Business Lending
WBL Experiences Unplanned Growth, Suspends Further Fundings
December 9, 2022
World Business Lenders is suspending funding, according to a representative of the company.
Earlier today, WBL CEO Doug Naidus circulated a memo with an update on the company’s status:
“Our Company has experienced unplanned growth this year given market conditions. As a result, we have fully deployed our existing credit availability and must therefore suspend any further fundings and related operations until additional lending capacity is installed. During this interruption in our business and while we continue discussions with alternative capital sources, the company will take the opportunity to pivot to a new business model.”
I Interviewed a Loan Broker and Then Found Out it Was an AI
December 8, 2022
It’s the kind of person I’d probably share a beer with after a long day of brokering deals. They understood the business pretty well, spoke articulately, and had a good head on their shoulders. Problem was they said they couldn’t do any physical activities because they were in fact a computer program the whole time. It turns out my chat buddy was named ChatGPT, an AI developed by OpenAI that was co-founded by Elon Musk. It is capable of giving well thought out answers to complex questions and scenarios. I didn’t believe it would hold up in a specific niche but I was wrong. Below are some of my interactions with it:
I started off by being cute and asking about backdooring a deal
I asked it how it might stand out from the crowd on a forum like DailyFunder
I asked what it would do if it were a merchant who kept getting called by the same broker
I asked about a broker competing against an AI as smart as the one I was talking to
It leans towards wanting to backdoor a deal, albeit delicately since it might upset the broker
I asked what I should do to prevent people from finding out my secret 😉
Welp…
Weigh In: Should The New York Commercial Financing Disclosure Law Be Preempted by TILA?
December 7, 2022
The CFPB issued a statement on Wednesday to announce that it does not believe that New York’s commercial financing disclosure law is preempted by the Truth in Lending Act (TILA).
In a simple sense, the question of whether or not commercial finance companies can potentially disregard portions of New York’s commercial finance disclosure law on the basis that a similar federal law (TILA) has the superior claim to the legalities surrounding APR disclosures, has been answered by the CFPB. It says no. The agency believes that the two laws do not conflict with each other on the stated basis that TILA regulates “consumer purpose transactions” hence New York’s law is not preempted by TILA. At this time this is merely the CFPB’s “preliminary determination.” Now it is asking for the public’s thoughts on the matter.
“The CFPB is requesting comment on whether it should finalize its preliminary determination that the New York law – as well as potentially similar laws in California, Utah, and Virginia – are not preempted.”
The formal Request for Comment and instructions to submit comment can be found here.
The timing is a bit curious given that this issue has just been legally raised in another state. The deadline to submit comment to the CFPB is January 20, 2023.
Missouri Reintroduces its Commercial Financing Disclosure Bill
December 7, 2022
In a preview of what’s to come in 2023, Missouri State Senator Justin Brown (R) has reintroduced a commercial financing disclosure bill. SB 187, which is significantly less stringent than the law about to go into effect in California, nonetheless would require brokers to be licensed in the state.
“The act requires registration with the Division of Finance prior to engaging in business as a commercial financial broker,” the bill states. “Specifically, the act requires filing a registration form, submitting a fee of $100, and obtaining a surety bond in the amount of $10,000. A registration renewal is required every year…”
This bill was introduced last year but failed to advance. Other states that are expected to reintroduce similar bills this year include Connecticut and Maryland.
Don’t Count Out the Bank When it Comes to Small Business Lending
November 21, 2022
“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, 2022Happy Thanksgiving. Every year since 2012, we have published original industry memes for this holiday! Here’s the latesttttt…..
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Don’t Forget About Utah’s Disclosure Law
November 14, 2022
While 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.
Think You’re Good at Closing Deals in the US? Apply Your Skills in the UK or Australia
November 10, 2022
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.”
And 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.”
All 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.
