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
deBanked CONNECT MIAMI Kicks Off Today
January 16, 2020
deBanked’s annual South Florida event, deBanked CONNECT MIAMI, begins today at 1:30pm at The Loews Hotel in Miami Beach. Check-in will take place at the Rotunda on the 2nd level.
This event is SOLD OUT. More than 500 people are registered to attend this year.
Got an event question? Email: events@debanked.com
Got a general deBanked question? Email: info@debanked.com
Having trouble with the deBanked Events mobile app?
Make sure you have updated to the latest version on Android. Try to uninstall and reinstall on iOS. Still having trouble? email events@debanked.com
Missed out on today? Or want to get a head start on deBanked’s next event? Broker Fair 2020 in New York City is right around the corner! Register now at: https://brokerfair.org
Dodd-Frank’s Small Business Lending Data Collection Rule Could Still Take Years to Implement
January 12, 2020
Small business lenders: Are you ready to regularly submit loan application data to the Consumer Financial Protection Bureau? No? Good, because almost ten years after Dodd-Frank passed, the provision that requires the CFPB to collect small business lending data still hasn’t been implemented.
And apparently we’re still years away.
Section 1071, as it’s known, modified the Equal Credit Opportunity Act and defined a small business lender as any company that engages in any financial activity. So if you’re wondering if this thing even applies to whatever you do in your corner of small business finance, it probably does.
The rule has taken so long to implement that consumer advocacy groups have actually sued the CFPB over the delay. The CFPB took note followed by initiative and hosted a symposium late last year to discuss how it might go forward. The next steps from here are to convene a panel of small business lenders, have that panel issue a report, propose what the rules on collection will be, collect feedback on the proposal, formulate a final rule, issue a rule, and then set a time for when it will go into effect. That process could mean that the earliest that data collection takes place is in 2023, possibly even longer as the entire financial services industry may need time to develop the infrastructure and human resources to comply.
Beyond that, advocates and critics of Section 1071 do not even entirely agree on what purpose data collection will even serve. Some believe the intent is merely for the government to have access to data it otherwise might not have while others believe that the CFPB could use statistics it deems discriminatory to bring enforcement actions against financial institutions. Sounds like we could use a few more years to get on the same page…
A recording of the 2019 Symposium is below:
Jonathan Braun Has Checked In To Prison
January 2, 2020
Jon Braun, who Bloomberg Businessweek profiled in a 2018 story series, checked into FCI Otisville on Thursday. He was sentenced to 10 years in prison on May 28th for drug related offenses he committed a decade ago. He was originally scheduled to surrender on August 25th but he successfully delayed the date until today, January 2nd.
I have not attempted to contact Mr. Braun since the day of his sentencing. But purely by chance I shared an elevator with him in the Brooklyn Federal Courthouse on May 28th just mere minutes after he had been handed ten years. Given the opportunity, I asked him how he felt about what just happened.
“I hope it goes by quick,” he replied stoically.
The End Of An Era – deBanked Through The Decade
December 30, 2019
deBanked estimated that approximately $524 million worth of merchant cash advances had been funded in 2010.
In 2019, merchant cash advances and daily payment small business loan products exceed more than $20 billion a year in originations.
First Funds
Merchant Cash and Capital
Business Financial Services
AmeriMerchant
Greystone Business Resources
Strategic Funding Source
Fast Capital
Sterling Funding
iFunds
Kabbage
OnDeck
Square Capital
Amazon Lending
Funding Circle USA
Yellowstone Capital
Entrust Cash Advance
Merchants Capital Access
Merchant Resources International
American Finance Solutions
Nations Advance
Bankcard Funding
Rapid Capital Funding
Paramount Merchant Funding
How GRID Finance’s Cash Advances Are Building Stronger Irish Communities
December 27, 2019
Five years ago, a small company in Dublin put Ireland’s fintech scene on the map by advising local SMEs to “get on the GRID.” GRID Finance, founded by Derek F Butler, introduced a peer-to-peer lending model to Irish businesses at a time when the industry was just beginning to form. From the beginning, the company’s secret sauce was the GRID Score, a proprietary credit score system that enabled the company to take on the difficult task of assessing the risk of SMEs.
