Business Lending
WEX and OnDeck Announce Strategic Partnership to Offer Financing to WEX Small Business Customers
January 17, 2017
SOUTH PORTLAND, Maine–(BUSINESS WIRE)–WEX Inc. (NYSE: WEX), a leading provider of corporate and small business payment solutions, and OnDeck® (NYSE: ONDK), a leader in online lending for small business, announced a partnership in which WEX will offer business financing from OnDeck to its small business customers.
WEX is a global, multi-channel provider of corporate payment solutions representing more than 10 million vehicles and offering exceptional payment security and control across a wide spectrum of business sectors. The company and its subsidiaries employ more than 2,500 associates who provide services in the Americas, Europe, Australia, and Asia.
“Our partnership with OnDeck will be a huge benefit to our small to mid-sized business customers who will now have access to new sources of financing,” said Brian Fournier, vice president, fleet channel partner, WEX. “The strategic partnership will enable these customers to take advantage of OnDeck’s leading portfolio of products and services.”
“OnDeck is 100 percent focused on helping small businesses seize opportunities, such as hiring employees, funding marketing, or buying inventory,” said Jerome Hersey, vice president, OnDeck. “Our partnership with WEX, an innovator in the payments marketplace, will enable us to offer more small businesses an unparalleled set of choices to meet their financing needs.”
For more information about WEX’s small business offerings, please visit: http://www.wexinc.com/fleet/small-business/.
About WEX Inc.
WEX Inc. (NYSE: WEX) is a leading provider of corporate payment solutions. From its roots in fleet card payments beginning in 1983, WEX has expanded the scope of its business into a multi-channel provider of corporate payment solutions representing approximately 10 million vehicles and offering exceptional payment security and control across a wide spectrum of business sectors. WEX serves a global set of customers and partners through its operations around the world, with offices in the United States, Australia, New Zealand, Brazil, the United Kingdom, Italy, France, Germany, Norway and Singapore. WEX and its subsidiaries employ more than 2,500 associates. The company has been publicly traded since 2005, and is listed on the New York Stock Exchange under the ticker symbol “WEX.” For more information, visit www.wexinc.com and follow WEX on Twitter at @WEXIncNews.
About OnDeck
OnDeck (NYSE: ONDK) is the leader in online small business lending. Since 2007, the Company has powered Main Street’s growth through advanced lending technology and a constant dedication to customer service. OnDeck’s proprietary credit scoring system – the OnDeck Score® – leverages advanced analytics, enabling OnDeck to make real-time lending decisions and deliver capital to small businesses in as little as 24 hours. OnDeck offers business owners a complete financing solution, including the online lending industry’s widest range of term loans and lines of credit. To date, the Company has deployed over $5 billion to more than 60,000 customers in 700 different industries across the United States, Canada and Australia. OnDeck has an A+ rating with the Better Business Bureau and operates the educational small business financing website www.businessloans.com.
OnDeck, the OnDeck logo, OnDeck Score and OnDeck Marketplace are trademarks of On Deck Capital, Inc.
Contacts
WEX
Rob Gould, 207-523-7429
robert.gould@wexinc.com
or
OnDeck
Jim Larkin, 203-526-7457
jlarkin@ondeck.com
Funding Circle’s New $100 Million Funding Round is a Surprise, But it’s Really Not
January 13, 2017The alternative small business lender that is arguably offering the longest terms with the lowest rates has secured a $100 Million Series F Round, according to an announcement on Wednesday.
With the round led by Accel, the strong sign of confidence contradicts the sentiment felt by many in the US about their business model. In the last few months, several of Funding Circle’s US competitors have suspended operations, shut their doors, or integrated into other companies. Most of the questions we’ve received lately have centered around “who’s next to fall?” not “who’s next to raise $100 million?”
So what’s going on here?
Imagine in an alternate universe that the US government was using Funding Circle’s platform to fund millions of dollars to small businesses, that the US Treasury Secretary was publicly cheering them on, and that they sat on Capitol Hill drawing up new laws that would regulate their industry in a way that would help them succeed, would you bet on them to win?
That alternate universe exists and it’s called the United Kingdom. It’s also Funding Circle’s primary market. Just last week the UK government lent Funding Circle another £40 million on top of the previous £60 million to lend to small businesses amid credit concerns related to Brexit and it’s only one example of how cozy government relations are over there.
Chancellor of the Exchequer (the US Treasury Secretary equivalent), Philip Hammond, said: “Funding Circle has become a real success story for British Fintech and news that it has attracted £80 million (US $100 mil) of investment is further evidence of the growing importance of this industry. This is another vote of confidence in a UK firm that plays an important role in our economy – helping businesses to grow and create jobs.”
And in a TV interview with Bloomberg, Funding Circle co-founder James Meekings said that the company is working with the government to help draft the regulations that they would have to abide by. Sounds like a nice arrangement.
The UK is still their biggest market but part of their $100 million funding round will be used to further develop their US business, Meekings said on Bloomberg. To date, the company has raised $375 million. Less than two years ago, their private market valuation was $1 billion, more than twice OnDeck’s current market cap. Funding Circle’s valuation in this round was not disclosed.
Funding Circle’s global loan volume these days rivals OnDeck’s. £400 million was lent by Funding Circle in Q4 versus $613 million lent by OnDeck in Q3, setting up the possibility that the former could surpass the latter in volume this year.
Funding Circle’s publicly traded SME Income Fund has also held up pretty well over the last year:
Shortly after announcing their funding round, a trade group they co-founded in the US, the Marketplace Lending Association, welcomed 11 new members. Might Funding Circle eventually gain the same favor in the US that they’ve nurtured in the UK? Would you bet on them?
