Enova Posts Q3 Results, Admits It is Dealing With Regulatory Situation
October 28, 2021
Enova’s Q3 report is very brief and to the point. Through both its consumer loan and business loan operations, the company generated a net income of $52M on $320M in revenue.
“We are pleased to again report a strong quarter of growth across all of our businesses,” said David Fisher, Enova’s CEO.
There was no mention of OnDeck by name this time around, its major small business lending division. Instead, Enova was sure to draw attention to a regulatory inquiry it had received from the CFPB.
“The Company has received a Civil Investigative Demand (‘CID’) from the Consumer Financial Protection Bureau (‘CFPB’) concerning certain loan processing issues,” the company stated. “Enova has been cooperating fully with the CFPB by providing data and information in response to the CID. Enova anticipates being able to expeditiously complete the investigation as several of the issues were self-disclosed and the Company has provided, and will continue to provide, restitution to customers who may have been negatively impacted.”
The language is particularly concessive. Whatever happened, they felt the need to self-report it and to provide restitution to customers.
This is likely to be queried in more detail during the company’s earnings call this evening.
Shopify Capital Originated $393.6M in MCAs and Business Loans in Q3
October 28, 2021Shopify Capital, the funding arm of e-commerce giant Shopify, originated $393.6M in merchant cash advances and business loans in Q3, the company reported. That’s up from the $363M in the previous quarter.
Covid was a boon to Shopify Capital given its dependence on e-commerce businesses. Its 2020 funding volume was almost double that of 2019.
“Shopify Capital has grown to approximately $2.7 billion in cumulative capital funded since its launch in April 2016,” the company announced. The large volume and continued success has landed the Shopify Capital division in the company’s “core” bucket of “near-term initiatives” that will build the company for the long term, according to a presentation accompanying Q3 earnings.
North Mill Equipment Finance Hit All-Time Quarterly Loan/Lease Originations Record
October 14, 2021
North Mill Equipment Finance just had its best quarter in 60 years. The company originated $129.1M in Q3. That was up from the record set the previous quarter of $120M.
Contributing to the company’s growth rate is the recent joint acquisition of 100% of the stock of parent company Aztec Financial, LLC.
“This has been an exceptional year,” said David C. Lee, Chairman and CEO, North Mill. “In addition to introducing a new category of equipment through the acquisition of Aztec, we recently purchased a $50.3 million portfolio of seasoned truck and trailer leases to help diversify our portfolio even further.”
The company is on pace to surpass $400M in originations in 2021.
Small Business Funders Are Hiring, But Does Anyone Want the Jobs?
September 28, 2021
As the small business finance market gets back to normalcy, the industry’s latest challenge is filling all of the open positions. Jobs that would once attract hundreds of resumés are now ending up with very few, if any at all.
Even after pursuing LinkedIn, the applicant pool just looks light.
In our research, AltFinanceDaily found five fintech companies on LinkedIn that have ads that are at-least a week old with three or less applicants.
One company based on Long Island, promoted a $5,000 signing bonus for an underwriting position and only had five applicants. Meanwhile, a self-acclaimed “prestigious” Manhattan lender even has a month-old ad posted that offers a $10,000 per month salary. That job has one active applicant, according to LinkedIn.
Chad Carter, Director of Franchise Success at Lendio, says the hiring process has been difficult, but isn’t impossible to navigate. “Being based in Utah has been somewhat challenging as unemployment is extremely low and the Silicon Slopes area has a lot of tech headhunting,” said Carter. “We’ve hired and are hiring hundreds more people this year so we feel it too. Luckily we have extremely good reviews on Glassdoor, which helps keep applications coming and our culture keeps them here.”
Some companies have gotten creative when it comes to building their staff to counter the lack of applicants in the workforce. “We have seen some open roles have more interest than others,” said James Webster, CEO of ROK Financial. He says his company has been able to expand hiring by offering remote sales positions that opens the applicant pool nationwide.
“We have been hiring and building an outside sales division known internally as the Remote Sales Division,” Webster said.
