Industry News
Barbara Corcoran, OnDeck Contest Final Aired on Rachael Ray Show
December 6, 2016The OnDeck “Seal of Approval” contest led by company spokesperson Barbara Corcoran recently came down to one final challenge and the results were aired on the Rachael Ray Show on Tuesday.
Three small businesses were featured and each won $10,000 paid for by OnDeck. Corcoran couldn’t mention the company enough times. This kind of collaboration and publicity is probably the best kind of marketing an alternative lender can get, not to mention a great opportunity for small businesses. Watch the TV segment of it below:
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SmartBiz Loans Ranked Number One Provider of Traditional SBA 7(a) Loans Under $350,000
December 5, 2016SAN FRANCISCO, CA – December 5, 2016 – SmartBiz Loans, the first SBA marketplace and bank-enabling technology platform, has ranked as the number one provider of non-Express, SBA 7(a) loans under $350,000 for the 2016 government fiscal year. SmartBiz also ranked number five among providers of under $350,000 traditional SBA 7(a) and Express 7(a) loans combined.
“SmartBiz’s success in this year’s SBA 7(a) ranking demonstrates how technology can support banks in meeting the needs of small businesses,” said Evan Singer, CEO of SmartBiz Loans. “SmartBiz is committed to creating the leading marketplace for both banks and small business owners, by matching small business owners with the bank best suited to their needs and enabling a higher percentage of SBA loans to be approved.”
SmartBiz generated $200 million in funded SBA 7(a) loans through its bank lending partners, which helped them earn the top spot. The data used is based on SBA lending data released in November, reflecting its 2016 fiscal year which ended on Sept. 30. Wells Fargo Bank, which was ranked just below SmartBiz, generated $155 million in funded non-Express SBA 7(a) loans under $350,000. This is the first time a technology platform and marketplace has achieved the number one position in SBA’s ranking of 7(a) loans.
“Small businesses are the driving force of the economy,” said Ann Marie Mehlum, retired Associate Administrator, Office of Capital Access, U.S. Small Business Administration. “By supporting them, the SBA and lending partners like SmartBiz are investing in the economy as a whole.”
SmartBiz is revolutionizing SBA lending. Its marketplace helps increase approval rates by automatically directing businesses to the right lender, while its advanced software streamlines the SBA loan application, underwriting and origination process. In this way, SmartBiz fills a critical gap in the small business loan market and enables small businesses nationwide to grow without settling for the sky-high rates of alternative online lenders or undergoing the typically slow and tedious traditional bank process.
About SmartBiz Loans
SmartBiz Loans is a unique combination of an online SBA loan marketplace and a bank enabling technology platform. The company’s online software provides SBA preferred lenders customized and automated origination, underwriting and documentation, making approval and funding fast and easy. Sophisticated algorithmic sorting in the SmartBiz marketplace also enables higher approval rates for small businesses because the right applications are automatically directed to the right bank. SmartBiz is based in San Francisco and was founded in 2009 by a team of experienced financial services entrepreneurs with backing from leading venture capital firms including Investor Growth Capital, Venrock, First Round Capital, Baseline Ventures, and SoftTech VC. Learn more at www.smartbizloans.com.
The OCC Wants Online Lenders to Become Limited Purpose Banks
December 2, 2016
Earlier today, Comptroller of the Currency Thomas J. Curry announced that the OCC will move forward with chartering financial technology companies that offer bank products and services that meet their high standards and chartering requirements.
“We have decided to move forward and to make available special purpose national charters to fintech companies for a few basic reasons,” he began saying during a speech at the Georgetown University Law Center. “First and foremost, we believe doing so is in the public interest. Fintech companies hold great potential to expand financial inclusion, empower consumers, and help families and businesses take more control of their financial matters.”
Curry also responded to critics who argued that a limited charter would put fully regulated banks at a disadvantage competitively. “The reality today is that the 4,000 fintech companies out there are already competing with national and state banks, without regard to any of the national bank responsibilities and under a patchwork of supervision,” he said. “Granting national charters to the companies who desire and warrant one doesn’t weaken the competitive position of existing banks or the dual banking system. In some ways, it levels the playing field because statutes that by their terms apply to national banks would apply to all special purpose national banks, even uninsured ones.”
Applying for this charter would be optional, not a requirement.
Like the Treasury RFI last year, the OCC has put up an official 13-question Request For Comment that is open until January 15th.
Those questions are:
1. What are the public policy benefits of approving fintech companies to operate under a national bank charter? What are the risks?
2. What elements should the OCC consider in establishing the capital and liquidity requirements for an uninsured special purpose national bank that limits the type of assets it holds?
