National Business Capital & Services Expands into Cannabis Funding with CannaBusiness Financing Solution
October 15, 2019
Today National Business Capital & Services (NBC&S) announced it has begun serving cannabis companies. Through its new program, CannaBusiness Financing Solution, NBC&S is now accepting applications for loans starting at a minimum of $10,000 from firms in the industry that are over one year old.
“The CannaBusiness Financial Solution will allow business owners to seamlessly obtain the capital they need, and allocate funding toward either hiring new employees, purchasing inventory, marketing strategies, or any other business need right away, without government regulations hindering growth opportunities or having to give up equity,” explained NBC&S President Joseph Camberato. “We’re not a bank and the lenders we work with aren’t banks either, so it falls into a different area of commercial lending.”
CannaBusiness is available in the 33 states where cannabis is legal, be it for medicinal or recreational uses, as well as in Canada.
“It’s a rapidly growing space, no pun intended,” joked Camberato when asked about the differences in funding cannabis companies compared to the industries NBC&S has served in its 12 years of business. “It would still be underwritten, just like one of our normal businesses. But we’re definitely going to want to know a little bit more about the business and understand what exactly they’re doing, how they’re operating, and exactly what are they’re focused on.” They’ll also examine if the business is in compliance with state laws. Qualifying cannabis companies must be in business for at least 1 year, with a minimum of $10K in monthly revenue. There is no minimum FICO score requirement.
While it’s not the first funder for cannabis companies, NBC&S views the move as a step in the right direction to “get ahead of the curve” according to Camberato. “We’re living through a modern-day prohibition, I think in 20 years we’ll look back on it and talk about it with our grandchildren and be like, ‘wow’ … I don’t think people realize how big of a deal this really is, but it is a business and it is another industry that has bloomed in front of us, again no pun intended. I think it’s fascinating that we get to witness this and that we’re really at the forefront of it and helping folks get the funds they need to grow.”
Jumping off from the politically charged word of ‘prohibition,’ NBC&S’ Vice President of Marketing, T.J. Muro, noted that he believed cannabis legislation to be one of the few issues that can be bipartisan, saying, “Out of everything today in our political climate, I think it’s the one thing that has unified people in the political parties. The liberal side appreciates the cultural influence and significance there, and then on the more conservative side it’s the tax revenue.”
The upcoming Senate vote on the SAFE Banking Act will put this theory to the test. The bill, which would allow the cannabis industry wider access to banking, has already passed the House.
The Broker: Funding Businesses The Irish Way
October 10, 2019
I’m sitting in the lobby of The Marker Hotel, a 5-star 7-story property on the edge of Dublin’s Grand Canal Dock. Here in Ireland’s major tech hub, I’m waiting for a self-identified corporate finance broker by the name of Rupert Hogan, the managing director of BusinessLoans.ie. Outside of our email exchanges, I don’t really know what to expect. I’ve met brokers from the US, Canada, Mexico, UK, and Hong Kong, but never Ireland.
When he arrives, he doesn’t disappoint. Hogan is full of energy and enthusiasm. He has a natural charisma and friendly manner that’s well-suited for a relationship-based business. It just so happens that SME finance in Ireland is still heavily reliant on person-to-person contact and Hogan is at the forefront of helping potential borrowers look beyond the bank for their financing needs.
SMEs are looking for speed and ease in the loan process, Hogan says. Historically, business owners would call on their bank for financing, invoking the sanctity and reliability of decades-old personal relationships, but Hogan explains that relationships between SMEs and banks just aren’t what they used to be. “[SMEs] feel like they’re going to get the runaround,” he says.
That’s where he comes in. And it could be any kind of business, he explains. Hogan jumps from a call with an import/export business to one in retail, followed by one with an agricultural equipment company. He has to understand a bit about them all no matter what it is, to figure out a proper financial solution. BusinessLoans.ie doesn’t charge for their service but they do receive a commission from the financial company if a deal closes.
“Corporate” finance may evoke images of big city corporations engaged in international commerce but Hogan’s company can connect SMEs with as little as €5,000 through an unsecured business loan or merchant cash advance. Invoice Financing, leasing, and trade finance are also tools at his disposal. It’s not all small, however, as he hands me a rate sheet for one lender that will go up to €25M. Interest rates on these products when compared with their American and UK brethren are quite reasonable, and suggest also that the target clientele is not subprime.
As we sit there drinking coffee, Americano style in my honor, an executive for a local SME lender happens to spot him while passing by. After they exchange pleasantries, Hogan explains to me that he submits deals to that lender through their online broker portal. And so I ask him if doing everything online has become the standard in Ireland.
