Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.
Articles by Sean Murray
My Unique Experience Running a Print Magazine
August 12, 2023
Two and a half years ago, the last ever physical version of deBanked Magazine rolled off the printer (Nov/Dec 2020). Some were shocked that we stopped it while those who knew the print business wondered how it had ever gone on for so long. It was a nice addition to our website, placing content in hard copy format and shipping it out to thousands of offices across the industry for a total of six times per year, every year. Covid disrupting the traditional office work arrangement made it impossible to keep a magazine going that had such a large percentage of office distribution. I wasn’t sad when I made the decision to cut the cord, more like relieved, for it was an extraordinarily tough product to consistently produce for very little return in exchange.
And that’s where my unique story begins. With an average print run of 3,000 – 4,000 per issue and distributed for free, our little b2b magazine left a big impression on many who received it. So much so that some subscribers began to wonder if the real lucrative business of this era weren’t all the financial products covered in the magazine but perhaps the magazine business itself! LOL. But on this I am not joking. Rumors spread and I found myself on the receiving end of both admiration and condemnation about how much profit people thought the magazine was probably making deBanked. The most common estimate I heard? That the magazine was guaranteed to be yielding at least $1 million per year just to myself personally after all the expenses. Which, man, would’ve been pretty awesome! Some threw out ballpark valuations for our magazine of $10 million (or even $100 million!!!!!) based upon assumptions that it made multiple millions a year in profit. Not the investment bankers of course, who knew better.
These numbers blew my mind, especially since I knew that they were very much rooted in complete delusional fantasy. If you want to know the truth, my internal personal valuation for our magazine had consistently been $0. This wasn’t some secret that I didn’t want anyone to know. I had just assumed it was obvious to all. I mean we were printing and mailing a free b2b magazine in the internet era. A magazine. A magazine…
In a good year, deBanked Magazine (when examined as a standalone) generated somewhere between $5,000 – $9,000 in total profit. That was with no salaries because it couldn’t afford even one full time employee dedicated to working on it. Not even myself got paid from it. The personal financial benefit to me throughout was a whopping $0. Thus with its extremely tight budget I played the role that a normal publication might have five people for in addition to working with a small number of freelancers for help in order to do the parts I couldn’t. I spent nights proofreading with a highlighter and days trying to figure out how we were going to fill up 30+ pages in a single issue. It was an incredible amount of work and truthfully, I really enjoyed it, which was the entire reason it existed in the first place. I thought it was a cool way to reach people that maybe weren’t reading our website and it provided us with a channel to create some long form stories we otherwise wouldn’t have created. I did not have one ounce of regret throughout that it was not a great financial business to be in and I promised myself I would just do it until I didn’t want to do it anymore or it started to generate a standalone loss.
But I admit the experience was slightly marred by the perception of how much some believed we were making from it. Everybody seemed to know somebody who had been in the magazine business and had apparently become a billionaire from it. They supposedly knew all the numbers, assumed our numbers, and as a result it made any humility I exhibited about it come off as disingenuous. I actually ended up becoming the target of some unusual hostility that I could not seem to shake about its “success,” no matter how obvious on its face that it wasn’t what they thought. There are those that will apparently take what they see and invent numbers off of how something looks and then tell others that those are the real numbers. I guess you live and learn.
And so when my wife questioned why she sometimes found me sitting at the dining room table at 2am hunched over a stack of crumpled printer paper with yellow markers on one side and a cup of coffee on the other, I made sure to tell her that what she was seeing was a billion dollars in wealth creation. My big find of the night might be that a product that wasn’t a loan had been characterized erroneously with loan-like language.
“Page 27, left column, 4th paragraph down, 3rd sentence, it says ‘repay,'” I’d write off to the printing press who was under the assumption that it was otherwise all ready to be scheduled for a job. “It shouldn’t say repay, it should say….”
Which was then replaced by something too long or too short that threw off the page count of the book and I’d wake up 3 hours later to be told that they’d need me to draw a chart, create a half page article, or maybe curate some photos to take up some space. “Also, there’s something wrong with the bleed on page 4 and these other photos you sent are RGB not CMYK,” I’d be told. “This needs to be fixed right now to meet the new deadline because you already missed the last deadline.”
Such is the mystical story of it all, the coming together of words on paper that then got sent in the mail. A good number of people enjoyed them. That was the reward. When it could no longer break even despite having no employees, I made the call to cut it. It was a lot of fun to be in print while it lasted. Also a heck of a lot of work. We tried a digital only version for a while thereafter but it just wasn’t the same.
