Industry News
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.
Former Bizfi COO Now at iPayment
July 18, 2017Former Bizfi chief operating officer Tomo Matsuo is now a senior vice president at iPayment, according to LinkedIn. Matsuo worked at Bizfi from February 2011 until June 2017. In addition to running the company’s operations, he was also president of Bizfi’s Asia affiliate.
Last month, iPayment, a payments company with more than 140,000 customers, entered into a partnership with RapidAdvance to be their de facto small business funding provider.
Bizfi Layoff Tally
July 17, 2017According to labor records, Bizfi gave a 90-day layoff notice to 74 employees on May 15th. Less than a month later on June 12th, the company gave notice to another 43 employee, bringing the total to 117.
Those layoffs are scheduled to take place on August 13th and September 10th accordingly.
Daniel Gorfine Moves On From OnDeck to CFTC
July 10, 2017Daniel Gorfine has moved on from OnDeck, according to a public announcement made by his new employer, the US Commodity Future Trading Commission (CFTC). Gorfine served as OnDeck’s VP of External Affairs and Associate General Counsel for a little over 2 and a half years.
His new job, an appointment made by Acting CFTC Chairman J. Christopher Giancarlo, will be Director of LabCFTC and Chief Innovation Officer.
According to the announcement, “Gorfine will be responsible for coordinating closely with international regulatory bodies, other US regulators, and Capitol Hill to discuss best practices around implementing digital and agile regulatory frameworks and approaches for the CFTC.”
His background in fintech is expected to help the CFTC accomplish its goal of promoting fintech innovation and fair competition.
