Business Lending

Senior Business Lending Exec of Square Has Moved to Coinbase

May 16, 2022
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coinbaseRonak Daya, who spearheaded several of Square Capital’s lending divisions, including “head of product for business lending” and “head of product for external lending and partnerships,” announced on twitter that he had moved on from the company. He had been involved in SMB lending for 7 straight years. His new role? Head of Financing Products at Coinbase.

If you thought Coinbase was just about buying Bitcoin, you’re wrong. Daya announced that he’ll be leading a team “to build lending and financing products both for consumers and institutional clients.”

“As I explored what came after Square, my primary focus was on challenging myself to go in a fundamentally new domain/area, and build for a new customer,” Daya wrote. “The priority was learning. Learning by building in domains that I am passionate about, but know little about.”

Convinced that the world is moving towards becoming a crypto-native economy, Daya added that he wants to “play a part in using trust, ease and education to onboard the next billion customers to a new financial system.”

Currently, Coinbase already offers a lending product, loans up to $1 million at 8% APR with monthly payments and no credit check. Though Bitcoin is used as collateral, payments are made by monthly ACH debit or through a linked USD wallet.

Ready Capital Small Loan Closings Reach New Growth with LenderAI

May 16, 2022
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SBA LoansLast week, Ready Capital Corporation announced another company record for small 7(a) loan closings in the $10,000 to $350,000 range. Originating 55 such loans in April, the company attributed its success to the use of LenderAI by iBusiness Funding LLC, a subsidiary of Ready Capital.

LenderAI is a technology platform comprised with an easy-to-use suite of tools, according to the company. iBusiness Funding says their “approach to funding is based on automation, backed up by hyper-current and relevant data.” The LenderAI self service lending origination software includes no implementation fees, free instant setup, digital borrower application, digital documentation, all while being E-Train automated and SOC II compliant.

“Our core mission when expanding the SBA small loan program was to help the smallest businesses, making affordable lending available to support economic development and underserved communities,” said Justin Levy, President of Ready Capital Small Balance Lending. “LenderAI has enabled our 7(a) small loan products. The technology platform allows us to process loans for smaller businesses, who have fewer capital options, by digitizing their documents and inputs, giving them access to capital while allowing them to stay focused on their businesses.”

With iBusiness Funding’s LenderAI system, Ready Capital’s Small Loan Lending program funding has increased from 84 loans in 2021 to over 150 loans in the first four months of this year. iBusiness focuses on specific criteria for its borrowers including likelihood of success, engagement, and background/credit.

“We believe our LenderAI technology has drastically improved document collection and processing, streamlining both the borrower and lender experience,” stated Katy Forte Seybold, iBusiness Funding Chief of Staff and Head of Strategy, in a press release. “There’s little risk to trying it out, with bank level security, flexible core platform integrations and, for a limited time, it’s free to try with no implementation fees.”

Register for The 4th Annual Alternative Finance Bar Association Conference

May 12, 2022
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AFBAThe fourth annual Alternative Finance Bar Association conference is BACK IN PERSON. This is the go-to event for and with the industry’s leading attorneys.

Mark your calendars for June 15th and June 16th in New York City and register by emailing Lindsey Rohan at lindsey@lrohanlaw.com. Registration is subject to approval and space availability.





Two-day program includes the following panels:

The State of the Industry: Industry experts discuss pending legislation, case law and market hurdles. They have both a regulatory panel ready to discuss what’s new in Virginia, Utah, NY and California as well as a Courtroom panel ready to discuss the winning and losing case law that has come out in the past year.

Bankruptcy: The aftermath of Chicago v. Fulton, In re Shoot the Moon and other pivotal bankruptcy cases that shape industry practices.

Ethics: Challenges faced by internal counsel and ways to navigate those pressures.

Collections: Trends in the post-COJ, post-COVID era.

Employment/Labor Law: The rise of labor use outside the U.S. What challenges arise from having call centers outside the U.S. Tax implications, oversight and practical benefits/detriments. Post-COVID remote work implications. What you need to be aware of to avoid creating liabilities.

The Art of Arbitration: The importance of a carefully drafted Arbitration Clause and the pro/cons of this venue.

Thinking Ahead: What technologies and market conditions will shape the future of the industry. Broad discussion of Blockchain technology, CRM systems, cannabis and what we can imagine will shape the future of Alternative finance.