I have a tendency to sell things at just about our cost of doing them because I know other companies have tight budgets. The hope is that people will like what we’re doing, it’ll have a positive impact, and they’ll want more of it. That’s pretty much what makes me tick. Had I another motive and the temperament for it, I’d be out there doing all the stuff that the people I write about are doing. It does look fun, but it also looks like a lot of hard work!
I don’t believe the magazine will ever come back, but I’ll never forget the experience of doing it.
The New York Disclosure Law is Here
August 1, 2023
The New York commercial financing disclosure law has arrived. Are you in compliance with it?
The 53-page requirements can be viewed here.
While the law is similar to the one recently rolled out in California, there may be some key differences. Your best bet is to contact a lawyer that is equipped to help you with this very thing. If you need a recommendation for one, email me at sean@debanked.com.
If you have no idea what this disclosure law thing in New York is all about, you need to catch up ASAP! This law was passed in 2020 and went through a formal rule-making process that lasted years. The rules were finalized on February 1, 2023 and were mandated to go into effect six months from that date.
Here’s a map of what you should be paying attention to right now!
New York State Loan Initiative Takes on Fintech Type Pitch
July 24, 2023
If a business owner told you they had been approved for a 3-6 year loan up to $150,000 with no origination fees, no prepayment penalties, and interest rates ranging from 9.25 – 12.25%, would you believe it was a real offer?
The criteria, after all, is just a matter of:
– having been in business at least 1 year
– having strong previous cash flow and projected cash flow
Not only is this real but it’s being rolled out by New York’s “Forward Loan Fund 2” as a working capital loan that can be used for equipment, payroll, utilities, rent, supplies, marketing and advertising, building renovations, and other expenses. The state stops short of calling itself a fintech platform or online lending platform, instead referring to itself as a “virtual platorm” that is “accessible anywhere in the state.”
This is the second run of this program. The first distributed loans to 1,700 small businesses.
“It was a godsend,” one testimonial posted on the NY loan fund site says. “NDC made it so easy. It took two weeks and the money was in our account. Can you feel my joy?”
The program offers more than just capital, promising that there is a “network of Entrepreneurship Assistance Centers (EAC) available to provide free support before, during, and after the loan application process.”
The program is backed by participating lenders that include Accion Opportunity Fund, Ascendus, NDC, Pursuit, and TruFund Financial Services. There is about $150M available to be loaned out “with plans to recycle and lend additional funds over the life of the program.”
“Due to a limited amount of funding availability and the high volume of applications expected, it is anticipated that not all applicants will be able to receive a loan,” a disclaimer says.
At a minimum, the documents required to be considered are:
1. Most recently filed tax returns OR internal financial statements.
2. Schedule of ownership
3. Personal guarantee from each individual owner greater than 19%
4. Articles of organization
5. Credit report
Congressional Effort Underway to Reinstate the SBLC Moratorium
July 23, 2023
It only took 40 years for the SBA to lift the moratorium on licenses for Small Business Lending Companies. Now there’s a congressional effort underway to reinstate it. The “Community Advantage Loan Program Act” which had not been assigned its own individual bill number in the Senate at the time of this writing, nevertheless garnered 18-1 approval by the Senate’s Small Business and Entrepreneurship Committee last week.
First, the proposal concludes that the SBA does not have adequate resources to issue more than 3 new SBLC licenses. Second, it calls for a 5-year moratorium on new licensees having Delegated Authority which is the authority granted to a lender to process, close, service, and liquidate SBA loans without prior SBA review. Third, it imposes new annual stress tests that would enable the SBA to revoke the new licenses. All in all, it is effectively a rollback of the new SBA rules, and those are just some key components of it.
Senators Ben Cardin, D-Md. and Joni Ernst, R-Iowa, are the sponsors of the proposal.
Among the small business lending companies that would be impacted by this is Funding Circle. Ryan Metcalf, Head of U.S. Public Affairs at Funding Circle, told deBanked that “We estimate that the proposed Cardin/Ernst bill would reduce 7(a) Small Loans made by Funding Circle over the next three years by 26%, of which 33% is to SMB in LMI neighborhoods and 40% in rural areas.” That’s without considering the increased regulatory costs or the likely reduced borrower conversion rate as a result of having non-delegated authority, Metcalf added.
