Articles by deBanked Staff
FTC Commissioner Rohit Chopra on Merchant Cash Advances
August 3, 2020
Following recent lawsuits filed by the FTC, Commissioner Rohit Chopra made the following statements earlier today in an announcement about merchant cash advances:
As the Commission proceeds into litigation in these matters and further studies this market, I hope that we will uncover additional information about business practices in this opaque industry. In particular, we should closely scrutinize the marketing claim that these payday-style products are “flexible,” with payments contingent on the credit card receivables of a small business. In reality, this structure may be a sham, since many of these products require fixed daily payments, and lenders can file “confessions of judgment” upon any slowdown in payments, with no notice or due process for borrowers.
This raises serious questions as to whether these “merchant cash advance” products are actually closed-end installment loans, subject to federal and state protections including anti-discrimination laws, such as the Equal Credit Opportunity Act, and usury caps. The stakes are high for millions of small businesses.
Rapid Finance Resumes Funding
July 29, 2020Rapid Finance is funding again, according to posts made by the company on social media.
“Now that most states are in the process of beginning to function normally, many small businesses are back in operation and we’re excited to announce that we have resumed accepting NEW financing applications!”
Shopify Originates $153M in MCAs and Loans in Q2
July 29, 2020
Shopify had a monster 2nd quarter. The e-commerce giant generated $36M in profit on $714.3M in revenue. As part of that the company originated $153 million worth of loans and merchant cash advances, only slightly down from the $162.4M in Q1. Still that figure was up by 65% year-over-year (and was more than 2x the volume originated by OnDeck).
The company has offered capital to its US merchants since 2016 and recently begun doing the same with its UK and Canadian merchants starting this past March and April respectively, the company revealed.
Shopify CFO Amy Shapero said that company had maintained loss ratios “in line with historical periods,” despite COVID. “Access to capital is even tougher in times like these, which makes it even more important to continue lowering this barrier by making it quick and easy so merchants can focus on growing their business,” Shapero stated.
Ascentium Capital Reports $2.5 Billion in Managed Assets
July 23, 2020Ascentium Capital announced it has reached $2.5 billion in managed assets, a new record for the Kingswood, Texas-based alternative funder. The news comes after the firm finished Q2 of 2020 with a funding volume of $225 million. Being a subsidy of Regions Bank, Ascentium has been funding businesses since 2011.
“Ascentium’s executive team has successfully weathered several periods of economic uncertainty and we are leveraging this to respond to the current situation as the US faces unexpected uncertainty for an unexpected duration,” Executive Vice President Tom Depping noted in a statement. “Our specialized finance platform incorporates process flexibility which enables us to adjust quickly. We have a strong team in place that is dedicated to meet market demands while managing risk.”
WATCH: NY State Senate Banking Committee Debates The Commercial Finance Disclosure Bill
July 22, 2020The New York State Commercial Finance Disclosure Bill passed through the senate banking committee yesterday, but not until some debate over the merits of it took place. You can watch the full discussion by the Senate Banking Committee below:
The Shakeup’s Impact on Stock Prices
July 15, 2020
Funding Circle US Lays Off 120 Employees
July 9, 2020Funding Circle US laid off 120 employees yesterday, according to a post shared by Ryan Metcalf, Head of U.S. Regulatory Affairs and Social Impact.
Reuters reported that the company will also centralize its technology development in the UK rather than have a separate US team going forward.
The US operation had largely been focusing on PPP lending and SBA 7(a) loans since the shutdowns occurred.
The announcement coincided with its UK business being approved to participate in the Bounce Back Loan Scheme.
Every Business That Got $150,000 or More in PPP Funds (The List)
July 7, 2020In the interest of transparency, the SBA dumped a list of more than 660,000 businesses that got $150,000 or more in PPP funding.
You can download the entire thing right here.