Butler, who I sat down with in September at the company’s headquarters alongside Chief Marketing Officer Andrea Linehan, says the GRID Score is an SME’s “passport to the economy.”
It’s the upper tier that GRID caters to while providing a unique product within Ireland known as a cash advance. The setup is similar to Square and PayPal in the US in that the loans are repaid via a percentage of an SME’s credit/debit card transactions on a daily basis. The term of the loan is fixed and the costs are reasonable.
“The reality is that small business funding and financing is a high risk,” Linehan says.
“There’s no subprime market here,” Butler adds. “We’re trying to build a prime cash advance market versus a subprime one in the US.”
Like GRID’s competitors in the industry, Linehan believes that finance in Ireland will transition online. “Ireland is still dominated by two banks,” she says, referring to Bank of Ireland and AIB. The company, therefore, believes it has a good head start on the impending shift. But in the meantime, they’ve learned how important it is to be embedded in the local communities. To that end, GRID has an office in Limerick, Ireland’s third largest city with 95,000 people that’s located about 200km away from its headquarters in Silicon Docks.
And their mission goes beyond providing funds. “If we can help get [SMEs] ready by giving them the tips to improve their financial health right now, let’s try and do that,” Butler says. “We want them to understand their financial health versus their cost of capital.”
While the company has sustained modest growth, Business Post reported earlier this month that GRID plans to raise €100 million in 2020 to provide even more loans through its platform.
Butler likens GRID’s mission to the MetLife Foundation, promoting financial health and building stronger communities. “We do a lot of work with the MetLife foundation because of the impact they have,” he says. “It’s why I launched GRID Finance.”
deBanked Throwback Thursday
December 26, 2019As we count down the end of the decade, I thought you might want to take a glimpse of how the decade started here at deBanked. Below is a snapshot of the main merchant cash info page that was on our site in December 2010!
When 2010 ended, I published the following predictions for 2011:
- Businesses will increasingly face pressure on past due taxes and as a consequence would face smaller funding offers with higher costs.
- Credit card processors will venture into funding their own clients rather than rely on 3rd party MCA companies.
- Brokers will increasingly begin to fund their own deals.
- Increasing competition will create downward pressure on costs.
- It will become harder for desperate businesses to obtain funds from anywhere, including MCAs.
Might some of that be true of the recent years?????
deBanked’s Top Ten Things of 2019
December 20, 2019In this video, I break down deBanked’s Top Ten Things of 2019. Happy holidays and have a Happy New Year from all of us at deBanked!
LendingClub Retail Investors Still Frozen Out In Several States After Sudden Restriction
December 5, 2019
On September 23, retail investors on the Lending Club platform in 5 states received strange news, they had been temporarily restricted from buying notes because of the state they lived in. No further information was provided.
74 days later, investors in New York, Florida, Texas, Arizona, and North Dakota (the affected states) are still frozen out from buying notes. Restrictions in a handful of other states have existed for years.
Lending Club was asked about this by Wedbush Securities analyst Henry Coffey on the November 5th Q3 earnings call and CEO Scott Sanborn explained that it was due to a review of their state licensing requirements that was conducted in their pursuit of a bank charter. “As part of our overall preparation for the bank charter, we did an updated review of our licensing requirements,” Sanborn said. “We identified some that we have that we don’t need and some that we believe we need that we don’t have, and that’s what you’re seeing.”
Sanborn went on to describe the overall impact of temporarily losing those investors to their bottom line as immaterial and that they were working quickly to restore investing access.
A month later, the restriction persists. 58 comments on the subject have piled up on a LendAcademy blog post discussing the matter, many of them unhappy. Investors in those states can still trade notes on the secondary market, but that is not really a consolation.
It may not matter. Lending Club stopped relying on individual retail investors as a significant funding source long ago.
