Business Lending
The Scoop Behind Sprout Funding’s Acquisition of Jet Capital
January 25, 2020
News from North Texas this month as Dallas-based Sprout Funding announced its acquisition of Jet Capital. The move comes as Sprout seeks to expand its technical operations.
“Sprout built a reputation as a group that funds a lot of its own internal deals, and Jet had spent a lot of time, energy, and money on their tech platforms,” Sprout’s CEO and Founder Brad Woy told deBanked. “So while we were really good on the sales and marketing side, they seemed to be a little bit more advanced in their tech and reporting, and we brought those two things together.”
Almost all of Jet’s employees will be joining Sprout, with the exception of one person who chose to go their separate way following the merger.
Jet’s COO Allan Thompson spoke kindly of the purchase, saying in a statement that “There is a great cultural alignment in addition to the obvious benefits of combining our technology, processes and people. The result will provide increased capabilities for Sprout and opportunity for all of our customers and partners.”
The financial terms of the acquisition were not disclosed.
Quarterspot is Shifting Its Business Focus
January 22, 2020Last week, several industry insiders reported receiving an email from NY-based company Quarterspot that said their agreement had been terminated.
The contents stated that the company is “shifting its business focus and will no longer be originating loans, but will continue to service currently outstanding loans.”
deBanked has confirmed that to be true. More information may be reported as it becomes available.
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Declined For Funding? Lack of Time in Business Beats Out Lack of Credit Worthiness
January 20, 2020
A study conducted by Square Capital and the Stevens Center for Innovation in Finance at the Wharton School at the University of Pennsylvania, pulled back the curtain on small businesses and the financing process.
Notably, the #1 reason that businesses said they had been declined for funding (regardless of the source) wasn’t credit, it was that they hadn’t been in business long enough.
#2 was (ironically) a lack of cash in the bank.
#3 was insufficient collateral.
Personal credit worthiness and business credit worthiness ranked #4 and #6 respectively.
These findings were one of many in the report published by Square last week. Among other key details were that healthcare & fitness businesses were the most likely to receive all the funding they sought whereas leisure & entertainment businesses were the least likely to receive all the funding they sought.
Black/African American business owners were more likely to apply for financing in the last 12 months than any other ethnic/racial group. A chart in the report shows that they were more than twice as likely to apply to an online lender or credit union than white business owners.
Nav Co-founders Step Down From C-Level Positions
January 14, 2020
Levi King, a co-founder of Nav Inc., resigned as the company’s CEO on Tuesday. In a two-part explanation on LinkedIn, King wrote. “To be clear, I’m not burned out on Nav. I’m not aspiring to do something elsewhere, and I’m not leaving the company. I’m still dedicated and passionate about helping Nav succeed. And, I will – just in a different capacity moving forward.”
King will do that by serving as the executive chairman of the board of directors. President & COO Greg Ott will take over as CEO.
On LinkedIn, King further wrote that the company needs “a more qualified leader” to take Nav to the next level after he and co-founder Caton Hanson have successfully grown the company to the right point.
Hanson, who served as the company’s Chief Legal & Compliance Officer, also stepped down and updated his job role with Nav to that of being “Of Counsel” on a part-time basis. Unlike King’s message on LinkedIn, Hanson’s reads as a farewell.
“Thank you for believing in me and our dream,” he wrote. “Thank you for your part in helping Nav achieve what some have called ‘impossible’. I am grateful to know you, have had the opportunity to work alongside you and to call you friends (and for many of you — co-owners). I look forward to Nav’s next chapter – and mine.”
Greg Ott, the new leader of the company, is said in a Nav press announcement to have served as a strategic and organizational leader in both startups and Fortune 1000 corporations. Prior to joining Nav, Ott served as Vice President of Marketing for Intuit QuickBooks.
“Nav’s founders created a company that is truly unique in its ability to revolutionize how small business owners navigate and access capital to grow their business,” Ott commented. “I look forward to building upon Nav’s successes and furthering the company’s vision of aligning financing qualifications, predicting needs, and facilitating transactions between data providers, lenders, partners and small businesses.”
New Jersey Firms Up Its Confession of Judgment Bill
January 13, 2020The New Jersey State legislature strengthened its Confession of Judgment (COJ) bill last week by adding language that grants the Attorney General power to enforce monetary penalties against violators.
S3581 would prohibit any provider of business financing from extending financing with a COJ. Business financing is defined as a loan, line of credit, cash advance, factoring, or asset-based transaction for a business purpose.
The bill still needs to pass the Senate and Assembly and be signed off by the Governor in order to become law. The bill’s sponsor, Senator Troy Singleton, is a Democrat, increasing the likelihood that the Democrat-controlled legislature and Democrat Governor Phil Murphy will move it forward.