“It’s getting there,” he says, while acknowledging there’s still a ways to go with the population that’s conditioned to handling their financial dealings offline. The company’s domain name is perhaps perfectly positioned to capture that transitioning audience. When businesses decide to look for a loan online, he explains, “I hope they go to BusinessLoans.ie”
Avi Wernick and Boris Kalendarev Move to RDM Capital Funding
September 23, 2019
Avi Wernick and Boris Kalendarev are joining RDM Capital Funding as the new Director of Partnerships and Strategy and CFO/COO, respectively.
The move comes after a fruitful year for the company, with it securing a $7.5 million credit facility from Charleston Capital, an amount that it has since extended; upping its funding originations from $300-500,000 per month at the beginning of 2018 to over $2.5 million currently; and witnessing 300% growth over the previous 12 months.
Wernick is moving from BlueVine, where he was a Business Development Manager. Seeking to develop and create new opportunities for RDM, as well as ensure the stability of these prospects, Wernick says that he’s bringing with him the skills and lessons learned at the New Jersey-based funding company, believing that how he will operate in RDM will serve as a “nod to his time and the guys at BlueVine.”
Prior to this, Wernick had done consulting work for Morgan Stanley in the early 2010s. Saying that he “wasn’t enthralled by” the world of institutional finance, he moved to RDM during its launch year, 2015, before starting at BlueVine in February 2018. Speaking of his homecoming to RDM, Wernick notes that he is excited to return to the “blend of ideas” that he says is integral to RDM’s approach towards operations and culture.
Kalendarev echoes this, saying that himself, Wernick, and Reuven Mirlis, RDM’s CEO, have been friends outside of business for years and that he enjoys the overlap of his personal and professional connections. “It’s something we arrived at gradually, it wasn’t like, ‘hey, we’re all working in finance, let’s pool our efforts.’”
Coming from Santander, where he was a Vice President, Kalendarev will be focusing on the operations of RDM. Having been a Financial Advisor for Wachovia Securities during the early years of college, as well as beginning his time at Santander during the days of his senior year, Kalendarev has been in finance for over ten years. On his departure from the Spanish bank he said that it “was a very hard role to leave,” but that he savored the risk which came with building a less established financial entity, saying that “you’re more aligned with it, you’ve got skin in the game.”
On the pair joining, Mirlis had to say, “We’re very, very excited for both Avi and Boris. They have an immense amount of value and they’re going to be an integral part of our group going forward. We’re extremely excited to have them on board and to see what’s to come going forward.”
When asked about what exactly may come in the future for RDM, Mirlis noted he plans to reach 300% growth for a second year in a row.
On the topic of the recent COJ bill, the new hires were optimistic, with Kalendarev remarking that RDM stopped using the contracts over eight months ago and that he thinks “it’s good for the space.” “It’ll be a challenge for these companies who tried to get rich quick and take short cuts and not build a sustainable operation,” said Wernick. “You know regulation is a scary thing.”
A Side-By-Side Look At Small Business Funding Securitization Pools
September 6, 2019Several small business funding companies have closed majored securitization deals since 2018 with Kroll Bond Rating Agency rating the transactions. For the most recent transaction with National Funding, Kroll compared each securitized pool side-by-side in a chart. An abbreviated version of it is below:
| NFAS 2019-1 (National Funding) | RFS 2018-1 (Rapid Finance) | CRDBL 2018-1 (Credibly) | SFS 2018-1 (Kapitus) | |
| Weighted Avg Original Expected Time (months) | 9.9 | 11.7 | 11.5 | 7.8 |
| Weighted Avg RTR Ratio | 1.36x | 1.27x | 1.32 | 1.35 |
| Weighted Avg Credit Score | 664 | 665 | 679 | 649 |
| Weight Avg Time in Biz (years) | 9.6 | 14.6 | 12.3 | 12.5 |
| Percentage of MCA | 0.0% | 14.1% | 45.8% | 60% |
| Percentage of Loan | 100% | 85.9% | 54.2% | 40% |
Apple Card Partnership Sees Goldman Sachs Lending to Subprime Borrowers
August 25, 2019
Apple Card launched this month, and with it have come some complaints over the unforeseen damage that wallets can do as well as an official guide from Apple on how to tend to and clean your new credit card. But aside from aesthetic and hygienic concerns, the card’s release to the wider public has raised eyebrows with news of subprime borrowers being approved.
Forged from a partnership between Apple and Goldman Sachs, a bank known for dealing with corporations and the rich, the move seems out of character for the 150-year-old institution.
Rolled out initially to Apple employees as a test, rumors began to circulate of early adopters expressing surprise at being approved despite having FICO scores in the middling 600s. Then, upon Apple Card’s wider release, Ed Oswald came forward and spoke to CNBC about receiving his card, along with a credit limit of $750 and an interest rate of 23.99%, despite having a credit score of around 620.
