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
Bizfi Founder Stephen Sheinbaum Joins World Business Lenders
July 24, 2017
Stephen Sheinbaum has joined NJ-based World Business Lenders as a managing director. Sheinbaum founded Bizfi (Originally Merchant Cash and Capital) in 2005 and served for years as the company’s CEO. Former Lending Club exec John Donovan has been the chief executive of Bizfi since October 2016 and still holds that post.
In a call, Sheinbaum said that World Business Lenders has a world class team and that he was proud to be joining it. He will be overseeing the company’s production from the Jersey City headquarters. The company reportedly has plans for expansion and product innovation.
Sheinbaum referred to himself as a builder and said that WBL will afford him the opportunities to execute.
Russian Billionaire Is Betting Big on Fintech (And Online Lending)
July 20, 2017
Russian billionaire Oleg Boyko is putting his chips on fintech. According to an announcement made by one of his companies, Finstar Financial Group, on Wednesday, he is committing $150 million of new capital towards financial technology startups over the next 5 years. And that money may be aimed at online lenders if his past investments are any indication.
A sample of Finstar’s investments:
- Spotcap – online business loans – UK, Australia, Netherlands, New Zealand, Spain
- Euroloan – consumer finance – Finland, Poland, Sweden
- Viventor – peer-to-peer lending marketplace – European Union
Boyko’s Finstar may have also crossed paths with online business lending in the US. In 2015, a venture capital fund identifying itself as Qwave Capital, attempted an unsolicited takeover of Kennesaw, GA-based IOU Financial. Though IOU only lends to small businesses in the US, it’s actually listed on the Toronto Stock Exchange where it’s valued at less than a dollar per share. In the ensuing battle for majority control of the company, IOU revealed that it had not only sued Qwave, but also sued a company using the Finstar name. Some quick online research showed that the owner of Qwave, Serguei Kouzmine, has run some of Boyko’s companies in the past, including a role at Finstar Financial Group.
While the takeover of IOU was unsuccessful, Qwave was at least able to acquire a significant stake. That wasn’t Kouzmine’s only foray into US-based lending companies either. Qwave now acts as the general partner of the FinTech Ventures Fund, LLLP. That entity lists not only IOU Financial among its investments but also Chicago-based LQD Business Finance, Atlanta-based Groundfloor and NYC-based Fundthatflip.
‘Debt Relief’ Company is Allegedly Robo-dialing Out Of Control
July 18, 2017
A lawsuit brought by famous serial TCPA plaintiff Craig Cunningham against defendants who allegedly robo-dial with offers for small business debt relief services, has a new twist, according to recent court records. That is that the defendants allegedly continue to robo-dial Cunningham despite having been served with the suit from him. All told, Cunningham says he has received at least 105 automated calls for the defendants’ business debt relief services despite the fact that he doesn’t even own a business.
Cunningham filed an amended complaint that also added new defendants alongside Mark D. Guidubaldi, Corporate Bailout and Protection Legal Group. They include Sanford J. Feder and Cashflow Care, LLC.
Cunningham was one of several TCPA litigants referenced in a featured story deBanked published about TCPA lawsuits last October.
Protection Legal Group, meanwhile, was cited in another brief where a small business owner sued them for allegedly not providing the debt relief services promised. According to the docket, Protection Legal Group has yet to file an answer to it.
Debt relief and debt settlement services have become a booming business as of late, but it’s a risky endeavor. Earlier this year, four individuals were arrested when they did not actually attempt to negotiate the MCAs or business loans they were paid to assist with. One of those arrested is still in prison awaiting trial. He is facing a maximum of 30 years.
Beneficiary of NAB/TMS Deal Could Be Rapid Capital Funding
July 14, 2017
Square is not alone in offering working capital to their payment processing customers. Troy,MI-based North American Bancard (NAB) has been offering their customers merchant cash advances through a Troy-based subsidiary known as Capital For Merchants (CFM) for more than 10 years. And after seeing the growth of that segment, NAB went out and acquired Miami,FL-based Rapid Capital Funding (RCF) in late 2014.
Now, NAB has become even bigger by acquiring Total Merchant Services to make them the seventh largest payment processor in North America. The new combined company, which will operate under the NAB name, will rival Square in annual processing volume.
One beneficiary of the deal could be RCF, who merged with CFM earlier this year. RCF has historically had a sizable direct sales operation that facilitated financing for all merchants, regardless of whether or not they processed payments with NAB. That continued until recently when they reportedly pivoted towards focusing more of their new origination efforts on NAB’s (and now combined with TMS’s) 350,000+ merchants.
RCF was founded nearly 10 years ago. They acquired Anaheim,CA-based rival American Finance Solutions in the fall of 2014, right before joining the NAB family.
Need Leads This Summer?
