Johny Fernandez: I'm here in Miami, the land of fast cars,
great food and beautiful beaches. But you know what else
is here, the flourishing non banking finance industry.
deBanked has held three major events right here in Miami, in
2018 at the Gale, in 2019 at Eden Roc, and in 2020 at The
Loews, but a lot has changed since January. So we're right
back here in Miami to see how the industry is doing.
Jordan Fein: My name is Jordan Fein. And I'm the CEO and
founder of Greenbox Capital, I got into the industry in 2007. I
started in credit card processing, and then I founded
Greenbox Capital in 2012, we started to organize and put it
all together and start servicing Canadian and US market and then
just over eight years now in business. From 2012, we saw
incredible growth, I mean, it was just very easy to close a
deal and kind of starting to see that now reminding you back
five, six years ago how it used to be. After COVID, you're
getting a little bit of feeling of how it was back in the day.
But it's quickly getting competitive, you're seeing a lot
of funders come back online. And there's a lot less merchants and
there's a lot more competition already in the last three or
four weeks.
Johny Fernandez: And specifically speaking regarding
the market of Miami, go ahead and walk me through how you
think COVID has impacted the Miami market, but also the
future of the Miami market.
Jordan Fein: I know I could speak for Miami, there's a lot
of COVID fatigue happening, where people are just fatigued
from overall COVID and the precautions like that, and you
know, they want to be out there's places there's bars that
are probably not supposed to be open, that are open. And people
are out there doing, they're doing the restaurants, they're
doing their bars, but they're doing their house parties. And I
think that everyone wants to go back to normal life here.
Craig Hecker: Craig Hecker and the company's called Bitty
advance. I've been in specialty finance since 2007. And I
started a company called Rapid Capital Funding that I
ultimately sold. And I ended up acquiring Bitty Advance
recently, in February of this year,
Johny Fernandez: obviously, you've been in business for
quite some years, but kind of walk me through the challenges
that you've seen, because of COVID.
Craig Hecker: So I think it taught us a lot. And I think
that when you face challenges like, like this pandemic, it
really pushes you to reinvent yourself or reinvent certain
parts of your business that you never thought were possible. And
one of the things that we've learned is that we have a lot of
folks that prefer to work at home, they're actually more
efficient working from home, they're not in any hurry to come
back into the office setting. Of course, we have certain
employees that you know, their their jobs require them to kind
of be with other employees, etc. But I think it's really forced
us to adapt, and to just embrace a new normal.
Justin Leto: My name is Justin Leto, and I'm the CEO of Idea
Financial.
Larry Bassuk: Larry Bassuk, I'm the president of Idea Financial.
Justin Leto: Idea Financial is a small business lender, we got
our start back in early 2017. Larry and I are not from the
financial services industry. We're both trial lawyers by
training and by vocation prior to doing this. And we spent
almost two decades as trial lawyers, and about five years
prior to this as law partners. We have an entrepreneurial
spirit, so to speak. And we had invented and started other
companies prior to Idea Financial. And then we had this
opportunity to start this business. And we took it back in
early 2017. And so for a while we sort of balanced the practice
of law with what we were doing here. And now we're fully
committed. This is what we do full time.
Johny Fernandez: What do you think your approach has been
from businesses and people here in Miami regarding the COVID
crisis, and how has it impacted the business here, specifically
in Miami?
Justin Leto: Miami, I think is going to continue to deal with
some significant issues related to COVID, especially now that
schools are reopening, and people are starting to get out
and about. However, the good thing I've seen about this city
is, over the last three, three months or so Miami has really
started to become compliant as a community with some of the
things that are necessary to stop the spread of this virus.
And I think that's been really positive and it's kept our
numbers down. And we hope that will continue. And we take a lot
of precautions here in the office as well, as far as hand
sanitizer, socially distant people wearing masks, you know,
everything that you're supposed to do to make sure that we keep
things safe.
Johny Fernandez: So during the COVID crisis, how has that
impacted the business?
Larry Bassuk: I think that we've been consistent in our risk
management approach from the beginning. When we first
surveyed the alternative lending space to see where we thought
the best opportunity was for Idea Financial, we decided to
focus on the higher credit quality segment of the market.
Our credit standards reflect that, our risk management
principles reflect that, and quite frankly, our product
reflects that. So during the COVID crisis, when it was very
acute in March, April, May, we got to see in real time, how our
risk mitigation principles were, were functioning, it was a real
test of all the theory that we had put in place, leading up to
the COVID crisis, during the COVID crisis, we got to see
things shake out, and we got to see things being proven. A lot
of assumptions that we had made, a lot of standards that we were
very strict on, really helped us manage the crisis. Going
forward, we see that we're going to be doubling down on those
risk management principles, doubling down on how we
underwrite and keeping a very close watch on how the
businesses perform pre COVID, during COVID, and then
hopefully, post COVID.
Jordan Fein: I'd be lying to you, if I told you that, well,
it was it was fine for us, it wasn't and it was, it wasn't
fine for anybody, we got hit pretty hard, I'd say that
anywhere between 20 to 24% of our Canadian and about 25 to 28%
of our US market got wiped out. And we shut down funding from
mid March to the end of April. And we started funding again in
early May. And we've just increasingly been bringing back
people from furlough and getting getting our legs back under us.
