00:01.230 --> 00:04.320 Sean Murray: Hello, Welcome back. It's Sean Murray here at deBanked TV. 00:04.410 --> 00:11.760 Johny Fernandez: And I'm Johnny Fernandez. Sean, happy Monday. Beautiful day outside. Beautiful--this weekend was great. So can't complain about 00:11.760 --> 00:19.800 that. Let's, let's jump right into it. Alright, so the first conversation, first topic we're going to have is regarding some industry 00:19.800 --> 00:25.500 trends that are happening. So Sean, let's go ahead and discuss this a little bit more. 00:25.560 --> 00:34.230 Sean Murray: We both did this to their eye at the same time, that wasn't like a special...special signal. Coincidental. 00:35.050 --> 00:40.270 Johny Fernandez: So industry trends, Sean. So let's talk a little bit about some of the trends that are happening right now in the industry. 00:40.270 --> 00:47.260 We have talked about about it earlier before on the show. And there's definitely been a couple of things that are that are happening now that 00:47.890 --> 00:48.670 it's exciting. 00:49.230 --> 00:59.520 Sean Murray: Yeah. So last year, I made a prediction that when all this craziness was over, we were gonna go embark on the the wildest period of 00:59.520 --> 01:07.620 demand for small business capital in history. That was my prediction, and kind of a bold prediction to make. And maybe people thought I said 01:07.620 --> 01:13.470 it just because it you know, it sounded positive and optimistic, but I think we're already starting to see it. We're hearing about a lot of 01:13.470 --> 01:20.190 capital raising, we're hearing a lot about how much funding is already happening to small businesses out there. Just recently, we put up some 01:20.250 --> 01:30.660 news clips and stories, there was one about IOU Financial, small business lending company that just posted a pretty impressive 2020, all 01:30.660 --> 01:41.460 considered. They just put out their Q4, finally, and it looks like they have rebounded. And so I think there was a lot of wonder as to whether 01:41.460 --> 01:46.830 or not companies were going to fail, what was gonna happen. And we were seeing companies come back with like, really, really strong. We just saw 01:46.890 --> 01:55.860 a company called RDM Capital, they just secured a $50 million credit facility. And OnDeck just put out their Q1 numbers, everyone's got their 01:55.860 --> 02:04.500 eye on OnDeck, especially after the whole Enova thing. And they found it about like $330 million, or at least that's that's the Enova figure, you 02:04.500 --> 02:11.610 know, the acquired OnDeck, but they also have headway capital in the business backer, so they kind of have like three different small 02:11.610 --> 02:19.560 business lenders under one brand. But I think the figure that was thrown around was, Enova small business lending figure was around 330 million 02:19.590 --> 02:23.370 or so for the quarter, which is pretty big, pretty big quarter. 02:24.150 --> 02:30.630 Johny Fernandez: Especially rebounding after, like everything-- like everyone everyone experienced last year, and then being able to pull off 02:30.630 --> 02:38.940 those numbers. Because I think it's like what we said earlier, you and I were talking individually, that at this point, you know, businesses need 02:38.940 --> 02:47.550 money. Essentially, you know, it's gonna be a big game changer for, you know, the industry and people loaning out that money, because everyone 02:47.550 --> 02:50.550 needs some type of assistance, at the end of the day, 02:50.630 --> 03:00.770 Sean Murray: yeah. Well, I think one thing that really stood out to me was the commentary made surrounding the portfolio, OnDeck's portfolio. 03:01.130 --> 03:08.270 Because when Enova acquired OnDeck, it seemed like they didn't have a lot of competence in the value of your existing loan portfolio. As if 03:08.270 --> 03:17.120 all those small business customers were going to default or go out of business, I'm not sure. Then we had put out a couple stories that kind 03:17.120 --> 03:28.490 of, I guess, you could say, was critical of the OnDeck/Enova deal, because it seemed to me that OnDeck sold for a very low price, and it 03:28.490 --> 03:33.860 was just a wonder as to why they sold at the, you know, essentially the bottom of the market. 