3. What information should a special purpose national bank provide to the OCC to demonstrate its commitment to financial inclusion to individuals, businesses and communities? For instance, what new or alternative means (e.g., products, services) might a special purpose national bank establish in furtherance of its support for financial inclusion? How could an uninsured special purpose bank that uses innovative methods to develop or deliver financial products or services in a virtual or physical community demonstrate its commitment to financial inclusion?
4. Should the OCC seek a financial inclusion commitment from an uninsured special purpose national bank that would not engage in lending, and if so, how could such a bank demonstrate a commitment to financial inclusion?
5. How could a special purpose national bank that is not engaged in providing banking services to the public support financial inclusion?
6. Should the OCC use its chartering authority as an opportunity to address the gaps in protections afforded individuals versus small business borrowers, and if so, how?
7. What are potential challenges in executing or adapting a fintech business model to meet regulatory expectations, and what specific conditions governing the activities of special purpose national banks should the OCC consider?
8. What actions should the OCC take to ensure special purpose national banks operate in a safe and sound manner and in the public interest?
9. Would a fintech special purpose national bank have any competitive advantages over full service banks the OCC should address? Are there risks to full-service banks from fintech companies that do not have bank charters?
10. Are there particular products or services offered by fintech companies, such as digital currencies, that may require different approaches to supervision to mitigate risk for both the institution and the broader financial system?
11. How can the OCC enhance its coordination and communication with other regulators that have jurisdiction over a proposed special purpose national bank, its parent company, or its activities?
12. Certain risks may be increased in a special purpose national bank because of its concentration in a limited number of business activities. How can the OCC ensure that a special purpose national bank sufficiently mitigates these risks?
13. What additional information, materials, and technical assistance from the OCC would a
prospective fintech applicant find useful in the application process?
Read the OCC’s 17 page report on the matter. The Request For Comment and submission instructions are at the end of it.
Nude Photos Used as Collateral for Loans, Leak
December 2, 2016Perhaps the only thing worse than sending a nude photo of yourself to a lender as collateral is learning that the photo had been leaked on to the internet. In China, some online lenders hold on to nude photos of their borrowers (typically women) to use as leverage to pay up. If they don’t, the photos may be distributed to the borrower’s friends and family members to shame them. While this practice is certainly not common, about 10 gigabytes worth of such photos from loan platform Jiedaibao were leaked on to the internet recently, according to People’s Daily
Jiedaibao says that loans with such terms are private peer-to-peer loans that they can’t regulate. “We have called the police and collected evidence to protect the company’s reputation. Those who leaked the nude pictures will be punished according to law,” they said in a public response.
Chinese regulators have been working hard to address the growth of p2p lending after investors have lost billions through fraud. P2P lender Ezubao for example, turned out to be a $7.6 billion ponzi scheme. Meanwhile, Moodys reported that by the end of last year, a whopping 800 p2p loan platforms in China had already failed or were facing liquidity issues. In response, banking regulators want all p2p lenders to register with the government.
Bitcoin-based P2P Lending Platform BitLendingClub Shuts Down
December 2, 2016BitLendingClub (not to be confused with Lending Club) has shut down their bitcoin-based p2p lending platform, citing regulatory pressure. A message posted on their website says, “over the last year or so, the regulatory pressures has been increasing to the point that it is no longer feasible to maintain the operation of the platform. We are regretfully announcing that we will have to begin terminating the services effective immediately.”
BitLendingClub received a $200,000 seed investment from European VC fund LAUNCHub just two years ago. The company changed its name to LoanBase in September 2015 but then changed it back only a few months ago.
This was no small experiment either. Kiril Gantchev, BitLendingClub’s CEO, claims on his LinkedIn profile that the company made more than 10,000 loans worth more than $8 million dollars, originating from 90 countries. The company’s website claims an average APR of 192% and a default rate of nearly 12%.
In March however, the company stopped lending to people in several countries including Iran, Ireland and Nigeria due to elevated fraudulent activity.
It’s unclear what “regulatory pressures” caused them to shut down but the company appears to have been operating from San Francisco despite originally incorporating in Bulgaria. A search for a California lending license connected to them yielded no results. After the US, the country with the 2nd most borrowers on the platform was Venezuela followed by Brazil, the UK and India.
“Investors should understand the risks involved when making bitcoin loans,” their website warned. “The main risks are default and failure to collect.” they added.
Total Merchant Resources Launches Wholesale Funding Division, Secures $20 Million in Private Equity
December 1, 2016Dec 2, 2016 / Piscataway, NJ – An old name in the industry is now a new kid on the block with wholesale. Total Merchant Resources in Piscataway, NJ announced today that it is finished with a first round of funding and has secured $20 million in private equity. This new designation allows TMR to quickly and easily service ISO’s from coast to coast via its wholesale funding division, TMRNOW.