But this is not the bank’s first foray into FICO’s less than 700. Since its launch, Goldman’s Marcus has issued $4.75 billion in personal loans, 13% of these going to borrowers with a FICO of 660 and under.
This 13% and the partnership with Apple are indicative of David Solomon’s tenure as CEO of Goldman Sachs, who has sought to expand into consumer finance following years of declining trade revenues.
And while this contrasts the bank’s history, the push for more access to credit is aligned with Apple’s values. In fact, in the 1990s, when the tech company was in talks with Capital One over a potential card partnership, Steve Jobs “had an aversion” to rejecting any customers who wanted to sign up. Such yearning for openness and ease of access has reportedly scared off other banks. According to CNBC, Citigroup was in advanced talks with Apple prior to Goldman Sachs’s confirmation, but pulled out of the deal due to concerns over the profitability of the partnership. Similarly, JPMorgan Chase, Barclays, and Synchrony all allegedly bid on the deal.
But what does such access mean? Well opening up credit to those with a less-than-proven track record increases the risk of losses due to unpaid loans. The speed with which funds are made available, the application and approval process takes two minutes, means that Apple Card could rival payday loans and alternative finance for those customers looking for more modest funding. And as well, the commodification and attention paid to the appearance of the card by Apple has led to it being viewed as the latest gadget from the company rather than a tool to use when financially necessary, as pointed out by Macworld, raising questions over how credit cards should be marketed.
On the topic of access, Ian Kar, the author of the Fintech Today newsletter said that “Apple is only making one card, so they have to target everyone … It’s not like they’re Chase with multiple cards like Sapphire Reserve to target a higher demographic and other cards for lower segments.”
This singular approach to credit joins Apple’s growing collection of services. Likely being pushed to account for the falling sales of the iPhone, Apple Card is the latest in a line of launches that includes Apple News+, Apple TV+, Apple Pay, and Apple Arcade.
This year, iPhone sales saw a drop of 12%, making up 48% of total Apple sales. While Apple services rose by 13% from 2018 to become the second largest segment of the company’s sales portfolio, being 21%.
When discussing Apple Card and its role in the bank’s ecosystem in an internal Goldman Sachs memo, Solomon, hinting at further partnerships, said “Apple Card is big, but it’s also a beginning.”
OnDeck Canada, Credit Union Announce Partnership
July 11, 2019
Today sees the partnership of OnDeck Canada and Coast Capital Savings, the first collaboration of its kind in Canada, being between an online lending company and a federal credit union.
Beginning this month, small business members of Coast Capital will be able to apply for term loan financing from OnDeck Canada of up to CAD$250,000 online, in branch, and via the Coast Capital Contact Centre. And as a perk of partnering with an alternative financing company, Coast Capital members will benefit from the fast turnaround times for approvals and funds being made available that are typical of the industry, with waits being as short as one day.
The move comes as OnDeck Canada is expanding to Quebec, paralleling Coast Capital’s efforts to spread across the nation, beyond its home of British Colombia. Both parties appear to be approaching the partnership with similar visions of where it will take them, with Tiffany Kayar, the OnDeck Canada Communications Manager, explaining that OnDeck is able to further help fund those small businesses who have been historically underserved by alternative financing, and Coast Capital will benefit from a greater national presence.
It is one more notch on OnDeck’s belt of partnerships, coming after the online lender linked with JPMorgan Chase in 2017 and PNC Financial Services Group last year to extend loans to businesses.
And for Coast Capital, which has the largest membership base of any credit union in Canada, it is a development that is consistent with their history of innovation. Having offered Canada’s first free checking account from a full-service financial institution and Help Extras®, which further assist members with investing, this opening up of funding channels to small business owners further cements Coast Capital’s position as a unique non-bank choice for finance management.
With small businesses comprising 98% of Canadian businesses, this partnership is hoping to provide support for such a large sector of the country’s economy. Saying in a press release that “As the proven leader in online small business lending, OnDeck Canada is delighted to partner with Coast Capital to offer online financing to its small business customers, ensuring that their unique and ever-evolving needs are met faster than ever with the power of automation and a world class digitized customer experience,” Neil Wechsler, CEO of OnDeck Canada, is confident that the synergy between OnDeck’s tech and Coast Capital’s membership will benefit the Canadian business community. Just as Derek Turner, Head of Small Business at Coast Capital, is sure that the partnership will “deliver the Coast Capital experience that so many members already enjoy, to even more people across Canada.”
2M7 Financial Solutions and the State of Alternative Funding in Canada
July 1, 2019
“What’s a cash advance?”
This is how Avi Bernstein, CEO of 2M7 Financial Solutions, recalled a typical conversation in 2008, when his company was founded in the Canadian market. According to him, customer knowledge of alternative financing methods was dismal, partly due to a handful of homogenous banks dominating the scene as well as a void of funders in the country.
