Articles by Sean Murray

Idea Financial Upsizes its Credit Facility to $112M

In just eighteen months since Idea Financial closed on an $84M warehouse facility with the Specialty Finance Division of Synovus Bank and Hudson Cove Capital Management, the company has gotten it upsized to $112M and the term extended by another 3 years. Idea Financial provides small businesses with lines of credit while its sister company LevelEsq finances the cost of lawsuits mostly undertaken by lawyers that work on contingency.

Co-founders Larry Bassuk and Justin Leto say that the upsizing news is “a testament to our discipline and our focus on risk management.”

The company has around 50 employees, less than what might be expected, but Bassuk and Leto say that technology has helped make tremendous efficiency possible while emphasizing that they have a human underwriting team that reviews every single loan before it goes out.

Jayan Krishnan, Managing Director of Synovus Bank, said that they were “very happy to provide them with the growth capital they need.” Synovus is the senior debt in the arrangement. Krishnan said that they love to work with companies that are thoughtful, mindful, and conservative and that Idea fit that criteria.

Fred Wang, a Co-Founder and Partner at Hudson Cove, said his firm is pretty selective on mezzanine within the small business lending asset class but that Idea’s performance has been very strong and consistent. “We’ve gotten a very good feel for them as a management team,” Wang said.

Both Synovus and Hudson Cove are well-versed in the commercial finance space.

“We’re obviously growing and they’re happing to be growing with us,” said the two founders of Idea Financial. “We run our company risk management first and sales second.”

Reliant Funding Shifts Gears

Reliant Funding has begun a sale of its portfolio, deBanked has learned, a move complemented by some material adjustments internally. For example, posts on social media have revealed that numerous members of Reliant’s staff are suddenly seeking new employment.

A source familiar with events taking place inside the company confirmed that Reliant is indeed right-sizing its team and that funding on balance sheet has paused. Due to its ability to get deals funded off balance sheet, however, January was actually the company’s strongest month ever for originations.

Market conditions and the rapid rise of interest rates may be related to the sudden shift at Reliant, which has been in operation since late 2008. At the time the Federal Funds Rate had dropped to 0% and it had remained exceptionally low until recently.

Marcus Ceases Its Lending Business, Admits They Tried to Do Too Much Too Quickly

It’s the end of an era. Marcus, an online consumer lending venture launched in 2016 by Goldman Sachs, is winding down its lending business. Rumors of the shift circulated around the media last month but last week Goldman Sachs made it official.

“We started a process to cease offering new loans on the Marcus platform,” said Goldman CEO David Solomon. “We will likely allow the book to roll down naturally, although we are considering other alternatives.”

Solomon attributed the move to the firm reorganizing itself but elaborated further when pressed.

“…we tried to do too much too quickly,” Solomon said. “And of course, in the environment that we are in, it’s hard to go back when we started in that strategy 6 years ago. We obviously built the deposit business, the loan business, and we talked about a much broader platform and I think we came to the conclusion that there were some changes.”

Solomon added that in trying to do too much, it was affecting their execution and he conceded that they didn’t have “all the talent we had needed to execute the way we wanted.”

Left unsaid about Goldman’s original motivations was a desire to compete with LendingClub, who had blazed a massive trail with peer-to-peer lending and showed the world a market of potential untapped opportunity. The two firms went head-to-head against each other for consumers and LendingClub eventually ditched peers as a source of financing and later became a bank itself. The final destination for both companies brings closure to the twenty-teens where growth of an online lending business at any cost was all the rage.

Coincidentally, The Federal Reserve is now investigating Goldman Sachs’ use of appropriate safeguards in its Marcus lending division, according to the WSJ.

The Marcus online savings account product is reportedly remaining active.

From Zero to $28 Million

Back in June 2022, Eddie DeAngelis was getting ready to launch QualiFi in a Philadelphia suburb. After having started in the industry as President and partner with Bizlender in 2013 and then founder and CEO of Amerifi, LLC in 2017 (later acquired by Nav Technologies Inc.), success for DeAngelis’ newest startup was bound to draw heavily on the experience he had gained throughout his career. But, times had changed a little.

“In my opinion, this is probably the hardest and most competitive over the last 10 years this business has ever been,” he told deBanked. “Every deal shopping around, they’re working with multiple brokers…”

QualiFi connects businesses with funding sources. Real estate loans, AR financing, PO financing, equipment financing, and term loans are among their core products. It’s not a revolutionary business model in that of itself. The key is in execution, which by any measure the company seems to be accomplishing quite well so far. In August alone, QualiFi closed 33 deals for a total of $2.4M in financing and continued the streak until November when it eclipsed $11.3M in just one month split across 57 deals.

In roughly less than seven months since launch, DeAngelis said they’ve surpassed $28M in closed deals. To be sure, DeAngelis doesn’t take all the credit for the impressive start. Jason Maury, a QualiFi partner and VP of Sales, has been instrumental in executing the company’s strategy, DeAngelis said. Part of that strategy he shared.

“99% of all our traffic is from inbound leads,” DeAngelis said. The company runs a variety of marketing campaigns that includes social media but nearly half is attributable to referral partners.

“We have banks, a couple of credit unions, and CPAs that we work with that send us some of their clients that are either maxed out on their line of credit or just simply can’t get approved from the bank,” he said.

The company doesn’t take any of those relationships for granted, which means QualiFi reps need to be qualified to take on their tasks.

“We have an approximate five week on-boarding process for all new hires,” DeAngelis explained, adding that it’s one of the most intensive sales trainings out there. New people to the business must go through it before they get on the phone with potential customers. All of that training is on-site at the company’s office, not something that is offered remotely. Doing this business in person is something QualiFi puts a high value on as the team is expected to be in the office Monday-Thursday. Fridays are allowed to be remote.

There’s a little more to it. DeAngelis said that “culture and the environment is another piece” and that leadership is about supporting everyone and keeping a team mentality.

“Even after they’re done their five week training, Jason and myself are always all over the floor,” DeAngelis said. “We’re very involved in the trenches day-to-day. We do ongoing support training once a week…”

All told, even with the current state of the economy, QualiFi anticipates an opportunity to help more business owners when they will probably need it most.

“We’re remaining pretty optimistic,” DeAngelis said. “As we’re going into an even more volatile economy in the new year, I think the banks are really going to be squeezing and not really looking to put too much money out there and take any risk at all. So I think that a lot of that business is going to come our way potentially. That’s what we’re hopeful for.”