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
CFPB’s Small Business Lending RFI is Now Closed
September 18, 2017The window to share your two cents on the CFPB’s quest to collect data on small business lending has closed. The extended deadline to respond to the RFI was September 14th.
The agency received 2,668 comments, 650 of which you can read online. Most responses that deBanked reviewed asked the CFPB to exempt certain businesses such as community banks from the law. Others denounced the CFPB’s objective as misguided or poorly thought-out from the get-go.
Nevertheless, Section 1071 of the 2009 Wall Street Reform and Consumer Protection Act directed the CFPB to collect data on small business lending presumably to determine if women and minorities are treated differently.
Some observers expected this initiative to be derailed when Richard Cordray, the Director of the CFPB, resigned to campaign for Governor of Ohio. However, the governor’s race is now in full swing and he has yet to resign, and could now possibly remain in his position until it expires next year.
The implementation of any resulting rule from the RFI would likely not take place until some time in the 2020s, sources contend.
The Top Small Business Funders By Revenue
September 14, 2017Thanks to the Inc 5000 list on private companies and earnings statements from public companies, we’ve been able to compile rankings of alternative small business financing companies by revenue. Companies that haven’t published their figures are not ranked.
| SMB Funding Company | 2016 Revenue | 2015 Revenue | Notes |
| Square | $1,700,000,000 | $1,267,000,000 | Went public November 2015 |
| OnDeck | $291,300,000 | $254,700,000 | Went public December 2014 |
| Kabbage | $171,800,000 | $97,500,000 | Received $1.25B+ valuation in Aug 2017 |
| Swift Capital | $88,600,000 | $51,400,000 | Acquired by PayPal in Aug 2017 |
| National Funding | $75,700,000 | $59,100,000 | |
| Reliant Funding | $51,900,000 | $11,300,000 | Acquired by PE firm in 2014 |
| Fora Financial | $41,600,000 | $34,000,000 | Acquired by PE firm in October 2015 |
| Forward Financing | $28,300,000 | ||
| IOU Financial | $17,400,000 | $12,000,000 | Went public through reverse merger in 2011 |
| Gibraltar Business Capital | $16,000,000 | ||
| United Capital Source | $8,500,000 | ||
| SnapCap | $7,700,000 | ||
| Lighter Capital | $6,400,000 | $4,400,000 | |
| Fast Capital 360 | $6,300,000 | ||
| US Business Funding | $5,800,000 | ||
| Cashbloom | $5,400,000 | $4,800,000 | |
| Fund&Grow | $4,100,000 | ||
| Priority Funding Solutions | $2,600,000 | ||
| StreetShares | $647,119 | $239,593 |
Companies who were published in the 2016 Inc 5000 list but not the 2017 list:
| Company | 2015 Revenue | Notes |
| CAN Capital | $213,400,000 | Ceased funding operations in December 2016, resumed July 2017 |
| Bizfi | $79,000,000 | Wound down |
| Quick Bridge Funding | $48,900,000 | |
| Capify | $37,900,000 | Wound down |
The Google Battle for Lending and SMB Finance Keywords
September 14, 2017The online lending battle is at least in part being fought online. Below is a chart of organic page 1 rankings in Google for some of the industry’s biggest players, banks, and the SBA. (Hat tip to Fundera and NerdWallet):
| Keywords | OnDeck | Kabbage | Fundera | Lending Club | NerdWallet | National Funding | Traditional Banks | SBA.gov |
| business loan | 1 | 9 | 3 | 5 | 4,7 | 6 | ||
| merchant cash advance | 2 | 3 | 4 | 8 | ||||
| working capital | 9 | 4 | ||||||
| commercial loan | 3 | 2,7 | ||||||
| small business loans | 2 | 3 | 5 | 7 | 1 | |||
| business line of credit | 3 | 2 | 11 | 1,4 | 6,7,8,9,10 | 5 | ||
| fast business loan | 1 | 4 | 2 | 5,6 | ||||
| business loan with bad credit | 7 | 1 | 2 | 3 |
The Top 10 Google Search Results for Merchant Cash Advance in February 2012 compared to now:
| February 2012 | September 2017 |
| MerchantCashinAdvance.com | Wikipedia |
| Yellowstone Capital | OnDeck |
| Entrust Cash Advance | Fundera |
| Merchants Capital Access | NerdWallet |
| Merchant Resources International | Businessloans.com |
| American Finance Solutions | Bond Street |
| Nations Advance | Capify |
| Bankcard Funding | National Funding |
| Rapid Capital Funding | CNN |
| Paramount Merchant Funding | CAN Capital |
The top result in 2012 is a great example of how much easier it was to game Google’s system back then. After achieving rank #1 for MCA and 300 other related keywords, MerchantCashInAdvance.com, which was just a lead generation site, sold for $75,000 in December 2011. The site was later clobbered by Google Penguin for black hat SEO and banished from visibility.
