Business Lending

Don’t Count Out the Bank When it Comes to Small Business Lending

November 21, 2022
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bank building“So ideally, the best-case scenario for a business owner is always to try and get approved by a bank, it gives them more flexibility, you’re able to build that relationship with the bank,” said Juan Caban, Managing Partner at Financial Lynx.

It’s an old adage that the bank is the best option, but given their historically tough criteria and reputation for sluggishness, the feasibility has long been a question. Caban, however, said that obtaining a bank line of credit is not as daunting as it sounds. Qualifying businesses (TIB 2+ years, 700+ FICO, and favorable industry) can obtain a pre-approval in 24 hours, approval in 7-10 days, and funding in another 2-3 weeks, making the entire process last about 3-4 weeks overall, according to Caban. And brokers can earn a one-time fee of up to 5% as well, he added.

“Bankers tend to be a little old fashioned oftentimes, now some of that’s changing in how they evolve,” said Patrick Reily, co-founder at Uplinq. “We’re dealing with some really interesting progressive banks in the last five years that are thinking about ‘how do we do better and how do we change things,’ but the reality is that they tend to move more slowly.”

Reily’s company, Uplinq, empowers lenders like banks, credit unions, or other financial institutions to approve and manage risks on loans they would have otherwise declined.

“Some of the companies we work for, they’re able to increase the number of people they lend to by 5 to 15 fold,” Reily said. “Think about that. That’s a huge difference.”

Technology, it appears, is widening the approval window, which means business owners shouldn’t count out options they previously thought impossible.

Caban of Financial Lynx, echoed same, explaining that business owners should explore all potential avenues.

“We pride ourselves in knowing the trends and products in banking and can be a great asset for Brokers/ISOs,” Caban said.

“I think it’s smart always to look broadly and understand what your options are, who is best capable to serve you,” said Reily.

deBanked Thanksgiving Memes 2022

November 20, 2022
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Happy Thanksgiving. Every year since 2012, we have published original industry memes for this holiday! Here’s the latesttttt…..


If FTX Was a Funding Company (Parody)




















2021 Thanksgiving Day Memes
2020 Thanksgiving Day Memes
2019 Thanksgiving Day Memes
2018
2017
2016
2012

Don’t Forget About Utah’s Disclosure Law

November 14, 2022
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Utah flag on moneyWhile a new era of business moves forward in Virginia and the clock ticks down to compliance with the new complicated disclosure law in California on December 9th, it can be easy to miss state #3 in all of this, Utah.

Utah’s commercial financing disclosure law goes into effect on January 1, 2023. It’s more than just a form. Covered parties must apply for a commercial financing license. A checklist for that can be found here. Similar to other states, the commission paid to a broker must be disclosed but there is no APR requirement.

The full law can be read here.

Think You’re Good at Closing Deals in the US? Apply Your Skills in the UK or Australia

November 10, 2022
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Think you’re well-versed in the SMB finance business? You might want to take advantage of a fast pass being offered to replicate your success in the UK or Australia.

The opportunity stems from a proposal posted on LinkedIn by Capify CEO David Goldin. Goldin’s got two decades of experience in the business itself and 14 specifically in the UK/Australian markets. Now he’s looking to personally select a handful of brokers and/or small funding companies and guide them on expanding their business overseas.

But why?

Goldin believes that US operators could bring a certain dynamic lacking in the other markets, complete dedication to a single product where there is a lot of opportunity. “There’s very few MCA shops there,” he said. “Very few of them that are MCA-only companies.”

UK Business FundersAnd so the dedicated MCA broker shop is something uniquely American and could prove to be a potent model if applied abroad. Brokers do play a major role in those markets but they’re a jack of all trades, Goldin explained, offering every product there is, resulting in limited throughput for a single core product. Markets like the UK and Australia offer some unique advantages in that they’re English speaking and the products themselves are already established. Goldin said that there’s an opportunity for US operators that “know how to sell risk-based capital” to come in and leverage the Capify infrastructure and intellectual capital.

To be clear, he’s not talking about sitting in an office in New York or Miami and calling business owners in Sydney and London, but about actually opening up a local office in those markets.

“You got to have a local presence,” Goldin said. “A remote company doesn’t work. You need to actually be there.”

Reserve Bank of AustraliaAll this would be set up and developed with the guidance of Capify, a benefit that would shorten the learning curve of doing business in a new market. “There’s a lot of stuff to navigate,” he said. “Different regulations, different rules, different clients.”

deBanked first began exploring the Australian market in 2015. At the time, there were about 20 alternative lenders operating in the country. Since then the market has flourished. The population of Australia is only 26 million people, about two-thirds that of Canada, but Goldin said that it’s not as competitive.

“The US is bigger but also 50x the competition,” he said.

For anyone interested in this opportunity, the best way to contact him is through LinkedIn. The original post can be found here.