He claims the number of applicants for remote sales positions have been high, but that doesn’t mean his company is hiring a ton of staff to add to the program. “We are still extremely selective on who we allow onto the platform as they represent ROK in the market,” said Webster.
“All in all, recruiting is harder now than it has been in previous years,” Webster said. “Especially when the culture in the office is such a priority to maintain.” He noted that the roles that are currently difficult to fill are mostly administrative positions, not sales.
A recruiter for a large finance-centric company that wishes to stay anonymous told AltFinanceDaily that the finance industry in general is having hiring troubles, not just fintech. “There’s tons of turnover all around,” said the recruiter, who claims that they themselves are actively being poached by other companies due to the lack of people wanting to work.
“I can only assume that fintech is just as crazy,” the recruiter said.
More Than 70% of UK SMEs Say They’re Bouncing Back After the Pandemic
September 15, 202145 per cent of SMEs say they’ve already hit or surpassed pre-Covid levels of turnover, with a further 26 per cent expecting to return within one year
The results also show alternative lenders are now being used to finance businesses just as much as traditional banks
More than 70 per cent of UK SMEs are making strong post-pandemic recoveries, according to a new study investigating the impact of Covid-19 on small businesses.
Just weeks on from the relaxation of restrictions on July 19th, 45 per cent of SMEs say they have already hit or surpassed pre-Covid levels of turnover, with another 26 per cent expecting to achieve that within a year.
More than 250 SMEs were involved in the survey by alternative lender Capify, which also highlighted how 48 per cent of UK businesses had adapted their business models in some way to survive during lockdown. Launching online sales (38 per cent) and adopting new services or products (38 per cent) were the two most popular answers.
The findings also made good reading for employment statistics, with over 50 per cent of SMEs making no permanent cuts to their number of staff over the past 12 months, despite 64 per cent using the Coronavirus Job Retention Scheme (CJRS) during the pandemic.
The second most popular Government-backed support used was the Bounce Back Loan Scheme (BBLS), which was taken up by 55 per cent of SMEs.
The important role of alternative lenders alongside traditional banks through the pandemic was also highlighted, with 41 per cent saying they would look to traditional lenders for future loans and finance, closely followed by alternative finance companies at 39 per cent.
And with the survey finding that one in three businesses expect to need finance during the next 12 months, John Rozenbroek, CFO/CCO at Capify says the need for a range of financial options to support the UK’s economic recovery is clear.
“It’s fantastic to see that the majority of UK businesses are enjoying strong performances following the easing of lockdown restrictions, with many reaping the rewards of adapting their business models during the pandemic,” he said.
“The CJRS and BBLS clearly played important roles in keeping SMEs ticking over, but it’s also important to note that many small businesses went without much government support, having fallen through the gaps of various support schemes.
“Alternative finance has played a huge part in propping up and supporting businesses through the challenges of the last 18 months, and our data show that as an industry, it is now being considered by SMEs just as much as traditional lending options like high street banks.”
Despite the easing of restrictions, Covid-19 continues to impact SMEs with 54 per cent of survey respondents saying uncertainty over the future will be their number one challenge during the next 12 months.
“There is still a long way to go on the road to recovery for SMEs, even following the end of financial support from the Government, which is why alternative lenders like ourselves will need to be working closely with them,” added John.
“SMEs make up an incredible 99 per cent of the UK’s business population, and have companies across so many sectors have proven their resilience repeatedly, so it’s crucial for the economic recovery that SMEs continue to grow and succeed.”
ENDS
Notes to Editors
The Capify SME confidence survey received over 250 responses from UK SMEs across a wide range of sectors, including Construction, Manufacturing, Agriculture, Motor trades, Restaurants, Professional Services and Transportation.
About Capify
Capify is an online lender that provides flexible financing solutions to SMEs seeking working capital to sustain or grow their business. The fintech company has been operating in the UK market for over 13 years and also has a sister company, Capify Australia, which provides similar services to Australian SMEs for over 13 years.
