact a qualified industry attorney. Here is a short list to start from.
Eight Individuals Arrested by FBI in Small Business Loan Carroting Scam
April 18, 2025
Eight individuals have been arrested by the FBI and charged in connection with a scheme to defraud small business owners out of millions of dollars by charging them money in return for a promise of a large line of credit that would never come.
The individuals charged include: Joseph Rosenthal, Matthew Robertson, Nicholas Smith, James Missry, Paul Cotogno, Blaise Cotogno, Adam Akel, and Nicholas Winter.
As part of the alleged conspiracy the group used the following domain names: oakcapitalgrp.com, oldbridgefunding.com, wsfcap.com, opticapitalgrp.net, and more.
In addition, they used company names and entities that include: Clover Advance Group LLC, FFCG LLC, Advance Source Capital Group dba ASF Capital, WSF Capital Group, Forward Advance LLC, Delta Fund Grp, Oak Capital Grp, United Front Capital, Quick Call Capital, Pine Equities, D&D Equities, ASC Group LLC, and Old Bridge Funding.
“For some victims, the Defendants sent some of the Defendants’ funds to bank accounts provided by the victim,” the criminal complaint states. “The victim was instructed to then repay that same money back to the Defendants over several days, which would in turn improve the victim’s credit score, making the victim more credit-worthy. Further, to secure the loan or line of credit, the victims were required to make a larger, one-time payment comprised of the victim’s own money, which the Defendants typically referred to as a balloon payment. Once the Defendants had recouped their own funds and obtained the victim’s own money via the balloon payment, the Defendants did not extend financing to the victim. Instead, the Defendants kept the victim’s money and broke off communication with the victim.”
The scam had been going on for almost four years, according to the criminal complaint. Several of the names listed above had circulated on an industry message board as likely being involved in a bait and switch LOC fraud scheme.
“These defendants perpetrated a years’ long scheme to defraud hard-working business owners in New Jersey and across the United States, stealing millions of dollars from thousands of victims,” said U.S. Attorney Alina Habba. “These charges reflect our Office’s commitment to holding accountable those who prey on small business owners trying to support their communities and earn a decent living.”
Recent M&A Activity in the Space
April 17, 2025There’s been quite a bit of M&A activity in the small business finance industry over the last 6 months. Here’s a list of some of the more notable deals:
10/25/24 – Kapitus Acquires Ten Oaks Commercial Capital and Launches Equipment Financing Arm
1/7/25 – eCapital Acquires LSQ to Expand Technology Solutions and Strengthen Market Leadership
4/1/25 – NMEF Acquires Pawnee, Marking a Significant Milestone of Growth and Industry Leadership
4/8/25 – Onset Financial Acquires Channel Forming One of the Largest Independent Equipment Finance Lenders
4/15/25 – Pipe Acquires Glean.ai
Will the CFPB’s Small Business Data Collection Rules Change?
April 4, 2025On April 3, the CFPB filed papers agreeing with the Revenue Based Finance Coalition’s (RBFC) request to stay the litigation between them over coverage of the Small Business Lending Rule. As it last stood, a federal court was leaning toward the CFPB’s side that the 888 pages of data collection rules should apply to MCAs despite them not being loans.
As to why the CFPB would agree to a stay, the agency explained that it may now be tweaking the rules at issue.
“New leadership has been assessing the Final Rule and the issues that this case presents to determine the CFPB’s position. CFPB’s new leadership has directed staff to initiate a new Section 1071 rulemaking. The CFPB anticipates issuing a Notice of Proposed Rulemaking as expeditiously as reasonably possible. Because the anticipated rulemaking process may moot or otherwise resolve this litigation, holding this matter in abeyance would conserve the Court’s resources.”
– CFPB in its response to the Motion to Stay
“The CFPB respectfully proposes submitting periodic status reports every 90 days during the pendency of the rulemaking and will promptly inform the Court when the rulemaking process is complete,” the Agency stated. “Within 30 days of the issuance of a final rule, the CFPB proposes that the parties confer and notify the Court of whether and how they wish to proceed.”
The small business data collection rules are scheduled to go into effect in July.
Debt Relief Scammer Charged Criminally With Wire Fraud
April 3, 2025Edward William Rennick III, a known debt relief scammer previously barred from the debt relief industry by the FTC, continued on with his scheme for years after the ban. He is now charged criminally with wire fraud conspiracy.
According to the US Attorney for the Middle District of Florida, Rennick and others engaged in a scheme to defraud consumers by instructing them to stop paying their creditors and to make fixed monthly payments to the entities they controlled instead, all under the guise of consolidating their debts. These consumers were told that all of the diverted funds would go into an escrow account and be used to pay off their debts. Instead, much of those funds were misappropriated by members of the conspiracy for personal use.
You can view the US Attorney’s charges here.
