1 00:00:09,540 --> 00:00:11,940 Johny Fernandez: I'm here in Miami, the land of fast cars, 2 00:00:11,940 --> 00:00:14,730 great food and beautiful beaches. But you know what else 3 00:00:14,730 --> 00:00:17,820 is here, the flourishing non banking finance industry. 4 00:00:18,180 --> 00:00:21,720 deBanked has held three major events right here in Miami, in 5 00:00:21,720 --> 00:00:26,640 2018 at the Gale, in 2019 at Eden Roc, and in 2020 at The 6 00:00:26,640 --> 00:00:29,970 Loews, but a lot has changed since January. So we're right 7 00:00:29,970 --> 00:00:32,700 back here in Miami to see how the industry is doing. 8 00:00:42,590 --> 00:00:44,930 Jordan Fein: My name is Jordan Fein. And I'm the CEO and 9 00:00:44,930 --> 00:00:48,410 founder of Greenbox Capital, I got into the industry in 2007. I 10 00:00:48,440 --> 00:00:50,570 started in credit card processing, and then I founded 11 00:00:50,570 --> 00:00:53,210 Greenbox Capital in 2012, we started to organize and put it 12 00:00:53,210 --> 00:00:56,780 all together and start servicing Canadian and US market and then 13 00:00:56,810 --> 00:01:00,170 just over eight years now in business. From 2012, we saw 14 00:01:00,170 --> 00:01:03,350 incredible growth, I mean, it was just very easy to close a 15 00:01:03,350 --> 00:01:06,860 deal and kind of starting to see that now reminding you back 16 00:01:06,860 --> 00:01:10,340 five, six years ago how it used to be. After COVID, you're 17 00:01:10,340 --> 00:01:13,010 getting a little bit of feeling of how it was back in the day. 18 00:01:13,010 --> 00:01:14,840 But it's quickly getting competitive, you're seeing a lot 19 00:01:14,840 --> 00:01:17,900 of funders come back online. And there's a lot less merchants and 20 00:01:17,900 --> 00:01:20,030 there's a lot more competition already in the last three or 21 00:01:20,030 --> 00:01:20,540 four weeks. 22 00:01:20,820 --> 00:01:22,410 Johny Fernandez: And specifically speaking regarding 23 00:01:22,410 --> 00:01:25,530 the market of Miami, go ahead and walk me through how you 24 00:01:25,530 --> 00:01:29,190 think COVID has impacted the Miami market, but also the 25 00:01:29,190 --> 00:01:31,350 future of the Miami market. 26 00:01:31,410 --> 00:01:32,820 Jordan Fein: I know I could speak for Miami, there's a lot 27 00:01:32,820 --> 00:01:35,760 of COVID fatigue happening, where people are just fatigued 28 00:01:35,760 --> 00:01:39,420 from overall COVID and the precautions like that, and you 29 00:01:39,420 --> 00:01:42,930 know, they want to be out there's places there's bars that 30 00:01:42,930 --> 00:01:46,320 are probably not supposed to be open, that are open. And people 31 00:01:46,320 --> 00:01:48,630 are out there doing, they're doing the restaurants, they're 32 00:01:48,630 --> 00:01:51,870 doing their bars, but they're doing their house parties. And I 33 00:01:51,870 --> 00:01:54,450 think that everyone wants to go back to normal life here. 34 00:01:55,530 --> 00:01:58,080 Craig Hecker: Craig Hecker and the company's called Bitty 35 00:01:58,080 --> 00:02:02,580 advance. I've been in specialty finance since 2007. And I 36 00:02:02,580 --> 00:02:05,250 started a company called Rapid Capital Funding that I 37 00:02:05,250 --> 00:02:09,570 ultimately sold. And I ended up acquiring Bitty Advance 38 00:02:09,840 --> 00:02:11,940 recently, in February of this year, 39 00:02:12,390 --> 00:02:14,070 Johny Fernandez: obviously, you've been in business for 40 00:02:14,100 --> 00:02:16,470 quite some years, but kind of walk me through the challenges 41 00:02:16,470 --> 00:02:18,450 that you've seen, because of COVID. 42 00:02:18,690 --> 00:02:20,880 Craig Hecker: So I think it taught us a lot. And I think 43 00:02:20,880 --> 00:02:26,160 that when you face challenges like, like this pandemic, it 44 00:02:26,160 --> 00:02:30,330 really pushes you to reinvent yourself or reinvent certain 45 00:02:30,330 --> 00:02:34,650 parts of your business that you never thought were possible. And 46 00:02:34,680 --> 00:02:37,710 one of the things that we've learned is that we have a lot of 47 00:02:37,710 --> 00:02:41,820 folks that prefer to work at home, they're actually more 48 00:02:41,820 --> 00:02:46,770 efficient working from home, they're not in any hurry to come 49 00:02:46,770 --> 00:02:50,970 back into the office setting. Of course, we have certain 50 00:02:51,150 --> 00:02:55,290 employees that you know, their their jobs require them to kind 51 00:02:55,290 --> 00:02:58,860 of be with other employees, etc. But I think it's really forced 52 00:02:58,860 --> 00:03:04,800 us to adapt, and to just embrace a new normal. 