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Take This Industry Fraud Evaluation Survey
Fraud is a growing challenge in the alternative lending space, particularly for lenders and funders that serve small businesses. As fraud tactics evolve – from synthetic identities and doctored bank statements to first-party fraud and account takeovers – funders and lenders face heightened risks that can lead to increased defaults, operational losses, and stricter underwriting processes.
MoneyThumb and deBanked have partnered to conduct a survey across lenders, funders, brokers, banks, and the fintech sector to reveal and better understand how fraud is impacting the industry. The goals are to help underscore the problem / shine a spotlight on an increasingly important sector that adversely impacts the industry and provide information on the most common fraud types and the tools strategies lenders are using to mitigate risk.
Your feedback is completely anonymous, and as a thank-you for participating, you’ll receive an exclusive early copy of the full report—plus additional insights not available to the public.
Check out other joint reports deBanked has previously participated in.
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NMEF Announces Strategic Joint Venture With Oaktree to Accelerate Growth in FMV Leasing Platform
JUNE 10, 2025, NORWALK, CT – North Mill Equipment Finance, LLC (“NMEF” or “North Mill”), a leading commercial equipment lessor located in Norwalk, Connecticut, today announced a new partnership with funds managed by Oaktree Capital Management, L.P. (“Oaktree”), a global investment firm with deep expertise in credit and asset-backed finance. The collaboration launches a joint venture designed to grow NMEF’s fair market value (FMV) equipment leasing platform, alongside Oaktree’s investment in the venture.
The combined capital commitment from Oaktree and NMEF will support the funding of $350 million in FMV equipment lease originations initially, with additional capital capacity available to continue funding the venture.
This partnership combines NMEF’s established origination network and servicing capabilities in the equipment leasing space with Oaktree’s institutional capital base and investment team. This new extension of NMEF’s platform will focus on FMV leases across a wide range of essential-use equipment including construction, medical, logistics, and manufacturing assets.
“This marks a major step forward in our efforts to deliver flexible, value-driven leasing solutions to the market,” said David Lee, Chairman and CEO of North Mill Equipment Finance. “We’re excited to work with a partner like Oaktree who shares our long-term vision and brings deep understanding of asset-backed investing.”
Under the terms of the agreement, NMEF will originate and service all transactions through their national network of independent originators and vendors. North Mill will also invest alongside Oaktree in the venture.
“We’ve built a strong and scalable platform, and this partnership allows us to bring it to a broader investor base,” said Lee Bergeron, Senior Vice President of Structured Products at NMEF. “Together with Oaktree, we’re well-positioned to meet growing demand for flexible equipment financing solutions.”
Paul Cheslock, Vice President of Structured Products at NMEF, added, “This collaboration gives us the capacity to do more of what we do best—helping businesses acquire the equipment they need with creative and sustainable financing options.”
From Oaktree’s perspective, the partnership is a natural fit with their investment strategy. “We’re pleased to partner with North Mill to support the next phase of growth for their FMV platform and bring long-term value to their customers,” said Rana Mitra, Managing Director at Oaktree. “We are excited to partner with an extremely high-quality originator and servicer like North Mill as we continue generating attractive asset-backed finance exposures for our investors,” said Brendan Beer, Portfolio Manager for Oaktree’s Asset-Backed Finance and Structured Credit strategy.
About North Mill Equipment Finance (NMEF)
NMEF is a national, premier lender who works with third-party referral (TPR) sources to finance small to mid-ticket equipment commercial leases and loans ranging from $15,000 to $3,000,000 and up to $5,000,000 for investment grade opportunities. NMEF accepts A – C credit qualities and finances transactions for many asset categories including but not limited to medical, construction, franchise, technology, vocational, manufacturing, renovation, janitorial and material handling equipment. NMEF is majority owned by an affiliate of InterVest Capital Partners. The company’s headquarters are in Norwalk, CT, with regional offices in Irvine, CA, Voorhees NJ, and Murray, UT. For more information, visit www.nmef.com. One of NMEF’s controlled affiliates, BriteCap Financial LLC, is a leading non-bank lender providing small businesses with fast, convenient financing alternatives such as working capital loans since 2003 from its main office in Las Vegas, NV. For more information, visit www.britecap.com.