03:33.860 --> 03:34.000 Johny Fernandez: Yeah. 03:34.000 --> 03:39.700 Sean Murray: You know what I mean, like, if you're gonna if you're trying to get the best price for your company, selling at the bottom, 03:39.730 --> 03:46.480 you know, selling at the bottom is just seem like not, you know, I'm not part of the discussions. I don't know what's really going on. But it was 03:46.480 --> 03:54.670 incredible, incredible to me to see how much OnDeck sold for. I can't remember what the number was, was like 90 some odd million. And part of 03:54.670 --> 04:00.910 that I think stemmed from there was this lack of competence, and how much OnDeck's existing and small business lending portfolio was worth. 04:01.210 --> 04:13.090 And we just heard in the q1 earnings, that apparently, their portfolio was worth about $200 million more than they thought. That there was a 04:13.090 --> 04:21.100 lot more value in that book than they had originally presented. And that's obviously a good thing. That's a good thing for Enova. It's a 04:21.100 --> 04:30.280 good thing for OnDeck. But I think it's proof of two things that OnDeck was probably worth more than what it went for at the time, and two, that 04:30.430 --> 04:39.310 the damage that we've seen wasn't catastrophic to the point where there's no room for recovery. And so I think what we're going to see and 04:39.310 --> 04:47.470 this is my prediction yet again, and that we are already in the process of the biggest boom cycle for small business lending that we've ever seen 04:47.510 --> 04:56.720 Johny Fernandez: Yeah. And I think something I was actually reading the Daily Funder last week, and it's really interesting to see just how 04:56.720 --> 05:03.230 different businesses whether it's like restaurants, small businesses, Like, they're asking for help, like, they're like, hey, like, do you 05:03.230 --> 05:11.540 know like, Who can help me out like with finances for like equipment or, you know, for to pay my rent that's not like PPP or government related 05:11.540 --> 05:18.740 loans. And that was the whole discussion that they were having, like, especially, I read one specifically about a restaurant owner. And he was 05:18.740 --> 05:25.700 asking, he's like, hey, like, you know, do what's like the best lending company that can help me out finance, like equipment, and he was a brand 05:25.700 --> 05:33.230 new business owner here in New York City. And it's like, you know, it's a tough time to just do any of that. Especially here in New York after 05:33.230 --> 05:40.040 everything we've been through. So, and now, and there was a whole discussion of like, the different options that they had. And it's going 05:40.040 --> 05:46.370 to be tough for these guys, sometimes to get loans, because even something that they were talking about, it was even despite the fact 05:46.370 --> 05:53.300 that they have like great credit and stuff like that, but they're still, you know, a plethora of things that have happened within the last year 05:53.300 --> 06:03.200 that makes it hard, because you don't know, like, this person, like, you know, that's really start digging into their background to make sure 06:03.200 --> 06:11.270 that you know, they're okay and that they're doing their they will do fine, because last year was extremely unpredictable for a lot of people. 06:11.630 --> 06:18.750 And I think it's something like we talked about the fact that like, some people could be behind rent, like a whole year. And, you know, it's like... 06:18.410 --> 06:25.370 Sean Murray: Oh, you were asking-- So, you know, by the way, Johny was asking me I was talking about what was the source for my prediction that 06:25.370 --> 06:33.590 there was going to be all this need for capital. And we had mentioned it before, you had mentioned it before, that business owners are behind on 06:33.590 --> 06:41.540 rent significantly. And they need to make it up. PPP wasn't there to pay your whole background. And we talked about if you're in New York City. 06:43.100 --> 06:45.200 Your back rent could be like half million million dollars. 06:45.230 --> 06:47.750 Johny Fernandez: Yeah, on rent alone, which is crazy. 