Articles by deBanked Staff
California Bill Aims to Add Consumer Debt Collection Protections to Commercial Debts
August 20, 2024Among several commercial finance bills currently making their way through the legislature in California is SB1286, which would apply consumer debt collection protections to commercial debts.
If this bill were to eventually pass commercial debt collectors would need to obtain the same license currently required under existing law for consumer collectors. In addition, it would be a crime for a collector of a commercial debt “to send a communication that simulates legal or judicial process or that gives the appearance of being authorized, issued, or approved by a governmental agency or attorney if it is not.”
There are still more components that would require compliance as well. Like the fact that under current law a debt collector is required to stop collecting a consumer debt when an alleged debtor provides the debt collector with certain information, including information relating to the debtor’s status as an alleged victim of identity theft. This would also apply to commercial debts. The full language of the bill can be read here.
Another bill moving along right now is SB1482, which would “would impose various duties on commercial financing providers and brokers, including, among other things, prohibiting the taking of a confession of judgment or power of attorney at any time before a default.”
Although both bills were introduced all the way back in February, they are currently being passed through committees.
Prosper Continues to Chug Along
August 18, 2024Prosper originated $512.2M in consumer loans in Q2 of 2024, which was down 14% from the same period last year. This was “primarily due to the reduced usage of our Warehouse Lines to purchase loans, as well as decreased third-party investor demand,” the company said in its quarterly report.
Prosper rates its borrowers from AA (best) to HR (worst). They are AA, A, B, C, D, E, HR. Twenty two percent of their borrowers in the first half of 2024 were given a B rating. 15% had an E rating and only 10% had a AA rating.
Overall, Prosper has been chugging along, generating an insignificant net loss of only $500,000 for the quarter. The fact that it supplies public quarterly reports is unique in that the company is not public but continues to sell notes to retail investors, making it more-or-less the only remaining peer-to-peer lender to remain from what is now a bygone era.
Kris Roglieri Alleged to Have Transferred Assets to Third Parties
August 16, 2024The Chapter 7 Trustee managing the personal bankruptcy of Kris Roglieri brought new information to light on Thursday by alleging that Roglieri lied heavily in his original bankruptcy petition. In addition to hiding assets, income, expenses, debts, gifts, and records from the bankruptcy process in part by running them through many business entities he owned, he also moved funds from his personal account into his Commercial Capital Training Group, LLC (CCTG) bank account just weeks before filing for personal Chapter 11 bankruptcy back in February. From there, assets from CCTG and assets from the National Alliance of Commercial Loan Brokers, LLC (NACLB), another business he owned, were transferred to third parties to be preserved as safekeeping for Roglieri’s own benefit.
“[Roglieri] thereafter transferred the assets including without limitation operations, funds, good will, client lists, and other personal property of Commercial Capital Training Group, LLC and the National Alliance of Commercial Loan Brokers, LLC to third parties,” the Trustee wrote. “[Roglieri] facilitated the transfer of assets from the Debtor Entities to dissipate the value of the Debtor membership interest in the Debtor Entities as a potential source of payment to creditors of the Debtor bankruptcy estate.”
On May 15, deBanked reported that the NACLB Conference had changed its name to Commercial Loan Broker Association (CLBA).
“The third parties are preserving the value of the transferred assets for the benefit of the Debtor,” the Trustee wrote. Assets belonging to the Roglieri estate were to have been turned over to the Trustee but were not.
Roglieri allegedly “facilitated the transfer of assets, including operations, funds, goodwill, client lists, and other personal property of Prime Commercial Lending, LLC to third parties” as well.
The Trustee has asked the Court to deny Roglieri a discharge of his bankruptcy. The full complaint can be viewed here.
Shopify Capital’s Funding Business Grows in Q2
August 14, 2024Shopify Capital originated ~$700M in business loans and merchant cash advances in Q2. During the earnings call, Shopify CFO Jeff Hoffmeister referred to its Capital division as a “growth business” that had increased in volume. Shopify has otherwise seemed to downplay mention of this division since early last year. In terms of origination volume, the company is still not as big as Enova or Square Loans.
Shopify’s rival, Amazon, used to offer funding to its clients directly as well, but switched to referring its clients to third party lenders earlier this year.
Business Finance Companies on Inc 5000 List in 2024
August 13, 2024Here’s where small business finance companies rank on the Inc 5000 list for 2024:
| Company Name | Ranking | Growth |
| Clara Capital | 158 | 2,295% |
| 4 Pillar Funding | 251 | 1,620% |
| Fundible | 254 | 1,611% |
| Byzfunder | 303 | 1,404% |
| Valiant Business Lending | 337 | 1,286% |
| CapFront | 541 | 792% |
| SellersFi | 974 | 523% |
| SBG Funding | 1,158 | 443% |
| Splash Advance | 1,238 | 418% |
| Channel | 1,330 | 389% |
| iAdvance Now | 1,421 | 362% |
| Flexibility Capital | 1,513 | 342% |
| eCapital | 1,968 | 265% |
| Kapitus | 2,025 | 258% |
| Merchant Industry | 2,057 | 254% |
| ApplePie Capital | 2,265 | 230% |
| Backd | 2,282 | 228% |
| Capital Source Group | 2,306 | 226% |
| Direct Funding Now | 2,323 | 225% |
| Expansion Capital Group | 2,829 | 179% |
| Fora Financial | 3,560 | 134% |
| Percent | 4,047 | 111% |
| Smarter Equipment Finance | 4,566 | 89% |
| Gateway Commercial Finance | 4,598 | 88% |
Did we forget you?! Let us know at info@debanked.com and we’ll add you.