About Oaktree
Oaktree is a leader among global investment managers specializing in alternative investments, with $203 billion in assets under management as of March 31, 2025. The firm emphasizes an opportunistic, value-oriented, and risk-controlled approach to investments in credit, equity, and real estate. The firm has more than 1,200 employees and offices in 25 cities worldwide. For additional information, please visit www.oaktreecapital.com.
View PostQuickBooks Capital Continues to Grow
Intuit’s small business loan program, QuickBooks Capital, is continuing to grow. It generated $35M more revenue in FY Q3 2025 than it did over the same period last year, according to the company’s latest earnings report. Considering Intuit’s total quarterly revenue was $7.8B, its funding business, a small percentage of the total in comparison, is only mentioned in detailed on occasion.
QuickBooks Capital benefits from having a funding button in the widely used QuickBooks Capital software, a feature so effective that they were effectively the sixth largest online small business lender that deBanked tracked in 2024. Its two main products are a term loan and a line of credit.
View PostTell Your Merchants to Act on The Texas Legislation
Unbeknownst to many small businesses in Texas, revenue-based financing will be severely restricted in the state starting September 1, 2025 if the governor permits HB 700 to be finalized into law. For small businesses who might want to have a say on this matter, the Revenue Based Finance Coalition (RBFC) has provided information for merchants to conduct outreach to the appropriate parties. If you have merchants who want to weigh in before it’s too late, please share this link with them.
Govenor Abbott has between now and June 22nd to veto the legislation. If he signs or elects not to sign the bill by that date, the law will take effect on September 1, 2025.
View PostOnline Search is King for How Merchants Shop For Funding, Survey Reveals
Perhaps the most surprising statistic to come out of a 2025 small business lending survey conducted by IOU Financial is that 12% of merchants said they started their search for business funding options from a cold call. But as one might expect, phone calls are not necessarily the direction in which business is moving. Forty-one percent of respondents, for example, complained that they received too many phone calls from multiple reps.
The number one origin point—far above cold calls (12%), friends/referrals (8%), and social media (7%)—was online search (63%). And they’re not just looking at the first website and firing off a form. Fifty-eight percent, for example, said that online reviews were among the most valuable factors in choosing the right business funding provider, while loan calculators and comparison websites/tools also weighed heavily at 49% and 40%, respectively.
Historically, online search primarily meant Google, but according to a TD Bank survey, 30% of small business owners are already turning to AI assistants like ChatGPT for insights on financial health or financing.
And most merchants skip their bank. “More than 70% of small business owners do not apply for business funding with their bank before exploring non-bank options,” the IOU survey found. “This trend highlights a major shift in trust and preference away from traditional banks and toward alternative lenders—which could be driven largely by the desire for speed, flexibility, and ease of access.”
Carl Brabander, EVP of Strategy for IOU Financial, discussed some of the recent findings of this survey at Broker Fair 2025 this past May in New York City.
View PostNorth Dakota Law Regulates “Alternative Financing” as a “Loan”
The state legislature in North Dakota recently passed House Bill 1127. This bill made a simple amendment to a 1970s-era law called the Money Brokers Act (“MBA”).
Despite its name, the MBA is not limited to brokers. It is the primary law regulating consumer and commercial lending in North Dakota. It applies to any person engaged in the act of arranging or providing loans. Such persons are called “money brokers” in the MBA.
This amendment adds a two-sentence definition of the word “loan”. When this amendment takes effect, the MBA will define “loan” as follows:
“Loan” means a contract by which one delivers a sum of money to another and the latter agrees to return at a future time a sum equivalent to that which the person borrowed. This includes alternative financing products as identified by the commissioner through the issuance of an order.