A major shift has obviously taken place over the last 5 and a half years. Is the search results game rigged to advance Google’s own interests? Three years ago I put forth my theory on that.
One thing that’s different between then and now is that Google now has 4 paid links above the organic search results as opposed to 3 and the paid links blend in more with the organic results. With the organic results pushed further down the page, they’re not as visible as they were five years ago.
Read my previous analyses on the industry’s search war over the years:
December 2015 Google Serves Low Blow to Merchant Cash Advance Seekers
March 2015 Google Culls Online Lenders – Pay or Else?
October 2014 Merchant Cash Advance SEO War Still Raging
August 2014 Six Signs Alternative Lending is Rigged: Do Lending Club and OnDeck have a helping hand?
October 2013 Google Penguin 2.1 takes swing at the MCA industry
August 2013 Your merchant cash advance press release may be hurting you
December 2012 Is Google your only web strategy?
July 2012 The other 93% [of leads]
April 2012 The SEO war continues
February 2012 The SEO War for Merchant Cash Advance: The first story on this topic
Where Alternative Finance Ranks on the Inc 5000 List
September 14, 2017Here’s where your peers rank on the Inc 5000 list for 2017:
| Ranking | Company Name | Growth | Revenue | Type |
| 15 | Forward Financing | 12,893.16% | $28.3M | MCA |
| 47 | Avant | 6,332.56% | $437.9M | Online Consumer Lender |
| 219 | OppLoans | 1,970.22% | $27.9M | Online Consumer Lender |
| 260 | US Business Funding | 1,657.42% | $5.8M | Business Lender |
| 361 | nCino | 1,217.53% | $2.4M | Software |
| 449 | Kabbage | 979.31% | $171.8M | Online Consumer Lender |
| 634 | Lighter Capital | 712.03% | $6.4M | Online Business Lender |
| 694 | Swift Capital | 652.08% | $88.6M | Business Lender |
| 789 | CloudMyBiz | 575.46% | $2.1M | IT Services |
| 1418 | loanDepot | 286.11% | $1.3B | Online Consumer Lender |
| 1439 | Nav | 281.98% | $2.7M | Online Lending Services |
| 1731 | United Capital Source | 224.85% | $8.5M | MCA |
| 1101 | ZestFinance | 165.99% | $77.4M | Online Lending Services |
| 2050 | National Funding | 184.74% | $75.7M | Online Business Lender |
| 2572 | Blue Bridge Financial | 136.73% | $6.6M | Online Business Lender |
| 2708 | Bankers Healthcare Group | 127.51% | $149.3M | Financial Services |
| 2714 | Tax Guard | 127.02% | $9.9M | Financial Services |
| 2728 | Fora Financial | 125.81% | $41.6M | Online Business Lender |
| 2890 | Reliant Funding | 121.61% | $51.9M | Online Business Lender |
| 4005 | Cashbloom | 70.47% | $5.4M | MCA |
| 4945 | Gibraltar Business Capital | 42.08% | $16M | MCA |
Compare that to last year’s list below:
Of the companies on the 2016 list, Capify and Bizfi were wound down while CAN Capital ceased operations but then later resumed them more than half a year later.
Bond Street Has Stopped Lending
September 13, 2017
NYC-based small business lender Bond Street has stopped making new loans, according to sources who worked with them. The Wall Street Journal published a similar report earlier today. In addition, the WSJ reported that Goldman Sachs is hiring 20 of Bond Street’s employees.
