Articles by deBanked Staff
AMEX: Kabbage to be the “Landing Point” for Small Businesses
August 5, 2021
Now that American Express has put “Kabbage to work” with a business checking account offering, the company shared what’s next during the Q2 earnings call.
“..what you’ll see ultimately is the Kabbage platform being the landing point for small businesses,” AMEX Chairman and CEO Steve Squeri said. “And the way you want to think about this is fintech with scale. And so when you think about Kabbage, which is a pure-play fintech in the small business space and you think about American Express and the small businesses, and you combine that together, you have a fintech at scale. Not a fintech growing at scale, a fintech growing from scale with a balance sheet. And so that has always been the vision of Kabbage. As you bring Kabbage into the bank holding company structure, you have to do some other things to future proof it, if you will, and that’s what we’ve been doing. But that’s what you will see.”
Shopify Capital Originated $363M in MCAs and Business Loans in Q2
August 4, 2021
Shopify Capital originated $363M between merchant cash advance and business loans in Q2, bringing the first half total to $671.6M.
“Not only does Shopify Capital help fuel our merchants’ growth,” said Shopify President Harley Finkelstein in the quarterly earnings call, “our data tells us that merchants that accept Capital stay with Shopify longer as they succeed on the platform and take more of Shopify’s other solutions, namely Shopify shipping, apps, themes and domains and maybe most importantly, extending capital when their business needs it, reinforces the trusted relationship that we have with our merchants, one that goes beyond what they have with their bank or any other vendor. When we talk about Shopify’s flywheel, this is exactly what we mean.”
Shopify Capital is in the same league as rivals Square and Enova in terms of small business financing volume. Square Loans originated $1B for the first half, for example, while Enova has originated $722M.
Square Loans (Formerly Square Capital) Originated $627M in Small Business Loans in Q2
August 4, 2021
Square Loans, the lending arm of the fintech bank Square, originated $627M of its Flex Loans in Q2, according to the company’s latest announcement. That brings the year-to-date total to $1.02B across 167,000 loans. The numbers produce a rough average of only $6,000 per loan.
“After pausing flex loan offers from early March to late July of 2020, we continued to expand loan offers during the second quarter behind improvements in underlying Seller GPV trends, nearing pre-pandemic quarterly origination levels for core flex loans,” the company said.
Square is on pace to meet or eclipse its pre-covid volume. (It originated $2.3B in 2019.)
Square touted much bigger news in the past few days, however, its planned acquisition of Australia-based Afterpay in a $29B all stock deal.
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Enova Originated $400M in Small Business Loans in Q2
August 3, 2021
Enova, the international lending firm that owns the OnDeck brand, reported Q2 small business loan originations of $400M. That brings the year-to-date figure to $722M, approximately half of the volume OnDeck was producing prior to Covid. (OnDeck’s 2019 originations were $2.475B)
“OnDeck’s performance continues to exceed our expectations,” said Enova CEO David Fisher during the quarterly earnings call, “and we will easily exceed our forecast of $50 million of annual cost synergies, primarily from eliminated duplicative resources, as well as $15 million in run rate net revenue synergies.”
Cash has also come pouring in.
“…While we originally thought that OnDeck’s legacy portfolio would have very little value, we now expect to receive over $220 million of total cash from the acquired portfolio, net of securitization repayments,” Fisher said. “In fact, we’ve already realized over $100 million from the legacy portfolio.”
Although ISOs (aka brokers) will remain an important part of driving OnDeck’s growth, Enova is happy that OnDeck brings more to the table.
“The good news about OnDeck, is at least they had a direct channel and a pretty good direct channel because of their terrific brand on the small business side, where our small business products had no direct channel,” Fisher said. “It was all through ISOs. So, we gain that capability through OnDeck.”
Enova reported $80M in net income for the quarter on $265M in revenue.
LendingClub is Back in the Commercial Loan Business
August 2, 2021
In 2019, LendingClub threw in the towel on its business loan product after mediocre demand and results.
But now LendingClub is somewhat back in the game, due to its acquisition of Radius Bank. The company reported $624 million worth of commercial loans on its Q2 balance sheet, which consists of equipment financing, commercial real estate, and other commercial financing. The average yield on these loans is only 5.81%.
This portion of their business has received little attention, but LendingClub’s website now touts a variety of business loan options available including commercial real estate, SBA loans, equipment financing, and yacht loans.
On leases, it says its target transaction size is between $1 million and $10 million.
During a previous earnings call in Q1, Lending Club execs said they expected all of their portfolios to grow in 2021, but that their focus would remain on the consumer segment. The company originated $2.7B in consumer loans in Q2.
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Greenbox Capital Acquired Level Up Funding
July 29, 2021
Miami-based Greenbox Capital, a small business finance provider, has acquired Level Up Funding.
Level Up, which focuses on small business lines of credit, was co-founded in 2019 by industry veterans Maciej Bykowski, once the Director of Sales for OnDeck, and Drew Batiato, the former Chief Credit Officer of Idea Financial. Level Up was based in Denver and relocated to Miami, nearby to where Greenbox is.
In an official announcement, Greenbox Capital CEO Jordan Fein, said “We are thrilled to have Level Up Funding join our organization. Their founders and key staff are a wealth of industry knowledge. The acquisition will immediately impact growth and the unique selling proposition that we offer our clients.”
Fein says to expect more such deals in the future:
“We’ll continue to make strategic moves to scale, which includes synergistic acquisitions to further distance ourselves from our competitors,” he said. “Level Up is the first of many to come.”
Bykowski of Level Up said, “Our mission has always been driven by a consumer first perspective. Having a shared vision for the future of alternative lending, we are excited to work together to leverage technology to enhance Greenbox Capital’s product offering and create a seamless customer experience.”
“We’re very excited for our future here at Greenbox. We will have the opportunity to develop new products that will aid clients across the US and abroad with their business growth,” said Level Up’s Drew Batiato.
