Articles by deBanked Staff
Small Employer Firms Less Likely to Seek Out Factoring Than a Decade Ago
May 20, 2025The percentage of small employer firms (< 500 employees) that applied for financing or credit that sought out factoring specifically, has dropped over time, according to the Small Business Credit Survey conducted by the Federal Reserve. deBanked pulled the responses published over the last 10 years to compare and found a noticeable change.
Percentage of financing applicants that sought factoring by year:
- 2015: 3%
- 2016: 7%
- 2017: 4%
- 2018: 4%
- 2019: 3%
- 2020: 4%
- 2021: 3%
- 2022: 4%
- 2023: did not ask
- 2024: 2%
- 2025: 2%
The anomalous 7% figure in 2016 is likely due to confusion over factoring with merchant cash advances. The Federal Reserve did not ask respondents if they had sought out merchant cash advances specifically until the 2017 study, at which point they discovered that 7% had actually sought out MCAs in 2017 and only 4% had sought out traditional factoring.
Ready Capital’s Q1 and Fintech Footprint
May 20, 2025Ready Capital originated $343M in SBA loans in the first quarter of 2025. It did an additional $44M in non-SBA small business loans in the same period.
“While we anticipate moderation in volume ahead, we view recent policy updates from the SBA as constructive towards reinforcing the program’s long-term strength and integrity,” said Thomas Capasse, CEO of Ready Capital. “Ready Capital continues to deliver performance above industry benchmarks. Our 12 month default rate was 3.2% versus the industry average of 3.4% and our five year charge-off rate has now declined for the fourth consecutive quarter, reflecting the strength of our credit and servicing practices. Additionally, our 12 month repair and denial rate reached a historic low.”
While Ready Capital is known as the fourth largest SBA lender and by far the largest non-bank SBA lender, the company is also among the biggest fintech innovators in the space.
- 2019: Acquired Knight Capital and iBusiness Funding
- 2023: Launched LenderAI
- 2023: Acquired non-SBA assets and talent from Fountainhead SBF LLC
- 2024: Acquired Funding Circle US
- 2024: Inherited Funding Circle’s funding partnership with eBay
On the last point above, eBay brokered more than $100M in small business funding in 2024 alone, with more than half of that believed to have gone to Funding Circle US, now Ready Capital via iBusiness Funding. On eBay, iBusiness Funding offers term loans up to $500k with repayment terms up to 7 years.
The rest of eBay’s funding volume goes to an MCA provider named Liberis.
See You at Broker Fair
May 18, 2025REGISTERED FOR BROKER FAIR? HERE’S WHAT YOU NEED TO KNOW:
Broker Fair Preshow tonight at JIMMY at ModernHaus (SoHo) 15 Thompson St, New York, NY. Requires the separate preshow ticket. This event is sponsored by Lendini. All food is Kosher.
Broker Fair conference tomorrow at Tribeca 360 is at 10 Desbrosses St, New York, NY. Checkin starts at 9am.
- Agenda here.
- Lunch is sponsored by Triton Recovery Group who created a curated latin flavored menu. All food is Kosher.
- The post-show reception starting at 3:35 is sponsored by Bitty. All food is Kosher.
See you there!
LEARN FROM THE PROS AT BROKER FAIR
May 14, 2025Here’s some of what you can expect at Broker Fair 2025 on May 19 in NYC! TICKETS WILL NOT LAST
PLUS, hear from:
PLUS, Get dazzled by presentations from:
Read the agenda to see when they’re up!
All food at both the May 18 preshow and full conference on May 19 will be Kosher. |
Texas on Pace to Pass MCA Bill With Broker Registration Requirement
May 13, 2025
The State of Texas is moving toward passing a “commercial sales-based financing” bill that would impact the merchant cash advance industry. Among the key details is an MCA broker registration requirement that would require brokers to get approved by the Office of Consumer Credit Commissioner (OCCC) in order to broker any MCAs to a merchant located in Texas. Brokers would be subject to OCCC oversight and the rules governing transactions with Texas-based merchants would apply regardless of where the broker themselves is located.
Furthermore, The Finance Commission of Texas would have the authority to adopt its own rules “to prohibit certain acts or practices by providers including acts or practices the commission considers unfair.”
The current iteration of the bill, which has already passed the House and is now in the hands of the Senate to confirm, can be found here.
Shopify Continues to Grow its Merchant Funding Business
May 8, 2025“We continue to grow our capital business and have recently introduced several product innovations that give merchants more choice for how they manage their loans, and how they choose among various loan options,” said Jeff Hoffmeister, CFO of Shopify during the Q1 earnings call.
The company had ~$1.4B in business loan & merchant cash advance receivables on its balance sheet as of March 31, 2025. It purchased & originated $805M worth of business loans in Q1, putting it on pace to surpass the $3B total for all of 2024.
“Shopify Capital is a financing program that offers merchant cash advances and loans to eligible businesses based on the store’s location, history, use and interaction with the Shopify platform,” the company states. It is offered in the US, Australia, Canada, and the UK.
OppFi: Bitty performed well in Q1 2025
May 7, 2025“Our investment in Bitty continued to perform well in the first quarter of 2025,” said OppFi CEO Todd Schwartz during the earnings call. “The business continued to drive accretive profitability and cash flow to OppFi. We continue to see significant imbalance between supply and demand for working capital among small businesses. We are excited to be part of Bitty’s growth ahead.”
OppFi owns a 35% stake in Bitty.
During the Q&A, Schwartz reiterated that Bitty was well-positioned despite the uncertainty surrounding tariffs in the current environment.
NerdWallet Q1: Small Business Loan Originations Down, AI Agents Are Referring Them Business
May 7, 2025Small business loan originations were down for NerdWallet in Q1 “as underwriting remained tight and trade policy uncertainty dampened demand.” This is not a new development at the company as it has been publicizing a similar sentiment for some time.
The biggest takeaways from NerdWallet’s regular reports, however, are how the company, long reliant on organic Google search listings for much of its online traffic, is weathering the transition from the online search-ranking era to the AI answer-agent era. Analysts have been asking NerdWallet CEO Tim Chen to weigh in on what they’re seeing and how it’s going. Now, in this latest quarter, Chen says that AI actually appears to be referring them business so far.
“I think as we think ahead to channels beyond Google search, for example, I’d say top of mind for us is the factors that have historically driven success in areas like Google Search seem to be carrying over to other AI driven search engines. So it’s early days here, but compared to our competitive set, NerdWallet receives a really high share of referral traffic from AI sources. So I think big picture, the way I think about it is AI, at its best, helps you find a great answer quickly without a bunch of effort or spam. And areas with simple answers, AI is gonna meet that user need really well.”
– Tim Chen, CEO, NerdWallet
deBanked independently prompted both Grok-3 and ChatGPT-4o to make recommendations to shop for a small business loan and both recommended Fundera among its top answers. Fundera was acquired by NerdWallet in 2020. ChatGPT-4o put Fundera in its top 2 and Grok-3 put them in its top 3. AI-agents are becoming more memory-based and personalized so this experiment may produce different results for others.
On search rankings specifically, NerdWallet’s Chen said that it had taken a bit of a haircut for them over the past year, in part because even search engines are also now delivering AI-based answers at the top of the results.
AI is permeating so much that the transcript of the earnings call that deBanked relied upon for this writeup was also prepared and published by AI.
