Industry News
Idea Financial Upsizes its Credit Facility to $112M
February 23, 2023
In just eighteen months since Idea Financial closed on an $84M warehouse facility with the Specialty Finance Division of Synovus Bank and Hudson Cove Capital Management, the company has gotten it upsized to $112M and the term extended by another 3 years. Idea Financial provides small businesses with lines of credit while its sister company LevelEsq finances the cost of lawsuits mostly undertaken by lawyers that work on contingency.
Co-founders Larry Bassuk and Justin Leto say that the upsizing news is “a testament to our discipline and our focus on risk management.”
The company has around 50 employees, less than what might be expected, but Bassuk and Leto say that technology has helped make tremendous efficiency possible while emphasizing that they have a human underwriting team that reviews every single loan before it goes out.
Jayan Krishnan, Managing Director of Synovus Bank, said that they were “very happy to provide them with the growth capital they need.” Synovus is the senior debt in the arrangement. Krishnan said that they love to work with companies that are thoughtful, mindful, and conservative and that Idea fit that criteria.
Fred Wang, a Co-Founder and Partner at Hudson Cove, said his firm is pretty selective on mezzanine within the small business lending asset class but that Idea’s performance has been very strong and consistent. “We’ve gotten a very good feel for them as a management team,” Wang said.
Both Synovus and Hudson Cove are well-versed in the commercial finance space.
“We’re obviously growing and they’re happing to be growing with us,” said the two founders of Idea Financial. “We run our company risk management first and sales second.”
Reliant Funding Shifts Gears
February 3, 2023
Reliant Funding has begun a sale of its portfolio, deBanked has learned, a move complemented by some material adjustments internally. For example, posts on social media have revealed that numerous members of Reliant’s staff are suddenly seeking new employment.
A source familiar with events taking place inside the company confirmed that Reliant is indeed right-sizing its team and that funding on balance sheet has paused. Due to its ability to get deals funded off balance sheet, however, January was actually the company’s strongest month ever for originations.
Market conditions and the rapid rise of interest rates may be related to the sudden shift at Reliant, which has been in operation since late 2008. At the time the Federal Funds Rate had dropped to 0% and it had remained exceptionally low until recently.
Bitty Bets Big
February 1, 2023
“It’s a new product, it’s a new pricing structure, for deals that are $20,000 up to $125,000,” said Daniel Dames, VP of Operations at Bitty Advance.
Bitty Advance formally announced at deBanked Connect Miami that they will now be taking on bigger deals up to $125,000. They had started doing a few big deals back in November with select partners but now their new product, known as “Big Bitty,” is in full effect. Historically, the company had focused on microfunding, now known as “Core Bitty,” which they will still continue to do.
Better rates, longer terms, and lower fees is the new approach Bitty is taking with increased funding, according to Dames, and it calls for a bit more diligence on the underwriting and funding side. A merchant interview is required with Big Bitty as opposed to the strictly automated process enjoyed with Core Bitty, for example.
“This is Bitty, this is just a new product,” said Dames. “You submit the same way, you do everything the same way that you’re used to, really the difference is they see the numbers, they see the larger amount, they see the lower fees, they see the better rates, and they see the longer terms.”
Big Bitty isn’t just about doing bigger deals for the sake of doing bigger deals. Dames explained that they witnessed the challenges brokers face when having to send deals to multiple places and they recognized the value of being a one-stop shop for them.
Trial of PPP Lending CEO To Start in May at Earliest
January 2, 2023The trial of Rafael Martinez, the CEO of MBE Capital Partners, LLC that was arrested last year for fraud related to PPP lending and borrowing, is slated to begin in May at the earliest, according to the docket. The government accused Martinez of using false representations and documents to fraudulently obtain the approval of the SBA for his company to be a non-bank lender through the PPP. He subsequently used that approval to obtain $932M to issue PPP loans and generate $71M in lender fees. It is the first known case of a PPP lender being charged criminally. Martinez pled not guilty.
2023 Is Here. Are You Ready?
January 1, 2023Happy New Year! deBanked CONNECT MIAMI is now only 2 and a half weeks away. Hosted at the Miami Beach Convention Center in South Beach on January 19th, this event will set the industry’s course for 2023.
deBanked’s Most Watched Videos of 2022
December 19, 2022deBanked TV continued its strong showing throughout 2022. For the second time ever, we’ve ranked the most watched videos for the year.
1. Equipping The Dream
deBanked debuted a sales-based reality show called Equipping the Dream, a real inside experience of an equipment finance sales shop. Episode #1 was not only the most watched video on deBanked for the year, it was the most viewed piece of content on deBanked for the year period. Episodes 1-6 also managed to fall within the top 7 most watched videos for the year as well, all of them beating out every other single video except one. If you haven’t watched it, do you even work in small business finance sales?! Episode 1 | All Episodes Here
2. Merchant Cash Advance’s Big Day – The David Goldin Story
The only video to compete with episodes of Equipping the Dream was the documentary on David Goldin’s journey to winning a landmark patent lawsuit that allowed the merchant cash advance industry to grow into what it became. You can’t work in the industry and not know this amazing piece of history!
3. Banned From the MCA Industry
A discussion about an FTC settlement order banning individuals from the MCA industry was among the most watched videos of 2022.
4. Brokering Small Business Funding in 2022
deBanked interviewed two small business finance brokers to gather their thoughts on the state of the industry.
5. Virginia Disclosure Law Discussed
On June 30, 2022, we at deBanked discussed as much as we knew about the Virginia disclosure law one day before it went into effect. Are you complying with the law there?!
IOU Originated Whopping $74.2M in Q3
November 21, 2022
IOU Financial experienced a strong third quarter, reporting total loan originations of $74.2M, a 25.8% increase over Q2. The year-to-date total now stands at $192.7M.
“IOU Financial continues to grow revenues and invest in scalability while reducing its adjusted operating expense ratio,” said Robert Gloer, President and CEO, in an official announcement. “We remain laser focused on scalability and growth while maintaining consistent underwriting standards, and we expect to build on this trend in the months and quarters to come.”
IOU attributes the growth to “healthy demand from borrowers” and “continued demand from investors seeking high quality loans.”
Notably, the company said that collections had been in line with expectations and it had “not seen significant increases in delinquencies, defaults or loan modifications.”
Cover Genius Raises $70M in Series D Funding Led by Dawn Capital
November 8, 2022
The insurtech company, Cover Genius raised $70 M in Series D funding led by Dawn Capital. Participants also included investors from New York-based Atlas Merchant Capital and existing investors including GSquared and King River Capital. The funding will be used to continue growth expansion for new global insurance distribution platform, XCover.
“XCover is our award-winning global distribution platform for any line of insurance or warranty, with an API for instant claims payments that holds an industry-leading Net Promoter Score (NPS) of +65,” said Angus McDonald CEO and Co-Founder of Cover Genius. “We work with our partners to co-create solutions that embed protection that’s licensed or authorized in over 60 countries and all 50 US states.”
This platform makes it simple for digital companies to offer tailored insurance policies directly to their customers and is trusted by some of the world’s largest companies including Booking Holdings (owner of Priceline, Kayak and Booking.com), Intuit, Hopper, Skyscanner, Ryanair, Turkish Airlines, Descartes ShipRush, Zip and SeatGeek. It’s also available at Amazon, Flipkart, eBay, Wayfair, and SE Asia’s largest company, Shopee.
At the moment, Cover Genius is entirely focused on growth and expansion.
“We are a fast-growing, global market leader and this latest funding round will help us as we enter our next growth phase,” said McDonald.