The Small Business Lender Rankings (A preliminary peek)
January 4, 2017
Here’s a peek at how some of the industry’s largest alternative small business lenders were doing for the year in originations as they headed into the last quarter of 2016. This data should be considered an estimate and is obviously not comprehensive. Still, this should give you a clue where some players will end up:
| Lender | Q1 – Q3 2016 | FY 2015 | FY 2014 |
| OnDeck | $1,772,000,000 | $1,900,000,000 | $1,200,000,000 |
| PayPal | $1,000,000,000 | $850,000,000 | |
| Square | $550,000,000 | $400,000,000 | $100,000,000 |
| IOU Financial | $87,500,000 | $146,400,000 | $100,000,000 |
Other small business finance companies do more than just loans, with many doing merchant cash advances. And some companies work to get customers funded through other platforms when prospective customers don’t fit their risk box. The numbers below are origination approximations regardless of whether the customer was ultimately placed on their balance sheet or someone else’s and whether or not the transaction was a loan or MCA.
| Funder | Q1 – Q3 2016 | FY 2015 | FY 2014 |
| Bizfi | $415,000,000 | $481,000,000 | $277,000,000 |
| Yellowstone Capital | $350,000,000 | $422,000,000 | $290,000,000 |
| Platinum Rapid Funding Group | $135,000,000 | $100,000,000 |
CAN Capital Shareholder Files Lawsuit
December 25, 2016Add an aggrieved shareholder to the list of CAN Capital’s recent messes. On December 19th, Deborah Clearman filed a motion for summary judgment in lieu of a complaint in the New York Supreme Court, alleging that CAN had failed to comply with a settlement agreement that stipulated she be paid $150,000 by November 14, 2016.
Clearman, who has been a shareholder of the company since 2003, is the owner of 83,362 shares of CAN Capital preferred Series A-1 stock and 48,078 shares of CAN Capital preferred Series A-2 stock, according to the settlement agreement now visible to the public because of New York State’s open court system.
The original dispute between the parties precedes the latest events rocking the company, though the alleged non-payment could be related to liquidity woes. CAN was only just served the summons on Wednesday the 21st and has not yet filed a response to the allegations.
CAN recently suffered a Rapid Amortization Event with their $200 million securitization, has suspended the funding of new deals and has laid off nearly half of their employees.
The lawsuit is registered as case number 656603/2016 in the New York County Supreme Court
CAN Capital’s Collateral ‘Adjustment’
December 24, 2016Last month, CAN Capital disclosed that they had “self-identified that some assets were not performing as expected” on the same day that three of the company’s top executives were put on leave. Since then it’s been reported that a discrepancy arose when CAN’s old systems were not equipped to handle the shift from variable payment advances to fixed payment loans. This is notable given that CAN began doing fixed payment loans all the way back in April 2010.
The discrepancy found its way into CAN’s 2014 securitization. S&P Global Ratings recently reported on this that “there was a correction of previously misclassified assets that affected the results of the calculation of [the] adjusted performing asset balance” on CAN Capital Funding LLC Series 2014-1.
Ratings agency DBRS illustrates the collateral dip on CAN’s securitization once the classifications were reported correctly on Series 2014-1 below.
This is the first public glimpse into what CAN’s old systems got wrong and by how much.
The drop triggered a rapid amortization event, potentially causing liquidity issues for CAN, hence why new funding may be paused. The principal balance on the $200 million notes has dropped by nearly $70 million in the last two months, indicating big payouts.
The process to manage a rapid amortization event is described in the original DBRS ratings report. The implications aren’t good given that this appears to be brought on by misclassifying assets rather than a natural deterioration of loan performance.
Last week, CAN laid off nearly half of its employees as it tries to correct course.
Update: On December 25th, deBanked published a brief of a newly discovered lawsuit filed against CAN Capital on December 19th by an aggrieved shareholder alleging the company had failed to pay her a $150,000 settlement payment.
Broker Running Around Calling Himself a ‘Direct Lender’ Shut Down by CA Regulators
December 21, 2016A loan broker representing themselves to be a “direct lender,” was not a direct lender at all, according to witness testimony entered against Financial Services Enterprises DBA Pioneer Capital. The California Department of Business Oversight (DBO) noted in its case against Pioneer that “the evidence did not show that respondent actually funds loans itself, and did not include documentation of any loans actually consummated.”
The regulatory action, which was centered around whether or not the business loan broker was unlicensed in California ended unfavorably for Pioneer, with the DBO ordering the company to Desist and Refrain. You can read a good summary on LeasingNews by attorney Tom McCurnin: http://leasingnews.org/archives/Dec2016/12_21.htm#dbo
Citizens Bank to Use Fundation’s Tech and Services in 2017
December 21, 2016Fundation is back at it, this time announcing a deal with Citizens Bank to offer “digital lending capabilities to small business customers.”
According to a press release:
The added capability will enable small businesses to apply for loans and lines of credit through a simple online application at citizensbank.com. In most cases approval is provided within minutes, and loans are funded in as little as three business days. Additionally, Fundation will offer credit to some customers that do not meet Citizens’ credit guidelines, helping the bank to serve more of its small business customers’ credit needs.
Expected to go into effect in mid-2017, it should be a huge improvement to Citizen’s existing online loan application process, which doesn’t appear to even exist. A cursory review of their website indicates that business owners can at best, schedule a consultation with a banker over the phone.
Fundation has transformed this process for other banks in the past, Regions Bank for example, as we showed in a prior post. The partnership should be valuable for both Fundation and Citizens.
The Twelve Days of Funding
December 20, 2016On the Twelfth day of funding, my true love gave to me
Merry Christmas, Happy Hanukkah and may all your deals fund!
