Early Bird Pricing for Broker Fair 2022 Ends Soon
June 30, 2022Early bird pricing to Broker Fair 2022, taking place this October 24th at the New York Marriott Marquis in Times Square, ends soon. This large annual commercial finance expo has already sold out the top level sponsorships. Among the premier names are National Funding, Lendini, and Rapid Finance as Platinum Sponsors and Balboa Capital, Fintap, ROK Financial, and Ocrolus as Gold Sponsors.
This event brings together brokers, lenders, funders, vendors, and more from around the small business finance industry. Attendees can expect education, inspiration, networking opportunities, and more.
Deal Gone Bad? Next Stop Arbitration
June 20, 2022
When a funder is unable to resolve a breach of contract with a customer on its own, litigation may seem like the only option left. But there may be an alternative, a process known as arbitration.
“Arbitration is a creature of contract,” said Zachary Meyer, a partner at a law firm. Meyer is also the co-founder and Chief Administrator of RapidRuling, an arbitration forum that has recently experienced an uptick in cases from the small business finance space. An arbitration forum is an alternative to the courthouse, where disputes are adjudicated by an arbitrator instead of a judge. It’s binding. The prevailing party, for example, can take an arbitrator’s award to the Court and turn it into a judgment.
Meyer told AltFinanceDaily that part of the original vision for RapidRuling was an entirely online system that would prevent one or both parties from having to incur travel costs to participate. The overall cost of arbitration for a respondent in Montana, for example, would go up if they had to pay for a flight to New York City just to appear for it. “It’s beneficial for the [respondent],” Meyer said.
But in 2019 when RapidRuling first launched, the industry was already well accustomed to relying on AAA, the acronym for the American Arbitration Association. AAA, which was founded in 1926, resolved more than 300,000 total cases in 2019 alone. But then, Covid hit.
“It was like a perfect storm,” Meyer said. As the court system ground to a halt and struggled to move online, an all-online arbitration forum like RapidRuling suddenly had significant appeal. Meyer explained that the forum’s low filing fee compared to alternatives also grabbed attention. It understandably took off.
But the path to arbitration, including which forum to rely upon, may all hinge on the original contract itself, which a funding company’s attorney should carefully draft. Copying and pasting a random contract off the internet, for example, carries great risk, Meyer explained, because one may later discover a boilerplate arbitration clause to be limiting or disadvantageous.
RapidRuling’s website describes its arbitration process in four steps:
1. Submit Your Dispute
2. Wait For Opposing Party To Respond
3. Arbitrator Reviews Submissions
4. Receive An Arbitration Award
Contrast that value proposition to litigation, which depending on the circumstances could be drawn out for years.
RapidRuling seeks out arbitrators that are well-qualified, fair-minded, and diverse. “We have a panel of six arbitrators right now,” Meyer said, “and we’re looking to add more.”
Grand Opening of Latin Financial’s New Office Joined by Public Officials, Family, and Friends
June 4, 2022
Just a few miles outside of Hartford, cars exited the highway and advanced towards a quieter part of Connecticut. The aptly named “Beaver Road” is home to Wethersfield’s US Postal Service building on one side and the Connecticut Farm Bureau building on the other. Drivers veered towards the latter and pulled into a parking lot situated behind a literal babbling brook. There are other tenants besides the Farm Bureau in the expansive brown-bricked commercial-use building as indicated by a sign outside, but the business that people had come to celebrate hadn’t even been added to it yet.
Nevertheless, the blue and white balloons waving in the wind outside the back entrance were a clue that this was the right place. Inside, on the first floor, a line of people found the large plated logo of Latin Financial, a small business that helps other small businesses obtain working capital.
Already personally acquainted with the firm led by Sonia Alvelo, she led myself and others on a tour of the company’s new space. Latin Financial employees were easily identifiable by their blue company shirts, but others wore green to signal that they were part of a sister company named Sharpe Capital. Sharpe is spearheaded by Brendan P. Lynch.