And now I think we're really cooking right now.
Craig Hecker: It has been interesting, to say the least,
you know, we paused our funding, beginning of April, when things
were looking, you know, very, very uncertain. And, you know,
everyone was kind of in panic mode. But then, you know, as
things started to unfold, and we, you know, really had a lot
of faith and belief in the small business customer, and their
ability to, you know, survive, sustain, you know, reinvent
themselves, you know, and they've come back pretty strong.
And we've seen, you know, better, better credit quality
from customers, we've seen customers that are, you know,
they were pausing payments for, you know, a brief period of
time, you know, during that, you know, mid March to, you know,
end of April period, but, but those businesses for the most
part, have, you know, resumed payments and, you know, come
back online
We asked locals what the experience has been like for
them.
Speaker: This area, this you know, you can't beat it I mean,
people are gonna come somewhere, we're gonna get rid of this
COVID stuff. You know, if, if Joe Biden wins, COVID's gone,
you know, Trump wins, we got COVID for four more years, but
then after that, I'm sure everything will be good. You
know what I mean? The people got to come somewhere where we're
gonna go?
Yea I mean, it's always been like a party place to like,
there's a lot of like, people outside walking the streets like
I've gone to Wynwood and it looks like a ghost town, like,
more people are staying at home kind of thing. So if for sure,
it's not the same, like vibe being here.
I just think it's gonna take a while, I really think it needs
to take a while you got a lot of hotels we're absorbed by hotels,
I just don't know how many people are going to come back
and, you know, and flood the hotels and the restaurants and
whatever we have here. I mean, a locals are, there's locals here.
But there's not a huge amount locals who were really using
these facilities and we really need the economy to come back to
fulfill these to fill the spaces the void that we're having.
Johny Fernandez: So what happens from here on out? What does the
recovery process look like for the industry here in South
Florida?
Jordan Fein: For the industry to recover? I think what needs to
happen is I do think the government needs to continue to
provide stimulus, right, I really, really do. Because they
need to, they need to, they need to protect against the loss of
demand, there's still a massive loss of demand, when you talk
about consumer spending, because of their lack of willingness to
be out, be social, take trips, to travel, not to mention the
high loss, high unemployment rate, right. And I think that's
going to take time to recover. So I think that the government
stimulus needs to start to decrease but still be there to
provide support. And I think that the industry will recover
and will recover strong. And I also think that our industry
plays a big role in this. Because if you notice anything,
any funder will tell you this, you're still seeing a lot of
Treasury deposits in these small businesses, it tells you that
small businesses truly were not being served. In the beginning,
there's a big, big, small businesses or whatever they were
serving, you know, you heard some of these, like the Lakers
got money or whatever. But you're starting to see that the
real small business in this country are actually getting
money in the last 60 days, 90 days. So that's super, super
important to continue.
Craig Hecker: So I see the industry moving forward in a in
a fairly positive way. I mean, clearly, there's been quite a
bit of fallout, as you would imagine, you know, with with
different funders being, you know, paused for extended period
of time, extended period of time and with their customer base
being, you know, maybe more impaired. It depends on the
asset class that you're in, you know, we're funding small,
small businesses with an average revenue of about 13 to 15,000 a
month. So I think some of the funders that were funding much
larger transactions, their customer base, definitely a
little bit more impaired, you know, certain regions, certain
areas of the country, you know, certain restaurants that are
slower to come back because of a lot of the rules imposed on them
in their different communities. But I think, I think the
business is going to come back strong, and I think it's causing
the better operators to have the best opportunity. And that's
kind of how I see the business moving forward.
Larry Bassuk: I think that we are going to double down on our
strategy of focusing on the higher credit quality segment
within the market, continuing to provide our flagship line of
credit product to well qualified businesses, we believe that
there's going to be more demand than ever for capital and, and
most likely, the banks, the traditional banking system,
again, is not going to be able to keep up with that demand. So
that's where we see a lot of opportunity in the market for us
to continue growing, riding that. And I think that the
experience that we've gained as a team, so obviously, we have,
it's not just the two of us, we have a very, very talented and
very strong team working here at Idea Financial, and all of us
together have learned a lot during this crisis. And a lot of
those lessons are going to continue to be applicable to
what we do in the future, to allow us to underwrite better,
certain things that we've decided to take into
consideration when we're underwriting a deal, we're going
to continue to do that. And it's a very dynamic environment right
now, everybody's kind of waiting and seeing to what's going to
happen, is there going to be another lockdown? Or is there
going to be a second spike, what's going to happen with flu
season, what's going to happen when schools open? So this is a
very challenging time to help small businesses, but we're
staying true to our mission. And again, we're small business
owners, we always will behave and think like small business
owners. So we believe very strongly in our mission to
provide capital to the small and medium sized businesses in the
United States that are going to continue to be the driving force
of this economy.
Johny Fernandez: Here in Miami, there is optimism in the air
despite the hardships people faced this year. Now, we can't
say when things will go back to normal, but I have seen
firsthand why the FinTech spirit here in Florida is full of
sunshine. I'm Johnny Fernandez with deBanked News. And we'll
see you right back here in person when the industry
returns.