Articles by deBanked Staff
Enova/OnDeck Originated $580M in Q4 Small Business Loans
February 7, 2022
Enova reported Q4 small business loan originations of $580M in its latest quarterly earnings report.
“As is evident by these numbers, our acquisition of OnDeck continues to pay dividends,” said Enova CEO David Fischer. “SMB Q4 originations were 26% higher than Q3 and 99% higher than a year ago, as it was enabled to effectively leverage the strong OnDeck brand and expertise.”
The company’s cost of funds has shrank from 8.3% in the 4th quarter of 2020 to 6.5% in the 4th quarter of 2021. This was made possible in part by adding a new two-year $150M revolving warehouse with JP Morgan.
Enova’s overall small business lending operation is complemented by a consumer arm. As of year-end 2021, small business lending represented 52% of the company’s portfolio while 48% was attributable to the consumer side.
“Within consumer, line of credit products represented 31%, installment products accounted for 67%, and short-term loans represented just 2%,” Fischer said.
Enova finished Q4 with a net income of $49M and full-year 2021 with a net income of $256M.
PayPal: “We are now one of the top 5 lenders to small businesses in the United States”
February 2, 2022
PayPal’s Q4 earnings report failed to mention its small business lending division, but an internal assessment of its Working Capital product was made known through a recent interview published by McKinsey.
“Through our PayPal Working Capital product, we are now one of the top five lenders to small businesses in the United States,” said Franz Paasche, PayPal’s SVP, Chief Corporate Affairs Officer at PayPal. “Seventy percent of those PayPal Working Capital loans are going into regions of the country where banks have pulled out, sometimes for good economic reasons,” he continued.
Despite the self-reported achievement, the company’s attention is now focused in a different sector of lending altogether, in the rapidly expanding consumer market known as Buy Now, Pay Later (BNPL).
“Buy Now, Pay Later is a perfect example of the type of investment we are making to give shoppers and retailers more reasons to engage with PayPal,” said CEO Dan Schulman during the company’s recent earnings call. “Buy Now, Pay Later is available in 8 markets, including with Paidy in Japan. We continue to see rapid consumer adoption, with $3.2 billion of Buy Now, Pay Later TPV in Q4 alone, a $13 billion run-rate, with Q4 growth of over 325% year-over-year. We have processed 54 million loans globally since launch, with 13 million unique consumers and 1.2 million merchants using our Buy Now, Pay Later services.”
PayPal’s stock plummeted by 20% after earnings were released that was connected to challenges unrelated to lending facing the company.
MJ Capital Investors May Face Tough Road Ahead
January 31, 2022
The second interim report, filed by MJ Capital’s Receiver, offered some discouraging news for investors holding out hope that the business had been legitimate all along. That is if it can even be determined who all the investors are.
“No such comprehensive investor list was located in the books and records of the Receivership Defendants,” the Receiver stated.
To date, it is believed that there were more than 5,500 total investors who invested more than $200 million altogether. The Receiver says that it has already received estimated loss claims of $150 million.
The challenge with so large a figure is that the business only has $11 million on hand even after cash has been recovered and third parties have surrendered assets. In companies comparable to what MJ Capital purported to be, a recovery of investor capital would be made possible by the gradual collection of customer receivables as the portfolio was wound down. MJ Capital, in alleged ponzi fashion, did not even have a portfolio.
What little business it did have on its books, appears to have been falsified, the Receiver states.
“The Receiver’s ongoing investigation continues to indicate that many of the MCA agreements are forgeries where the supposed customer never signed any document and never received from or paid to the Receivership Defendants any money.”
Many of the affected investors placed their life savings into MJ Capital, the Receiver has learned.
The SEC and MJ Capital’s former CEO, Johanna Garcia, are scheduled to attend Court-ordered mediation on February 28, 2022.
Shakeup at American Banker
January 27, 2022
American Banker, the longstanding publication for the banked, experienced a shakeup on Thursday.
It was announced that Editor-in-Chief Alan Kline and Executive Editor Bonnie McGeer had left the company. Kline had been with the company since 1997 and McGeer since 2007. Their departures came on the heels of another well-known name leaving just weeks earlier. Joe Adler, American Banker’s Washington Correspondent since 2006, announced that his last day had been January 7th.
Rob Blackwell, a former American Banker employee that had once served in Kline’s role, was among the first to comment on the news.
“This may be an upsetting day for some @AmerBanker reporters and editors out there,” he said on Twitter. “Just want to say to them that your work has been and continues to be top-notch. You may only see numbers on how many read your story; but I see how often they get passed around.”
American Banker’s new Editor-in-Chief will be Chana Schoenberger, formerly the Editor-in-Chief of Financial Planning. As part of that role, she will also take charge of the organization’s signature event, “The Most Powerful Women in Banking.”
The CEO of the company that owns American Banker, Gemma Postlethwaite, said that “Chana is the ideal choice to lead our flagship brand into the future. She will bring her diverse experience and astute insights to further our mission of advancing professionals in the banking community.”
“It’s an honor to work with such a talented group of journalists who are dedicated to covering the future of banking, financial services, and fintech at American Banker,” said Schoenberger. “I am also excited to tell the stories of the women who lead this dynamic industry as we move into the third decade of the Most Powerful Women in Banking.”
Could Siri, Alexa, and Video be the New Frontier for Lenders?
January 25, 2022
The annual fintech study published by Smarter Loans revealed that 25% of respondents had used either Alexa, Siri, or another voice search to find information about financial services.
Voice devices, it appears, are not only getting better at answering regular questions, but users are also getting more comfortable even asking them in the first place.
“Alexa, what is deBanked?” for example, returns an accurate reply despite our not having made any efforts to opt-in to the device’s knowledge base. Alexa just knows.
So why bother performing an old-fashioned Google search? Turns out, it’s becoming less common to do. Only 57% of respondents said they discovered the lender they applied with through online search. 13% said they discovered them through social media. 8% came from a friend’s recommendation. 15% found them through a well-regarded “Loan & Financial Directory” (Smarter Loans, who authored the study).
Once on a lender website, users had questions. 27% read online articles and reports, 37% read reviews, 16% called the company, and 9% consulted a friend or family member.
60% of respondents said informative videos about a company or its products would increase their confidence in that company. That could be key since 66% of respondents said that they researched more than 3 lenders before applying for a loan.
All of the respondents resided in Canada. 92% of respondents also said that they were satisfied or very satisfied with their loan provider.
Missouri Introduces Commercial Financing Disclosure Bill
January 25, 2022Add Missouri to the list of states proposing mandatory disclosures in commercial financing transactions.
[See: New York, California, New Jersey, Virginia, North Carolina]
Missouri’s SB 963 is different from bills in other states in that it does not seek the disclosure of an annual percentage rate. Adopting a simpler approach, SB 963 would require commercial financing companies to disclose:
1. The total amount of funds provided
2. The total amount of funds disbursed
3. The total amount to be paid
4. The total dollar cost
5. The manner, frequency, and amount of each payment
6. Prepayment costs or discounts
7. Whether or not a broker will be compensated
The bill was introduced by State Senator Justin Brown (R).
New Jersey Reintroduces Commercial Financing APR Disclosure Bill
January 20, 2022
Members of New Jersey’s state legislature are trying for a fifth year in a row to advance a commercial financing APR disclosure bill. Senate Bill 819 was introduced on January 18th. Senate Majority Whip Troy Singleton (D) is the primary sponsor.
Similar to what was just introduced in the Virginia legislature, the bill is mainly aimed at “sales-based financing.”
“Sales-based financing means a transaction that is repaid by the recipient to the provider, over time and as a percentage of sales or revenue, in which the payment amount may increase or decrease according to the volume of sales made or revenue received by the recipient. ‘Sales-based financing’ includes a true-up mechanism where the financing is repaid as a fixed payment but provides for a reconciliation process that adjusts the payment to an amount that is a percentage of sales or revenue.”
Dorsey Focuses Tweets on Bitcoin and Anti-Web3 Since Leaving Twitter
January 18, 2022
Jack Dorsey’s departure from Twitter didn’t leave him without a job. He’s still the CEO of Square (now Block), a payments company that is one of the largest small business lenders in the country. Still, all that extra time on his hands must mean he has plans in the works, especially since he believes hyperinflation is right around the corner.
If his tweets are any indication, Dorsey is focused mainly on Bitcoin as both an answer to inflation and as a counter to the burgeoning “web3” concept attributed mainly to projects on the ethereum blockchain.
“You don’t own ‘web3.’ The VCs and their LPs do,” Dorsey tweeted on December 20. “It will never escape their incentives. It’s ultimately a centralized entity with a different label. Know what you’re getting into…”
“The VCs are the problem, not the people,” he later added.
His comments rubbed some in Silicon Valley the wrong way.
I’m officially banned from web3 pic.twitter.com/RrEIAuqE6f
— jack⚡️ (@jack) December 22, 2021
Since being “banned by web3,” Dorsey announced that Block is building an Open Bitcoin Mining System to help make mining more distributed and efficient. A tweet thread he shared by Block Hardware Manager Thomas Templeton explained exactly what that means:
“We want to make mining more distributed and efficient in every way, from buying, to set up, to maintenance, to mining. We’re interested because mining goes far beyond creating new bitcoin. We see it as a long-term need for a future that is fully decentralized and permissionless.
We started by digging into two big questions. 1) What are customer pain points today? 2) What are the specific technical challenges? We spoke with members of the mining community to learn more about their experiences. Here’s what we’ve found so far:
1/ Availability. For most people, mining rigs are hard to find. Once you’ve managed to track them down, they’re expensive and delivery can be unpredictable. How can we make it so that anyone, anywhere, can easily purchase a mining rig?
2/ Reliability. Common issues we’ve heard with current systems are around heat dissipation and dust. They also become non-functional almost every day, which requires a time-consuming reboot. We want to build something that just works. What can we simplify to make this a reality?
3/ Performance. Some mining rigs generate unwanted harmonics in the power grid. They’re also very noisy, which makes them too loud for home use. Unsurprisingly, all miners want lower power consumption and higher hashrates. What’s the right balance of performance vs other factors?
Developing products is never a solo journey, and evaluating existing tech is always part of our practice. For this project, we started with evaluating various IP blocks (since we’re open to making a new ASIC), open-source miner firmware, and other system software offerings.
We are interested in performance *and* open-source *and* our own elegant system integration ideas. Which tech and which partners should be on our list to consider? We’ve learned so much just from these preliminary conversations and we want to keep this going.
Team. We’re incubating this investigation within Block’s hardware team and are starting to build out a core engineering team of system, asic, and software designers led by @afshinrezayee. A few of the open roles are Electrical Engineers, Analog Designers, and Layout Engineers.
Thanks for engaging with our work. If you have questions, want to share more feedback about the pain points or missing features of the existing mining solutions, or know someone we should be talking to about our open roles, you can reach us at miningsystem (at) block (dot) xyz”
As for inflation, well Dorsey’s not so shocked that the number continues to tick upwards.
damn Santa didn't take the transitory inflation away https://t.co/P1CFEIQyNV
— jack⚡️ (@jack) January 12, 2022