Flash forward to 2019 and 2M7 is operating within a Canadian market that is much more trusting and knowledgeable of merchant cash advances, although it is not yet at the levels witnessed in the U.S.
“Low hanging fruit,” is how Bernstein describes the industry now, as small and medium-sized businesses are flocking to 2M7 and its contemporaries, which offer higher approval ratings and faster confirmation of funding than their more traditional counterparts. In fact, according to a 2018 study conducted by Smarter Loans, 24% of those Canadians surveyed stated that they sought their first loan with an alternative lender that year. As well as this, only 29% reported that they pursued funding from more established, traditional financial institutions and 85% of those that received financing confirmed their satisfaction.
Figures like these help to explain why the Canadian market has seen a rise in interest from foreign businesses in the previous five years. Greenbox Capital, First Down Funding, and Funding Circle are examples of those companies who have successfully implanted themselves within the market, a feat that Bernstein claims isn’t easy.
“It’s a different business,” he notes when comparing the market to that of the U.S. Listing the dissimilarities in market maturity levels, sales tactics, processing channels, and collection styles, as well as the currency exchange rate that’s to be considered, Bernstein says that he’s found those American funders who come to Canada unprepared never stay long enough to become a fixture of the industry.
Warning against half measures, Bernstein explains that “You’ve gotta put boots on the ground” if you want to succeed in Canada. Giving the impression that unless you’re willing to learn the rules applied in the market, hire people, and house them in an office north of the American border, Bernstein is keen to highlight what’s required of foreign companies looking with interest at Canada.
But it’s a risk-reward situation. The market is opening up as more funders enter it, and with the arrival of larger companies, such as OnDeck Capital, more resources are being devoted to raising awareness of alternative financing amongst Canadians.
Meanwhile, homogenous firms like 2M7 are continuing to grow in this developing market. Receiving an average of 200-300 applications for funds per month, 2M7 is capitalizing off opportunities by proving themselves to be open to a wider range of applications. Bernstein asserts that “we try to fund everything,” and that they keep an “open mind to every opportunity” that lands on their desk. Perhaps this is a mindset not shared by more conservative of funders in the industry, but, as Bernstein says, “we’re here, we’re funding, and we’re ready to rock n’ roll.”
You can meet Avi Bernstein and 2M7 at deBanked CONNECT Toronto on July 25th.
Enova Small Business Hires Two Industry Veterans to Lead ISO Partnerships
June 14, 2019CHICAGO (June 14, 2019) — Enova Small Business, a leading provider of loans and financing to growth-minded small businesses in the U.S., announced today that Justin Friedman and Jay Shaw have joined Enova Small Business as senior sales executive and senior manager of partner management, respectively. In their roles, Friedman and Shaw will be responsible for managing ISO relationships for Enova Small Business subsidiaries Headway Capital and The Business Backer, reporting to head of Enova Small Business, Jim Granat.
The hire of Friedman and Shaw comes at a time of rapid growth for Enova Small Business, as Q1 small business originations increased 58 percent year-over-year.
“At Enova Small Business, we are focused on delivering a faster and easier funding process for our customers, and we’re excited to welcome Justin and Jay to help drive our continued growth,” said Granat. “Both Justin and Jay are highly regarded in the small business funding community, and they bring a wealth of knowledge and experience to the team that will benefit our partners and our customers,” said Granat.
Friedman joins Enova from Libertas Funding, where he served as head of strategy. Prior to that, he led partnerships account management at OnDeck. Shaw joins Enova Small Business from funder Quick Bridge Funding, where he served in a variety of roles, including Chief Compliance Officer and, most recently, director of account management and syndication.
Friedman and Shaw will manage ISO relationships for the Eastern U.S. and the Western U.S., respectively.
About Enova Small Business
Enova Small Business includes Enova International’s two small business brands, Headway Capital and The Business Backer.
Headway Capital offers a True Line of Credit up to $100,000 to U.S. small businesses looking for flexible, fast funding. Headway Capital serves small businesses of all sizes and across industries with everyday revolving access, transparent terms and no prepayment penalty. Small businesses can select bi-weekly or monthly payments and can determine the repayment timeline that works best for them, from 12 months to two years.
The Business Backer extends relationship-based funding solutions to small businesses in need of cash flow management and believes that by replacing distrust with trust and by valuing relationships over automation, they are building a better way where small business owners can trust the financing process and easily access the best solutions. The Business Backer is proud to offer its customers competitive rates, fast funding, and a quick and simple approval process. Small business owners walk away with a solid understanding of what’s available to them based on their situation and can quickly determine the best next step in their journey to getting funded.