Both brands previously operated in nearby Newington but outgrew what they had. When the ceremony officially kicked off with some impromptu speeches, the prominence of those assembled became evident. It included, among others, the Better Business Bureau, the local Chamber of Commerce, and the Connecticut Children’s Hospital.
Wethersfield’s mayor, Michael Rell, was also there. Rell welcomed Latin Financial to the neighborhood, echoing the note sang by other government officials.
Connecticut State Senator Matthew Lesser shared his appreciation for Alvelo and her company’s mission to provide capital to underserved small businesses both in the state and across the nation. Lesser explained that the state legislature had recently decided to delay a proposed commercial financing bill (Senate Bill 272) so that it could further assess the input from companies like Latin Financial and the potential impact it would have before moving forward. A version of the bill will be reintroduced next year.
Meanwhile, Joseph Rodriguez, Deputy State Director for US Senator Richard Blumenthal’s office, said that he was impressed by the company’s accomplishiments and contributions to the community. He presented Alvelo with a Certificate of Special Recognition signed by Blumenthal in honor of her new office and for her service to Connecticut Small Businesses.
Werner Oyanadel, Latino and Puerto Rican Policy Director at the Connecticut General Assembly’s Commission on Women, Children, Seniors, Equity & Opportunity, said that Alvelo had “been a good partner of [their] work at the Capitol” and that “Latin Financial is filling a big void assisting new businesses and Latino entrepreneurs’ access to needed reources.”
Employees of both Latin Financial and Sharpe appeared excited by all the fanfare while friends and family members were proud to share in the moment. Alvelo ceremoniously cut a blue ribbon for the cameras and in conversations that followed it became known that they were hiring.
Alvelo has previously spoken at Broker Fair in New York and AltFinanceDaily CONNECT Miami. She has been a primary source of information for AltFinanceDaily since 2016 on matters regarding small business financing in Puerto Rico.
Who Needs The Merchant Cash Advance Keyword Anyway?
May 31, 2022
Almost five years since Google banned its search engine from displaying ads when queries contain the phrase “cash advance,” the loss of business attributed to that has probably been nil to the small business finance space.
According to Google, despite there being between 100,000 to 1 million searches for “cash advance” each month on average, only 1,000 to 10,000 searches per month are specifically for “merchant cash advance.”
People are ~10x more likely to search for business line of credit, business loan, working capital, or business credit card, according to Google’s estimates.
This is somewhat in line with findings from the Federal Reserve, whose recent study determined that 7x more business owners seek out a loan or line of credit than they do a merchant cash advance.
But putting that aside, the ban on paid advertising for all things cash advance has had an upside for some lucky companies. Without ads, Google has inadvertently (or maybe intentionally) elevated funding providers that are local to the searcher to the top of the organic results. That means listings on Google Maps that contain keywords matching the search queries are reaping the benefits of being prominently placed at the top of the page and are potentially capturing all the clicks along with it. The end result is an old-fashioned SEO war to win what few searches there are.
Compare that to a search for sba loan where paid advertising is fair game. In the era of PPP and EIDL, it’s perhaps no surprise that there are between 100,000 to 1 million searches per month for that keyword on average. Many of those searchers will probably not be eligible for an SBA loan so perhaps the next best fit would be equipment leasing or invoice factoring, two queries that are on par with merchant cash advance in average monthly searches, meaning volume is relatively low.
But how does low search volume turn into the large volume of funding originated? Well, another factor has changed since Google implemented the cash advance advertising restriction in 2017, and that is that Google is not as relevant as it used to be. Business owners are more likely to discover a potential capital source from social media or a fintech platform they already have a relationship with than ever before. According to a recent study, 25% of people claimed they had actually used either Alexa, Siri, or another voice assistant to find information about financial services, signaling a major departure from how traditional searching used to be conducted.
All of which means that the paid advertising restriction on a niche keyword on Google is unlikely to make any kind of difference in the big picture. Odds are you might not have known this restriction even existed. Bing, on the other hand, has no qualms with cash advances and allows paid advertising on it.