The initiative by Cardin and Ernst does not come as a surprise. The two had been critical of the the SBA’s plans to allow more SBLCs all along, arguing that new licensees were likely to be fintechs who were “the very entities responsible for issuing billions of dollars-worth of Paycheck Protection Program (PPP) fraud”
Virginia Now Has 150 Registered Sales-Based Financing Providers
July 11, 2023
The number of registered sales-based financing providers in Virginia is increasing, according to the most recent available public records. At last count there were 150. Both funders and brokers are required to be registered if they plan to do any MCA business with VA-based merchants.
If you’re not on the list and you believe you registered, you may not have completed all the steps. Not only do you have to register as a sales-based financing provider but you also have to register to transact business in the state.
1. Register as a sales-based financing provider.
2. Register to transact business in the state.
So there are two applications and registrations to fulfill the requirement, per deBanked’s understanding. See more info here. Please consult an attorney if you have questions.
The state has been very quick to add new registrants to the list so if someone said they registered months ago but that the government has been slow to add them, it might actually be a matter of them missing a requirement instead.
Sales, Tech, Funding, and the Law in California
July 7, 2023deBanked sat down with three individuals from across the spectrum of the small business finance world in Southern California.
With David Austin, an attorney and Managing Partner at Austin LLP, we discussed merchant cash advance law and the importance of legal counsel to run one’s business correctly.
With Trey Markel, VP Sales & Marketing at Centrex Software, we discussed corporate finance, AI, blockchain, tech, and more.
With Justin Thompson, Chief Revenue Officer at National Funding, we talked about what’s changed in sales and the state of selling.
They’re all on deBanked TV or listen to them on Spotify!
And don’t forget to register for deBanked CONNECT San Diego!
Can’t Watch Videos In the Office? deBanked is On Spotify
June 30, 2023Can’t watch videos on company time? Catch up with what’s going on in the industry by listening to deBanked’s podcast on your commute. With more than 500 deBanked TV segments altogether since 2020, we’ve been adding some of the most memorable and informative ones to Spotify.
Recent interview guests include:
- Justin Thompson – National Funding
- Andrew Carman – PerCina Report
- Steve Geller – Leasing Solutions LLC
- George A. Parker – VenSource Capital
- Nancy Robles – Eastern Funding
- Alyssa Guglielmi – JRG Funding
- Porsha Brooks – Lenpick
Federal Legislators Jump on Commercial Financing Disclosure Bandwagon, Renew Push to Give CFPB Authority Over Industry
June 16, 2023
Feel like there’s a lot of state-level disclosure going around lately? Well now some members of Congress believe another layer is needed at the federal level. In a bill titled the “Small Business Financing Disclosure Act of 2023,” the language looks awfully familiar. There’s a Double Dipping clause in it, for example, which was a term first seen in a New York State law.
The federal bill, which was introduced by US Senator Robert Menendez and Congresswoman Nydia M. Velázquez, seeks to place the small business finance industry under the authority of the Consumer Financial Protection Bureau (CFPB). As part of that, the Director (currently Rohit Chopra) would be responsible for devising all the rules and formulas, according to the bill. Furthermore, with regards to sales-based financing, the bill specifically states:
1. The provider must disclose an APR.
2. The estimated term of repayment and periodic payments based on projected sales volume must be disclosed.
“Small businesses are the lifeblood of the American economy,” said Congresswoman Velázquez. “But for too long, predatory lenders have taken advantage of businesses in need of capital by offering loans and similar products with unclear terms and exorbitant interest rates.”
Supporters of the bill, including Senator Sherrod Brown and Senator Ron Wyden, also stated that the bill is aimed at “predatory lenders.”
In Senator Menendez’s press statement for the bill, it cites Funding Circle, a small business lending company, as a supporter.
“We believe a free and fair market operates most efficiently when there is transparency in pricing, terms and conditions,” said Ryan Metcalf, Head of U.S. Public Affairs at Funding Circle U.S. When a small business has all of the necessary information up front including the annual percentage rate (APR), they can comparison shop and make informed decisions that are best for their business. Funding Circle supports one national uniform small business financing disclosure law because it is in the best interests of small businesses and interstate commerce.”
The push for a small business financing bill is not new. A similar bill introduced by Velázquez last year did not move forward, nor did the one from 2021, nor the one from 2019. The difference is that previous versions focused on Confessions of Judgment and fairness in small business lending. The latest version takes on the air of disclosure while attempting to subjugate the whole industry to CFPB regulatory authority.