53 00:03:10,930 --> 00:03:13,780 Justin Leto: My name is Justin Leto, and I'm the CEO of Idea 54 00:03:13,780 --> 00:03:14,440 Financial. 55 00:03:14,830 --> 00:03:17,500 Larry Bassuk: Larry Bassuk, I'm the president of Idea Financial. 56 00:03:17,620 --> 00:03:19,900 Justin Leto: Idea Financial is a small business lender, we got 57 00:03:19,900 --> 00:03:23,800 our start back in early 2017. Larry and I are not from the 58 00:03:23,800 --> 00:03:26,500 financial services industry. We're both trial lawyers by 59 00:03:26,500 --> 00:03:29,980 training and by vocation prior to doing this. And we spent 60 00:03:30,220 --> 00:03:33,550 almost two decades as trial lawyers, and about five years 61 00:03:33,550 --> 00:03:36,130 prior to this as law partners. We have an entrepreneurial 62 00:03:36,130 --> 00:03:38,860 spirit, so to speak. And we had invented and started other 63 00:03:38,860 --> 00:03:42,190 companies prior to Idea Financial. And then we had this 64 00:03:42,190 --> 00:03:45,820 opportunity to start this business. And we took it back in 65 00:03:45,850 --> 00:03:49,900 early 2017. And so for a while we sort of balanced the practice 66 00:03:49,900 --> 00:03:53,050 of law with what we were doing here. And now we're fully 67 00:03:53,050 --> 00:03:54,730 committed. This is what we do full time. 68 00:03:55,000 --> 00:03:56,920 Johny Fernandez: What do you think your approach has been 69 00:03:56,920 --> 00:04:00,250 from businesses and people here in Miami regarding the COVID 70 00:04:00,250 --> 00:04:03,490 crisis, and how has it impacted the business here, specifically 71 00:04:03,490 --> 00:04:04,030 in Miami? 72 00:04:04,360 --> 00:04:06,520 Justin Leto: Miami, I think is going to continue to deal with 73 00:04:06,610 --> 00:04:09,220 some significant issues related to COVID, especially now that 74 00:04:09,220 --> 00:04:11,590 schools are reopening, and people are starting to get out 75 00:04:11,590 --> 00:04:14,770 and about. However, the good thing I've seen about this city 76 00:04:14,770 --> 00:04:18,490 is, over the last three, three months or so Miami has really 77 00:04:18,490 --> 00:04:21,100 started to become compliant as a community with some of the 78 00:04:21,100 --> 00:04:23,260 things that are necessary to stop the spread of this virus. 79 00:04:23,530 --> 00:04:25,360 And I think that's been really positive and it's kept our 80 00:04:25,360 --> 00:04:27,910 numbers down. And we hope that will continue. And we take a lot 81 00:04:27,910 --> 00:04:30,460 of precautions here in the office as well, as far as hand 82 00:04:30,460 --> 00:04:33,940 sanitizer, socially distant people wearing masks, you know, 83 00:04:33,970 --> 00:04:35,920 everything that you're supposed to do to make sure that we keep 84 00:04:35,920 --> 00:04:36,430 things safe. 85 00:04:36,580 --> 00:04:39,130 Johny Fernandez: So during the COVID crisis, how has that 86 00:04:39,130 --> 00:04:40,390 impacted the business? 87 00:04:40,840 --> 00:04:43,120 Larry Bassuk: I think that we've been consistent in our risk 88 00:04:43,120 --> 00:04:46,750 management approach from the beginning. When we first 89 00:04:46,780 --> 00:04:49,990 surveyed the alternative lending space to see where we thought 90 00:04:49,990 --> 00:04:53,530 the best opportunity was for Idea Financial, we decided to 91 00:04:53,530 --> 00:04:57,640 focus on the higher credit quality segment of the market. 