WEDNESDAY KEYNOTE: David Picon, Esq. – It is with great pride that David Picon of Proskauer Rose will be the Keynote speaker. For years the AFBA has admired his work from afar. Attendees now have an opportunity to learn directly from David what makes for an unstoppable litigator.

THURSDAY SPECIAL EVENT: AFBA Game Show Mash-Up with the Industry’s Legendary Attorneys. Special Guests you will not want to miss!

Speakers:

  • Andrew Smith, Covington & Burlington LLP
  • Brian Simon, Hollis Public Affairs
  • Jamie Polon, Mavrides Moyal Packman & Sadkin, LLP
  • Patrick Siegfried, Rapid Finance
  • Natalie Pappas, Rapid Finance
  • Keith Ellis, Expansion Capital Group
  • Kate Fisher, Hudson Cook LLP
  • Cathy Brennan, Hudson Cook LLP
  • Blake Sims, Hudson Cook LLP
  • Steve Denis, Small Business Finance Association
  • Christopher R. Murray, Murray Legal PLLC
  • Mark Stout, Padfield & Stout
  • Shanna Kaminski, Kaminski Law Group
  • Michael W. Davis, DTO Law
  • John Viskocil, Fora Financial
  • Gabriel Mendelberg, Mendelberg P.C.
  • Anthony F. Giuliano, Giuliano Law P.C.
  • Jeffrey S. Cianciulli, Weir Greenblatt Pierce LLP
  • David Picon, Proskauer Rose
  • Jonathan Nelson, Dedicated Financial GBC
  • Lindsey Rohan, BasePoint Capital LLC
  • Christina Grigorian, Katten; Zach Miller, Burr & Foreman
  • Renata Buhkman, Delta Bridge Funding
  • Vanessa Petty, Settle
  • Alexis Shapiro, Forward Financing
  • Jan Owens, Manatt Phelps
  • Scott Pearson, Manatt Phelps
  • Jesse Michael Carlson, Kapitus
  • Robert Zadek, Buchalter

When:

Day 1 – June 15
9:00am – 4:30pm: Offices of Proskauer Rose (includes light breakfast and lunch)
5:30pm – 7:30pm: Cocktails at Dear Irving

Day 2 – June 16
9:30am – 6:00pm: 15 W. 38th Street, 2nd Fl, Sinatra Room (includes light breakfast and lunch)
4:00pm: Wine & Cheese

Register soon, SPACE IS LIMITED!




deBanked is a sponsor of the event. Industry attorneys are highly encouraged to attend.

SoFi Says it is Working With SMB Finance Companies

May 10, 2022
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SoFi StadiumSoFi may not exactly be in the small business lending market per se, but a digital payments company it acquired in April 2020, Galileo, has been put to good use.

“Galileo continues to expand its client base to include B2B and enterprise clients as adoption of modern cloud-based digital payments and banking has opened up new verticals and client types, use cases and opportunities,” said SoFi CEO Anthony Noto during the company’s Q1 earnings call. “For example, we launched two new clients in the first quarter that offer innovative working capital models for B2B and small- to medium-sized businesses.”

Noto said that they were not naming specific names at this time. “We will announce those [names] in conjunction with our partners as opposed to during our earnings call, but that’s increasingly a big channel for us, and we have a product pipeline to better serve the enterprise and SMB space holistically based on the demand we are seeing.”

SoFi reported a Q1 net loss of $110M, which it said was an improvement over the $177.6M net loss it recorded during the same period last year.

Shopify Capital Originated $346.7M in Business Funding in Q1

May 8, 2022
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shopify glyphShopify Capital originated $346.7M in MCAs and business loans in Q1, the company announced. That included merchants in the US, UK, and Canada. Though it was a 12% increase over the same period last year, the figure puts them virtually on par with originations in 2021 if the following three quarters hold steady.

Shopify was one of the only online lenders whose origination volume substantially increased during covid. Most experienced significant drops but have since dramatically recovered.

“The hundreds of thousands of businesses that shifted their business to Shopify during the pandemic and stayed with us since can now take advantage of our powerful retail point-of-sale offering for a unified view of their sales online and offline,” said Shopify CEO Harley Finkelstein during the Q1 earnings call. “Shopify has been developing the world’s best point-of-sale retail software for years, and it’s now at the point where all merchants who came to Shopify during the pandemic can leverage it.”