Just seven months ago, Bond Street announced that they had closed a $300 million loan purchase agreement with Jefferies. The WSJ reported that an inability to raise additional equity is what threw a wrench in their future. The same situation happened to Bizfi just a few short months ago, who wound down after 10 years and shipped their portfolio off to rival Credibly to service.
Bond Street’s 1-3 year loans with APRs ranging from 8% – 25% were terms that many in the alternative business lending universe say is a fundamentally unprofitable model. The company now appears to be joining the ever growing purgatory of alternative small business finance companies. They join Dealstruck, Herio Capital, Bizfi, and Nulook Capital. CAN Capital was previously on that list but was recently restructured and revived.
Able Lending, another small business lender, denied that they were going out of business but admitted they were looking to be acquired.
Square is also reportedly in talks to hire Bond Street employees, the WSJ claims. When Bizfi closed, their employees were mainly picked up by rivals World Business Lenders, Strategic Funding, iPayment, 6th Avenue Capital, and others.
Reaction to Lending Club’s New Credit Model
September 13, 2017The few retail investors discussing the recent change Lending Club made to their credit model weren’t exactly optimistic, according to comments on the Lend Academy forum. Of particular concern is grade inflation wherein borrowers who previously scored a C or lower may now find themselves in the A or B category.
“We expect loan volume to shift toward higher quality grades (grades A and B) because some borrowers will qualify for lower interest rates under the new model,” Lending Club stated in an email last week.
Retail investor sentiment may not be all that important, however, as capital from self-managed accounts on the platform has waned after peaking in the first quarter of 2016. In Q2 of 2017, self-managed accounts only accounted for 13% of the capital used to fund loans. The majority came from banks and institutions.
SOS Capital Offers Super Bowl Tickets As Part of Charity-Driven Football Contest
September 10, 2017
Think you’re good at NFL predictions? SOS Capital is offering anyone the chance to win Super Bowl tickets in their football eliminator contest. The entry fee is a $100 donation to the JJ Watt Foundation to support Hurricane Harvey flood relief in Houston, TX.
Pool Details:
- $100 Donation Entry Fee
- Winner Receives 2 Super Bowl Tickets- Courtesy of SOS Capital
- 100% of proceeds will be donated to JJ Watts Charity
- Unlimited Entries Allowed
- Kicks Off Week 2 of the NFL Season
- Deadline to enter is Thursday Sept 14th 2pm
Contact SOS Capital for details on how to join and donate. Call 212-235-5455 or email Charity@soscapital.com
I have already made my donation to the JJ Watt Foundation and joined. I hope to see many others of you in the contest!
Square Wants to Become a Bank
September 6, 2017
Square is expected to apply for an Industrial Loan Company (ILC) bank charter this week, according to American Banker and other sources. Like SoFi, who is busy trying to do the same thing, their attempt will also face competitive resistance.
In June, Richard Hunt, president and CEO of the Consumer Bankers Association (CBA), told deBanked that in the case of SoFi, “The whole world is evolving, fintech is evolving. This was inevitable one way or another.” It is therefore not entirely surprising that Square is following SoFi. Others may wait to see how the regulatory debate plays out before putting in applications of their own, however.
“No one envisioned when they wrote the ILC charter that we would have fintech companies that finance mortgages and student loans from private equity capital and not deposits. It’s a new world. Like with all rules and regulations, federal regulators should periodically review longstanding policy,” Hunt said.
Several people from the banking industry argue that the ILC charter route is a loophole and that if fintech companies exploit it and screw up, they could put the entire banking system at risk.
Christopher Cole, executive vice president and senior regulatory counsel at the Independent Community Bankers of America (ICBA), previously said, “We have been fighting the ILC charter for over a decade. When Walmart tried to apply for an ILC charter in 2006 we objected at that point. And that resistance was part of the reason why they never got a charter.”
On August 25th, Congresswoman Maxine Waters requested that a hearing be held on ILC charters to weigh all the concerns before acting on new ILC applications.
Until then, just because Square wants to become a bank, doesn’t mean they will succeed in doing so.
