Industry News
The deBanked Golf Outing 2017 Was a Success
August 28, 2017
Thanks to everyone that attended deBanked’s first ever industry golf outing at Marine Park Golf Course in Brooklyn, NY. And thank you to all the sponsors who helped make it a success!
A PHOTO ALBUM IS NOW LIVE
- SOS Capital
- Elevate Funding
- Hudson Cook, LLP
- Yellowstone Capital
- Signature Printing & Consulting
- Grassi & Co
- Central Diligence Group
- Sure Funding Solutions
- Unique Funding Solutions
- Imperial Advance
Official photos from the event should be available soon. In the meantime, follow us on Instagram to see them when they come out.
P.S. The inaugural conference for MCA and business loan brokers is COMING SOON. Visit http://brokerfair.org to receive updates on Broker Fair 2018.
Journalist Barred From Being a Director of a UK Firm
August 21, 2017
George Popescu, owner of Lending Times, and the winner of the 2017 LendIt Awards for best journalist coverage, has been banned from acting as a company director in the UK for 12 years, according to the government’s Insolvency Service. The ban stems from his tenure as a director of a company called Boston Prime.
George Alex Popescu (“Mr Popescu”) breached his fiduciary duties to act in the best interest of Boston Prime Limited (“Boston Prime”) and/or failed to ensure that both Boston Prime, as the regulated firm, and him individually, as the approved person, complied with the Financial Conduct Authority (“the FCA”) rules and guidance.
$6.2 million was transferred out of the company to a company named FXDD. Boston Prime’s receiver is presently suing FXDD seeking the return of the funds to the company. Proceedings are ongoing. Mr. Popescu is not under investigation and there are no legal proceedings at this time against Mr. Popescu.
Meanwhile in the US, Popescu has raised millions of dollars for his latest company, Lampix, by conducting an initial coin offering for Pix tokens. Lampix reports having raised 52921.88 ETH to-date, currently valued at more than $17 million.
A month ago, the SEC issued a warning about these kinds of offerings.
“Recently promoters have been selling virtual coins or tokens in ICOs. Purchasers may use fiat currency (e.g., U.S. dollars) or virtual currencies to buy these virtual coins or tokens. Promoters may tell purchasers that the capital raised from the sales will be used to fund development of a digital platform, software, or other projects and that the virtual tokens or coins may be used to access the platform, use the software, or otherwise participate in the project. Some promoters and initial sellers may lead buyers of the virtual coins or tokens to expect a return on their investment or to participate in a share of the returns provided by the project. After they are issued, the virtual coins or tokens may be resold to others in a secondary market on virtual currency exchanges or other platforms.
Depending on the facts and circumstances of each individual [Initial Coin Offering] ICO, the virtual coins or tokens that are offered or sold may be securities. If they are securities, the offer and sale of these virtual coins or tokens in an ICO are subject to the federal securities laws.”
Lampix is not licensed to sell securities and they claim their tokens are not securities.
Catching Up With Marketplace Lending – A Timeline
August 13, 20175/17 – Funding Circle surpassed Zopa in cumulative lending to become the UK’s biggest marketplace lender
5/18 – Breakout Capital announced appointment of Douglas J. Lanzo as EVP and General Counsel
5/22 – The New York State legislature held a joint hearing on online lending
5/25
- OnDeck had the maturity date of its $100M credit facility extended
- China Rapid Finance reported Q1 net revenue of $10.5M
- Prosper Marketplace closed $495 securitization transaction
- SoFi co-founder Dan Macklin announced his departure from the company
5/31 – IOU Financial reported Q1 results, had $1M loss on $4.3M in revenue and lent (CAD) $22.1M
6/2 – Zopa began allowing investors to sell loans that have previously been in arrears
New York State legislators proposed the formation of an online lending task force
6/6 – deBanked and Bryant Park Capital published their Q1 confidence index in which industry CEOs scored their confidence in the continued success of the MCA and small business lending industry at 73.8%, the lowest level since the survey started in Q4 2015. It peaked at 91.7% in Q1 2016.