“We are thrilled to open our very successful funding platform to the entire industry. In addition, TMR is now perfectly positioned to do business in California since we are one of the few in this space to obtain a California lending license.” said TMR Co-Founder and CEO Jason Reddish.
Reddish and co-founder Val Pinkhasov, who were featured on CNBC’s ‘Shark Tank’, were among the very first business lenders to enter this space. They are a respected name in the industry and, thanks to their major prime time TV appearance, have brought attention to this underutilized model for businesses to obtain working capital.
“Funding on the retail side all these years, we understand where funders have failed in the past and being that our money is completely private, we have no one to answer to in regards to underwriting. We create our own programs and common sense pricing. We look forward to being a name that ISO’s can trust on every level and making common sense, in house decisions” says Val Pinkhasov President of TMR.
Both Reddish and Pinkhasov have several decades of finance experience and have helped thousands of businesses achieve their goals. They are now excited, in a properly regulated fashion, to do so in on the wholesale side. Please visit TMRNOW.COM for more information.
For more information call Gary Lane (212) 220 9872.
Shakeup at CAN Capital – CEO and 2 other Execs Put on Leave of Absence
November 29, 2016Update 11/30 7:30 pm: CAN says they are still open for business and still providing access to capital for current customers and renewal business. They are not actively seeking new business at this time, but will evaluate it as it comes in.
CAN Capital has confirmed that CEO Dan DeMeo has gone on a leave of absence. The company’s chief financial officer Aman Verjee and chief risk officer Kenneth Gang have also reportedly stepped down. Parris Sanz, the company’s Chief Legal Officer, has been made acting head of the company, while Ritesh Gupta has been promoted to COO.
A statement from CAN Capital is below:
“As the board and our leadership team conducted our business reviews and looked at how we can best position the firm for future growth, we self-identified that some assets were not performing as expected and that there was a need for process improvements in collections. It became clear that our business has grown and evolved faster than some of our internal processes. As we work to improve these processes, the Board has named twelve-year CAN Capital veteran and senior executive, Parris Sanz acting head of the company and promoted Ritesh Gupta to COO, while Dan DeMeo, CEO, and two other members of his team are on a leave of absence. Over the past 18 years CAN Capital has consistently made decisions to position ourselves for growth and leadership in the industry and we look forward to helping small businesses succeed for many years to come.”
Some of CAN Capital’s referral partners have reported to us that the funding of new deals has been put on hold until January 2017. This could not be confirmed, however. (Update: This was later confirmed)
More than just an industry leader, CAN was founded in 1998 and is widely regarded as the first merchant cash advance company. A year ago, deBanked featured Dan DeMeo and CAN in a story to mark their success. As of April this year, they had funded more than $6 billion since inception. In August, they secured a coveted partnership with Entrepreneur Magazine.
Having secured a $650 million credit facility last year led by Wells Fargo, they are the second largest player in the alternative business finance industry behind OnDeck.
Sanz joined the company in 2004 with more than 12 years of experience as a corporate, securities, and transactional attorney. Before joining CAN Capital, he was a senior executive and General Counsel of a specialty pharmaceutical company, the successful sale of which he led in 2003. Prior to that, Sanz was an attorney in private practice at the law firms of Latham & Watkins in Los Angeles and Paul, Hastings, Janofsky & Walker in San Francisco, where he handled a wide variety of M&A transactions, securities offerings including IPOs, and other corporate transactions, and acted as outside general counsel to a number of technology start-ups.
Sanz received his J.D. from Harvard Law School in 1993 and a Bachelor of Arts degree from U.C. Berkeley, High Honors and Phi Beta Kappa, in 1990. Sanz is admitted to practice in California and Washington, D.C., is a registered In-House Counsel in New York, and is also admitted to practice before the United States Court of Appeals for the Federal Circuit.
Brief: LendIt Brings First Fintech Awards to the Industry
November 28, 2016
Marketplace lending conference LendIt, has announced the first fintech industry awards and is inviting nominations to recognize top-performing companies and executives.
Nominations are now being accepted (closes December 21st) for 18 different categories including executive of the year, fintech woman of the year, emerging consumer lending platform and most innovative bank. The award ceremony will be held during LendIt’s 2017 conference in March.
“The lending industry is entering its 2.0 phase, after maturing in 2016,” said Peter Renton, co-founder and chairman of LendIt in a statement. “As we seek to connect the global online lending community and foster innovation and industry growth, we must recognize those that are making the biggest contributions and innovations and moving our industry forward.”
The entries will be judged by a panel of 30+ industry experts including Gilles Gade, CEO of Cross River Bank, Glenn Goldman of Credibly, and Angela Ceresnie, COO of ClimbCredit.