IOU Financial Was Profitable in Q1
May 19, 2022
IOU Financial may have originated $59.6M in small business loans in Q1, but the company also managed to do it profitably. Specifically, IOU recorded net earnings of $1.1M in Q1 2022 compared to a $100,000 net loss over the same period the year prior.
“IOU Financial continues to deliver on its promise to stakeholders by growing loan originations and increasing profitability while continuing to invest the scalability of its operations and technology,” said Robert Gloer, President and CEO in a public statement.
IOU’s Q1 revenue totaled $3.9M, earned mostly from servicing and fee revenue that is generated by its marketplace model. $500,000 of it was attributed to referral fee revenue earned by IOU’s direct-to-merchant retail operation called ZING Funding.
Fundworks Completes $30.0 million Investment Grade Notes Offering
May 17, 2022VAN NUYS, CA. MAY 17, 2022: The Fundworks, LLC, a leading a tech-enabled small business finance company, announced today the closing of $30.0 million of Senior Secured Notes to a group of institutional investors. This transaction refinanced the Company’s existing $20.0 million of Senior Secured Notes and provides substantial excess capital to fund the continued growth of its small business funding platform.
“We are very pleased to announce this financing, which will allow us to continue our growth this year after record-setting funding volumes in 2021,“ said Co-Founder and Chief Executive Officer, Evan Smiedt. “This additional capital positions The Fundworks to continue its mission to provide growth capital to small businesses nationwide.”
“Given current volatile markets, we are particularly pleased with the continued support of holders of our previous Note issuance, as well as the participation of new investors in the transaction,“ said Bradley Smiedt, Co-Founder and Chairman.
Brean Capital, LLC served as the Company’s Exclusive Financial Advisor and Placement Agent on the transaction.
About The Fundworks:
The Fundworks is a tech-enabled finance platform providing working capital solutions to merchants to grow their businesses, take advantage of short-term opportunities and fund seasonal business fluctuations. The Company’s proprietary technology platform makes the opaque, time-consuming process of obtaining capital simple, fast and reliable. Since inception, Fundworks has funded more than $425 million to over 8,100 small businesses throughout the United States. The Company is headquartered in Van Nuys, CA.
For more information, please visit: http://www.thefundworks.com
For more information/ questions/ interview requests / media inquiries, please contact:
Evan Smiedt
Email: info@thefundworks.com | Phone: (844) 644-FUND
Ready Capital Small Loan Closings Reach New Growth with LenderAI
May 16, 2022
Last week, Ready Capital Corporation announced another company record for small 7(a) loan closings in the $10,000 to $350,000 range. Originating 55 such loans in April, the company attributed its success to the use of LenderAI by iBusiness Funding LLC, a subsidiary of Ready Capital.
LenderAI is a technology platform comprised with an easy-to-use suite of tools, according to the company. iBusiness Funding says their “approach to funding is based on automation, backed up by hyper-current and relevant data.” The LenderAI self service lending origination software includes no implementation fees, free instant setup, digital borrower application, digital documentation, all while being E-Train automated and SOC II compliant.
“Our core mission when expanding the SBA small loan program was to help the smallest businesses, making affordable lending available to support economic development and underserved communities,” said Justin Levy, President of Ready Capital Small Balance Lending. “LenderAI has enabled our 7(a) small loan products. The technology platform allows us to process loans for smaller businesses, who have fewer capital options, by digitizing their documents and inputs, giving them access to capital while allowing them to stay focused on their businesses.”
With iBusiness Funding’s LenderAI system, Ready Capital’s Small Loan Lending program funding has increased from 84 loans in 2021 to over 150 loans in the first four months of this year. iBusiness focuses on specific criteria for its borrowers including likelihood of success, engagement, and background/credit.
“We believe our LenderAI technology has drastically improved document collection and processing, streamlining both the borrower and lender experience,” stated Katy Forte Seybold, iBusiness Funding Chief of Staff and Head of Strategy, in a press release. “There’s little risk to trying it out, with bank level security, flexible core platform integrations and, for a limited time, it’s free to try with no implementation fees.”