July 13, 2017
I am often asked for referrals on things like lead sources. Fortunately our website already has quick cheat sheets on who to call for your everyday merchant cash advance and business lending needs. Below is a link to a few of them:
Accountants and auditors familiar with the industry
Industry attorneys – it’s pretty common for a firm to have an area of focus so they’re already categorized
Conferences we’re attending in 2017
Past digital issues of our magazine
I hope you find this helpful!
CFPB’s New Arbitration Rule Does Not Apply to Business Loans
July 10, 2017The CFPB’s new rule to regulate arbitration clauses in consumer finance contracts does not apply to business loans, according to the agency’s fine print. Page 403 of 775 (that’s how long the rule is) includes a footnote that says:
As is explained in proposed comment 3(a)(1)(i)-1, Regulation B defines “credit” by reference to persons who meet the definition of “creditor” in Regulation B. Persons who do not regularly participate in credit decisions in the ordinary course of business, for example, are not creditors as defined by Regulation B. 12 CFR 1002.2(l). In addition, by proposing to cover only credit that is “consumer credit” under Regulation B, the Bureau was making clear that the proposal would not have applied to business loans.
Watch the video on what the CFPB’s rule is about below:
What Happened to Bizfi?
July 1, 2017
Update 9/22: Select assets of Bizfi including the brand and marketplace were acquired by rival World Business Lenders
Update 8/30: Credibly was selected to service Bizfi’s $250 million portfolio
This past week, Bizfi gave their remaining employees a 90-day warning notice, according to sources familiar with the matter. It was the latest wave of layoffs to hit the company over the last few months. At its peak, Bizfi, which provided capital to small businesses, employed more than 200 people. Some of those riding out their potentially last 90 days are anxiously awaiting the outcome of nonpublic negotiations to salvage parts of the company’s legacy, if it can be done at all.
It’s a bittersweet moment, according to newly former employees I spoke with, some of whom are so young they vaguely recall Bizfi’s past as both Merchant Cash and Capital (MCC) and Next Level Funding (NLF). They characterized their experience as having worked in fintech.
MCC was founded in 2005 as a buyer of future credit card sales, way before the rise of modern fintech. They later spawned affiliate company NLF, which was eventually consolidated into the newly minted Bizfi brand in 2015. In 2016, they were one of the top three largest originators of merchant cash advances. Today, they are no longer funding new business.
Overall, the company grew too fast and missed the window of opportunity to sell, observers maintain. In a CNBC interview in 2015, a Bizfi representative said that they believed securing a major equity investment would allow them to go public by 2017. Such an investment never came. And with the market cooling last year, institutional interest in the space waned and several of the industry’s better-known players were forced into a precarious position.
Bizfi held on, until recently.
I myself was the third employee of MCC, or fourth depending on who actually walked through the door first on my first day that I shared with another new hire back in 2006 (who by the way was Jared Feldman, the eventual co-founder and CEO of Fora Financial, which sold for millions to Palladium Equity Partners LLC). I was at MCC until 2008 and then worked at NLF until 2010. That means I had been gone for five years before the companies ever merged to become Bizfi and seven years before the current dilemma. Therefore I’m not able to personally comment on what exactly went wrong because the company was nowhere near the same as when I left it.
I will report new developments as they become public.
All Companies Can Now Submit Draft IPO Registrations Confidentially
June 29, 2017
There’s a reason the public never got to view BFS Capital’s September 2015 IPO registration documents. Thanks to the JOBS Act, “an emerging growth company may confidentially submit to the Commission a draft registration statement for confidential, non-public review by the Commission staff prior to public filing.” They can then choose to abandon the offering altogether without having to suffer the fate of their financial statements being made public, which is what BFS Capital did. But if they ultimately had chosen to move forward, their documents would’ve been shared in the public domain.
A new decision handed down by the SEC is now expanding that privilege beyond “emerging growth companies” to all companies. That means that any company can submit draft documents confidentially. It will take effect on July 10th.
“This is an important step in our efforts to foster capital formation, provide investment opportunities, and protect investors,” said Director of the Division of Corporation Finance, Bill Hinman. “This process makes it easier for more companies to enter and participate in our public company disclosure-based system.”
The only reason BFS Capital’s confidential filing is known, is because the company broadcasted that they had filed accordingly in a press release.
“By expanding a popular JOBS Act benefit to all companies, we hope that the next American success story will look to our public markets when they need access to affordable capital,” said Chairman Jay Clayton. “We are striving for efficiency in our processes to encourage more companies to consider going public, which can result in more choices for investors, job creation, and a stronger U.S. economy.”
It is possible that other companies in the industry have filed draft registration statements, got discouraging feedback from the SEC and then decided to withdraw without any of their competitors being the wiser.