06:47.750 --> 06:53.429 Sean Murray: Yeah, so you need to sell Yeah, you need to, you need to sell a lot of product, you need to make a lot of money. And I think 06:53.429 --> 07:00.389 people are just gonna be like, you know, full energy to go out and do as much business as possible. But even outside, outside of New York, it's 07:00.389 --> 07:07.799 the same thing. And so there's this huge incentive to not only make up for what you know, for make up for the damage, but also there's, you 07:07.799 --> 07:15.959 know, there's a lot of there's a lot of things happening at once we have a real estate boom happening. I think we have inflation happening. And I 07:15.959 --> 07:25.439 think it's higher than what the government is kind of revealing it to be, I think that's going to reduce the cost of borrowing. Because if 07:25.439 --> 07:33.299 you're, if you're borrowing money at a low interest rate, and you know, inflation is going up, then these terms could actually be even better 07:33.299 --> 07:38.699 than presented. If you if you factor in high inflation, you could essentially be paying back what you borrowed, you know, and on the time 07:38.699 --> 07:45.479 value money perspective. So there's all these different reasons for why I think there's gonna be a boom, but you know, if you owe if you owe 07:45.479 --> 07:50.849 A year's worth of rent, and you're like, how do I get out of it? You're going to need money to make money. And yeah, it's going to be one of the 07:50.879 --> 07:52.919 one of the major causes for everything 07:53.080 --> 07:58.600 Johny Fernandez: Yeah, it's going to be exciting. And I was also reading this other article that New York's since its, quote, unquote, now 07:58.630 --> 08:05.860 somewhat affordable. There's people coming out from out of New York, they're moving here, and they want to start new businesses, you know, 08:05.980 --> 08:12.550 and we're speaking specifically talking about New York, but I think this could apply anywhere else, that if you know, you want to start a new 08:12.550 --> 08:21.400 business, especially now is kind of an ideal, I believe it's an ideal time to start a business because, you know, there's cheap real estate 08:21.400 --> 08:31.090 property now, like, you can jump into it, do it, but you're gonna need money at the end of the day. And I think the risk doesn't look as scary 08:31.090 --> 08:41.260 as it did last year. And now it's kind of like, you know, the, it's, we would hope it's uphill from here. But it's still tricky. But the article 08:41.260 --> 08:46.960 was saying that this is the time that a lot of entrepreneurs, they're kind of stepping out of the comfort zone and jumping into a market like 08:46.960 --> 08:47.290 New York. 08:47.290 --> 08:54.020 Sean Murray: Yeah, well, remember, I think it was you did this story where Facebook rented all that office space by Penn Station during, 08:54.050 --> 08:59.330 the height of the pandemic, when everyone was fleeing the city, they sign this, like, amazing deal for like this, you know, this 08:59.330 --> 09:06.710 massive space and everyone thought it was the, it was the dumbest thing ever, right? Oh people never gonna work in the city again, but Facebook 09:06.710 --> 09:13.850 was smart. They probably signed that deal at the right time. I think Amazon did that too at a building. And, you know, maybe you're right 09:13.850 --> 09:16.310 about prices being low-er 09:19.100 --> 09:19.700 Unknown: [cross-talk] 09:20.340 --> 09:27.180 Johny Fernandez: Exactly, there's like, there's definitely a gap where, you know, people have to jump on the opportunity and recover like, you 09:27.180 --> 09:36.360 know, recover, make sure they they're uphill from here and make sure they get on that boat. But there's, it's a it's a limited gap. I mean, I 09:36.360 --> 09:43.110 believe within the next couple of months, if you don't jump on that ship, about you know, trying to recover and try to build a business or 09:43.110 --> 09:52.680 make, you know, start a new business. You've had a year and a half to do it. So the time is coming up, like you said and things are, I think the 09:52.680 --> 09:59.040 reality you and I've talked about it, especially today for some reason this weekend. You know, I saw it more and more things are getting back 09:59.040 --> 10:08.250 to normal. or "normal", you know, as one can say, but yeah, I mean, you have to take advantage. I feel like if you don't take advantage now 10:08.250 --> 10:16.770 before the summer starts, you know, you're in good shape, but if not things, things are going to go back. So yeah, it'll be inter 10:16.770 --> 10:24.720 sting. It'll be interesting to see also have small businesses in general, how they end up, you know, figuring out how to survive. You know, and 10:24.750 --> 10:33.390 how to recuperate after everything that they've lost. Especially, you know, from places like New York, and LA and California, whatnot. So.. 10:35.010 --> 10:35.820 Sean Murray: Totally agree. 10:35.820 --> 10:41.730 Johny Fernandez: Yeah. So excited to see. I love this guy.