Articles by deBanked Staff
Don’t Forget About Utah’s Disclosure Law
November 14, 2022
While a new era of business moves forward in Virginia and the clock ticks down to compliance with the new complicated disclosure law in California on December 9th, it can be easy to miss state #3 in all of this, Utah.
Utah’s commercial financing disclosure law goes into effect on January 1, 2023. It’s more than just a form. Covered parties must apply for a commercial financing license. A checklist for that can be found here. Similar to other states, the commission paid to a broker must be disclosed but there is no APR requirement.
Upstart Funded $9M in Small Business Loans in Q3
November 8, 2022
They’re known as a consumer fintech lender but last quarter Upstart also originated $9M in small business loans. It’s a new market it entered into this past June that coincided with revelations that the company is struggling in its core lending divisions due to adverse market conditions that led to a 90% drop in its stock price. Nevertheless, despite just laying off 7% of its workforce, Upstart sees small business lending as a growth opportunity.
“Well now we’re close to $10 million in loans originated and the team is rapidly shipping improvements as we look to refine that product,” said Upstart CEO David Girouard during the quarterly earnings call. “While the financial impact of these upgrades to our products is muted in the current environment, we’re confident that they’ll set us up for a giant leap forward once the economy and credit markets normalize.”
Upstart considers small business lending to be a $644B/year market, according to the quarterly earnings presentation. When questioned if it made sense to be investing in this business versus just trying to manage expenses in the near term, Girouard said “the way we think about that is we would like to, to the extent possible, continue to invest or even increase investment in the future products because that’s obviously what our franchise is built on and what will lead to significant growth in the future.”
Upstart set a record in Q3, claiming that 75% of all the loans made on its platform during the quarter required no human intervention.
Square Funds $1.14B in Q3
November 5, 2022
Square Loans, a subsidiary of Block, originated 126,000 loans for a total of $1.14B in Q3. The company has a positive outlook on the state of its lending business, saying that “Square Loans achieved strong revenue and gross profit growth during the third quarter of 2022.” Overall, originations grew by more than 10% over the previous quarter.
Square Loans is one of several lenders thriving during this period of economic uncertainty. Rivals Enova and Shopify Capital also recently reported strong business loan results.
deBanked CONNECT MIAMI is BACK
October 31, 2022deBanked returns to Miami Beach this coming January 19th! Connect all over again at the Miami Beach Convention Center for one of the best experiences in the alternative finance industry.
Enova CEO: We’re seeing competitors pull back on originations
October 28, 2022
Enova’s small business loan originations hit $807M in Q3, according to the company’s latest quarterly earnings report. That’s up significantly from Q2’s total of $679M.
Despite the nation’s economic headwinds, the company said that credit quality across their portfolio remained solid and that SMB originations would continue to grow as a percentage of Enova’s overall business thanks to “strong demand and strong unit economics.”
“On the competitive side, we are seeing both consumer and SMB competitors pull back meaningfully on originations as they struggle to manage both credit and their loan portfolios and access to capital, problems that we are not experiencing,” said Enova CEO David Fisher. “Demand has also remained strong for our SMB products. Small business government stimulus has been exhausted, and we believe that we’re seeing additional tailwinds as banks have tightened credit, resulting in high credit quality borrowers who may have otherwise gone to a bank coming to us.”
Fisher attributed Enova’s unique ability to manage the economic circumstances to “deep experience, sophisticated and proven machine-learning-driven analytics, diversified product offerings, strong balance sheet and [a] world class team.”
Notably, Enova has also been emphasizing its shorter-term products and paying attention to segments of the SMB market likely to cause trouble.
“Construction has been a place where we really started backing away from three or four quarters ago, which was a great decision in hindsight,” Fisher said. “Trucking has been a complete mess. That whole industry is just messed up between fuel prices and supply chain issues, both affecting ability to repair your trucks and also keeping trucks full. I mean, that industry is just a complete mess. So we backed away from trucking very early this year as well.”
Shopify Funds $507.6M in Q3, Expands MCAs and Loans to Australia
October 27, 2022Shopify Capital originated $507.6M in merchant cash advances and loans in Q3, up from $416.4M in Q2. The increase was assisted in part by the company’s expansion into Australia, bringing the total countries that Shopify funds in to four (US, UK, Canada, AUS).
Shopify is the largest e-commerce platform after Amazon but the two companies are in the same ballpark when it comes to lending originations, and Shopify is potentially doing more.
Shopify generated total revenue of $1.4B in Q3.
“In Q3, we delivered another solid quarter of GMV, revenue, and gross profit dollar growth against the high inflationary environment,” said Amy Shapero, Shopify’s CFO. “From an operational perspective, we recalibrated our organizational structure, successfully rolled out a new compensation framework, and began integrating Deliverr into Shopify. Looking ahead, the flexibility of our platform, breadth of solutions, pace of innovation, and disciplined investment approach position Shopify well to realize the enormous opportunity ahead.”
Broker Fair 2022 Has Sold Out
October 17, 2022
Tickets to Broker Fair 2022 sold out early Monday morning and tickets to the pre-show sold out a few hours later. Broker Fair, the industry’s largest annual event in NYC, is being held on October 24th at the New York Marriott Marquis in Times Square.
This event is where brokers, funders, lenders, and more gather for education, inspiration, and incredible networking opportunities to set themselves up for success. Broker Fair 2022 will mark deBanked’s twelfth event since 2017.
If you’re a broker in the small business finance industry or commercial lending space, THIS IS THE EVENT TO BE AT!
For inquiries and questions about the event or your tickets, email events@debanked.com.
A Glimpse Into Amazon Lending
October 16, 2022
When Amazon revealed it had made more than $1 billion in small business loans in 2018, many people were stunned to find out they had become so active as a lender. But other than marketing it to sellers on their own platform, the company has not attempted to draw much attention to it. They have, however, regularly disclosed “seller receivables” which are defined as “amounts due from sellers related to [their] seller lending program.” Assuming the company has consistently kept their loans on balance sheet and kept loan terms steady, one can drawn their own conclusions about the trajectory of its loan program.
Below are the loan receivables as of year-end for each year except for 2022.
2016: $661M
2017: $692M
2018: $710M
2019: $863M
2020: $381M (covid)
2021: $1B
2022 (Q2): $1.3B
Loan receivables dropped significantly during covid and are most recently at their highest level ever, almost double what it had been in 2018.
In addition to its own Amazon Lending product, Amazon is also offering loans through Lendistry and lines of credit through Marcus by Goldman Sachs. The Lendistry relationship, which piloted last year, resulted in $35M being loaned to more than 800 sellers. Because of its success, Lendistry now plans to loan $150M to Amazon sellers over the next 3 years.
The Marcus by Goldman Sachs relationship is notable because it marks Marcus’ first foray into small business lending.
