Articles by deBanked Staff
NextPoint Financial Formally Announces End of LoanMe Business
June 23, 2022
Less than a week after word spread that LoanMe had stopped originating business loans, NextPoint Financial, LoanMe’s parent company, confirmed it in a formal announcement.
“Given current market conditions, the Company announces that LoanMe, Inc. (“LoanMe”), a subsidiary of the Company, will cease loan originations,” the statement read. “As a result, LoanMe has reduced its workforce and will continue to service outstanding loans that were previously originated. The Company decided to make these strategic changes to the business of LoanMe to better reflect the areas of focus and growth at NextPoint and to take into account existing market dynamics.”
The circumstances with LoanMe have apparently contributed to NextPoint’s failure to file its year-end 2021 and Q1 2022 financials, which are claimed to be forthcoming. NextPoint is publicly traded on the Toronto Stock Exchange. The sunsetting of LoanMe is oddly timed given that NextPoint only just acquired LoanMe last year and because LoanMe was one of its two primary business operations. NextPoint was a SPAC that also acquired Liberty Tax at the same time.
Although NextPoint cites “current market conditions,” a recent lawsuit filed by LoanMe against a loan servicer suggests that there may have been other issues at play as well.
Small Business Lending on Blockchain to be Discussed at NFT NYC
June 23, 2022Sean Murray is scheduled to speak at the NFT NYC Conference this afternoon about the use of NFTs in the small business lending market. NFT NYC is a 4-day event dedicated to the subject of non-fungible tokens. Blockchains present a possible solution to some inefficiencies that exist in the small business finance industry. Some or all of Murray’s presentation will be shared on deBanked.
Here’s a short preview of what’s going at NFT NYC:
LoanMe Has Stopped Originating Business Loans
June 15, 2022
At least two public-facing employees of LoanMe have stated that the company has stopped originating business loans. Both believe that this is permanent.
The news may seem rather abrupt given that NextPoint Financial, a new publicly traded SPAC, just completed its acquisition of LoanMe less than a year ago. NextPoint apparently had second thoughts because in March it announced that it may have overpaid for LoanMe after reviewing its financial calculations. It stated that it would commence a review of the matter and report back. No determination to that end, if one were made, was subsequently announced.
NextPoint has since delayed filings of its year-end 2021 and Q1 2022 statements on the basis that it had not yet been able to finalize the books for LoanMe and another newly acquired subsidiary named Community Tax LLC. In doing so, it did not suggest that anything was awry.
Separately, however, LoanMe sued a loan servicing company in Delaware Superior Court on May 9th under seal for allegedly breaching a contract. The case was unsealed on June 10th. Three days later, two LoanMe employees say that they received notice that the company was shuttering.
The Senior National Accounts Manager wrote on social media, “yes, LoanMe is permanently closing. The powers that be at our parent holding company, NextPoint Financial, decided it was time to pull the plug.”
Credibly is Making Moves
June 14, 2022
Michigan-headquartered Credibly has confirmed it acquired ProApprove, a specialty finance company offering home improvement financing solutions. The deal, which it said actually took place in 2021, is now front-and-center because of an agreement Credibly has secured with Castlelake, a global alternative investment firm, for the purchase of up to $350M in home installment contract receivables originated by ProApprove.
“Through conversations with contractors who obtain financing from Credibly, we identified a significant market opportunity in the home improvement space,” said Ryan Rosett, co-founder and co-CEO of Credibly.
“We are pleased to support the expansion of ProApprove’s home improvement financing program at a time when there is increased demand for financing solutions from homeowners across the U.S.,” said, Matt Little, Partner, Global Specialty Finance and Business Development & Capital Markets at Castlelake. “We believe that ProApprove’s parent Credibly has established itself as an experienced commercial lending platform with a keen focus on risk. We believe this transaction provides an opportunity to support a new product for Credibly in a historically underserved consumer market.”
The news follows the announcement that Credibly had secured a $50M credit facility for its core small business lending business. At the time, Credibly CFO Michael Seneski said of it, “The cost savings resulting from the refinance, coupled with the new financing facility, further solidifies our position as a leader in providing capital to SMBs and will be used to accelerate our aggressive growth trajectory.”
Credibly was founded in 2010.
No More Delays? California Finalizes Commercial Financing Disclosure Rules – Sets December 9th as Effective Date
June 9, 2022
Four years after California passed a commercial financing disclosure law, the debate over what the final rules should be has finally ended. On Thursday, the Department of Financial Protection and Innovation’s rules were approved and published. The law is scheduled to take effect on December 9, 2022.