Is this is a big deal? Yes. Here’s why.
Until now, the MBA has always defined the term “money brokering” to include the act of providing “loans” but has never defined the term “loan”. As a result, forms of business financing that are not typically considered loans – such as factoring or revenue-based financing (also sometimes called “merchant cash advance”) would not be subject to the MBA. Adding this new definition of “loan” to the MBA creates significant risk that alternative forms of business financing will become subject to the regulatory burdens impose by MBA.
Those burdens are significant. The MBA requires money brokers to obtain a license from the North Dakota Department of Financial Institutions (“DFI”). The MBA also caps the maximum amount of fees and charges that can be impose by a money broker at a rate of 36% per year.
With this new definition, the North Dakota Department of Financial Institutions (“DFI”) can now issue an order designating any financing product as a loan subject to the MBA. Does the DFI intend to regulate revenue-based financing? That’s unknown at this time. The Commissioner of Financial Institutions provided a memorandum to the legislature stating that the new definition would allow DFI to ensure that North Dakota’s citizens “will have access to new lending products, without sacrificing safeguards”. It is possible that the Commissioner is intending to focus on consumer financing products and not commercial financing. Even if that’s the case, that’s small comfort.
There is still a problem with this law because the first sentence of the definition is simply too broad. It states that a “loan” includes a transaction with the following two features:
1. There is a contract by which a sum of money is delivered to another.
- A typical revenue-based financing is structured as a purchase of a merchant’s future revenue at a discounted purchase price. The purchase price is a sum of money delivered to the merchant.
- Invoice factoring transactions also involve a delivery of funds in the amount of the face value of the invoice minus a discount and/or a reserve.
2. At a future time, the person receiving that money agrees to return an “equivalent” sum.
- In revenue-based financing, the merchant agrees to deliver the purchased amount based on an agreed-upon percentage of the merchant’s revenue stream. Arguably this is a “sum of money” equivalent to the purchase price advanced to the merchant.
- Factoring is a bit more complicated. In recourse factoring, a factoring client sometimes is required to repurchase an invoice from the factor if the invoice is not paid on time. The repurchase price is based on the face value of the invoice. Arguably this is a “sum of money” equivalent to the face value of the invoice minus a discount and/or a reserve.
Even if the DFI does not order that revenue-based financing or factoring are loans, a North Dakota court could take the position that the definition of “loan” is now so broad that these products are already loans under the revised MBA. No DFI order is needed.
If a North Dakota court concludes these products are now subject to regulation under the MBA, including its 36% rate cap, then this opens the door for North Dakota businesses that obtain financing to sue any provider that imposes charges that effectively exceed that rate cap.
It’s not clear whether the North Dakota legislature understands what it just did. This amendment was part of a legislative package that was primarily focused on data security. The addition of the “loan” definition would be difficult to find if you weren’t looking for it. House Bill 1127 passed with almost unanimous support. Did all those legislators understand that this law could drive away products that offer working capital to businesses that badly need liquidity and don’t have access to a bank line of credit? I doubt it.
Does this mean that providers of alternative financing should stop funding in North Dakota? That’s a business decision. We’ll certainly be watching to see if the DFI provides any guidance on any kind of “alternative financing” product it considers to be a loan. But providers of revenue-based financing and factoring should start thinking about whether they might need an MBA license North Dakota and whether they can live with the MBA’s 36% rate cap.
According to the North Dakota legislature’s website, this change in the MBA is likely to take effect on August 1, 2025. That gives you some time to think about whether North Dakota is still a viable market for your financial products.
