Articles by deBanked Staff
Do You Need a Mentor?
June 11, 2019
“You don’t need a f-ing mentor,” is the opening line of a short online video delivered to camera by Gary Vaynerchuk, the celebrated high energy marketing and sales guru. In the video, he concludes by saying: “Enough with the mentor horseshit. Go f-ing execute. There’s unlimited free mentors on f-ing YouTube. Go f-ing work.”
A discussion with industry insiders suggests that Vaynerchuk’s sentiment is somewhat controversial.
“Without mentorships, I wouldn’t be able to be where I am now,” said Josh Feinberg, co-founder of New Hampshire-based Everlasting Capital, a brokerage that has twice made it onto the Inc. 500/5000 list of the fastest growing U.S. companies, ranked #323 in 2017.
“Mentorship doesn’t just mean asking people for advice,” Feinberg said. “It means being able to build relationships with people who are on a greater level.”
For instance, Feinberg said that he and co-founder of BFS Capital, Cathy Bass, would speak about how she and others grew BFS, how they go to market and what is most important to them.
“And I was able to implement some of that into my own company,” Feinberg said.
Joe Cohen, who runs Business Finance Advance, a brokerage in Brooklyn, said he has mentored dozens of people, mostly his employees, throughout his career.
“You have to instill a solid work ethic,” Cohen said. “And you have to lead by example. Not by dictating, ‘You do this.’”
As for Vaynerchuk’s assertion that there are “unlimited free mentors on YouTube,” David Korchak, Managing Member of Primary Capital, a funder in Brooklyn, makes a clear distinction between a social media celebrity and a mentor.
“I don’t understand how anyone can say they have a mentor in someone with two million followers on Instagram,” Korchak said. “What did this person do for you? Maybe he helped you get to the gym in the morning…but that’s inspiration, that’s not mentorship. That’s the difference between someone posting a video on Instagram and someone sitting down with you at a desk and showing you ‘This is where you made a mistake. This is how you can make sure you don’t do that again, and this is how you can make it better for the future.’ That’s not inspiration, that’s guidance. And a mentor is a guide for you.”
But Chad Otar, a veteran MCA broker in New York, said that he agrees with what Vaynerchuk was trying to communicate in his video
“You can have a mentor,” Otar said. “But at the end of the day, you have to put your blood, sweat and grit into it. A mentor can only do so much.”
When asked if Otar has a mentor, he said it’s his brother, who introduced him to the MCA industry. This leads to the question of who can or ought to be one’s mentor?
“A mentor can be anyone in the industry who’s been there before,” Cohen said. “Someone who can tell you what’s going to happen if you do this and what’s going to happen if you do that.”
Cohen said that when he started out in sales years ago, his mentors were older colleagues of his on the sales floor.
“I saw in them commitment to the job and how they worked diligently to make every deal happen,” Cohen said. “They never gave up.”
Some ISO owners even pay to train their managers to be excellent mentors to their salespeople, like Edward Deangelis, founder of the fast-growing Pennsylvania-based brokerage, Amerifi.
Deangelis said that he has used Sandler Training for the last seven years, both for himself and his team. His managers go to Sandler Training’s management boot camps once or twice a month for 3 to 4 hours.
“They learn skill sets on how to be an excellent sales manager,” Deangelis said. “How to cultivate your team rather than just be a boss. And to really ask [their] salespeople what they’re struggling with.”
Deangelis also has a CEO coach that comes to the office once a month for him. He said that the coaching has helped him in many ways, including in his personal life.
Feinberg said that you really have to choose your mentors carefully because a lot of people can talk themselves up into being something they’re not. And he said that one person in the business who said he would guide Feinberg in the right direction ended up stealing his deals by the end of the relationship.
“Look at media exposure,” Feinberg suggested. “If they seem big but you can’t find them in the news or you haven’t seen proof, it’s probably not someone to take advice from.”
Prospa, An Online Business Lender, Goes Public In Australia
June 10, 2019
Another online small business lender has gone public. This time it’s Australia-based Prospa, a company founded in Sydney in 2012. Prospa offers daily and weekly payment business loans with terms from 3-24 months and competes with companies like OnDeck and Capify.
Earlier this year Prospa surpassed $1 billion in loans funded to 19,000 small businesses. In a 2015 interview with deBanked, cofounder Beau Bertoli said, “The market in Australia has been very ripe for alternative finance. We see an opportunity for the alternative finance segment to be more dominant in Australia than it is in America.”
