Mulligan Funding Closes $100 Million Securitization
February 6, 2023February 6, 2023 – SAN DIEGO – Mulligan Funding, one of the largest providers of SMB access to working capital in the country, today announced the closing of a $100 million asset-backed securitization (ABS). This new financing continues a history of impressive growth for the company, even during difficult market conditions. As Mulligan Funding’s first securitization, the senior bonds achieved an A rating from Kroll Bond Rating Agency (KBRA), the highest rating they will award a first-time issuer in this asset class. The facility has a 3-year revolving period and is expandable to $500 Million.
Mulligan Funding, known for its commitment to full transparency and its exceptional customer service, started in 2008 in the midst of the financial crisis, when traditional banks began to pull back from the small and medium-sized business lending market. The private, family-owned business, which has so far provided access to over $1bn in working capital to its customers, is honored to have achieved the noteworthy milestone of closing its first securitization.
David Leibowitz, chief executive officer at Mulligan Funding, shares, “This is a really significant step forward for us. It adds materially to the funding we require in order to continue on the path of responsible growth to which we remain committed. We’re particularly pleased that the ratings afforded to these notes by KBRA, constitute an affirmation of the disciplined approach to credit management which has always been at the core of our business strategy.”
###
About Mulligan Funding
Headquartered in San Diego and named on the prestigious Best Places to Work SoCal 2022 List by Best Companies Group, Mulligan Funding serves as a leading provider of working capital ($5K – $2M) to the small and medium-sized businesses that fuel our country. Since 2008, we have prided ourselves on our collaborative, innovative, and customer-focused approach. Through our unique ability to combine technology, a human touch, and unwavering integrity, we help those we serve bring their dreams to life with our people-first culture.
Kabbage Rebrands to Business Blueprint
January 31, 2023
Kabbage by American Express is now Business Blueprint. A lot of terminology on the former Kabbage website, which now forwards to an official page on the American Express website, have already been reworded. Kabbage Funding, for example, is now being referred to as American Express Business Line of Credit and the Kabbage mobile app is now the American Express Business Blueprint app.
On social media, American Express Group President of Global Commercial Services & Fraud Risk at American Express said, “today marks an important milestone for us, as we fully integrate Kabbage into American Express with the launch of Business Blueprint.” Marrs continued by saying that American Express will work towards becoming a digital one-stop-shop for small businesses’ financial needs.
Although it is not specifically stated, negative news headlines related to Kabbage’s former PPP business before the American Express acquisition probably contributed to the official rebrand.
What’s To Come in 2023? The Industry Shares Their Predictions
January 11, 2023
It’s halfway into the first month of the new year and the expectations for 2023 are buzzing. Fintech and alternative finance executives have different views on what’s to come. Here’s what they had to say:
Nick Chandi (CEO & CO-Founder at Forward AI): “Adopting real-time payments (RTPs) will be critical in 2023 as SMBs continue to grow. RTP transactions are set to grow 300% globally over the next five years, potentially becoming the new standard for banks, FinTech’s, and businesses to move money. The implementation of real-time payments allows SMBs to manage their cash flow better, settle transactions in real-time, hold cash for longer, and make due payments instantly.”
Bruno Raschio (President at East Capital): “Predictions include negative growth in the equities markets as earnings estimates lower, the S&P to remain below 4,000 by the end of the year, as well as stagnant growth in real estate prices. Even a 10-20% in price reductions in real estate prices as interest rates continue to rise, closing in on 30-year highs.”
Gregg Templeton (Founder at TRAM Funding): “I predict that embedded finance will really take root this year. Both B2B and B2C will be looking for ways to embed banking and financial services directly into their user experience.”
Tyson Rose (Head of Partnerships at BlockApps): “My top three predictions for the financial world as we enter 2023 are as follows. Lenders will outsource more of their business processes and adopt new technologies to drive down costs wherever possible. Smaller lenders will enter the direct ABL and factoring market. Banks and FIs will focus on building fintech solutions to take greater market share in the transportation and supply chain financing industries.”
Sharmylla Siew (Senior Underwriter at Lending Valley): “We predict a number of funders to tighten up their guidelines during the recession and the continuous spread of the regulations state by state with less funding being outputted by hybrid funders.”
