Business Lending

Broker Fair Ticket Registration To Shut Off Any Day Now

November 28, 2021
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Broker Fair CrowdBroker Fair 2021 ticket registration will shut off days before the December 6th event. The broker-centric conference is now officially counting down to its kickoff at Convene in New York City.

“This pretty much happens every time we put on a show,” said Broker Fair founder Sean Murray. “Even though this event is post-covid, we’re looking at the number of registrations so far and are very pleasantly surprised.”

Hundreds of small business finance brokers are registered to attend Broker Fair. The annual event first launched in 2018.

“I don’t know what day we’re going to disable registration yet, but based on the pace I’d say there’s no way we make it until Friday,” Murray said.

While supplies last, tickets can still be purchased here

Not Just For Salespeople: Becoming a Certified Small Business Finance Professional

November 23, 2021
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Certified Small Business Finance ProfessionalIts aim is to become an industry standard. The newly launched Certified Small Business Finance Professional (CSBFP) program will first become available at Broker Fair in New York City on December 6th.

But what’s the difference between this one and others? Steve Denis, Executive Director of the Small Business Finance Association (SBFA), says that his organization’s backing of the CSBFP makes all the difference.

“We’re the largest trade group in the space without question,” Denis said, adding that the group has about 30 members, several of which are among the largest in the country.

“It’s going to be a signal that you’re doing things the right way and want to go out of your way to show that you are doing things the right way,” Denis said.

“IT’S OPEN TO ANYONE IN THE INDUSTRY”

The certification will require applicants to complete a course centered on understanding products, laws governing the industry, and compliance. The certification exam will focus on testing applicants’ ability to understand key concepts and best practices.

This course is designed to be taken in person. While it will be available at Broker Fair, Denis said that they plan to partner with other events as well.

SBFA“We’re going to focus on as many in-person training sessions as possible,” he said.

And it’s not just salespeople they’re targeting. Underwriters, collectors, support staff, and more are not only all welcome to obtain their certification, but are also encouraged.

“It’s open to anyone in the industry,” Denis said. “The more the better. […] It will send a very strong message that there is a diverse group of people that want to take a certification and take it very seriously.”

In the official announcement, it was stated that it would be more than just a stamp and that certified professionals would also be provided with “a way to connect, learn and grow beyond the initial education process.”

Denis compared the CSBFP standard to CFPs (Certified Financial Planners) in the financial advisor space.

Attendees of Broker Fair 2021 can take the course at the event at no extra charge.

IOU Financial Originates $52.2M in Q3

November 19, 2021
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iou homepageIOU Financial continued its growth trajectory this past quarter with $52.2M in small business funding originations. It was the company’s biggest month since inception.

“Our successful migration to a marketplace strategy has enabled IOU Financial to capture more volume in Q3 than would have previously been possible,” stated Robert Gloer, President and CEO in an official statement. “This has proven to be a win-win that has in turn given us the financial latitude to invest in growth initiatives and further reduce our corporate debt.”

The company was also profitable in Q3, though the company said this was “due in part to a reversal in its provision for loan losses and recoveries of loans previously written off, as well as a reduction in operating expenses due to the recognition of $1.5 million in employee retention credits.”

IOU’s customers have been in business for an average of 11.5 years and borrow $82,688 on average for a weighted average term of 11.9 months.

For the first 3 quarters of 2021, the company has originated $111.9M.

Wing Lake Capital Announces New Capstone Fund

November 12, 2021
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wing lake capitalAfter acquiring Franklin Capital in October of last year, Wing Lake Capital CEO Shaya Baum spoke to deBanked about a new fund the company is unveiling, the Capstone Fund. 

A mix of debt and equity has put $50 million into the Capstone Fund, all from investors of the Franklin Fund. According to Baum, the Franklin Fund still has about $100 million in it. 

“Wing Lake Capital has two funds now,” said Baum. “There’s the Franklin Fund and the Capstone Fund. The Franklin Fund was launched as a bridge for companies that are stuck in the cash advance merry-go-round. Companies are stacking cash advances until they are using Peter to pay Paul, and then there are no more Peters.”

Comparing the Franklin Fund to the Capstone Fund, Baum described it as a “graduate fund” that will enable companies with too many advances to move beyond them and that it would serve as a stepping stone between the Franklin Fund and traditional SBA or bank financing.

