Articles by deBanked Staff
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.”
You can watch the full 12 minute, 35 second TV episode deBanked produced here.
An Update on Section 1071 of Dodd-Frank
October 23, 2020
After more than a decade, Section 1071 of The Wall Street Reform and Consumer Protection Act (AKA Dodd-Frank) is finally moving along. The law expanded the Equal Credit Opportunity Act to require that the Consumer Financial Protection Bureau collect demographic data from small business finance companies. For ten years, a whole lot of nothing happened to roll it out, so you’ll be forgiven if it seems like the latest updates are a bit vapid.
But then the CFPB got sued for its failure to carry out its duties and it resulted in a settlement that requires the agency to hit certain milestones by certain timelines. Section 1071 is all about collecting loan applicant data in commercial finance to measure if there are disparities in the ability to access credit, particularly for female-owned and minority owned businesses. It necessitates a mechanism to comply, which will
ultimately cost time and money.
But in the meantime, the milestones to even get to the point where data collection is being carried out, are roughly as follows:
1. Convene a panel of small business lenders
2. Have that panel issue a report
3. Propose what the rules on collection will be
4. Collect feedback on the proposal
5. Formulate a final rule
6. Issue a rule
7. Set a time for when that rule will go into effect
We spoke with one alternative finance company that has been engaged in the process.
“I am representing, and Greenbox Capital is essentially representing, the industry,” CEO Jordan Fein told deBanked in regards to his role as a Small Entity Representative to the CFPB’s panel of small business lenders. “There are some banks, there’s Funding Circle, but other than that, it’s Greenbox Capital serving in the industry.” Fein said that panelists give their opinion and engage in discussion on how companies will be impacted. He also said that he was very happy to participate in the process.
“It’s an honor to be selected to the industry panel providing feedback on section 1071 of the DoddFrank Act ensuring fair lending laws to women- and minority-owned businesses,” said Fein. “Over 2 million businesses across the U.S. are either women or minority owned and it’s vital they can secure funding as easily as non-minority owned businesses.”
The panel must complete a report within 60 days of convening. With several more milestones to go, a final rule is unlikely to go into effect prior to 2022. But until then, know that Section 1071’s implementation will probably happen during your lifetime.
deBanked Meets The Kosher Guru
October 19, 2020In a crossover episode, deBanked president and chief editor Sean Murray had lunch with Kosher Guru at Reserve Cut in lower Manhattan. In it, they talked Kosher food, business funding, and more!
DailyFunder Still #1 Small Business Finance Community
October 14, 2020
DailyFunder, the small business finance forum founded by Sean Murray in 2012, continues to be the leading online community for the industry, according to a recent announcement. The forum recently surpassed 10,000 registered members, in addition to logging more than 2 million page views just in 2020 so far.
“The forum has attracted well over a million visitors since inception and users have historically spent longer than 10 minutes on the site in any given session on average,” Murray said.
deBanked’s parent company fully acquired DailyFunder earlier this year. The announcement was featured prominently in deBanked’s January/February 2020 magazine issue. In it, Murray renewed the website’s objective:
“The mission will be to create a great forum for those involved in day-to-day dealmaking,” he said in a Q&A. “How can we provide a platform that enables those in the industry to make more money? That’s the way I look at it. I think if we can provide that type of value, success will follow.”
OnDeck / Enova Merger Overwhelmingly Approved by Shareholders
October 8, 2020The drama surrounding what OnDeck allegedly did or did not disclose to shareholders about the Enova merger presumably came to an end on Wednesday. 38 million voting shares approved the deal while less than half a million voted against it.
However, shareholders sent a message by voting against “the compensation that may be paid or become payable to the Company’s named executive officers that is based on or otherwise relates to the merger.”
OnDeck has said that the merger is expected to be completed in the fourth quarter of 2020.
Jackie Reses is Leaving Square Capital
October 2, 2020
Square Capital’s lead executive, Jacqueline Reses, is leaving the company. Square announced on October 2, that her resignation would be effective as of October 31. Reses is largely responsible for developing Square’s robust lending business, one that effectively made the company one of the largest non-bank small business lenders in the country.
It’s time to hang up my boots and say goodbye to my good friends at @Square. To the people I’ve worked with: everything I love about Square is related to you. It is my privilege and honor to have been along for the ride with you.
— Jackie Reses (@jackiereses) October 2, 2020
I shared my thoughts with Squares today because the place is so special! I thought I would share. pic.twitter.com/tXAE0dZhK9
— Jackie Reses (@jackiereses) October 2, 2020
Square Makes Jeopardy’s Daily Double
September 17, 2020“What is Square?”
That was the right question to the answer read by Jeopardy host Alex Trebek during an episode that aired this week. Contestant “Beth” hit a Daily Double and waged $2,000 to try and take the lead over “David” and “Joe.”
@Jack, hello pic.twitter.com/zwIzdAyTVT
— Nick D 👨👧 (@ndimichino) September 17, 2020
Square employees reacted on twitter by pointing out that the quoted transaction cost was a little out of date, but mostly took the honorable mention in stride.
We've made it! https://t.co/MZoZofrsno
— Jackie Reses (@jackiereses) September 18, 2020
Additional Lawsuits Filed Against OnDeck Directors Over Enova Deal
September 14, 2020At least three federal lawsuits have been filed against the directors of OnDeck relating to the announcement that the company is being acquired by Enova. These suits allege securities act violations with regards to how the technical aspects of the deal were disclosed while the initially reported action in the Delaware Court of Chancery alleged a breach of fiduciary duty.
The federal securities lawsuits are:
Daniel Senteno v. On Deck Capital, Inc. et al – Case 1:20-cv-01179-MN
Eric Sabatini (on behalf of a class) v On Deck Capital, Inc et al – Case 1:20-cv-01166-MN
Mohamed Aboubih v On Deck Capital, Inc. et al – Case 1:20-cv-07319-Vm
