Articles by deBanked Staff
Square Capital Lends $155M to Small Businesses in Q3
November 6, 2020Square Capital loaned $155M in Q3, according to the company’s latest earnings report.
“We paused new flex loan offers until the end of July and, upon resuming offers, we were measured in ramping origination volumes in August and September,” the company said. The $155M originated was spread out across 35,000 loans.
The figure puts them slightly ahead of OnDeck ($148M) for the quarter but well below Shopify Capital ($252M)
2020 YEAR TO DATE:
| Company | Q1 2020 | Q2 | Q3 | YTD TOTAL |
| PayPal | $1.3B | |||
| OnDeck | $592M | $66M | $144M | $806M |
| Square Capital | $548M | $0 | $155M | $703M |
| Shopify Capital | $162.4M | $153M | $252.1M | $567.5M |
LendingClub’s Delinquency Rates Are Lower Now Than They Were Pre-Covid
November 5, 2020“Delinquency rates for the personal loan portfolio continue to outperform pre-Covid levels, even as most hardship plans have come to an end,” LendingClub announced in its Q3 earnings report. “Strong performance continues despite unemployment benefits largely coming to an end in July.”
The company ramped loan originations back up to $584M last quarter after hitting a low of $326M in Q2. Prior to Covid, the company was lending $2.5B to $3.5B a quarter.
LendingClub reported a Q3 net loss of $34.3M, bring the ytd net loss total to $160M.
Neuberger Berman Acquires Significant Stake in IOU Financial
November 4, 2020
Neuberger Berman, an investment manager with $374B under management, is acquiring a 15% stake in IOU Financial, a small business lender. As part of the deal, one of the firm’s funds has agreed to purchase up to $150M a year of IOU’s loans over the next two years.
“This investment by a Neuberger Berman managed fund represents a strong vote of confidence in the fundamental, long-term value of our business, and is a testament to IOU’s loan origination and servicing capabilities in addition to its capital markets capabilities” said Phil Marleau, CEO of IOU, in a public statement.
Additionally, Neil Wolfson, a former board member to rival OnDeck, is joining IOU’s board of directors.
Status of Par Funding
November 2, 2020
According to the latest status report filed by the Receiver in the Par Funding SEC case:
“The Receiver and his consultants at Development Specialists, Inc. (“DSI”) have re-hired several employees of Par Funding/Full Spectrum Processing, and remain engaged in the process of communicating with Par Funding’s more than 1,300 merchants to reconcile accounts, discuss the status of collections, and to collect account receivables. Through October 29, 2020, the Receivership Entities have combined cash on hand in excess of $42 million, excluding approximately $1.8 million in funds due to Par Funding that are pending release from various ACH processing companies.”
The Receiver has also asked the judge to expand the Receivership to include additional companies including two “related MCA” entities known as Capital Source 2000, Inc. and Fast Advance Funding, LLC.
At this stage of the litigation, a reboot of the company is becoming less and less likely.
A press release/article published on October 13th appears to plead on behalf of the Par defendants, by saying that the “whole process has unfolded mysteriously” and that “the actions of the receiver make it seem like a verdict had already been issued, before due process could take its course.”
Business Who Received Multiple MCAs is Charged by NJ AG
November 1, 2020New Jersey State Attorney General Gurbir S. Grewal and the New Jersey Bureau of Securities within the Division of Consumer Affairs is suing Owusu A. Kizito and his business Investigroup, LLC. Regulators allege that “he defrauded at least 57 investors out of nearly $2.2 million through the fraudulent sale of unregistered securities and then used much of the money for his own personal benefit, including payments for his Maserati.”
Among the allegations in the AG’s announcement is that the defendants used merchant cash advances which assigned away the company’s rights to its receivables and that it failed to disclose this material information to investors.
Shopify Capital Originated $252M in MCAs and Business Loans in Q3
October 29, 2020
Shopify Capital, the finance arm of the 2nd largest e-commerce platform in the United States, reported making $252.1M worth of merchant cash advances and loans in the 3rd quarter. This is a 79% increase over the same period last year and spans three markets, the US, UK, and Canada. It’s also a quarterly record for the company.
The figure also solidly trumped the numbers recently reported by rival OnDeck.
Shopify CFO Amy Shapero said that the company has maintained loss ratios in line with historical performance.
“Businesses need financial resources to survive and fulfill their potential especially in these uncertain times and as you heard just now capital greatly increases the value of Shopify to our merchants,” she said during the earnings call.
Enova Posts $94M Profit for Q3
October 27, 2020Enova, the international lending conglomerate that recently acquired OnDeck, reported a Q3 profit of $93.67M, bringing the company to over $147M in profit for the year so far.
“We are pleased to report strong earnings as the credit quality of the portfolio continued to improve during the third quarter,” said David Fisher, Enova’s CEO in an official announcement. “Encouraged by the better than expected portfolio performance and the stable and predictable credit risk seen in our testing, we thoughtfully began reaccelerating lending in the third quarter.”
Speaking about OnDeck, Fisher said that “OnDeck experienced growth in originations, improving credit quality and solid profitability. Our integration plans and recognition of the expected synergies and financial benefits of the transaction remain on track. With the combination of Enova’s and OnDeck’s complementary, market-leading businesses and our extensive experience navigating changes in the operating environment, we believe we are well positioned to grow profitably and drive long-term shareholder value.”
Revisiting Miami in 2020
October 23, 2020deBanked reporter Johny Fernandez flew down to Miami in September to find out how the South Florida non-bank small business finance industry has been getting along since covid. The following are some excerpts of interviews:
Jordan Fein, CEO of Greenbox Capital
“I’d be lying to you if I told you that, well it was fine for us. It wasn’t fine for anybody. We got hit pretty hard. I’d say that anywhere between 20 – 24% of our Canadian and about 25 – 28% of our US market got wiped out. And we shut down funding from mid-March to the end of April and we started funding again in early May. We’ve just increasingly been bringing back people from furlough and getting our legs back under us and now I think we’re really cooking right now.”
Craig Hecker, CEO of Bitty Advance
“So I think [the covid crisis] taught us a lot. And I think that when you face challenges like this pandemic, it really pushes you to reinvent yourself or reinvent certain parts of your business that you never thought were possible. And one of those things that we’ve learned is that we have a lot of folks that prefer to work at home, they’re actually more efficient working from home, they’re not in any hurry to come back into the office setting. Of course, we have certain employees that their jobs require them to kind of be with other employees, etc. but I think it’s really forced us to adapt, and to just embrace the new normal.”
Larry Bassuk, President of Idea Financial
“I think that we’ve been consistent in our risk management approach from the beginning. When we first surveyed the alternative lending space to see where we thought the best opportunity was for Idea Financial, we decided to focus on the higher credit quality segment of the market. our credit standards reflect that, our risk management principles reflect that, and quite frankly, our product reflects that. So during the covid crisis, when it was very acute in March, April, May, we got to see in real time, how our risk mitigation principles were functioning. It was a real test of all the theory that crisis, we got to see things shake out, and we got to see things being proven. A lot of assumptions that we were very strict on, really helped us manage the crisis. Going forward, we see that we’re going to be doubling down on those risk management principles, doubling down on how we underwrite and keeping a very close watch on how the businesses perform pre-covid, during covid, and then hopefully post-covid.”
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