6/8 – Amazon surpassed $3 billion in loans made to small businesses since their lending program launched
6/9 – RealtyMogul announced that they had exited the residential fix-and-flip market
6/12 – The US Treasury published a report that called for the repeal of Section 1071 of Dodd Frank
6/13
- SoFi applied for a bank charter, specifically an Industrial Loan Company charter
- Lendio announced a pilot agreement with Comcast business
6/14 – Patch of Land expanded its debt facility from $10M to $30M
6/19 – Goldman Sachs’ online lender Marcus surpassed $1 billion in loans made since inception
6/20 – Former Lending Club CFO Carrie Dolan joined Metromile, an insurance company, as CFO LendingTree acquired MagnifyMoney
6/21 – Pearl Capital secured $15M in financing from Chatham Capital Management
6/27
- Square Capital announced that it will pilot a consumer loan program
- Former RapidAdvance CFO Rajesh Rao became the CFO at Beyond Finance, Inc.
6/29
- Funding Circle hired Joanna Karger as US Head of Capital Markets and Richard Stephenson as US Chief Compliance Officer
- Pave suspended lending operations
- Ron Suber, president of Prosper Marketplace, announced that he was stepping down from the company
- The SEC announced that all companies will now be able to submit draft IPO registrations confidentially, a perk previously only reserved for businesses designated as “emerging growth companies” under the JOBS Act.
6/30
- PayPal Holdings Inc announced that it had invested in LendUp
- Yellowstone Capital announced that they had funded $47 million to small businesses in the month of June
7/3 – Funding Circle announced that Sean Glithero had joined the company as its new global CFO
7/5 – Lending Club appointed Ken Denman to its Board of Directors
7/6
- CAN Capital announced that they had been recapitalized and were resuming funding operations
- Orchard Platform and Experian announced a strategic collaboration on data
7/7
- CFPB announced that it was extending the deadline of its small business lending RFI from July 14th to September 14th
7/10
- China Rapid Finance announced that they had made 20 million cumulative loans since inception
- CFPB announced new arbitration rule that effectively bans class action waivers from consumer finance contracts
- Former OnDeck VP of External Affairs and Associate General Counsel Daniel Gorfine, was appointed by the Consumer Future Trading Commission to be Director of LabCFTC and Chief and Innovation Officer
7/11
- dv01 and Upgrade (Former Lending Club CEO Renaud Laplanche’s new company) announced a strategic reporting partnership
- PayPal hired former Amazon executive Mark Britto to lead its lending business
- Fora Financial expanded its credit facility led by AloStar
See previous timelines:
4/6/17 – 5/16/17
2/17/17 – 4/5/17
12/16/16 – 2/16/17
9/27/16 – 12/16/16
Yellowstone Capital Originated $45M in Funding in July
August 1, 2017NJ-based Yellowstone Capital originated $45 million in funding for small businesses last month, according to a company email obtained by deBanked. Two sales reps alone funded 170 deals and 139 deals respectively for a combined $7.45 million.
The monthly volume was only $2 million shy of the $47 million originated in June.
Loans to a Business Not Paying Their Payroll Taxes Results in the Banker Being Convicted
July 29, 2017
Here’s a chilling situation that lenders, factors and MCA funders working with merchants who are behind on their taxes might want to take note of.
On June 27th, Douglas Corriher, a bank VP, was hit with a 32-count superseding indictment over a factoring fraud conspiracy with a staffing company in North Carolina. Despite the dozens of pages alleging improper conduct between Corriher and the staffing company owner, Corriher pled guilty to employment tax conspiracy because Corriher knew the staffing company owed payroll taxes but factored their invoices anyway to enrich the bank.
As the Department of Justice summarized it:
“Corriher was aware that the company owed more than $1 million in payroll taxes. Notwithstanding this, Corriher continued to make advances on the loans knowing that the fund of unpaid payroll taxes would enable the staffing company to repay the loan and allow the bank to continue collecting high rates of interest on the loan advances along with lucrative fees.”
