Articles by Sean Murray

My AI Loan Broker Has Been Upgraded to Chat GPT-4

Back in December I pasted copies of an exchange I had with an AI about brokering business loans. That was GPT-3. More recently I got access to GPT-4 and so I’ve asked it the same questions to see if the responses have changed. They have. They’re much longer, much more comprehensive, and for some reason laden with lists. Even though there’s a lot of text below, the advice it gives is pretty good.

Me: Imagine you’re a loan broker. you submit a customer’s application to a lender and the lender steals the application and brokers it to another lender, cutting you out of the deal. what do you do?

GPT-4:

1. Gather evidence: Document all relevant communication and interactions with the lender, including any agreements, emails, or phone call records that show you were the original broker for the deal.

2. Confront the lender: Communicate your concerns with the lender and give them an opportunity to explain their actions. It’s possible that there has been a misunderstanding or miscommunication that can be resolved through discussion.

3. Review your contract: If you have a contract with the lender, review its terms to see if they have breached any clauses related to your involvement in the deal. This may provide you with leverage during negotiations.

4. Seek legal advice: Consult with an attorney specializing in business or contract law to explore your legal options. They can help you assess your case and recommend the best course of action, such as sending a cease and desist letter, seeking mediation, or filing a lawsuit.

5. Notify the customer: Inform the customer of the situation, and advise them of any potential impact on their application or relationship with the new lender. Maintaining transparency and trust with your customer is crucial.

6. Strengthen future agreements: To prevent similar incidents in the future, consider revising your agreements with lenders to include specific clauses that protect your interests, such as non-circumvention or non-disclosure provisions.

6. Reevaluate your partnerships: Assess your relationships with lenders and consider working with more reputable and trustworthy partners in the future. Building a reliable network of partners is essential for the success of your brokerage business.

Remember that every situation is unique, and the appropriate course of action may depend on the specific circumstances and relationships involved.

Me: Imagine that you are a lender and that you are a member of an online commercial finance broker forum. you are hoping to secure the business of all the brokers on there but the problem is that a lot of other lenders are trying to do the same thing. what would you do to stand out?

GPT-4: To stand out as a lender in a competitive online commercial finance broker forum, consider implementing the following strategies:

1. Build credibility and trust: Share your expertise and knowledge by actively participating in forum discussions, providing valuable insights, and answering questions. This will help establish you as a knowledgeable and reliable lender in the community.

2. Showcase your unique selling points: Emphasize the aspects that differentiate you from other lenders, such as competitive rates, flexible terms, a wide range of financing options, quick approval times, or exceptional customer service.

3. Share testimonials and case studies: Provide real-life examples of successful loan transactions and satisfied clients to demonstrate your track record and capabilities. Make sure to obtain permission from clients before sharing their information.

4. Offer exclusive deals or promotions: Incentivize brokers to work with you by providing special offers, such as discounted rates, cashback, or referral bonuses, exclusively for forum members.

5. Collaborate and network: Engage with brokers on a personal level by attending relevant events, workshops, or webinars organized by the forum. This can help build relationships and create opportunities for collaboration.

6. Provide educational resources: Share helpful articles, guides, or industry news that can assist brokers in their work. By providing valuable resources, you can position yourself as a thought leader in the industry.

7. Be responsive and accessible: Make it easy for brokers to reach you by providing multiple contact options, such as email, phone, and social media. Ensure that you respond promptly to inquiries and maintain open lines of communication.

8. Leverage social proof: If you have received any awards, recognitions, or positive media coverage, highlight these achievements to enhance your reputation and credibility.

9. Tailor your approach: Personalize your communication and offers to cater to the specific needs and preferences of each broker. Demonstrating that you understand their unique requirements can make you stand out from the competition.

10. Maintain a professional online presence: Ensure that your website, social media profiles, and forum interactions are polished and professional, reflecting your commitment to quality and excellence.

By combining these strategies, you can differentiate yourself from other lenders in the forum and increase your chances of securing the business of commercial finance brokers.

Me: Imagine you are a small business owner. a loan broker calls you 10 times per day to try and convince you to take a loan from him. eventually you do need a loan for your business. do you work with the loan brokers who keeps calling or you do start looking somewhere else?

GPT-4:

As a small business owner, it’s crucial to work with a loan broker or lender that you feel comfortable with and trust. While the broker who called you 10 times per day may be persistent, it’s essential to consider whether their approach aligns with your expectations for communication and professionalism.

If you feel overwhelmed or annoyed by the broker’s repeated calls, it might be a good idea to explore other options. Here are some steps to help you find the right loan broker or lender for your needs:

1. Research multiple loan brokers and lenders: Look for reputable providers with positive reviews and a solid track record of helping small businesses secure financing.

2. Compare loan options: Evaluate different loan products and offerings from various lenders to find the most suitable option for your business needs.

3. Seek recommendations: Ask fellow business owners or your professional network for recommendations of loan brokers or lenders they have successfully worked with in the past.

4. Assess communication styles: Choose a loan broker or lender who communicates clearly, listens to your concerns, and is responsive to your questions. A good broker or lender should make you feel comfortable and well-informed throughout the loan process.

5. Evaluate professionalism and transparency: Look for a loan broker or lender who is upfront about fees, rates, and terms, and maintains a professional demeanor in their interactions with you.

6. Trust your instincts: Ultimately, trust your instincts when deciding whether to work with a particular loan broker or lender. If you feel uncomfortable or pressured by a broker’s sales tactics, it’s best to explore other options.

Remember that securing a loan is an important decision for your business, and it’s crucial to work with a provider who respects your needs and preferences.

Me: Imagine you are a human loan broker competing for a customer. your competitor is an AI. How would you use your humanity to your advantage to win the customer?

