Articles by deBanked Staff

Hiring in the B2B Finance Industry Still Challenging

“To say that hiring is a difficult process is an understatement and I think that it’s a direct reflection of the labor market and the volatility in America’s labor market right now,” said Manny Yosipov, CEO at Advanced Recovery Group. Yosipov’s company does collections in the MCA and business lending space, where like many other industries, persistently low unemployment coupled with a workforce tuned into lifestyle accommodations has made the hiring environment challenging.

“You have quality talent now that want remote work and a lot of flexibility,” said Yosipov. “I think that it’s hardest for companies that have started pre-covid, survived covid, and are now trying to grow and scale in the post covid market.”

Daniel Hye, ISO Relations Manager at Zahav Asset Management, said that if remote work wasn’t in such high demand, the open positions would have likely been filled by now. Zahav is currently looking to fill an underwiting and collections role.

“We could have already had someone, but we really don’t want remote because it makes a huge difference with the way things work,” Hye said. “Especially in our industry, everything’s about speed. You want to walk over to the underwriter or you want to turn around to the underwriter and say, ‘Hey, this deal, the ISO just called me, can we get this done? Or this was a mistake? Can you do this?’ Once it’s remote it changes the whole dynamics of how everything works.”

“I mean, remote is very preferred by a lot of people,” said Carli Bova-Chezem, Director of Human Resources at Capital Gurus, “but it’s kind of funny I talked to so many people all the time and it really isn’t for everybody. I get handfuls of people that are like, ‘I’ve been remote for the last month but I really want that camaraderie of an office and I miss being around people.’”

Capital Gurus has used a variety of sources to recruit but they’re now using an end-to-end hiring system called Breezy. Bova-Chezem said that it’s increased their application rate while streamlining the process.

“There’s a plethora of places that these applicants are coming from,” said Bova-Chezem. “Up until I’d say about a month ago, it was primarily LinkedIn, which is obviously a great resource, but we’ve gotten a lot more outreach using this new system, which has been great.”

Hye of Zahav, meanwhile, says they’ve also tried a variety of systems but that it comes down to finding job applicants with proper experience. “I think the biggest issue is being able to find someone who fits the criteria and is happy to get involved,” Hye said.

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BHG Financial Tightening Its Credit Box, Dealing With Tough Environment

BHG Financial (formerly Bankers Healthcare Group) originated $1 billion in loans in Q3, according to recently filed disclosures about the company. That was down from $1.1B in Q2. BHG mainly provides business loans and unsecured loans to healthcare practitioners. Although the company considered it to be a stronger quarter than anticipated, it predicts that Q4 will not be as strong and that originations will actually drop significantly to between $600M to $800M.

“As we look to the fourth quarter, BHG believes origination volumes will likely be less than Q3 as they continue to shrink their credit box,” said Terry Turner, CEO of Pinnacle Financial Partners, which owns 49% of BHG.

While originations start to slow, loan loss reserves have also increased.

“The decrease in income from BHG during the three and nine months ended September 30, 2023 as compared to the same periods in the prior year is largely the result of increases in (i) the liability for estimated future inherent losses for the outstanding core portfolio of loans sold to banks through the auction platform that may be subject to future substitution due to payment default or prepayment and (ii) the allowance for loan losses for loans BHG has retained on its balance sheet due to the uncertain economic environment.”

BHG is also exiting its “merchant financing business,” according to Pinnacle CFO Harold Carpenter. Carpenter was referring to NaluPay, BHG’s Point of Sale financing division. NaluPay launched a little over a year ago to great fanfare, claiming it would enable merchants “to offer their customers large credit lines, a suite of promotional and non-promotional financing options, and instant credit decisions within seconds.”

Nevertheless, Pinnacle says that BHG is feeling good about the direction things are heading.”BHG is optimistic about credit at the end of the third quarter,” Turner said.

Square: Business Loan Originations, Loss Rates Steady in Q3

Block’s Square Loan division chugged along in Q3, originating 120,000 loans for a total of $1.17B. The company’s origination figures in the first nine months of this year are basically on par with the origination figures of the last nine months of 2022. This suggests that Block is being cautious and conservative.

Block also said that loss rates on Square Loans “remained consistent with historical ranges.”

Square loan originations for the past six quarters:

Q2 2022: $1.01B
Q3 2022: $1.14B
Q4 2022: $1.16B
Q1 2023: $1.10B
Q2 2023: $1.10B
Q3 2023: $1.17B

Block did not talk about Square Loans on its earnings call except to say that it’s among a number of products it offers that serves as a retention tool and that in the future it will become more of an acquisition channel as well.