92 00:04:57,700 --> 00:05:00,940 Our credit standards reflect that, our risk management 93 00:05:00,940 --> 00:05:04,180 principles reflect that, and quite frankly, our product 94 00:05:04,180 --> 00:05:07,600 reflects that. So during the COVID crisis, when it was very 95 00:05:07,600 --> 00:05:12,760 acute in March, April, May, we got to see in real time, how our 96 00:05:12,790 --> 00:05:16,570 risk mitigation principles were, were functioning, it was a real 97 00:05:16,570 --> 00:05:20,170 test of all the theory that we had put in place, leading up to 98 00:05:20,170 --> 00:05:24,130 the COVID crisis, during the COVID crisis, we got to see 99 00:05:24,130 --> 00:05:27,340 things shake out, and we got to see things being proven. A lot 100 00:05:27,340 --> 00:05:30,070 of assumptions that we had made, a lot of standards that we were 101 00:05:30,070 --> 00:05:34,420 very strict on, really helped us manage the crisis. Going 102 00:05:34,420 --> 00:05:38,020 forward, we see that we're going to be doubling down on those 103 00:05:38,020 --> 00:05:40,330 risk management principles, doubling down on how we 104 00:05:40,330 --> 00:05:43,090 underwrite and keeping a very close watch on how the 105 00:05:43,090 --> 00:05:46,060 businesses perform pre COVID, during COVID, and then 106 00:05:46,060 --> 00:05:47,110 hopefully, post COVID. 107 00:05:47,840 --> 00:05:50,150 Jordan Fein: I'd be lying to you, if I told you that, well, 108 00:05:50,150 --> 00:05:52,280 it was it was fine for us, it wasn't and it was, it wasn't 109 00:05:52,490 --> 00:05:55,700 fine for anybody, we got hit pretty hard, I'd say that 110 00:05:57,530 --> 00:06:04,970 anywhere between 20 to 24% of our Canadian and about 25 to 28% 111 00:06:04,970 --> 00:06:10,340 of our US market got wiped out. And we shut down funding from 112 00:06:10,370 --> 00:06:14,750 mid March to the end of April. And we started funding again in 113 00:06:14,750 --> 00:06:17,510 early May. And we've just increasingly been bringing back 114 00:06:17,510 --> 00:06:20,480 people from furlough and getting getting our legs back under us. 115 00:06:20,480 --> 00:06:22,280 And now I think we're really cooking right now. 116 00:06:22,759 --> 00:06:24,359 Craig Hecker: It has been interesting, to say the least, 117 00:06:24,809 --> 00:06:29,459 you know, we paused our funding, beginning of April, when things 118 00:06:29,459 --> 00:06:33,359 were looking, you know, very, very uncertain. And, you know, 119 00:06:33,569 --> 00:06:38,249 everyone was kind of in panic mode. But then, you know, as 120 00:06:38,279 --> 00:06:41,909 things started to unfold, and we, you know, really had a lot 121 00:06:41,909 --> 00:06:46,829 of faith and belief in the small business customer, and their 122 00:06:46,829 --> 00:06:50,909 ability to, you know, survive, sustain, you know, reinvent 123 00:06:50,909 --> 00:06:55,169 themselves, you know, and they've come back pretty strong. 124 00:06:55,529 --> 00:06:58,649 And we've seen, you know, better, better credit quality 125 00:06:58,649 --> 00:07:01,589 from customers, we've seen customers that are, you know, 126 00:07:01,589 --> 00:07:04,589 they were pausing payments for, you know, a brief period of 127 00:07:04,589 --> 00:07:09,569 time, you know, during that, you know, mid March to, you know, 128 00:07:09,569 --> 00:07:12,569 end of April period, but, but those businesses for the most 129 00:07:12,569 --> 00:07:15,719 part, have, you know, resumed payments and, you know, come 130 00:07:15,719 --> 00:07:16,499 back online 131 00:07:17,000 --> 00:07:19,990 We asked locals what the experience has been like for 132 00:07:19,990 --> 00:07:20,410 them. 133 00:07:20,500 --> 00:07:22,720 Speaker: This area, this you know, you can't beat it I mean, 134 00:07:22,720 --> 00:07:24,700 people are gonna come somewhere, we're gonna get rid of this 135 00:07:24,700 --> 00:07:28,900 COVID stuff. You know, if, if Joe Biden wins, COVID's gone, 136 00:07:28,930 --> 00:07:31,330 you know, Trump wins, we got COVID for four more years, but 137 00:07:31,330 --> 00:07:33,760 then after that, I'm sure everything will be good. You 138 00:07:33,760 --> 00:07:36,880 know what I mean? The people got to come somewhere where we're 139 00:07:36,880 --> 00:07:37,240 gonna go? 140 00:07:37,240 --> 00:07:39,760 Yea I mean, it's always been like a party place