For more details about Capify, visit: http://www.capify.co.uk
Capify Media Contact:
Ian Wood, Marketing Director
iwood@capify.co.uk
0161 393 9536
Cannabis Boom Exposes Difficulties in Lending
September 15, 2021
The legalization of cannabis across the U.S. has exposed an interesting opportunity for banks and small business lenders. With tons of capital, insane amounts of cash flow, and an industry outlook that couldn’t be better, banks and lenders should be swarming in droves to get their hands on a piece of the legal marijuana action. Seemingly a match made in heaven, lenders and cannabis cultivators are running into some serious trouble when it comes to how the cash crop operators manage their businesses’ finances.
“We had too much cash to keep in one place,” said Charles Ball, the owner of Ball Family Farms, a wholesale grow operation based in Los Angeles. By stashing cash in different safe-houses around LA, Ball had to operate his completely legitimate and legal business like an illegal operation. “Traditional banking wasn’t an option for us,” Ball said.
“We used to drive the cash around,” said Ball. For recent renovations of lighting fixtures, Ball had to pay $125,000 in cash to the company who did the service for him. Ball also paid taxes in cash, a process in which he had to walk into a Los Angeles government building with $40,000 cash on his person. At the time, there was no bank that was willing to hold the cash for him — even for tax purposes.
Prior to going fully cash, Ball did do business with some big banks, but he realized quickly that they weren’t interested in servicing his cash upon learning what his business was doing.
“They closed my account for wearing a shirt with my business name on it, they put two and two together,” said Ball, when referencing the closing of two accounts with Bank of America and Chase after representatives of the banks saw him wearing his company shirt to make deposits. One of the biggest difficulties of running a cannabis distributor isn’t the growing or the distribution of the product, it’s what to do with the money, according to Ball.
“We had no way of banking,” he said, up until February of this year, when he was able to secure his first type of deposit account with a local bank in the Los Angeles area that was fully aware of what his business was doing. “I have to pay more fees, and I don’t get the same type of customer service, everything is different,” Ball said.
With service fees on his deposit account between $2,000-$3,000 per month, the security of doing business with a bank must be worth the price. When pursuing a loan with that bank to expand his operation however, the lending process was halted at the last second after federal regulators told the bank they wouldn’t allow the deal to go through.
“We were denied on the approval date [of the loan],” said Ball. According to him, the bank told him the FDIC stepped in and killed the deal. Once again, Ball Family Farms was forced to explore other options outside of banking, such as exploring renovation options through landlords or simply waiting until the cash is on hand to make the move. “The banking system in this industry is very flawed,” said Ball.
“We’ve never taken private investor money,” Ball said when asked about whether he had explored any other avenues of receiving a loan. “We took [the start] slowly and it works, we are a ground up operation.”
This problem is not unique to Ball Family Farms. Legal cannabis cash flow has been a major issue since legalization first took place in the states. It seems like local governments want the tax revenue, but the bank’s regulators want to make it difficult for lenders to get their hit off the cash pipe until the federal government changes the law on their end.
The opportunity for funding in the industry isn’t going unnoticed however, as cannabis-exclusive funders and brokers are beginning to pop up across the U.S.
Judy Rinkus, for example, CEO of Seed to Sale Funding, is a Michigan based broker who works exclusively with cannabis businesses.
“[The industry’s] biggest problem is simply finding a lender who isn’t prohibited from lending to cannabis-related concerns,” said Rinkus. According to her, one of the biggest issues is the infancy of the industry, as many cannabis wholesalers and retailers just haven’t been around long enough to be reliable borrowers.
“Most businesses have been established for 3 years or less, they haven’t kept good financial records, and accept a lot of cash payments, and they lack sufficient collateral,” Rinkus said.
Rinkus stressed the importance that real estate plays in giving cannabis businesses borrowing power. “Having real estate to pledge as collateral is key,” she said. “There are ways to get other types of loans, but they are often enormously expensive and are limited to no more than 10% of an entity’s historic revenues.”
Rinkus’ outlook on the industry remains positive, and she remains a supporter despite the difficulties associated with cannabis lending. “Businesses in this space are the true American entrepreneurs,” said Rinkus. “In many areas of the country, they are creating jobs and wealth for folks that would otherwise not have the same chances.”