Prospa was slated to go public on the Australian Securities Exchange last June but it was cancelled in dramatic fashion 15 minutes before being listed as rumors swirled that the Australian Securities and Investments Commission (ASIC) had questions about their business practices. By September, Prospa agreed to revise its loan disclosures to be more fair. Those revisions were published by ASIC.
Prospa’s IPO raised AUS $110 million and was valued at AUS $610 million. The share price jumped nearly 20% in early trading on Tuesday.
SEC Seeks Partial Summary Judgment Against Ruderman in 1 Global Capital Case
June 10, 2019The SEC filed a motion for summary judgment against defendant Carl Ruderman last week as part of its ongoing lawsuit against 1 Global Capital and related parties. The motion applies to Ruderman on Count 1 of the SEC’s amended complaint alleging violations of 5(a) and (c) of the Securities Act of 1933 in addition to summary judgment on Ruderman’s second affirmative defense alleging the instruments he and Defendant 1 Global Capital LLC sold were not securities.
Ruderman has until June 18th to file his opposition to the motion.
CLA’s Credit Invisibles Event Kicks Off
June 5, 2019The Canadian Lenders Association event kicks off today in Toronto. Hosted by Perc Canada and TransUnion at Blake, Cassels & Graydon LLP, this is the second in the series on “Credit Invisibles” and “Credit Deserts.”
The CLA’s purpose is to support the growth of companies that are in the business of lending, or providing other means of credit, to small business and individuals by non-conventional or innovative means to exchange ideas and explore ways of improving the sector; encourage principled and professional practices by Innovative Lenders; educate the public at large about Innovative Lending; encourage individual potential borrowers to be informed about the appropriateness of Innovative Lending to the borrowers’ circumstance; and to advocate on behalf of, and represent the interests of Innovative Lenders.
deBanked president Sean Murray will be in attendance.
One New York COJ Bill Moves Forward
June 5, 2019A bill that would prevent companies from using Confessions of Judgment against out-of-state debtors is progressing through the New York Assembly. A07500 cleared the judiciary committee on Tuesday despite some Republican opposition. The milestone comes as no surprise as the judiciary committee chair, Assemblymember Jeffrey Dinowitz, is also the bill’s sponsor.
Assemblymembers Niou, DenDekker, Wright, Wallace, and Schimminger are bill co-sponsors.
A07500 now heads to the Codes committee.
IOU Originates $32.8M in Loans in Q1
May 30, 2019IOU Financial funded $32.8M in loans in the first quarter of 2019, according to publicly filed financial statements. The company also continued its profitable streak and plans to grow originations by:
- Identifying, recruiting and partnering with business loan brokers;
- Forming new strategic partnerships with entities such as banks and small business suppliers and leveraging their relationships with small businesses to add new customers;
- Expanding its product offering to allow it to serve small businesses whose needs are not met by its current products;
- Investing in direct marketing and sales; and
- Continuing its expansion into Canada.
MCA Company Files 15 COJs Against a Medical Practice, Dispute Arises Over Alleged Forgery
May 29, 2019
A New Jersey physician was one day going about his usual business, and the next day found himself an unwitting judgment debtor for almost $2,000,000 based on more than a dozen forged Confessions of Judgment (COJs) of which he had no knowledge. That’s the scenario described in papers by the physician’s attorney suing New York-based Itria Ventures, LLC. Itria is a subsidiary of its more well known parent company Biz2Credit.
In the span of 19 months, Itria funded a medical practice 19 times (an average of once a month), putting the practice on the hook for millions of dollars in purchased receivables. In March 2017, Itria declared one of those agreements to be in default and filed a COJ in the Supreme Court of New York, successfully securing a judgment in the amount of $245,114. Despite this, Itria continued to enter into at least 3 more funding contracts with them after defaulting.
The relationship would sour as Itria attempted to enforce its New York judgment in New Jersey with vigor. According to Court papers filed in Bergen County, Itria sought to have a judgment debtor, a doctor, arrested after he allegedly did not respond to an information subpoena or attend a deposition. In September 2018, a judge denied Itria’s application for an arrest warrant as the parties were reportedly in discussions to resolve.