View PostTexas Passes Law Limiting Sales-Based Financing to 1st Positions Only (and more)
The Texas House of Representatives has adopted the Senate’s controversial Commercial Sales-Based Financing amendment that prohibits a sales-based financing provider from automatically debiting any merchant in the state unless they are in a perfected 1st position. With the governor’s signature it will be law. As previously outlined, Texas had introduced its own commercial financing disclosure bill which included many extra requirements such as broker registration, state regulatory oversight, and now… a prohibition on any sales-based financing (with a particular aim at MCAs) where payments are debited that is not a true 1st position with a perfected security interest. It bears mentioning that 1st position here means 1st position out of any other claim altogether, not just other MCAs.
The passed bill, which is the Senate version on the right hand side of this document, includes the following language:
CERTAIN AUTOMATIC DEBITS PROHIBITED.
A provider or commercial sales-based financing broker may not establish a mechanism for automatically debiting a recipient’s deposit account unless the provider or broker holds a validly perfected security interest in the recipient’s account under Chapter 9, Business & Commerce Code, with a first priority against the claims of all other persons.
While the law specifies sales-based financing, broadly encompassing either a purchase transaction (MCA) or a loan where the payments ebb and flow with sales activity (revenue based finance loan), companies with a special bank relationship are exempt from the law. The exemption applies to: “a bank, out-of-state bank, bank holding company, credit union, federal credit union, out-of-state credit union, or any subsidiary or affiliate of those financial institutions.”
Though the House had until Monday to decide on adopting the Senate’s amendment, the 98 Yeas to the 23 Nays made it a done deal at the very end of yesterday’s legislative session. It now simply awaits the governor’s signature.
View PostDodd-Frank 1071: Regulatory Uncertainty in Small Business Financing
Jeffrey S. Paige is the Chief Legal Officer of CFG Merchant Solutions. Visit: https://cfgmerchantsolutions.com
A Changing Regulatory Landscape for Commercial Finance in New York & Beyond
When President Trump returned to office on January 20, 2025, he signed several executive orders with significant implications, particularly for New York’s commercial finance sector and the revenue-based financing industry. One such order was a regulatory freeze that could impact rules issued by the Consumer Financial Protection Bureau (CFPB), specifically those concerning small business financing data collection under Dodd-Frank Section 1071. The rationale behind this freeze is that the CFPB, an agency not directly controlled by Congress, exceeded its intended regulatory scope.
Trump’s order not only halts the issuance of new rules but also mandates the withdrawal of any rules previously sent to the Office of the Federal Register. More critically, it directs agency heads to “consider postponing” any rules that have been published but have not yet taken effect, creating a 60-day review period for reassessment of their legal and policy implications.
“Should actions be identified that were undertaken before noon on January 20, 2025, that frustrate the purpose underlying this memorandum, I may modify or extend this memorandum to require that department and agency heads consider taking steps to address those actions,” the order concludes. This places Section 1071 in limbo, leaving financial institutions uncertain about compliance obligations moving forward.
However, New York funders may still need to prepare. Under 12 U.S.C. § 5552 of the Dodd-Frank Act, individual states (including their respective financial regulators and attorneys general) have the authority to enforce federal consumer financial law, specifically, the Consumer Financial Protection Act and 18 enumerated consumer laws such as TILA, EFTA, FDCPA, GLBA, and regulations issued by the CFPB. Simply put, New York has the ability to enforce these laws and regulations, including Section 1071, by bringing suit in federal or state courts or other appropriate proceedings against any “covered person or service provider” as defined and not excluded by the Dodd-Frank Act’s terms. It is therefore prudent for non-exempt lenders and funders to take a proactive approach.
What Is Dodd-Frank 1071?
The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, sought to address vulnerabilities in the financial system exposed during the 2008 financial crisis. On March 30, 2023, Section 1071 amended the Equal Credit Opportunity Act (ECOA), empowering the CFPB to collect and report key data from financial institutions on small business financing. The compliance deadline varies based on the size of the institution, with the earliest deadline set for July 18, 2025, affecting Tier 1 providers, defined as high-volume financial institutions.