Dodd-Frank’s Small Business Lending Data Collection Rule Could Still Take Years to Implement
January 12, 2020
Small business lenders: Are you ready to regularly submit loan application data to the Consumer Financial Protection Bureau? No? Good, because almost ten years after Dodd-Frank passed, the provision that requires the CFPB to collect small business lending data still hasn’t been implemented.
And apparently we’re still years away.
Section 1071, as it’s known, modified the Equal Credit Opportunity Act and defined a small business lender as any company that engages in any financial activity. So if you’re wondering if this thing even applies to whatever you do in your corner of small business finance, it probably does.
The rule has taken so long to implement that consumer advocacy groups have actually sued the CFPB over the delay. The CFPB took note followed by initiative and hosted a symposium late last year to discuss how it might go forward. The next steps from here are to convene a panel of small business lenders, have that panel issue a report, propose what the rules on collection will be, collect feedback on the proposal, formulate a final rule, issue a rule, and then set a time for when it will go into effect. That process could mean that the earliest that data collection takes place is in 2023, possibly even longer as the entire financial services industry may need time to develop the infrastructure and human resources to comply.
Beyond that, advocates and critics of Section 1071 do not even entirely agree on what purpose data collection will even serve. Some believe the intent is merely for the government to have access to data it otherwise might not have while others believe that the CFPB could use statistics it deems discriminatory to bring enforcement actions against financial institutions. Sounds like we could use a few more years to get on the same page…
A recording of the 2019 Symposium is below:
New Small Business Administration Chief Confirmed
January 9, 2020The newest Administrator of the SBA was announced on Tuesday. Jovita Carranza was appointed after President Trump had tweeted the previous Thursday about her nomination.
I am pleased to announce that Jovita Carranza will be nominated as the new @SBAgov Administrator. She will be replacing Linda McMahon, who has done an outstanding job. Jovita was a great Treasurer of the United States – and I look forward to her joining my Cabinet!
— Donald J. Trump (@realDonaldTrump) April 5, 2019
Replacing Linda McMahon, of WWE corporate fame who left the position in early 2019 to work at pro-Trump super PAC America First Action, Carranza will be the SBA’s first permanent leader in just under a year. The Administration had been led by Chris Pilkerton as the Acting Administrator in the interim.
Nominated by bipartisan vote of 88-5 in the Senate, Carranza appears to draw support from both sides of the political spectrum. Among those who voted against Carranza were former Democratic presidential nominee hopefuls Kamala Harris and Kirsten Gillibrand. Speaking on the appointment, Democrat and Ranking Member of the Senate Committee on Small Business and Entrepreneurship Ben Cardin said that he was “optimistic that Treasurer Carranza can be the leader and advocate that the Small Business Administration and American small businesses need right now.”
Discussing her confirmation, a moment of political unity in an increasingly divided period for Washington, Heidi Chung of Yahoo! Finance noted the duality that Carranza brings to the office: “Long been known as someone for the people, she want to definitely help women as well as people of color, so I think, broadly speaking, even though she is a Trump favorite, I think a lot of people are looking forward to what she’s going to bring to the table when she really takes this job on.”
Having served as United States Treasurer from 2017 to 2019, Carranza was responsible for the operations of the US Mint, had dealings with the Federal Reserve, acted as an advisor to Secretary of the Treasury Stephen Mnuchin, and is likely to appear inside your wallet as a signature on dollar bills. Carranza also served as Deputy Administrator in the SBA during George W. Bush’s presidency.
Prior to her time in Washington however, Carranza worked at UPS for over twenty years. Starting off as a part-time truck loader, Carranza worked her way up through the package delivery service to become President of the company’s Latin American and Caribbean operations and subsequently Vice President of Air Operations from their Louisville, Kentucky facility.
Having worked at UPS while being a young mother and attending college, Carranza said on those years that “I thought if I could make it out of this situation – having an opportunity to acquire leadership and managerial skills; receiving on-the-job training – I would be able to finance higher education for myself; secure better caretakers and schools for my daughter – this is the American dream – what I strived to achieve not looking back!”
Carranza was born in Chicago to Mexican immigrant parents. Her father working as a factory foreman and her mother as a housewife. According to Carranza, her mother read a newspaper every day in order to teach herself English.
Seen as a long-time ally to Mnuchin, Carranza is credited by the Secretary as being instrumental in Republicans’ 2017 tax bill, and has said in a statement that she will “continue to promote pro-growth economic policies, eliminate job-killing regulations, and fight for the small businesses that are the lifeblood of the American economy.”
When asked at her Senate confirmation hearing in December what she would do in office, Carranza said that she would “put particular emphasis on opening more doors for women and for entrepreneurs in underserved communities, including military families and veterans,” and that she “will be a tireless advocate in the Cabinet for small businesses.”
Created in 1953, Carranza will be the SBA’s 44th Administrator, working with a budget of $820 million for 2020.