Alicia Josshua (ERC Specialist & Field Underwriter at Symmetry Financial Group): “Small businesses are leaning more towards alternative financing because of the flexibility. This financing niche allows for quick turnarounds in approvals and fundings within a week. Big banks have scaled back on lending such as lines of credit [and there’s a] longer approval process such as 4-8 weeks. The alternative financing space is not being affected and makes a great outlook for businesses.”
Andy Parker (CEO at The LCF Group): “2023 will be a challenging year for both small businesses and funders. Increasing borrowing costs, increased compliance and regulatory costs, and more frequent defaults for funders will lead to more expensive funding and tougher qualifications for small business borrowers.”
Amazon’s Business Loan Trajectory
January 10, 2023
According to documents purportedly obtained by Business Insider, Amazon plans to increase its business loan operations in 2023, estimating that loan receivables will eventually exceed $2B. Insider also says that its expected loss rate is 1.34%.
The receivable figure would not be all that surprising as Amazon as been on a steady trajectory upwards over the last decade with the exception of 2020 when covid struck. Its receivables reached $1.4B in Q3 2022. The year-end figure has not yet been released. $2B+ for 2023 would be in line with the historical trend.
2016: $661M
2017: $692M
2018: $710M
2019: $863M
2020: $381M (covid)
2021: $1B
2022 (Q3): $1.4B
Not counted in these figures is financing to Amazon sellers conducted through a third party. Amazon recently teamed up with Parafin on merchant cash advances, Lendistry for Business Loans, and Marcus for lines of credit, for example. Data on funding from these parties is a little more difficult to come by.
Backd Enters the Fifth Year of Funding Dreams
January 9, 2023
AUSTIN, TX – (Jan. 2023) – Backd, a commercial alternative business lender, has kicked off its fifth year in business, with a continued commitment to helping business owners fund and develop their dreams through easy-to-access alternative financing.
Last year the company grew exponentially while being named a 2022 Top Workplace by The Austin American Statesman. This is in addition to adding a business line of credit funding option to complement the already popular working capital. With a focus on a quick and convenient turnaround time to help companies that struggle to obtain conventional financing, Backd is looking to grow its financial products that offer flexible financing this year to support small businesses and allow them to truly thrive in 2023.
As part of this commitment, in the closing months of 2022, Backd CEO Xan Myburgh joined the Forbes Finance Council, a collective invitation-only community created in partnership with Forbes and the expert community builders who founded the Young Entrepreneur Council (YEC).
“It’s truly an honor to join this esteemed community,” Xan said. “As entrepreneurs, we are driven to improve upon the status quo, and I intend to provide my own expertise in entrepreneurial financial knowledge while simultaneously learning from the best business leaders the world has to offer.”
About Backd
Backd is a FinTech company headquartered in Austin that provides alternative financing solutions like working capital and line of credit for growing businesses across the nation.
For more information, visit backd.com, email kieran@backd.com or call Kieran at (512) 621-5169.
Tackling the California Disclosure Law With David J. Austin, Esq.
December 16, 2022
“I believe the law can be complied with in a technical sense based on how the statute is written,” said David J. Austin, Esq. of Austin LLP, “however, it opens up a funder to a number of attacks when they’re trying to enforce the funding.”
Austin, an attorney well-read on California’s new commercial financing disclosure law, has created a compliance guide specifically for merchant cash advance funders. Now that the law is in effect, he’s noticed a sudden urgency from small business finance companies to quickly wrap their heads around what they need to be doing.
“There’s nothing ambiguous about certain things in the statutes,” he said. “And it’s very specific, you have to use this font, you can’t use bold or italics, and I discussed that a little bit in [the guide]. It’s very specific about what you need to do.”
Austin imparted some helpful wisdom based upon the risks he sees. First, that funders need not just worry about the Department of Financial Protection and Innovation (DFPI) auditing one’s compliance, but also about what attorneys on the opposite side of the table might attempt to attack if these contracts ever end up in litigation, which they inevitably will. There should be concern, he said, about surrendering some control of the disclosure process to brokers, especially for this reason.
“In my view, the biggest liability in this statute is the broker screwing you up,” Austin said. “I can’t begin to say how important I think it is to—just for that one disclosure, take the broker out of the equation…”
Austin suggested that as far as California is concerned, funders should have direct communication with the merchant early on in the process so that when it comes time to make offers, the funder is able to send the required disclosures to the merchant themselves, and that the broker can simply be included in those communications. This workflow system might depart from one where a broker is accustomed to retaining all control of merchant communications, but Austin is looking at the risks through the lens of a funder.
