Surprising Stats of 2023

Remember when interest rates soared, banks collapsed, and experts began to prepare for the worst? Well, appearances can be deceiving.

Business loan origination volume at Square, Enova, Shopify, and Funding Circle are all on track to surpass 2022’s numbers. When it came to bad debt, PayPal was the only large tech lender to announce that it had become a problem this year. PayPal’s origination numbers are consequently also down year-over-year.

The S&P 500 was at 3,839.50 one year ago and closed at 4,774.75 yesterday, a gain of more than 24%.

Unemployment was 3.5% last December and had only modestly increased to 3.7% this November.

Inflation was 7.1% last November and only 3.1% this November.

Bitcoin is up by 150% year-over-year!

Anecdotal reports at smaller non-public small business funders, however, have hinted at bad debt increases all year and underwriting has generally become more conservative. Despite this, brokers are still brokering deals and funders are still funding. The predicted mass AI-induced layoffs have also not yet materialized. In the grand scheme of things, the argument could be made that 2023 was actually a pretty good year.

But 2024 could be dicey.

• The FCC closed the lead generator loophole.
• The first wave of small business finance companies will have to begin complying with new CFPB regulations.
• It will be a presidential election year like none ever experienced before.
• Americans are overleveraged. Forty percent of student loan borrowers failed to make a payment after the covid-era pause ended.
• General economic, societal, and political unease.

So what will happen? I guess we’ll find out. It could be terrible or awesome or anything in between.

A Fun QSR Chain or “Big Sandwich”?

As the small business financing space contemplates competition from merchant-integrated platforms like Square, Shopify, and Intuit, one behemoth is taking over the franchises themselves. The company is Roark Capital, an Atlanta-based PE firm with $37B in assets under management, and they taste delicious.

Roark Capital already owns Arby’s, Auntie Anne’s, Baskin-Robbins, Buffalo Wild Wings, Carvel, Cinnabon, Carl’s Jr., Hardees, Culver’s, Dunkin Donuts, Jamba, McAlister’s, Moe’s Southwest Grill, Schlotzky’s, Seattle’s Best Coffee, Jimmy John’s, SONIC, Jim’n Nick’s Bar-B-Q, Miller’s Ale House, North Italia, Nothing Bundt Cakes, and the Cheesecake Factory. Three of those are among the top fast-food sandwich chains in America (Arby’s, Jimmy John’s, and McAlister’s Deli). Roark is also presently in the process of acquiring Subway, the leading company in that category by nationwide sales. The deal was announced in August.

But now the FTC is saying not so fast on the basis that it might create a monopoly. According to Politico, “the government is focused in part on whether the addition of Subway gives Roark too much control of a lucrative segment of the fast food industry.”

“We don’t need another private equity deal that could lead to higher food prices for consumers,” railed Senator Elizabeth Warren on social media. “The FTC is right to investigate whether the purchase of Subway by the same firm that owns Jimmy Johns and McAlister’s Deli creates a sandwich shop monopoly.”

While many comments on social media made fun of this regulatory effort, perhaps such consolidation is a wakeup call for the small business finance industry. Once upon a time the textbook definition of a non-bank funding merchant was a restaurant or QSR sandwich shop. Although the target customer has broadened considerably since then, it may be worth keeping in mind that a large diversified portfolio of QSR funding customers might not be so diversified at all. Behind the scenes, it may actually all be a single counterparty. A small business might not be so small. You could be dealing with Big Sandwich.

All Registered Sales-based Financing Providers in Virginia (List)

Is the revenue-based financing provider you do business with registered to operate in Virginia? On July 1, 2022, Virginia’s commercial financing disclosure law went into effect and with that the necessity to register one’s business. As of March 8, 2023, this is the official list of registered sales-based financing providers:

• Advance Servicing Inc.
• Accredited Business Solutions LLC dba The Accredited Group
• Advance Funds Network LLC dba Advance Funds Network
• AdvancePoint Capital LLC dba advancepoint
• Ally Merchant Services LLC
• Alpine Funding Partners, LLC
• Business Capital LLC
• Byzfunder NY LLC dba Tandem dba Nano-FI
• Bridge Capital Services, LLC
• CFG Merchant Solutions, LLC
• Clarify Capital II LLC dba Clarify Capital
• Cloudfund VA LLC dba Cloudfund LLC
• Capflow Funding Group Managers LLC
• Clear Finance Technology (U.S.) Corp. dba Clearco
• Coast Premier LLC dba Coast Funding
• Commercial Servicing Company, LLC
• Corporate Lodging Consultants, Inc.
• Crown Funding Source LLC dba Crown Funding Source
• Diesel Funding LLC
• Direct Capital Source Inc.
• Dealstruck Capital LLC
• EBF Holdings, LLC
• Essential Funding Group Inc
• Errant Ventures LLC
• FC Capital Holdings, LLC FundCanna
• Fidelity Funding Group LLC
• Front Capital LLC
• Finova Capital, LLC
• Fintegra, LLC
• First Data Merchant Services LLC
• FleetCor Technologies Operating Company, LLC
• Flexibility Capital Inc.
• Fora Financial East LLC
• Forward Financing LLC
• Fox Capital Group Inc.
• Fundamental Capital LLC
• Funding Metrics, LLC dba Quick Fix Capital
• Good Funding, LLC
• Granite Merchant Funding, LLC
• Invision Funding LLC
• Itria Ventures LLC
• Jaydee Ventures, LLC dba 1 West Capital dba 1 West Commercial
• Kapitus LLC
• Knight Capital Funding III, LLC
• Lexington Capital Holdings Ltd
• LG Funding LLC
• Legend Advance Funding II, LLC dba Legend Funding
• Liberis US Inc.
• Libertas Funding, LLC
• Liquidibee 1 LLC dba Liquidibee LLC dba Altfunding.com
• Loanability, Inc.
• Millstone Funding Inc.
• National Funding, Inc.
• Nav Technologies, Inc.
• Pearl Alpha Funding, LLC
• Pearl Beta Funding, LLC
• Pearl Delta Funding, LLC
• Proto Financial Corp.
• PWCC Marketplace, LLC
• Parafin, Inc.
• PayPal, Inc.
• Payability Commercial Factors, LLC
• Pinnacle Business Funding LLC dba Custom Capital USA dba EnN OD Capital
• Platform Funding LLC
• Prosperum Capital Partners LLC dba Arsenal Funding
• QFS Capital LLC
• RFG USA Inc.
• Rival Funding, LLC
• Riverpoint Financial Group Inc.
• Rocket Capital NY LLC
• ROKFI LLC
• Ruby Capital Group LLC
• Rapid Financial Services, LLC
• Reliant Services Group, LLC
• Retail Capital LLC dba Credibly
• Revenued LLC
• Rewards Network Establishment Services Inc.
• Secure Capital Solutions Inc.
• Sky Bridge Business Funding, LLC
• SMB Compass LLC dba SMB Compass
• Santa Barbara Tax Products Group, LLC
• SellersFunding Corp.
• Sharpe Capital, LLC
• Shine Capital Group LLC
• Shopify Capital Inc.
• Shore Funding Solutions Inc.
• Streamline Funding, LLC
• Stripe Brokering, Inc.
• The LCF Group, Inc.
• United Capital Source Inc.
• Upfront Rent Holdings LLC
• Upper Line Capital LLC
• Vader Servicing, LLC
• Velocity Capital Group LLC
• Vivian Capital Group LLC
• Vox Funding, LLC
• ZING Funding I, LLC