Additionally, the Capstone Fund is also a place where companies who have extenuating reasons why they’re denied credit, but aren’t in distressed business situations, can get access to capital. 

Baum’s business model is sometimes at odds with the advance providers his companies try to draw customers away from, with Baum going so far as to say that some of these providers “hate” him. Despite this, he says that some quietly work with him.

“These companies say one thing publicly and privately do another,” said Baum. “These companies that come to us for help are companies that can no longer pay their cash advance debt.”

As part of his company’s program, the advance provider can recover some of its money, he asserted.

“We’re getting 800 deals a week from cash advance companies saying ‘hey, can you help us get out of these?’”

Regardless of the tension with competitors, Baum believes the new fund will ultimately benefit the merchants.

“The Capstone Fund is really focused on growth capital as opposed to restructuring distressed assets. Okay, we’ve restructured your business, you don’t have to pay that cost of capital, you have to focus only on growth. You have opportunities to grow, room for success, now let’s scale the business.”

Lender is Providing $5K Incentive to Veteran-Owned Businesses

November 10, 2021
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fountainheadIn an effort to promote veteran entrepreneurship, Fountainhead, the nation’s leading SBA 7(a) and 504 non-bank lender, is providing funds to veterans to assist them with closing costs of the deal should they pursue funding through the company.

Fountainhead’s CEO Chris Hurn spoke exclusively to deBanked Wednesday about what Veterans Day means to him, his business, and how giving this group a break on the cost of capital is not just a marketing ploy, but a genuine attempt to give back to an underserved and under-recognized community.

“We have always been very supportive of veterans getting into entrepreneurship,” said Hurn. “[The promotion] is basically us gifting $5,000 on a transaction if they close with us.”

“Oftentimes, that’ll be enough to cover a real estate appraisal, enough to cover the environmental reports, it may be able to cover some of the credit reports, different things like that. We do put a cap on it, we are still a for-profit enterprise, but we are covering up to $5,000 of the closing costs.”

As a lender with more than two decades of experience, Hurn believes that veterans are some of the most trustworthy and reliable business owners to do business with. “Some lenders feel like veterans don’t have business experience, I disagree with that,” he said. “I think the military teaches people to be very organized, very disciplined, which are two critical pieces for entrepreneurship.”

From the lender’s perspective, Hurn believes that it is not only good business practices that military experience can provide, but honesty and creditworthiness when it comes to paying back a loan.

“Veteran business owners tend to be extremely organized, extremely disciplined in terms of operating the business. I’m not saying [non-veteran] business owners don’t have aspects of that, but I think the military does a tremendous job on teaching those character traits, which as a lender I find very helpful to make sure I’m getting repaid.”

According to Hurn, about a fifth of his clients are veterans, and he is hoping to increase that number with this promotion.

“[Veterans] are a very good credit risk, we want to encourage them to get into entrepreneurship, and I think it’s the right thing for the business community to do all they can to help veterans.”

Upstart is Heading into Small Business Lending

November 10, 2021
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upstart websiteUpstart, the fintech AI consumer lender originally known for its student loan platform, is heading into small business lending.

“…we believe there is an unmet need to provide fast, easy access to affordable installment loans to business owners across the country,” said Upstart CEO David Girouard during the earnings call. “Every small business is different and they operate across a crazy wide spectrum of industries.”

Girouard explained that there are “significant challenges to delivering a compelling loan product that is useful to business owners,” in which there is also reliable value for the lender itself.

“This challenge is tailor-made for Upstart,” Girouard said. “While there is no shortage of credit options to business owners, we aim to deliver the zero-latency affordable credit solution that modern businesses require. This is another product in high demand from our bank and credit union partners, and we hope to bring it to market during 2022 as well.”

Upstart is no small player. The company’s market cap is currently around $20B and it is putting out about 1.5M loans a year for a total of more than $16B.

PayPal’s Lending Increases

November 8, 2021
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paypal buildingPayPal was mum about its working capital loan products in the latest quarterly earnings report, but clues lie in an important line item, Loans and interest receivable. The figure has historically been closely correlated with originations. PayPal reported $3.7B in those receivables at the end of Q3, up from $3.2B in Q2 and up from $2.77B at the end of Q4 2020.

The number was close to $4B at the end of 2019 so the figures represent a return to previous levels.