The goal of Section 1071 is to identify and address disparities in small business financing by analyzing key metrics such as:
- Demographics of business owners (race, gender, ethnicity).
- Financing terms, rates, and credit outcomes.
- Geographic data, including trends in underserved regions.
By requiring funders to disclose this information, the regulation seeks to foster accountability and ensure that small businesses—especially those owned by minorities and women—have equitable access to credit and capital.
CFPB & Section 1071 Timeline
2010: Dodd-Frank Act Enacted
- Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act is established.
2011: CFPB Established
- The Consumer Financial Protection Bureau (CFPB) is created as an independent agency overseeing consumer financial protection laws, including small business lending regulations under Section 1071.
2017: CFPB Faces Legal Challenges
- Industry groups challenge the CFPB’s authority and structure, arguing that it lacks proper congressional oversight.
- Under the Trump administration, regulatory focus shifts toward deregulation, and CFPB rulemaking efforts on Section 1071 slowed down.
2020: U.S. Supreme Court Decision – Seila Law v. CFPB
- The Supreme Court rules that the president can remove the CFPB director at will, weakening its independence but allowing it to continue functioning.
2021: Biden Administration Revives Section 1071 Rulemaking
- The CFPB under Director Rohit Chopra prioritizes implementing Section 1071, aiming to enhance transparency in small business lending.
2022-2023: CFPB Proposes & Finalizes Section 1071 Rule
- The proposed rule is released in 2022, requiring lenders to collect and report loan application data, including business owner demographics.
- In March 2023, the final rule is issued, with compliance deadlines set for 2024 and 2025 based on lender size.
2023-2024: Legal Pushback & Court Challenges
- Industry groups file lawsuits, arguing that Section 1071 creates excessive regulatory burdens and violates constitutional limits on CFPB authority
- In October 2023, a Texas court stays the rule for certain plaintiffs, pausing enforcement for some lenders.
- In 2024, additional lawsuits escalate concerns over the rule’s implementation.
January 20, 2025: Trump Returns to Office & Freezes Regulations
- On his first day back in office, President Trump issues an executive order freezing pending regulations, including Section 1071.
- The order:
- Blocks new CFPB rulemaking,
- Withdraws rules not yet finalized,
- Delays implementation of already published rules for a 60-day review period.
- President Trump’s justification: The CFPB is an unelected agency that overstepped its authority, and its rules should be reassessed.
2025: Uncertainty & State-Level Action
- The CFPB’s authority remains in question, leaving financial institutions uncertain about compliance requirements.
- New York may independently implement similar reporting requirements, as it has done with previous commercial financing regulations.
- Many New York funders continue preparing for potential state-level enforcement despite the federal freeze.
How Alternative Financing Providers Can Adapt
Funders in the alternative financing space should remain agile and prepare for multiple scenarios. Even if Section 1071 is rolled back, transparency and fair funding practices remain critical for fostering trust and maintaining credibility in the market.
Steps funders can take include:
- Investing in technology to automate compliance processes, ensuring readiness for future regulations.
- Engaging with industry stakeholders to advocate for practical regulatory approaches that balance fairness and business efficiency.
- Maintaining transparency in financing practices to build stronger relationships with merchants and partners.
Looking Ahead
As the financial industry navigates the potential rollback of Dodd-Frank 1071 (Republican Congressman Roger Williams of Texas has introduced H.R. 976 seeking to do just that), alternative financing companies should focus on long-term strategies that prioritize both compliance and innovation. This is especially true in New York, where the legislature is currently considering a bill called the Fair Business Practices Act, modeled after Title X of Dodd-Frank, that would among other things expand the New York Attorney General’s enforcement powers and enhance penalties in this industry sector for UDAP violations. This further signals that New York as well as other states is seeking to fill any void left by the weakening of the CFPB. Whether the regulation remains in effect or is dismantled, financial institutions should stay proactive in adapting to changes while ensuring fair access to capital for small businesses.
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