Business Lending
BriteCap Financial Ramps Up Team, Ready For Growth
December 19, 2024
The stream of announcements coming out of BriteCap Financial garnered notice. It started with news of a $150M credit facility back in August, followed by announcements of a new CEO, CFO, CCO, VPs, and more. The new CEO, Richard Henderson, whose CV includes previous roles at CAN Capital, Marlin Capital Solutions, and Direct Capital, told deBanked that the company wanted to have the right team in place to carefully grow the business. BriteCap, which is part of the North Mill family of companies, offers attractive term loans to small businesses.
As part of the plan, the company is looking to add not just new brokers but the right brokers, especially given the upstream programs they offer to merchants.
“We’re being very selective on who we onboard,” said Henderson. “We’re trying to make sure that we’ll use that to get to scale, but also to build powerful relationships with those brokers where it’s a true partnership.”
BriteCap has developed an online checkout system to streamline the funding process. It can be configured to work with however the broker is used to working. They’ve focused a lot on the mobile experience so that a merchant need not even be in front of a computer to go through it.
One notable advantage to BriteCap is precisely that affiliation with the North Mill family because it opens up the possibility of not just working capital as a solution but also equipment finance. According to Henderson, the potential crossover between the products works well especially when the deals have been originated in the right context. That context includes the best practices and professionalism that equipment finance brokers typically operate within.
Among the C-suite executives to recently join BriteCap are Pushkar Choudhuri as Chief Financial Officer and David Lafferty as Chief Credit Officer. The timing of everything aligns with the firm’s economic sentiments. Henderson said that he believes optimism is higher now and growing.
“…generally speaking, we’ve seen demand picking up and we have a pretty bullish view on the economy moving forward,” he said. “I think we’re entering into a very good time in our space.”
SBA Names Members to its Small Business Lending Advisory Council
December 11, 2024The results are finally in. After a six-month review period, the SBA finally announced the applicants that have been approved to serve on its inaugural small business lending advisory council.
They are:
- Paul Brown, Managing Partner, Michigan eLab Investment Co.
- Sheryl Cameron, Executive Director SBA Solutions, JPMorgan Chase
- Kevin Carey, Interim President and CEO, American Hotel and Lodging Association
- Ellis Carr, President and CEO, CDC Small Business Finance
- Jill Castilla, President and CEO, Citizens Bank of Edmond
- Tammy deClercq, COO Head of Operations SBA, Lendistry SBLC
- Jeff Dick, Chairman and CEO, MainStreet Bank (VA)
- Nicole Dilts, VP of Commercial Solutions, Michigan State University Federal Credit Union
- Maggie Ference, SVP Small Business and SBA Director, Huntington National Bank
- Jeff Hansel, 1st VP, Rockland Trust Company
- Amy Hereford, President and CEO, LiftFund Inc.
- Ernest Hunter, CEO, Frenchy’s
- Duane Lewis, Interim Co-CEO, Black Business Investment Fund Inc.
- Deborah Partin, SVP of Lending, Rural Enterprises of Oklahoma, Inc.
- Amy Patel, EVP Head of Commercial Distribution, TD Bank
- Giovanna Piovanetti, Executive President, Corporacion para el Financiamiento Empresarial del Comercio y De Las Comunidades
- Lane Rhodes, VP Senior Loan Officer, Live Oak Bank
- Mark Robertson, President and CEO, PCR Small Business Development Corporation
- April Schneider, Head of Small and Business Banking, Wells Fargo
The published list is about six members short of the planned 25 so it is likely a few more will be added. To be eligible, applicants had to have “experience and technical expertise in such areas as commercial lending, small business finance, government-guaranteed lending, small business advocacy or advisement, and expertise needed to provide advice on SBA’s loan programs.”
LiftFund and Lendistry are arguably the only two from the fintech space.
SoFi: ‘We plan to expand on our SMB customer business’
December 5, 2024Ever since SoFi announced the introduction of its own small business loan marketplace earlier this year, business owners have been able to use SoFi to get funding from a third party in an easy manner. And it’s going very well for them.
“The biggest initiative we had so far in 2024 was to take the application process and embed it into the SoFi app, so when all the demand that we get for small and medium business comes to SoFi, they can, within the native app, apply for a loan and then be referred to a partner as it relates to lending,” said SoFi CEO Anthony Noto. “We also do that as it relates to banking. You’ll continue to see us do that in a much bigger and broader way. There is monetization there today but we could do more products and more services to drive greater monetization, not to mention doing it ourselves at some point, which we would like to do over time. It is an early-stage business, and we want to crawl before we walk and then ultimately run. So you’ll see that in the SMB business.”
QuickBooks Capital Has Big Funding Quarter
December 2, 2024Intuit’s QuickBooks Capital funded $650M in the quarter ended October 31, according to the company’s latest earnings report.
“…We feel very bullish and confident in our money strategy, which includes, of course, payments, bill pay, and Capital,” said Sandeep Aujla, CFO of Intuit. Revenue and originations were up for the funding segment of its business and portfolio performance has been great. Allowances for Credit Losses, Charge-offs, and Past Due Amounts were cited as being immaterial for the quarter.
Intuit uses a fiscal quarter and this was considered Q1 2025. The company is now among the largest online small business funders in the US but still trails behind Square Loans, Enova, and Shopify Capital.
Are You The Top Broker?!
