Articles by deBanked Staff
Funding Circle US Originates $393M in 2022March 2, 2023
The American arm of Funding Circle originated $393M in business loans in 2022, according to the company’s latest public financial statements, nearly quadruple the previous year.
The majority of Funding Circle’s loans are currently projecting annualized returns in the vicinity of US inflation levels. A graph of their loans by cohort is below:
Funding Circle US has a fairly diversified base of capital, having worked with eight forward flow funders in 2022, one of which was a credit union.
The UK still remains the overall company’s primary market. It originated £723M in business loans in 2022, not including those part of government support scheme programs.
A Glimpse At How Big Fintechs Are Approaching The Small Business Loan MarketMarch 1, 2023
|Square Loans||Just recorded its biggest originations year ever. $4.07B funded in 2022|
|Enova/OnDeck||Seeing tremendous demand. Focusing on diversification. $2.97B funded in 2022|
|Shopify Capital||Reporting strong renewals. Just had its biggest originations year ever with $1.66B funded in 2022.|
|Upstart||Suspended business loan originations only 6 months after it started them.|
|LendingClub||Has suspended its equipment financing and commercial real estate lending divisions.|
|SoFi||Not interested in joining the small business loan market at this time.|
Square Loans Completes Monster Funding YearFebruary 26, 2023
Square Loans rose to the top of deBanked’s small business loan originations leaderboard last year after announcing $1.16B in originations in Q4. That brought the company, which is a subsidiary of Block (formerly Square), to over $4B funded for the year total, spread out across 461,000 loans.
In its annual shareholder letter, Block said that “Square Loans achieved strong revenue and gross profit growth during the fourth quarter of 2022.” Demand for loans has been steady and loss rates have stayed consistently within historical ranges.
Square Loans typically approves merchants for less than 20% of a merchant’s expected annual Square gross payment volume, is repaid by withholding a percentage of credit card sales, and enjoys a borrower base that pays off its loans in less than 9 months on average.
Block’s business is so large and now has so many components that Square Loans did not even come up in Block’s Q4 earnings call. Overall, the company generated $5.7B in revenue in 2022.
The small business loans originations leaderboard contains a lot of blanks. That’s because several public companies have attempted to obscure their business lending figures or non-public ones have opted to not disclose their figures. If you want your company’s figures to be added, email firstname.lastname@example.org.
New Commercial Financing Disclosure Bills Emerge in Several StatesFebruary 24, 2023
Several states have resumed efforts to pass a commercial financing disclosure bill this year, following successes that have already taken place in other states. Below are three on the table so far:
- Illinois – Small Business Truth in Lending Bill
- Maryland – Consumer Credit Commercial Financing Transactions
- Connecticut – An Act Requiring Certain Financing Disclosures
Illinois Introduces Small Business Truth in Lending BillFebruary 23, 2023
Illinois introduced a Small Business Truth in Lending bill last week, which one would correctly infer is about… disclosures. The language is similar to the law recently enacted in California and includes an APR requirement.
LendingClub Ceases Equipment Financing BizFebruary 22, 2023
Similar to Upstart, LendingClub is hitting the pause button on a segment of its lending business. In particular the company announced that it has ceased originations in equipment finance and commercial real estate.
“…commercial real estate and equipment finance, in this environment just not as attractive returns for the bank or for shareholders,” said LendingClub CEO Scott Sanborn in the Q4 earnings call. “So, we aren’t originating new loans there.”
What will remain on the commercial side, however, is its SBA Government Guaranteed Lending business.
“Lender” Sued for $10 MillionFebruary 21, 2023
King Family Lending says that it offers loans from $10,000 to $2M with 1-4 month terms that can be funded within 24 hours. There’s a collateral requirement, however, which could be anything from inventory, to real estate, to equipment, to sports contracts, to POs, to crypto. Founded in 2020, the lender was a borrower itself, allegedly borrowing more than $10 million from a law firm in order for it to make 97 loans to third parties.
According to a lawsuit filed on February 11, however, its alleged that King Family Lending and its owner never made any such loans and that the owner simply committed fraud and swindled the money.
The story behind King Family Lending, which includes all types of twists and turns, is best told by the Daily Mail. Enjoy.
Shopify Capital Seeing “Incredibly Strong Renewals From Previous Borrowers”February 16, 2023
Shopify Capital originated $393.2M in MCAs and business loans in Q4, an increase of 21% YoY, the company revealed. The company also began funding small businesses in Australia last year, bringing the total countries it does business in to four.
“[Shopify] Capital has acted as a lifeline for merchants, especially through the pandemic and this tough macro environment, allowing them to conveniently access capital when they need it most,” said Shopify President Harley Finkelstein. “Capital is now available in four countries, and our machine-learning algorithms to underwrite merchants keeps getting better.”
Finkelstein also noted that the company is “seeing incredibly strong renewals from previous borrowers.”
The graphic below, illustrating the cumulative growth of Shopify Capital’s originations, was shown in the company’s Q4 earnings presentation: