Articles by deBanked Staff
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.
Upstart Hit With Another Lawsuit
October 13, 2022A new lawsuit brought by a shareholder of Upstart is also being brought derivatively on behalf of Upstart. That’s because plaintiff alleges that the Directors of the company would otherwise have to sue themselves or the company’s executives for the damage caused, a highly unlikely course of action.
Plaintiff alleges the company or certain directors and executives violated Section 14(a) of the Exchange Act, breached fiduciary duties, were unjustly enriched, abused their control, grossly mismanaged the company, wasted corporate assets, and violated Section 10(b) and 21D of the Exchange Act.
Things are not exactly great in shareholder land. The company’s stock as of May 4th close was $93.57 and is now currently hovering around $24.49. The plunge began when the company released its poorly-received quarterly earnings on May 9th. For a long time, the company had asserted it was not a balance sheet lender, but a shift in economic conditions was causing that to change.
The unwelcome quarterly earnings report was coincidentally timed after Upstart CEO David Girouard had sold more than $200M worth of company stock in the previous 8 month span and co-founder and SVP Paul Gu sold $140M worth over nearly the same time period.
Then, in August, Girouard said, “In the last few months, lenders and institutional credit investors reacted more quickly and abruptly than we anticipated. Despite the fact that our bank partners have seen consistently strong credit performance, meaning portfolios performing at or above plan across quarterly cohorts, several of them have paused or reduced originations due to fear about the future of the economy.”
Plaintiff alleges that false and misleading statements allowed the stock price to be propped up while insiders sold their stock on material non-public information. The full complaint can be viewed here.
This lawsuit is separate from a securities class action filed earlier this year.
IOU Financial Sets Internal Loan Originations Record for Q3
October 4, 2022
IOU Financial is showing no signs of slowing down. The company announced Q3 loan originations of $74.2M on Tuesday, up from $59.M in Q2. Altogether, IOU has originated $192.7M in 2022 so far.
“IOU’s strong Q3 2022 loan originations and progress towards its strategic goals makes us cautiously optimistic about delivering on the high end of our guidance,” said Robert Gloer, President and CEO, in a statement. “IOU Financial continues to execute on its strategy substantially growing loan originations while investing in technology and product innovation.”
The company has projected total originations of $220M – $260M by year end. That would be significantly higher than the $161.5M originated last year.
Wondering How to Comment on the Impending NY Disclosure Rules?
September 25, 2022The deadline to comment on New York’s latest iteration of its commercial financing disclosure rules is October 31st. As stated on the Department of Financial Service’s website, the agency’s official contact on the matter is George Bogdan (George.Bogdan@dfs.ny.gov). It’s the same contact as was given for the previous comment period.
Notably, the DFS has said that it has received some comments that have asked the agency to abolish the disclosure rules altogether. That won’t happen, the DFS explained, because it is required by law to enact them.
Even if there are no additional comment periods after this one, it is highly unlikely that the NY rules would go into effect this year.