Upstart Funded $9M in Small Business Loans in Q3

November 8, 2022
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upstart websiteThey’re known as a consumer fintech lender but last quarter Upstart also originated $9M in small business loans. It’s a new market it entered into this past June that coincided with revelations that the company is struggling in its core lending divisions due to adverse market conditions that led to a 90% drop in its stock price. Nevertheless, despite just laying off 7% of its workforce, Upstart sees small business lending as a growth opportunity.

“Well now we’re close to $10 million in loans originated and the team is rapidly shipping improvements as we look to refine that product,” said Upstart CEO David Girouard during the quarterly earnings call. “While the financial impact of these upgrades to our products is muted in the current environment, we’re confident that they’ll set us up for a giant leap forward once the economy and credit markets normalize.”

Upstart considers small business lending to be a $644B/year market, according to the quarterly earnings presentation. When questioned if it made sense to be investing in this business versus just trying to manage expenses in the near term, Girouard said “the way we think about that is we would like to, to the extent possible, continue to invest or even increase investment in the future products because that’s obviously what our franchise is built on and what will lead to significant growth in the future.”

Upstart set a record in Q3, claiming that 75% of all the loans made on its platform during the quarter required no human intervention.

Square Funds $1.14B in Q3

November 5, 2022
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Square in San FranciscoSquare Loans, a subsidiary of Block, originated 126,000 loans for a total of $1.14B in Q3. The company has a positive outlook on the state of its lending business, saying that “Square Loans achieved strong revenue and gross profit growth during the third quarter of 2022.” Overall, originations grew by more than 10% over the previous quarter.

Square Loans is one of several lenders thriving during this period of economic uncertainty. Rivals Enova and Shopify Capital also recently reported strong business loan results.

National Funding is Venturing into Automated Lending

November 3, 2022
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national funding officeNational Funding did more than just survive the pandemic. Already in 2022 the company upsized its credit facility, invested in Finova Capital, closed on a $125M ABS, and now more recently is going full force into automated lending.

The new initiative that aims to build off of National Funding’s 20 years of experience will be led by Rob Rosenblatt, a seasoned fintech veteran that previously worked for American Express, Chase, Citi, Kabbage, and Behalf.

National Funding will still do business as it has previously but Rosenblatt said that his separate division, formally organized as Business Loan Center, LLC, will differ in that it will be fully digital to the point that borrowers won’t have to engage with a human being if they don’t want to when accessing capital. The self-serve automated experience that takes a customer from application to approval in a matter of minutes is admittedly not a new concept in that of itself, Rosenblatt concedes, but he believes National Funding is equipped to do it better than the rest.

“…what we hope to do that’s unique is, first of all, leverage all of the learnings that National Funding has because they’ve been in business for over 20 years,” Rosenblatt said. “Number two is create a superior technological experience which will help with speed and user experience because we’re brand new, so we won’t in any way be beholden to systems of the past. Third is really be aggressive in our use of alternative data.”

Rosenblatt also emphasized that they will create a “world class user experience” and he expressed his belief that there is more than ample room for a new player to enter this market.

“Dave Gilbert, the founder of National Funding, and Joe Gaudio, who’s the president and COO, they became in the course of our conversations very firmly convinced that there’s a huge opportunity to better serve large swaths of the small business universe that maybe today aren’t quite being served fully by the suite of products that are out there,” Rosenblatt said.

Enova CEO: We’re seeing competitors pull back on originations

October 28, 2022
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enovaEnova’s small business loan originations hit $807M in Q3, according to the company’s latest quarterly earnings report. That’s up significantly from Q2’s total of $679M.

Despite the nation’s economic headwinds, the company said that credit quality across their portfolio remained solid and that SMB originations would continue to grow as a percentage of Enova’s overall business thanks to “strong demand and strong unit economics.”

“On the competitive side, we are seeing both consumer and SMB competitors pull back meaningfully on originations as they struggle to manage both credit and their loan portfolios and access to capital, problems that we are not experiencing,” said Enova CEO David Fisher. “Demand has also remained strong for our SMB products. Small business government stimulus has been exhausted, and we believe that we’re seeing additional tailwinds as banks have tightened credit, resulting in high credit quality borrowers who may have otherwise gone to a bank coming to us.”

Fisher attributed Enova’s unique ability to manage the economic circumstances to “deep experience, sophisticated and proven machine-learning-driven analytics, diversified product offerings, strong balance sheet and [a] world class team.”

Notably, Enova has also been emphasizing its shorter-term products and paying attention to segments of the SMB market likely to cause trouble.

“Construction has been a place where we really started backing away from three or four quarters ago, which was a great decision in hindsight,” Fisher said. “Trucking has been a complete mess. That whole industry is just messed up between fuel prices and supply chain issues, both affecting ability to repair your trucks and also keeping trucks full. I mean, that industry is just a complete mess. So we backed away from trucking very early this year as well.”