Industry News
Why KeyBank Acquired Small Business Lending Platform from Bolstr
June 25, 2018
KeyBank announced last week the acquisition of a digital lending platform for small businesses created by Bolstr. The lending platform will allow KeyBank to more efficiently serve small businesses for their SBA and traditional lending needs, according to Jamie Warder, Head of KeyBank Business Banking.
“We found Bolstr to have a very flexible capability…and we believe that having the platform will allow us to get to a decision faster,” Warder told deBanked.
Founded in 2010 by Charlie Tribbett and Larry Baker in the Chicago area, Bolstr created a marketplace that connected small business borrowers to institutional and retail accredited investors, or individuals. KeyBank acquired the platform that facilitated this, but not the company. Bolstr no longer operates as it had, but it will continue to work with its current clients, according to Warder.
Warder said that with this acquisition, KeyBank, a regional bank, hopes to attract more small business customers who are looking for speed and ease in obtaining a loan. He thinks that with Bolstr’s platform, KeyBank can be more competitive, although he didn’t say that the bank’s qualifications for obtaining loans would necessarily change.
The Bolstr platform includes features like easy eSignatures, information gathering and digital questionnaires. Already, KeyBank has hundreds of thousands of small business customers, Warder said. The bank, which is headquartered in Cleveland, OH, is more than 100 years old and operates in 15 states.
Gusto Enables Employees to Choose Their Own Payday
June 21, 2018
Gusto announced today the launch of Flexible Pay, a new feature that allows employees to choose their own pay schedule. Employees will no longer have to adjust their finances around employers’ typical twice monthly payments.
“My kids have a better payroll system than I do,” said Josh Reeves, CEO of Gusto, in reference to kids who babysit or mow lawns and get paid immediately after the job is done.
With Flexible Pay, employees can get paid weekly or for work they did the previous day. Gusto gives an advance to the employer to pay the employee. Since this service is brand new, Gusto will be making these loans and keeping them on their own balance sheet. But Gusto spokesperson Rick Chen told deBanked that they are currently in talks with banks.
“Employees are essentially giving loans to their employers,” Chen said regarding the current system.
While Gusto is a payroll company, it is trying to disrupt the payday lending industry and other online lenders that focus on short-term lending. So far, this service is free. Gusto charges neither the employer nor the employee. The only catch is that the employer has to use Gusto’s payroll system in order to get this perk for its employees. The hope is that this program will incentivize employees to ask their employers for this perk and Gusto will gain new clients, according to Chen.
Founded in 2011, Gusto has over 60,000 payroll customers nationwide and offices in San Francisco and Denver.
LendUp Adds Top Capital One Veterans to Its Board
June 21, 2018
LendUp announced today that Capital One co-founder Nigel Morris joined as board chair, and Frank Rotman, an early Capital One employee and its longtime Chief Credit Officer, joined as board member.
LendUp Co-founder and CEO Sasha Orloff is delighted about this, but not surprised.
“Our mission is to help people have a path to better financial health, which involves helping people improve their credit score and learn better financial behavior,” Orloff said.
He acknowledged that, unlike most banks, Capital One has focused on expanding credit to those with lower credit scores, which is exactly what LendUp focuses on. Orloff told deBanked that half of all Americans have a credit score of 680 or below, yet most banks and fintechs look to serve the top half. LendUp serves the bottom half.
“So it’s no surprise that our board now has Nigel Morris from Capital One and includes Blake Buyers from Google Ventures,” Orloff said. “It’s like an incredible dream to be able to have the best in technology analytics and the best in building financial services, together.”
LendUp provides an alternative to payday lending by offering unsecured loans between $100 and $1,000. LendUp launched a credit card last year that has been so popular, the company was unable to issue more cards and now has a waiting list of 250,000 people, Orloff said.
Prior to establishing LendUp in 2011, Orloff worked on the credit risk team at Citigroup and said one thing that really stood out for him was a study Citigroup helped conduct that revealed that the average person with a subprime credit score will pay $250,000 to credit card companies throughout their life. He wanted to change this. He also mentioned that one’s credit score is based primarily on two factors: on-time repayment and access to credit that you don’t use.
“So we design our loans and our card products to help people make sure they’re paying on time and make sure that they’re only using the credit that they need.”
Orloff said that LendUp places an emphasis on financial education. LendUp actually offers customers more money at lower rates if they take the company’s education courses.
LendUp also offers helpful perks like allowing the borrower to pick the day they want to repay, which Orloff said is a first. And unlike other credit card companies that usually offer either one or zero payment reminder alerts, LendUp sends three reminder alerts which they have found to be very helpful for their customers.
For busy people with children and often more than one job, Orloff said, “the first alert is a reminder, the second is like ‘oh, ok I’ll get to this,’ and the third is ‘ok, I’ve got to pay this now.’”
Based is San Francisco, LendUp employs 250 people.