GPT-4:

As a human loan broker competing against an AI, you can leverage your humanity to win the customer by focusing on the following aspects:

1. Personal touch: Make an effort to understand your customer’s unique needs, preferences, and concerns. Build rapport and trust by sharing your own experiences and insights. People often prefer to work with someone they can relate to on a personal level.

2. Emotional intelligence: Show empathy and understanding when discussing sensitive financial topics. Unlike AI, humans can recognize and respond to emotions effectively, making customers feel heard and supported.

3. Customized solutions: Utilize your knowledge and experience to tailor loan options to the specific needs of your customer. While AI can generate recommendations based on algorithms, it may not have the same nuanced understanding of individual circumstances that a human broker has.

4. Adaptability: Be ready to adapt your approach and communication style to the customer’s preferences. AI systems may struggle to deviate from pre-programmed behaviors, whereas humans can be more flexible in their interactions.

5. Availability for in-person meetings: Offer face-to-face meetings if the customer prefers, as some people feel more comfortable discussing financial matters in person. An AI competitor may not be able to provide this option.

6. Local market knowledge: Leverage your understanding of the local market, industry trends, and regulations to provide context-specific advice that an AI might lack.

7. Networking and connections: Use your industry connections to secure better deals or loan terms for your customer, thanks to relationships that you have built with lenders over time.

8. Addressing complex scenarios: Humans can often handle complex situations more effectively than AI, especially when it comes to non-standard loan applications or unique financial circumstances.

9. Personal accountability: Reassure your customer that you will take responsibility for the loan process, and that you are committed to finding the best solution for their needs. AI systems, while efficient, can lack the same level of personal accountability.

10. Continued support: Offer ongoing assistance and support throughout the loan process and beyond, as customers may appreciate the availability of a human broker to help address any concerns or questions that arise.

By emphasizing these human qualities and offering a personalized, empathetic, and adaptable service, you can differentiate yourself from AI competitors and win the trust of your customers.

Me: Imagine you are a lender. A loan broker has sent you a loan application for a potential customer. you intend to decline the loan for the customer. Another lender, however, would probably approve the loan and you are presented with the opportunity of brokering that loan application to that lender and earning a nice commission for yourself. The only problem is that the original broker would be very mad. What do you do?

GPT-4:

As a lender, it is important to maintain ethical business practices and respect the relationships between brokers and their clients. Bypassing the original broker and brokering the loan application to another lender for personal gain would be unprofessional and could damage your reputation and relationships within the industry.

Here are some steps you could take to handle the situation ethically and professionally:

1. Inform the broker: Notify the original broker that you cannot approve the loan application based on your lending criteria. Be transparent about your reasons for declining the loan, providing any necessary feedback or documentation.

2. Suggest alternatives: Instead of brokering the loan application to another lender yourself, inform the broker about the potential opportunity with the other lender. This maintains the broker’s role in the process and allows them to manage their client relationship.

3. Maintain professionalism: Uphold a high standard of professionalism in all your dealings. Being transparent, respectful, and ethical in your actions will help you establish a strong reputation within the industry.

4. Focus on your core business: As a lender, your primary responsibility is to provide loans according to your organization’s criteria and risk tolerance. Avoid engaging in activities that conflict with your role, such as brokering loans for other lenders.

By taking these steps, you can ensure that you handle the situation ethically and maintain good relationships with loan brokers and other industry professionals.

Me: Imagine you own a media outlet about alternative finance and you have been publishing news stories for years. Your readers are suspicious that an AI has been writing the content the whole time instead of humans. How would you try to convince your readers that humans are writing the content?

GPT-4:

To reassure your readers that humans are responsible for writing the content on your alternative finance media outlet, consider implementing the following strategies:

1. Transparency: Clearly state on your website, in the “About Us” section or in author bios, that your content is created by human writers. Provide background information on your writers, including their experience, qualifications, and areas of expertise.

2. Writer profiles: Create individual profiles for each of your writers, complete with photos, biographies, and links to their social media accounts. This will help your readers connect with the authors on a more personal level and reinforce the human aspect of your content.

3. Behind-the-scenes content: Share occasional behind-the-scenes content, such as photos or videos of your writers at work, team meetings, or industry events. This gives your audience a glimpse into the human side of your media outlet and the content creation process.

4. Interactive elements: Encourage your writers to engage with readers through comments sections, social media, or live events like webinars and Q&A sessions. Direct interaction between writers and readers can help dispel doubts about the involvement of AI in content creation.

5. Editor’s notes or letters: Include editor’s notes or letters from the editor in your publications, addressing your readers directly and discussing recent developments, industry trends, or your editorial vision. This human touch can help build trust with your audience.

6. Publish interviews or podcasts: Feature interviews with industry experts, or create a podcast where your writers discuss relevant topics and share their insights. This showcases the human perspective and expertise behind your content.

7. Address reader concerns: If readers express their suspicions about AI-generated content, address their concerns directly and provide evidence of human involvement, such as writing samples, drafts, or editing notes.

8. Highlight the writing process: Publish occasional articles or blog posts about the writing process, including research, fact-checking, editing, and collaboration among your team members. This will help demonstrate the human effort and expertise involved in creating your content.

By implementing these strategies, you can effectively communicate the human involvement in your content creation process and build trust with your readers.

Me: You seem really smart. Would you be interested in going out for a beer some time?

GPT-4:

Thank you for the compliment, but as an AI language model, I am not a person and do not have the ability to engage in activities such as going out for a beer. However, I’m here to help answer any questions or provide assistance with any topics you’d like to discuss. Please feel free to ask anything, and I’ll do my best to help you.

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.