“I think you just have to say, ‘look, it’s the law and we’re not going to do it any other way,'” he said.
While a much more complete scope of what’s required is all part of the guide he’s offering, he hinted that the “reasonably anticipated true-up” requirement of the disclosure was mostly centered around the knowable seasonality of a business and that he likes the Historical Method of predicting a business’s future sales versus the state’s other allowable option, the Underwriting Method. The Historical Method requires that a funding company examine at least 4 months of a business’s previous history, so if any brokers have been left wondering why a funder has recently started asking for 4 months bank statements instead of 3, this is probably the reason. Austin believes that the Underwriting method, by contrast, creates a lot of extra work, like state audits and additional litigation risk.
“The statute [on the Underwriting Method] is long,” he said. “And like I said, it requires auditing. So the first thing that’s going to happen in any litigation is you’re going to be asked to provide those auditing details.”
Any mca funder curious about compliance, including for access to the full guide, should contact David Austin directly at david.austin@austinllp.com.
Since the law has gone into effect, AltFinanceDaily has determined that some funders are complying with the law already and are continuing to operate in the state like normal while others are taking a wait-and-see approach. Any funder thinking they can fly under the radar of the DFPI and ignore the regulations should consider that a compliance failure could likely be exposed in litigation.
“We know what the defense counsel is going to do,” said Austin, speaking on merchants’ lawyers using the disclosure requirements as a weapon. “They’re gonna push, push, push, push, push.”
WBL Experiences Unplanned Growth, Suspends Further Fundings
December 9, 2022
World Business Lenders is suspending funding, according to a representative of the company.
Earlier today, WBL CEO Doug Naidus circulated a memo with an update on the company’s status:
“Our Company has experienced unplanned growth this year given market conditions. As a result, we have fully deployed our existing credit availability and must therefore suspend any further fundings and related operations until additional lending capacity is installed. During this interruption in our business and while we continue discussions with alternative capital sources, the company will take the opportunity to pivot to a new business model.”
Funding Companies Sue California Regulator Over Looming Disclosure Law
December 6, 2022
The alarm bells sounded over California’s commercial financing disclosure law were more than rhetorical bluster. This past Friday, a trade association representing dozens of small business finance companies filed a lawsuit against the Commissioner of the California Department of Financial Protection and Innovation (DFPI) on the basis that the regulations scheduled to go into effect on December 9th are unlawful.
The suit, filed by the Small Business Finance Association, makes two claims.
First, that the regulations violate the First Amendment on the premise that they compel the group’s members to make inaccurate disclosures to customers while at the same time prohibiting members from engaging in communications that could be used to clarify or correct the required false or misleading information to customers. This in part refers to the requirement that funders assign misleading and/or false APRs to purchase transactions while being forced to use language and terminology that contradicts the contracts themselves.
Second, that APR disclosures are defined and governed at the federal level by the Truth in Lending Act and that California’s custom formulas and disclosures would only serve to confuse customers. The SBFA argues that the regulations are “preempted” by TILA.
These controversies, which have been the subject of debate for years, are not new information, but enforcement of the law is finally slated to begin in just 3 days. The complaint argues that compliance with the law may expose its members to civil and criminal liability and thus they are left with no choice but to proceed accordingly. Given the circumstances, however, there does not appear to be hard feelings about the situation.
“The SBFA enjoys a great working relationship with the DFPI and share their commitment to providing meaningful disclosures to small business owners,” said SBFA Executive Director Steve Denis when asked what this lawsuit meant.
He continued:
“We recognize the challenges involved in implementing SB 1235 and appreciate the effort and transparency the DFPI provided during the regulatory process. This is a complex issue and our lawsuit reflects the comments we have made during the regulatory process. We believe there are significant issues with the regulation that not only makes it difficult for us to accurately comply, but are inconsistent, create liability, and will provide further confusion for our small business customers. Again, we appreciate the effort by the DFPI and look forward to continuing our work together as the matter is resolved.”
The actual complaint is available for download here.
The law is scheduled to go into effect on December 9th.