Lendio Giving Program Funded $70,000 in Microloans Through Kiva
June 20, 2018
Lendio announced today that Lendio Gives, its employee contribution and employer matching program, has provided more than $70,000 in microloans to 2,800 underserved entrepreneurs in 78 countries through Kiva. Kiva is a nonprofit with a crowdfunding model that connects lenders to low-income entrepreneur borrowers. These microloans can be for as little as $25.
“At Lendio, we talk about ‘fueling the American Dream,’” Lendio CEO Brock Blake told deBanked. “That’s what we’re passionate about and what we’re driving. At Kiva, their mission is helping entrepreneurs throughout the world. So it was a natural extension to choose Kiva.”
According to Kiva’s website, Kiva emphasizes character over credit, and uses social underwriting to assess the creditworthiness of its borrowers. To date, Kiva has provided $1.2 billion in loans in 85 countries for everything from water and sanitation needs to working capital for small markets, restaurants and artisans.
The Lendio Gives program with Kiva started in 2016 and, according to a company statement, for every loan facilitated on the company’s marketplace platform, a percentage of the fee is donated to Kiva.
Back in April, Lendio announced that its Turndown program has facilitated nearly $60 million in loans in less than a year since it launched last summer. The Turndown program allows participating lenders to refer declined borrowers to the Lendio marketplace where borrowers can get funding elsewhere.
“The Turndown program is going extremely well,” Blake said. “It’s really helped us grow.”
Blake said that Lendio will be releasing numbers on the Turndown program within the next month or so.
Based in Salt Lake City, UT, Lendio was founded in 2011 and also has an office in New York. Of about 150 employees, 100 work at the headquarters in Salt Lake City and 50 work in New York.
Woman Arrested in Connection With Finance Company Data Theft
June 19, 2018
A woman was arrested in the Bronx this morning and charged with felony computer-related theft. The individual, whose name deBanked is not releasing until more information is known, was reportedly stealing customer data from Yellowstone Capital despite not being employed there. The photo shows police officers escorting her out from her home.
She is the third person to be arrested for stealing data from Yellowstone Capital in the last nine months but she’s the first that was not actually working there at the time.
Yellowstone Capital is arguably the largest merchant cash advance company in the country, according to deBanked’s leaderboard. The companies ranked ahead of them are lending companies, not MCA.
Reliant Funding is a Sponsor of deBanked CONNECT – San Diego
June 14, 2018Reliant Funding is a sponsor of deBanked CONNECT San Diego. The half-day event for funders, lenders, brokers and industry professionals is being held at the Andaz on October 4th!
Check out photos from deBanked’s past CONNECT event in Miami
National Funding is the Title Sponsor of deBanked CONNECT – San Diego
June 14, 2018National Funding has signed on as the title sponsor of deBanked CONNECT San Diego. The half-day event for funders, lenders, brokers and industry professionals is being held at the Andaz on October 4th!
Check out photos from deBanked’s past CONNECT event in Miami
New York Institute of Credit Celebrates 100 Years and Honors Harvey Gross
June 12, 2018
About 300 people gathered underneath the soaring ceilings of Guastavino’s ballroom in Manhattan last night to celebrate the 100th anniversary of the New York Institute of Credit (NYIC). Most attendees were members of the association, which provides networking opportunities and education to a myriad of constituents, including factors, financial advisors, lawyers, investors and accountants.
“[NYIC] is one of the few meeting places that brings judges, investors and professionals together,” said Jack Butler, CEO of Birch Lake, a boutique merchant bank based in Chicago.
In addition to Butler, other members, like Maxwell Cohen, traveled to attend to event. Cohen works in Fort Lauderdale, FL as Managing Partner for Corporate Strategy & Financial Consulting LLC and specializes in underwriting and brokering business loans.
“[NYIC] is great because it connects people in similar sandboxes…and sometimes we can build off each other’s strengths, ” Cohen said. “Everyone here is verified [and] if you’re here, we know you have capabilities to deliver.”
A central part the NYIC centennial celebration was the honoring of the organization’s Executive Director, Harvey Gross, who has worked for organization for 54 years.
A montage video of congratulations to Gross included praises from New York judges and others, including:
“He has a way of putting people together that produces spectacular results.”
“He’s been a mentor to so many.”
“Harvey has communicated best practices.”
“Some organizations looks inward. NYIC looks outward, because of Harvey’s leadership.”
“To talk about 54 years in five minutes is not easy, but I will try,” Gross said to the audience upon receiving the award. He explained that when he was 12 years old, his brother suggested that he get into the factoring business. He later told deBanked that he spent the next five or so years learning the business and left school by the time he was 18 to start a career in factoring. When he started working for the NYIC, the organization primarily served the factoring business, and has since expanded.
“I think tonight showed that the NYIC went through a lot of transitions over the last 100 years,” Gross told deBanked. “And we’re excited about new transitions in the next 100 years. And that includes MCA and fintech.”