Large Fintech Companies Helping to Normalize Revenue Based Financing

May 6, 2022
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With business increasing for wide-reaching financial technology companies like Square, Paypal, and Shopify, this has brought more attention to revenue-based financing products like the ones they offer. Henry Abenaim, Founder and CEO of Fundingo, said that it brings more businesses to the table.

“…you sometimes think it’s a small world or small group of merchants, and you really come to realize that it’s huge,” he told deBanked. “And the more they’re serviced, the more they need, the more they grow. So it just feels like there’s just more awareness of the product, and then more merchants that are going to come in demand and ask for it, as well as these bigger players are always going to service only a subset of the businesses.”

At the same time, a greater public awareness of options could tighten margins for certain funding providers. “I think it’s going to make the merchants that are way more bankable… get lower price deals, so it’s going to hurt the margins, it’s going to hurt the profits,” Abenaim commented.

John Bulnes, Vice President of Business Development at Fenix Capital Funding, expressed how it is not yet determined what kind of effect the larger mainstream companies will have on the industry. “I do think it’s something that the larger first position MCA companies may feel the effects of first, because they’re going to be competing more or so with taking away clients from those companies first, as opposed to the companies that are smaller that are doing shorter term deals.”

As these big companies operate with larger capital bases, it may indeed become more difficult for smaller companies to compete.

“… it’s going to be something that’s going to constantly adapt and fluctuate as time goes, but I do see it as an expanding industry… it’s kind of a sign that when you see more commercials and we see these bigger companies jumping into the space, that it is something that’s going to continue to grow,” said Bulnes.

And commercials and ads are definitely increasing. One of the largest online small business lenders in the country was asked about their TV and radio campaigns during their recent quarterly earnings call.

“We’ve definitely been ramping [commercials up] hopefully with a little bit more diligence than OnDeck was running ads three or four years ago,” said David Fisher, CEO of Enova. “But we’ve definitely jump back into kind of broader base advertising in that business and it’s been working really well.”

Square Loans Originated $756M in Q1

May 5, 2022
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Square in San FranciscoSquare Loans, the small business lending division of Block, is off to a roaring start. The company originated 90,000 loans for a total of $756M in Q1, according to the company’s latest quarterly earnings. One cause of that was a foray into the Canadian market as part of the company’s strategy to offer all its products in every market it operates in.

“I would say that we have always felt that fast access to funds, whether it’s a customer’s own funds or access to credit has been a key part of our platform and a key part of what our customers need in good times and in uncertain times,” said Block CFO Amrita Ahuja. “And we’ve built a lot of data, a lot of heuristics machine learning around the ability to enable customers for access to those funds in a responsible way. Obviously, we do that today on the Square platform with our Loans — Square Loans product, which we were able to very quickly pause during the early days of the pandemic, pivot to PPP, and then relaunch. And now with originations there back to pre-pandemic levels with continued strong results, encouraging results we’ve seen with respect to loss rates and repayment rates.”

Square Loans’ first quarter originations more than doubled YoY. The increase is consistent with results experienced by competitor Enova/OnDeck.

Enova Doubles Small Business Loan Originations YOY

May 4, 2022
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enovaEnova’s small business lending arm, powered mostly by OnDeck, originated $659M in Q1 of 2022. That was more than double the volume over the same period in 2021 and up 14% sequentially from Q4 2021. Overall, Enova reported a Q1 net income of $52M.

“The first quarter net charge-off ratio for small business receivables was 1.9%, up from 80 basis points last quarter, but below the prior year ratio of 2.6% and below pre-pandemic periods as we continue to see strong payment performance across all of our small business products,” said Enova CFO Steven Cunningham during the quarterly earnings call.

Company CEO David Fisher said that Enova felt really good about its market position in the small business lending space and considered itself the largest player in the non-prime sector of it overall. “We are not feeling APR pressure in our small business products,” Fisher said when asked if competitive forces might drive the company’s loan prices down. He attributed the company’s rapid originations growth to both an increase in marketing spend and an increase in customer awareness that they can access capital quickly online.

“…small businesses have a pretty strong appetite for growth, but also for kind of more traditional non-bank small business lenders,” Fisher said. “I think kind of the online approach with kind of the speed and the ease and the transparency is really appealing to businesses.”