Search Engine Algorithm Changes Impacted NerdWallet’s Small Business Lending Business
August 12, 2024
“Let’s say, you’re searching for a small business loan. You ideally, I think, want to comparison shop relevant choices, leveraging a brand you trust. And so if you see a government website explaining what a small business loan is, that doesn’t help, neither does a nonprofit website showcasing local grants nor is it helpful to see a regional bank that doesn’t do small business loans, right?”
This hypothetical was posed by NerdWallet CEO Tim Chen during the company’s recent quarterly earnings call. And that’s because a search engine update (which intuitively sounds like Google) actually impacted their SMB loan business in Q2.
“So during Q2, yes, like we said, [there was a] major algorithm update and [it] created meaningful headwinds on our search ads, and to a lesser extent, our traffic,” Chen explained. “So I’d characterize it as saying it’s stabilized and started getting a little better. Generally speaking, we think search is working well when it matches user intent and surfaces the best answers. And by that standard, we and a lot of industry observers felt like things went a bit haywire last quarter. So we think it’s inevitable, some of these kinks get worked out because there are strong commercial incentives for search engines to get it right. They want happy customers who keep coming back so they can sell more search ads.”
NerdWallet is one of the few companies in the business lending space to specifically draw attention to organic search traffic’s impact on its bottom line. NerdWallet, who previously acquired Fundera, has dominated in organic search rankings for top keywords for years. An investigation carried out by deBanked in 2018, for example, showed that NerdWallet and Fundera were consistently the top result(s) for basic business loan queries on Google.
But search wasn’t the only thing on their minds:
“SMB loans, particularly in originations, saw an increasing amount of pressure in Q2 as elevated rates and tighter underwriting persisted, combined with some of the organic search traffic challenges,” said NerdWallet CFO Lauren StClair. “So we continue to drive growth in the quarter with our diversified product offerings for small and midsized businesses in areas such as credit cards and banking. We believe we have a substantial runway for growth in both diversifying SMB subcategories as well as scaling SMB loans over the long run, though expect to face a tougher growth profile in the near term as we await a more robust lending environment.”
NerdWallet also recently laid off 100 employees.
OppFi Shares More About The Bitty Advance Deal
August 7, 2024
OppFi, a publicly traded fintech with a $430M market cap, discussed its recent investment in Bitty Advance during its regular quarterly earnings call today. OppFi acquired a 35% stake in the company with the option to acquire a majority in 2027.
“This acquisition is intended to serve as the foundational piece of our new small business financing vertical,” said OppFi CEO Todd Schwartz. “Bitty is a credit access company that offers revenue-based financing and other working capital solutions. Bitty generates income through origination and service fee income and therefore does not have balance sheet or credit risk.”
Special mention was made about Craig Hecker, who is still the majority owner, and his great leadership.
“I’m personally looking forward to collaborating with Craig and helping him and his team take Bitty to the next level of profitable growth by leveraging OppFi’s expertise in data analytics, marketing and automation,” Schwartz said.
During the Q&A session, Dave Storms of Stonegate Capital asked Schwartz to elaborate on any exciting short-term synergies the deal might present for OppFi. This was his response:
Todd Schwartz: I think Craig is a talented operator and obviously someone who has a lot of experience in the small business space. We think the collaboration between our two companies is going to yield great results. To remind everyone, Craig has a business that currently is in origination, so he’s earning his income from origination and servicing. We think that has a lot of optionality. He also has a really good digital platform. We believe in this digitization of small business and think there’s a lot of growth there. I think when you take a lot of the things that we do well and the things that Craig’s doing well, there’s a lot of complementary skill sets.
And I think it’s going to yield great results. I think we’ve done a lot of research on the SMB market and we feel that there is supply/demand imbalance. And we feel that there’s ability to not only take market share, but as the addressable market continues to go online to search for working capital options, that there potentially is even growth in the total addressable market. So we’re excited. We think there’s some accretion to earnings that we mentioned in this year and then for the future but we feel really good about taking our time there. We’ve kind of started to talk about it for over a year and a half. And so I think we’re just happy that we’ve fulfilled on our and delivered on our promise that we’re going to create, that OppFi is going to create a brand that has best suite of best-in-class digital financial service products that address supply/demand imbalance and credit access. And we feel like we’re on our way. We have all the ingredients to be able to do that and will yield great results for us.
SoFi Focused on Diversification
August 4, 2024SoFi signaled that diversification is a main goal in its business right now.
“Less capital, less risky businesses get valued much higher,” said SoFi CEO Anthony Noto in the company’s recent quarterly earnings call. “And we don’t want to have an over-dependence on a high capital, high-risk business. This year, the macroeconomic environment accelerated our diversification and it’s worked out quite well.”
Within the lending category of its business SoFi wants to scale up home equity loans and student loan refinancing and become more conservative on personal loan growth. That strategy is not only being driven by its diversification initiative but also the economy. For example, Noto said that the company wanted to see how the years trends with unemployment.
“We’re at 4.1% [unemployment], a move to 4.2% could signal a recession,” Noto said in the days before the actual unemployment numbers revealed an increase to 4.3%. SoFi’s stock dropped by more than 6% on the news.
SoFi’s business loan marketplace was hardly mentioned, generating only a single line in the company’s earning’s announcement. “Small and medium businesses can now apply and get approved offers from lending partners all on SoFi,” it said.
SoFi says its business loan partners can lend up to $2 million and can fund as fast as the same day.