The outlook on the industry is bright. More states are pushing for legalization, social taboo of marijuana is relatively nil, and the potential of an untapped industry in the eyes of both government and banking are becoming too good to pass up. As the industry begins to cultivate its presence, look for the money surrounding cannabis to creep its way into fintech sooner than later.
IRS Snooping Flexes Government Power, but May Drive Crypto
September 14, 2021
To fight tax evasion, the federal government wants the IRS to track any account in the United States that transacts more than $600 in or out over the course of a year. The tracking will apply to banks and other financial institutions. The feds claim that they will use any found tax dollars to help finance the administration’s new $3.5 trillion spending plan.
Such a move could push a suspicious populace into crypto, where records, however openly recorded on blockchains, could potentially obscure the parties involved.
Banks have fought against the government’s push to share account transactions, as they argue it will be a major invasion of privacy. This will undoubtedly create an entire new workload for them as well, as the banks will have to provide intricate details on most of the accounts on their books — an unprecedented task.
“I don’t believe that much is going to change,” said Yoel Wagschal, a CPA. Wagschal stresses to his clients to always live their life as if the government has access to the information about their spending habits for the sake of their wellbeing.
“The issue at hand is how far this is going to [go], how far the government’s reach will be,” said Wagschal. “When a government body gets power, they don’t give it back. Look at the power wagon they are on.”
As crypto becomes more of an avenue to store and invest money, it may also be a new channel for coin holders to keep their finances shrouded behind additional layers from the federal government.
Lenders, Funders Look to Expand as 2021 Heads Into Final Stretch
September 14, 2021
As the year ends, lenders and funders across the globe are looking to meet goals, help businesses, and close the books on some of the most unpredictable months the industry has ever seen. Whether it comes to improving technology, hiring more staff, or creating completely new concepts on how to do business, any company worth its salt isn’t just going to be content with just staying stagnant.
“Our main goal for this year’s end is to scale our small business loan and MCA deal flow in order to maximize our syndication opportunities, which we want to overtake commission as our primary revenue stream,” said Zack Fiddle, President of CapFront. “We’ve already built a robust CRM and marketing automation system over the past year, we have great people and a proven process and product, and we just moved to a much larger space.”
From a brand-new office in Garden City, Fiddle seems to be expanding his company on multiple fronts. “The next step for us is hiring more support staff and more account managers to handle more leads from increased media [spending] and more referrals from our various business development channels,” he said.
Other fintech brands are looking to come up with new ideas surrounding borrowing. “We are coming out with a special lawyer loan,” said Justin Leto, co-founder and CEO of Miami-based Idea Financial, whose recent announcement about LevelEsq will allow the firm to divi out loans to attorneys who wait to get paid until when —or if — their client wins. “We’ll have the only insurance product that is available on the market that will cover the downside risk that the case [the attorney] is borrowing on goes to trial and loses.”
“It’s a really exciting time here at Idea Financial because we are able to leverage a lot of our existing resources and expertise to enter an entirely new market, which is legal lending,” said Larry Bassuk, co-Founder and President of Idea Financial.
Other firms are taking the current political and social climates into consideration when it comes to their end-of-year plans. “[We’ll] be analyzing risk a little more in case there is another lockdown,” said Drew Matthew, CEO of Infusion Capital Group. The two-person firm doesn’t plan to expand their staff too much going into the new year, but Matthew did flirt with the idea of bringing on an ISO-rep as his business expands.
“I think we’re going to pick up dramatically,” said Matthew when asked about the number of his future clients. “Once there’s no more [covid restrictions], SBA money, or no more fear of another pandemic shutdown, no matter what [we charge], the small businesses in America need us.”
This risk and surrounding political climate have no influence on the location of Infusion Capital’s offices in the future. “I know everyone is going down to Florida, but not us,” said Matthew. “New York or nowhere, baby.”
As seasons change and the year ticks its final months, lenders, much like the businesses they support, are looking to find the next best way to edge out competitors while offering the best product and services for their customers.