to like, 141 00:07:39,790 --> 00:07:43,000 there's a lot of like, people outside walking the streets like 142 00:07:43,030 --> 00:07:45,970 I've gone to Wynwood and it looks like a ghost town, like, 143 00:07:47,050 --> 00:07:50,590 more people are staying at home kind of thing. So if for sure, 144 00:07:50,590 --> 00:07:53,950 it's not the same, like vibe being here. 145 00:07:54,350 --> 00:07:57,020 I just think it's gonna take a while, I really think it needs 146 00:07:57,020 --> 00:07:59,690 to take a while you got a lot of hotels we're absorbed by hotels, 147 00:07:59,690 --> 00:08:01,400 I just don't know how many people are going to come back 148 00:08:01,400 --> 00:08:05,960 and, you know, and flood the hotels and the restaurants and 149 00:08:06,020 --> 00:08:09,830 whatever we have here. I mean, a locals are, there's locals here. 150 00:08:09,830 --> 00:08:12,320 But there's not a huge amount locals who were really using 151 00:08:12,350 --> 00:08:15,710 these facilities and we really need the economy to come back to 152 00:08:15,710 --> 00:08:19,040 fulfill these to fill the spaces the void that we're having. 153 00:08:19,100 --> 00:08:21,560 Johny Fernandez: So what happens from here on out? What does the 154 00:08:21,560 --> 00:08:25,370 recovery process look like for the industry here in South 155 00:08:25,370 --> 00:08:25,940 Florida? 156 00:08:26,020 --> 00:08:28,630 Jordan Fein: For the industry to recover? I think what needs to 157 00:08:28,630 --> 00:08:32,740 happen is I do think the government needs to continue to 158 00:08:32,740 --> 00:08:36,160 provide stimulus, right, I really, really do. Because they 159 00:08:36,160 --> 00:08:39,040 need to, they need to, they need to protect against the loss of 160 00:08:39,040 --> 00:08:41,770 demand, there's still a massive loss of demand, when you talk 161 00:08:41,770 --> 00:08:45,460 about consumer spending, because of their lack of willingness to 162 00:08:45,460 --> 00:08:49,360 be out, be social, take trips, to travel, not to mention the 163 00:08:49,360 --> 00:08:52,120 high loss, high unemployment rate, right. And I think that's 164 00:08:52,120 --> 00:08:54,640 going to take time to recover. So I think that the government 165 00:08:54,640 --> 00:08:58,870 stimulus needs to start to decrease but still be there to 166 00:08:58,870 --> 00:09:01,750 provide support. And I think that the industry will recover 167 00:09:01,750 --> 00:09:04,900 and will recover strong. And I also think that our industry 168 00:09:04,900 --> 00:09:09,130 plays a big role in this. Because if you notice anything, 169 00:09:09,130 --> 00:09:11,800 any funder will tell you this, you're still seeing a lot of 170 00:09:11,830 --> 00:09:14,350 Treasury deposits in these small businesses, it tells you that 171 00:09:14,350 --> 00:09:17,830 small businesses truly were not being served. In the beginning, 172 00:09:17,830 --> 00:09:19,810 there's a big, big, small businesses or whatever they were 173 00:09:19,810 --> 00:09:21,610 serving, you know, you heard some of these, like the Lakers 174 00:09:21,610 --> 00:09:23,950 got money or whatever. But you're starting to see that the 175 00:09:23,950 --> 00:09:25,930 real small business in this country are actually getting 176 00:09:25,930 --> 00:09:29,020 money in the last 60 days, 90 days. So that's super, super 177 00:09:29,020 --> 00:09:29,860 important to continue. 178 00:09:29,900 --> 00:09:33,020 Craig Hecker: So I see the industry moving forward in a in 179 00:09:33,020 --> 00:09:37,250 a fairly positive way. I mean, clearly, there's been quite a 180 00:09:37,250 --> 00:09:40,880 bit of fallout, as you would imagine, you know, with with 181 00:09:40,880 --> 00:09:43,940 different funders being, you know, paused for extended period 182 00:09:43,940 --> 00:09:50,660 of time, extended period of time and with their customer base 183 00:09:50,660 --> 00:09:54,440 being, you know, maybe more impaired. It depends on the 184 00:09:54,440 --> 00:09:58,280 asset class that you're in, you know, we're funding small, 185 00:09:58,400 --> 00:10:02,810 small businesses with an average revenue of