November 21, 2024
Broker Battle returns on February 20, 2025 at deBanked CONNECT MIAMI. The competition, now the 2nd ever after last year’s very successful launch, is back with an improved format that allows for almost any qualified broker the opportunity to be tested LIVE in person. Broker Battle TWO will also have 3 separate broker categories versus last year’s catch-all. Those categories are Revenue Based Finance, SBA Lending, and Equipment Financing.
All competing brokers will be vetted, tested, and scored through very short judging rounds on the showcase floor. The two top scores from each category will actually compete on stage for the championship.
That means that as opposed to last year’s 6 total contestants and 7 separate battles on stage, this year’s competition could feasibly manage up to 100 contestants for which there will only be 3 total battles on stage (each being a championship). The format allows for more brokers to prove themselves in person while reducing total stage time for the final grand performance.
Each broker will win a cash prize and the distinction of being Top Broker (in their category). To be eligible for entry, you must be an active broker with good ethics and a positive reputation. You must also be registered to attend deBanked CONNECT MIAMI where it will take place and enter yourself in the battle itself here.
Broker Battle intends to foster best practices.
Cumulative Covid EIDL Chargeoffs Now Exceed $70 Billion
November 19, 2024The latest data from the SBA is in. It charged off $18.7B in Covid EIDL loans in FY 2024. That was down from $52B charged-off in FY 2023. The program still has an unpaid principal balance of $277B.
PPP loans were still being written off in FY 2024 as well, coming in $2.5B charged-off vs $10.6B charged-off in FY 2023 and $4.8B charged-off in FY 2022.
The EIDL program suffered astonishingly high losses during covid. Regular 7(a) loans, for example, only experienced $646M in charge-offs in FY 2024.
Undercover Agents Working for Federal Regulators Posed as Merchants, Inquired About Business Loans
November 13, 2024
If you want to get a sense of what CFPB oversight of small business financing is going to look like when it goes into effect in 2025, then consider the federal regulator just revealed that it hired undercover agents last year to pose as business owners, had them inquire about business loans, and recorded it all. All with the assistance of the DOJ.
Focused entirely on Nassau County, NY and Fairfax, VA, the fake merchants pretended to do $100k – $400k in annual revenue and be open for less than 5 years with 700+ FICO. With what amounted to more than 100 total in-person visits across 23 financial institutions (all of which were bank branches) for the duration of the operation, the CFPB allegedly hoped to gauge potential racial discrimination with the lenders they spoke with.
The undercover agents, described as testers, were instructed to tell representatives at banks that they were “looking to expand their business and to inquire about financing through business loans and business lines of credit.”
“All calls and visits with the lenders were audio recorded,” states the official report issued by the CFPB. The CFPB paid close attention to whether or not bank representatives suggested alternative financing products and whether or not they encouraged or discouraged to do one thing versus another.
While anyone is free to opine on what the findings actually were and the context of which they were found (FULL REPORT HERE), readers are reminded that the CFPB will be tasked with reviewing these very demographic metrics, like the ones they inquired about during this investigation, for almost all small business finance companies starting in July 2025 (even if you’re a broker). These regulations apply to revenue based financing providers just the same as lenders unless the incoming administration intervenes.
The CFPB’s role in small business finance was dictated in 2010 during the passage of Dodd-Frank, but it has taken nearly 15 years for the rules to finally go into effect. While the statute empowering the regulator to collect demographic data from small business finance companies does not specifically state that it has been granted any authority to bring enforcement actions based upon that data, the revelation that the regulator conducted an undercover operation that included them pretending to be business owners looking for loans across two states with the assistance of the Department of Justice should be a good indication of where things were at least planning to go. The current head of the CFPB, for example, Rohit Chopra, had expressed publicly that his plan was to wipe out all companies engaged in merchant cash advance. It is not known at this time who, if anyone, might replace Chopra under Trump. The last time Trump became president, the CFPB head that had been installed by Obama, famously claimed at the time that the President of the United States did not possess the authority to remove him. He was later removed.
Ready Capital Grows as Leading Non-Bank Small Business Lender
November 10, 2024
“Ready Capital has become a leading national non-bank lender to small businesses providing a full suite of loan options from $10,000 unsecured working capital loans to $25 million plus real estate-backed USDA loans,” said Ready Capital CEO Thomas Capasse during the company’s Q3 earnings call.
Ready, in some ways, has flown under the radar in recognition. On the one hand the company is the top non-bank SBA lender in the country and fourth overall SBA lender in the country. On the other hand, the company has previously acquired Knight Capital, iBusiness Funding, Madison One Capital, select non-SBA assets of Fountainhead, and Funding Circle USA. The result is that the overall organization is a powerhouse with a current public market cap of $1.25B.
iBusiness Funding, once the technology arm of Knight Capital, has played an integral role for the company. For example, when Ready acquired Funding Circle USA, it did it through the iBusiness Funding brand.
“[In 2019, iBusiness Funding was] a leader in unsecured small business lending,” Capasse said on the call. “And then they adopted their tech to the PPP which was very accretive. And since then there’s been the initiative within the SBA to emphasize small loans below $350,000, which many times are minority women-owned businesses, and so that’s been a significant initiative by the SBA–so what we’ve done is iBusiness has developed a tech stack, which is now being marketed as a third-party underwriting model for banks. Banks just do not focus on that at all. Even if they do SBA loans, it’s mostly for larger loans again above the $350,000 to the $5 million. So the idea with iBusiness is to grow the revenue stream from this software-based business.”
On Funding Circle, Capasse said that the newly acquired subsidiary would be “accretive to earnings once fully ramped.” The numbers offered so far was that $6.6 million growth in Q3 origination income came from small business working capital loans through the Funding Circle platform.