The full text of the rules are available here.
Given the length and complexity, readers are advised to consult with a knowledgeable attorney for the best immediate interpretation of the language and its implications. The rules cover merchant cash advance, factoring, leasing, and various forms of lending.
To read up on the history of this law, you can review our past coverage.
The Company That Acquired Alchemy Technologies is a Small Business Lender
June 9, 2022
The sale of Alchemy Technologies to Business Warrior was announced on Thursday. The sale price of $8.75M ($2.25M in cash), is more than 3x Alchemy’s 2021 revenue of $2.8M.
While Business Warrior describes itself as “the source for small businesses in America to get more customers,” its homepage leads with a pitch for a working capital loan. “Our goal is to give you access to funding before you need it so you can grow without the restraints set on you by your bank,” the website says.
Business Warrior provides loans from $5,000 to $100,000 with interest rates as low as 7.97% and with terms between 12-36 months. It also offers marketing, software, and scaling solutions.
“After working with Alchemy, we quickly realized the massive potential of adding this international group of industry leaders to the Business Warrior team,” said Jonathan Brooks, Business Warrior President, in a press release. “With our Business Warrior platform, premium marketing, and now a global lending technology presence, we are building solutions that propel the success of small businesses.”
“We are so excited about joining the Business Warrior family!” said Timothy Li, CEO of Alchemy. “This move provides Alchemy with the additional resources, tools and capital necessary to enhance our service to customers. Both companies believe small business owners are the lifeline of local communities. By bringing Alchemy and Business Warrior together, the positive impact on these communities is going to be worldwide.”
Business Warrior is publicly traded under the ticker (OTC: BZWR).
RCG Advances Permanently Banned From MCA Business by FTC
June 6, 2022
It’s déjà vu. Five months after the FTC successfully banned someone from engaging in the MCA business, the agency has secured a similar outcome from additional defendants. This time it’s RCG Advances and its operator that are banned, according to the final settlement announced by the parties. In addition, RCG is required to make an upfront payment of $1.5M to the FTC and refund $1.2M to its previous customers that it had allegedly deceived.
The penalty may appear rather small in the big picture, but it is possibly as strong an outcome as the FTC could’ve hoped to obtain given the odd circumstances that befell the case. For example, the FTC filed its suit against RCG in June 2020 under Section 13(b) of the FTC Act, one of the most common tools in its legal arsenal. Less than a year later, the Supreme Court of the United States ruled that despite long-standing precedent, 13(b) did not give the FTC legal authority to obtain monetary relief, which from the FTC’s point of view, defeated the entire purpose of bringing such claims. In light of the ruling, the FTC was forced to change its strategy in the RCG case. In May 2021, the FTC asked the Court if it could amend its lawsuit to state that what the defendants had actually done all along was violate the Gramm-Leach-Bliley Act. It was perhaps a more difficult path forward.
By January, the first settlement was announced. This RCG settlement now follows that. One defendant in the case has not settled and the proceedings are still ongoing.
Economic Hurricane? Timeless Advice For Your Small Business Finance Company
June 2, 2022“You know, I said there’s storm clouds but I’m going to change it … it’s a hurricane,” said JPMorgan CEO Jamie Dimon about the current economic situation. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”
At the very least, Dimon is predicting that a recession may be just around the corner. And if that’s the case, we dug up some timeless advice about how a small business finance company can brace itself for such a scenario. These quotes are from 2016 when economic experts were already beginning to wonder if the economy had already overheated, if you can imagine that.
“If the market moves sideways and you rely only on a single source of funding, you are at risk. It’s an incredibly obvious statement, but it becomes more acute when the economic environment comes under pressure.” – Glenn Goldman
“Liquidity is king. The more that participants in this market are able to diversify their capital structure, diversify their funding sources and work with multiple providers, the better off they will be.” – David Snitkof
“[Funders will have to decide] to tighten and pivot while the rest of the players in the space are going full steam ahead. That’s where you have to have some conviction and trust your data and do the right thing.” – Stephen Sheinbaum.
“Just because someone paid you back yesterday doesn’t mean he’s going to pay you back tomorrow. You have to be right more often in a recessionary environment.” – Andrew Reiser
“A small recession could lead to big failures if you don’t take the right steps.” – Yoel Wagschal
In April 2016, when recession predictions were making the rounds, the S&P 500 was ~2,000, Bitcoin was $450, Ethereum was $8, gas was ~$2.20/gallon, and few, if any people, believed that Donald Trump would ever become President.