about 13 to 15,000 a 186 00:10:02,810 --> 00:10:06,620 month. So I think some of the funders that were funding much 187 00:10:06,650 --> 00:10:11,120 larger transactions, their customer base, definitely a 188 00:10:11,120 --> 00:10:14,240 little bit more impaired, you know, certain regions, certain 189 00:10:14,240 --> 00:10:17,450 areas of the country, you know, certain restaurants that are 190 00:10:17,450 --> 00:10:22,970 slower to come back because of a lot of the rules imposed on them 191 00:10:23,000 --> 00:10:26,960 in their different communities. But I think, I think the 192 00:10:26,960 --> 00:10:30,800 business is going to come back strong, and I think it's causing 193 00:10:31,070 --> 00:10:35,330 the better operators to have the best opportunity. And that's 194 00:10:35,330 --> 00:10:37,610 kind of how I see the business moving forward. 195 00:10:37,780 --> 00:10:40,810 Larry Bassuk: I think that we are going to double down on our 196 00:10:40,810 --> 00:10:44,380 strategy of focusing on the higher credit quality segment 197 00:10:44,380 --> 00:10:48,280 within the market, continuing to provide our flagship line of 198 00:10:48,280 --> 00:10:52,270 credit product to well qualified businesses, we believe that 199 00:10:52,270 --> 00:10:56,350 there's going to be more demand than ever for capital and, and 200 00:10:56,410 --> 00:10:59,740 most likely, the banks, the traditional banking system, 201 00:10:59,770 --> 00:11:02,980 again, is not going to be able to keep up with that demand. So 202 00:11:02,980 --> 00:11:06,010 that's where we see a lot of opportunity in the market for us 203 00:11:06,010 --> 00:11:09,250 to continue growing, riding that. And I think that the 204 00:11:09,250 --> 00:11:12,190 experience that we've gained as a team, so obviously, we have, 205 00:11:12,340 --> 00:11:15,730 it's not just the two of us, we have a very, very talented and 206 00:11:15,730 --> 00:11:18,940 very strong team working here at Idea Financial, and all of us 207 00:11:18,940 --> 00:11:23,050 together have learned a lot during this crisis. And a lot of 208 00:11:23,050 --> 00:11:26,230 those lessons are going to continue to be applicable to 209 00:11:26,230 --> 00:11:28,900 what we do in the future, to allow us to underwrite better, 210 00:11:29,170 --> 00:11:31,900 certain things that we've decided to take into 211 00:11:31,900 --> 00:11:34,420 consideration when we're underwriting a deal, we're going 212 00:11:34,420 --> 00:11:37,510 to continue to do that. And it's a very dynamic environment right 213 00:11:37,510 --> 00:11:40,900 now, everybody's kind of waiting and seeing to what's going to 214 00:11:40,900 --> 00:11:43,660 happen, is there going to be another lockdown? Or is there 215 00:11:43,660 --> 00:11:45,850 going to be a second spike, what's going to happen with flu 216 00:11:45,850 --> 00:11:48,700 season, what's going to happen when schools open? So this is a 217 00:11:48,700 --> 00:11:52,150 very challenging time to help small businesses, but we're 218 00:11:52,150 --> 00:11:55,330 staying true to our mission. And again, we're small business 219 00:11:55,330 --> 00:11:58,720 owners, we always will behave and think like small business 220 00:11:58,720 --> 00:12:01,750 owners. So we believe very strongly in our mission to 221 00:12:01,750 --> 00:12:05,230 provide capital to the small and medium sized businesses in the 222 00:12:05,230 --> 00:12:08,950 United States that are going to continue to be the driving force 223 00:12:08,950 --> 00:12:09,730 of this economy. 224 00:12:10,420 --> 00:12:12,700 Johny Fernandez: Here in Miami, there is optimism in the air 225 00:12:12,730 --> 00:12:16,030 despite the hardships people faced this year. Now, we can't 226 00:12:16,030 --> 00:12:19,090 say when things will go back to normal, but I have seen 227 00:12:19,090 --> 00:12:23,140 firsthand why the FinTech spirit here in Florida is full of 228 00:12:23,140 --> 00:12:26,080 sunshine. I'm Johnny Fernandez with deBanked News. And we'll 229 00:12:26,080 --> 00:12:28,750 see you right back here in person when the industry 230 00:12:28,750 --> 00:12:29,470 returns.