Register for The 4th Annual Alternative Finance Bar Association Conference
May 12, 2022
The fourth annual Alternative Finance Bar Association conference is BACK IN PERSON. This is the go-to event for and with the industry’s leading attorneys.
Mark your calendars for June 15th and June 16th in New York City and register by emailing Lindsey Rohan at lindsey@lrohanlaw.com. Registration is subject to approval and space availability.
Two-day program includes the following panels:
The State of the Industry: Industry experts discuss pending legislation, case law and market hurdles. They have both a regulatory panel ready to discuss what’s new in Virginia, Utah, NY and California as well as a Courtroom panel ready to discuss the winning and losing case law that has come out in the past year.
Bankruptcy: The aftermath of Chicago v. Fulton, In re Shoot the Moon and other pivotal bankruptcy cases that shape industry practices.
Ethics: Challenges faced by internal counsel and ways to navigate those pressures.
Collections: Trends in the post-COJ, post-COVID era.
Employment/Labor Law: The rise of labor use outside the U.S. What challenges arise from having call centers outside the U.S. Tax implications, oversight and practical benefits/detriments. Post-COVID remote work implications. What you need to be aware of to avoid creating liabilities.
The Art of Arbitration: The importance of a carefully drafted Arbitration Clause and the pro/cons of this venue.
Thinking Ahead: What technologies and market conditions will shape the future of the industry. Broad discussion of Blockchain technology, CRM systems, cannabis and what we can imagine will shape the future of Alternative finance.
WEDNESDAY KEYNOTE: David Picon, Esq. – It is with great pride that David Picon of Proskauer Rose will be the Keynote speaker. For years the AFBA has admired his work from afar. Attendees now have an opportunity to learn directly from David what makes for an unstoppable litigator.
THURSDAY SPECIAL EVENT: AFBA Game Show Mash-Up with the Industry’s Legendary Attorneys. Special Guests you will not want to miss!
Speakers:
- Andrew Smith, Covington & Burlington LLP
- Brian Simon, Hollis Public Affairs
- Jamie Polon, Mavrides Moyal Packman & Sadkin, LLP
- Patrick Siegfried, Rapid Finance
- Natalie Pappas, Rapid Finance
- Keith Ellis, Expansion Capital Group
- Kate Fisher, Hudson Cook LLP
- Cathy Brennan, Hudson Cook LLP
- Blake Sims, Hudson Cook LLP
- Steve Denis, Small Business Finance Association
- Christopher R. Murray, Murray Legal PLLC
- Mark Stout, Padfield & Stout
- Shanna Kaminski, Kaminski Law Group
- Michael W. Davis, DTO Law
- John Viskocil, Fora Financial
- Gabriel Mendelberg, Mendelberg P.C.
- Anthony F. Giuliano, Giuliano Law P.C.
- Jeffrey S. Cianciulli, Weir Greenblatt Pierce LLP
- David Picon, Proskauer Rose
- Jonathan Nelson, Dedicated Financial GBC
- Lindsey Rohan, BasePoint Capital LLC
- Christina Grigorian, Katten; Zach Miller, Burr & Foreman
- Renata Buhkman, Delta Bridge Funding
- Vanessa Petty, Settle
- Alexis Shapiro, Forward Financing
- Jan Owens, Manatt Phelps
- Scott Pearson, Manatt Phelps
- Jesse Michael Carlson, Kapitus
- Robert Zadek, Buchalter
When:
Day 1 – June 15
9:00am – 4:30pm: Offices of Proskauer Rose (includes light breakfast and lunch)
5:30pm – 7:30pm: Cocktails at Dear Irving
Day 2 – June 16
9:30am – 6:00pm: 15 W. 38th Street, 2nd Fl, Sinatra Room (includes light breakfast and lunch)
4:00pm: Wine & Cheese
Register soon, SPACE IS LIMITED!
AltFinanceDaily is a sponsor of the event. Industry attorneys are highly encouraged to attend.