In the earnings call, PayPal CFO John Rainey said “growth in our short-term installment pay portfolio was the primary driver of this increase.” Rainey appeared to be referring to its Buy-Now-Pay-Later product.

Separately, PayPal announced that Venmo users should be able to pay for purchases on Amazon beginning next year.


This page has been updated to reflect the CFO’s statements that the increase was driven by short-term installment lending.

It’s Time to Check That ISO Agreement and Balance the Broker/Funder Relationship

November 8, 2021
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redline an iso agreementThe fine print of ISO Agreements, long a thorn in the side of brokers when it’s worked against them, is an area that is ripe for change. All too often the price of a referral relationship is a take-it-or-leave-it contract that is not up for negotiation. So says Jared Weitz, CEO of United Capital Source and Co-Chairman of the Broker Division at the SBFA. He told deBanked that he’s gotten major pushback from some funders for redlining deals prior to inking them.

Aware that he is not alone in dealing with this, Weitz is looking to push out uniform agreements to the industry that would align both sides, creating a fair arrangement and providing for mutual indemnifications.

“I want to explain the importance of it on a broker’s side because I think that what is happening is that there are funders who solicit business [by saying] that they are broker and customer-centric, us being the customer, and [then] we get handed an agreement that literally signs [our] business away,” said Weitz.

“If you don’t know any better, you’re totally screwed.”

Weitz spoke in detail about how the concept of redlining an agreement is a part of doing business with large financial institutions, but when it comes to funders, it’s an entirely different situation.

“In most industries, it’s such a normal thing to redline an agreement. We were [working] with AMEX, a huge company, and it was understood like ‘hey, shoot this over to your lawyer, let us know,’ it was already understood that we were going to redline it. In [small business lending] if you want to redline something, it’s almost like the funder gets offended.”

When it comes to mutual indemnification, Weitz talked about how this is the biggest issue in these types of deals, especially as new laws are creeping into certain states that are going to change the way many funders do business. In response to some of these new laws, funders are not only trying to put all of the legal responsibility on the brokers, but forcing them to give up their book of business in order to get deals done.

“THE GUY THAT DOESN’T LET YOU REDLINE HIS AGREEMENT, YOU SHOULD RUN AWAY FROM THAT GUY…”

“Now that there are new laws popping up in different states and being enforced differently, funders have come out with new agreements, and look, that’s okay to do right, any broker worth their salt is going to say ‘hey, we agree to not lie and mislead, we agree to follow the TCPA laws, to follow the CAN-SPAM email laws,’ that stuff is easy. What is with these agreements is that you have funders that say to a broker in the [contract], we want the right to come and fully audit your books.”

After the implementation of his own mutual agreement, Weitz claims that a quarter of the funders he worked with prior to his agreement no longer want to do business with him.

loan contract“There is a large 25 percent, and were talking about big name funders that I have stopped working with over the last twelve to eighteen months because they have literally tried to hit me with the most onerous agreement you could ever see, and when I spoke to them about it, they said ‘you know what Jared, most people just sign this and send it back.’ And that made me afraid for the broker industry.”

Although a positive relationship with a funder is imperative to being a successful broker, Weitz believes that some type of mutual agreement will protect people like him from being taken advantage of when things don’t go as planned for the funder.

“The guy that doesn’t let you redline his agreement, you should run away from that guy, because I have been in that scenario, where I’ve hugged, I’ve eaten at a man’s house with his family, and I’ve had that same man when things are down do what he has to do.”

Weitz talked about how the relationship with a funder can start a business relationship, but stressed that a fair agreement keeps it going. “Everyone’s friends when they’re making an agreement. Everyone’s [all] smiles, everyone is handshakes and hugs, but when things are bad in the world, and those smiles turn into straight faces, people look to that agreement, and say ‘okay what can I do?’”

When asked about losing deals to brokers who are willing to sign their lives away to get a deal done, Weitz said that those types of brokers are the ones that even if they do make a quick deal, they will never survive long enough to make a legitimate impact on the industry.

“I think funders will say ‘listen, you sign this agreement we will give you XYZ,’ and let me tell you, that’s the funder that is going to take your lunch from you, and that’s real,” said Weitz.

“The guy that offers you everything to just sign without a redline, is the guy that will crush your business, mark my words.”