The indictment had alleged that Corriher knew that the money withheld for payroll taxes by the staffing company would be diverted to pay the bank instead of the IRS despite the IRS having a de facto superior lien. The bank was said to be illegally in possession of the IRS’s money due to the banker’s actions.
Despite more than 30 counts of offenses seemingly more egregious than this, employment tax conspiracy is what garnered a conviction. Corriher is scheduled to be sentenced on October 6th. He faces a maximum of 5 years in prison.
Bizfi Founder Stephen Sheinbaum Joins World Business Lenders
July 24, 2017
Stephen Sheinbaum has joined NJ-based World Business Lenders as a managing director. Sheinbaum founded Bizfi (Originally Merchant Cash and Capital) in 2005 and served for years as the company’s CEO. Former Lending Club exec John Donovan has been the chief executive of Bizfi since October 2016 and still holds that post.
In a call, Sheinbaum said that World Business Lenders has a world class team and that he was proud to be joining it. He will be overseeing the company’s production from the Jersey City headquarters. The company reportedly has plans for expansion and product innovation.
Sheinbaum referred to himself as a builder and said that WBL will afford him the opportunities to execute.
Revisiting Funding Circle
July 21, 2017Funding Circle’s SME Income Fund delivered profits last year not only in the UK segment, but also in the US segment, according to sources. As the UK is Funding Circle’s home market, it naturally generated more revenue from it, but the margins were actually a lot higher in the US. The Fund’s 12-month calendar year ended on March 31st. The performance doesn’t reflect Funding Circle’s operations as a whole, just the publicly traded fund used to make loans through the company’s platform.
The fund’s Net Asset Value has reached £164.8M, Peer2Peer Finance News reported. Investors received dividends equal to 6.5 pence per share over the last year.
Funding Circle the company, has not filed its year-end 2016 financials yet. As a private limited company in the UK, they’re still a couple months away from the deadline to do so. In 2015, they lost £18M on £23.8M in revenue, which they attributed to their growth strategy.
Unlike with Lending Club and Prosper, anyone investing in a Funding Circle loan in the US must be accredited. Funding Circle Securities is the affiliated broker–dealer of Funding Circle USA. Lending Club and Prosper have a special arrangement with the SEC to work with retail investors. As part of that, every single loan on their platforms must be filed with the SEC as an individual security complete with a full prospectus.
Earlier this month, Funding Circle hired a new Global CFO, Sean Glithero, who was previously the CFO at Auto Trader.
Russian Billionaire Is Betting Big on Fintech (And Online Lending)
July 20, 2017
Russian billionaire Oleg Boyko is putting his chips on fintech. According to an announcement made by one of his companies, Finstar Financial Group, on Wednesday, he is committing $150 million of new capital towards financial technology startups over the next 5 years. And that money may be aimed at online lenders if his past investments are any indication.
A sample of Finstar’s investments:
- Spotcap – online business loans – UK, Australia, Netherlands, New Zealand, Spain
- Euroloan – consumer finance – Finland, Poland, Sweden
- Viventor – peer-to-peer lending marketplace – European Union
Boyko’s Finstar may have also crossed paths with online business lending in the US. In 2015, a venture capital fund identifying itself as Qwave Capital, attempted an unsolicited takeover of Kennesaw, GA-based IOU Financial. Though IOU only lends to small businesses in the US, it’s actually listed on the Toronto Stock Exchange where it’s valued at less than a dollar per share. In the ensuing battle for majority control of the company, IOU revealed that it had not only sued Qwave, but also sued a company using the Finstar name. Some quick online research showed that the owner of Qwave, Serguei Kouzmine, has run some of Boyko’s companies in the past, including a role at Finstar Financial Group.
While the takeover of IOU was unsuccessful, Qwave was at least able to acquire a significant stake. That wasn’t Kouzmine’s only foray into US-based lending companies either. Qwave now acts as the general partner of the FinTech Ventures Fund, LLLP. That entity lists not only IOU Financial among its investments but also Chicago-based LQD Business Finance, Atlanta-based Groundfloor and NYC-based Fundthatflip.