When those discussions failed, Itria claimed that 14 more of the 19 contracts were also in default as they went ahead and filed 14 new COJs against the medical practice parties in March 2019. All told, Itria’s judgments add up to around $1.9 million. And just as Itria had previously, they began the procedure to enforce them.
But there’s a twist. The COJs and the contracts might have forged signatures for one of the parties.
On April 18th, Itria Ventures was sued by the very same doctor they sought to have arrested.
“Those confessions of judgment appear to bear my signature and have been filed against me but are fraudulent and forgeries because I did not sign them and the signature on them is not mine,” the plaintiff argued. Itria is a co-defendant alongside several entities that make up the medical practice, two notaries, Itria’s attorneys, and the plaintiff’s own brother, who is also a doctor.
Plaintiff’s claims of forgeries are onerous given that notaries were present, but the evidence is compelling given that on several contracts a notary attested that he appeared before her to sign it when there is surprisingly no signature there at all.
“This is a fraud even the most sophisticated lawyers would have trouble spinning in their favor. This fraud is shocking to the conscience,” the plaintiff’s attorney argued.
In instances where plaintiff’s signature is present, plaintiff alleges that his brother forged his signature and that the notaries fraudulently went along with it. In addition to the alarming variations in his signature, the plaintiff’s attorney pointed out an instance where a signature appears to be not only forged but a photocopied forgery.
Accordingly, the plaintiff is seeking to have all the judgments as they pertain to him personally, vacated.
Itria wasn’t convinced the allegations held weight given that it was the first time forgery had been raised in 2 years of communications. Documents filed appear to show there have been discussions to resolve for some time. They separately pressed forward on May 13th to have a Court appoint a post-judgment receiver over the medical practice.
Itria has relayed to deBanked that their enforcement efforts have been in compliance with all laws and court rules and that they’ve worked with these debtors in a cooperative fashion to attempt to provide them with the opportunity to resolve their financial difficulties. For example, Itria says they (a) provided these debtors with a reduced/modified payment plan, (b) provided them, for an extended period of time, with a de facto forbearance from enforcement to allow them to ‘catch their breaths,’ and to attempt to resolve their financial difficulties by seeking financing elsewhere or otherwise , and (c) at the debtor’s request, assisted them in attempting to obtain alternate financing for many of their business needs, not just to make Plaintiffs whole.
On May 29th, the judge ordered a preliminary injunction enjoining Itria from enforcing the 15 judgments against the plaintiff only and any other judgments “purportedly executed by plaintiff.” The catch is that the plaintiff must post a $1.3 million bond by June 7th. If it’s ultimately determined that the injunction was not warranted, the plaintiff will be responsible for all of Itria’s costs and damages related to the injunction. Itria is not enjoined, however, from enforcing the judgments against any of the plaintiff’s co-defendants.
The case is listed under Index Number 154067/2019 in The New York County Supreme Court.
Funding These Franchises? Read This First
May 29, 2019
United States Senator Catherine Cortez Masto is concerned with the abilities of four major franchises to repay business loans, according to a letter penned to the Small Business Administration. They include Subway, Complete Nutrition, Dickey’s Barbecue, and Experimac. The issues raised should be on the radar of every provider of capital.
For Subway, Cortez Masto cites a New York Post article that alleged Subway Restaurants is plotting to put its own franchisees out of business through the enforcement of minor handbook violations. A whopping 1,108 Subway stores closed last year alone.
For Complete Nutrition, the franchisor is reportedly dismantling its own franchise. Cortez Masto says it first raised the prices of goods, wiping out franchisee profit margins. Following that, it eliminated its franchise model altogether, took away their franchisees’ POS systems, removed their locations from the Complete Nutrition website, and informed Complete Nutrition customers that the stores had been sold and to order online going forward instead of from the stores. At least 12% of SBA loans made to Complete Nutrition locations have been charged off.
For Dickey’s Barbecue, the franchise is experiencing more stores closing than opening. Cortez Masto suspects that the franchisor is providing misleading and inaccurate information to potential franchisees, resulting in failed stores and bankrupt business owners. A franchise blogger says, “The Dickey’s business model seems odd, continually selling new franchises to replace closed units, but seemingly doing little to fix the profit structure so existing franchisees survive.”
For Experimac, Cortez Masto says that most of the SBA loans made to Experimac were originated by Celtic Bank and that to-date 23% of these loans have failed.
