Sorry ... Page Not Found

Five Leading Innovative Banks Join American Fintech Council (AFC), Expanding Collaborative Efforts With Fintech Industry Leaders and Regulators To Develop Future of Finance

Washington, D.C. (August 28, 2024) – The American Fintech Council (AFC), the premier industry association representing responsible fintech companies and innovative banks, has announced the addition of five new members representing regional and community banks committed to fintech innovation. In joining AFC, the five banks bring deep history and experience serving community needs, as well as leading fintech platforms and services that are driving unprecedented value for customers both local and national.

“We are immensely proud to welcome our five new innovative bank members, but this announcement is about far more than AFC,” said Phil Goldfeder, Chief Executive Officer of AFC. “Financial technology has been a disruptive force helping to expand access to financial services for millions, particularly underserved communities. Yet, regulators have far too often applied inconsistent and unclear standards to responsible fintech providers – failing to consider the needs of consumers and the realities of who benefits from the inclusive, transparent, customer-centric services our members provide. Adding five more responsible innovative banks to our membership, sends a clear signal that fintech is the future of finance, and the scope of responsible innovation happening across the industry is far too significant to be ignored.”

AFC has consistently advocated for a unified and pragmatic regulatory approach towards innovation. Building on its mission to develop sound public policy, AFC has engaged significantly with federal prudential regulators and made its members’ views understood across the government.

More about AFC’s five new members:

• Lincoln Savings Bank, founded 1902, is owned and managed by Iowans and offers full-service community banking and financial services, as well as fintech and Banking-as-a Service (Baas) offerings through its LSBX division founded in 2014.
• New Horizon Bank was founded in 2009 by local business owners in Powhatan, VA looking for a community-focused bank; New Horizon combines traditional banking with technology and innovation that anticipate community needs.
• Republic Bank has served Chicagoans since 1964; in addition to traditional bank offerings, family-owned Republic Bank is the payments and fintech partner for Fortune 500 companies, national retailers, and nationwide auto insurers.
• Stearns Bank was founded in Minnesota in 1912 and has since grown to serve customers in Arizona and Florida; in 2021, Stearns entered the embedded finance and BaaS spaces with a continued focus on expanding access to responsible credit and capital.
• TransPecos Banks offers a full range of banking products as well as fintech services concentrated in the TransPecos region of West Texas and San Antonio; founded in 1928, TransPecos Banks embraces technology and innovation to better serve local communities and businesses.

A standards-based organization, AFC is the premier trade association representing the largest financial technology (Fintech) companies and innovative BaaS banks. AFC’s mission is to promote a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. AFC members foster competition in consumer finance and pioneer products to better serve underserved consumer segments and geographies.

Whoa, QuickBooks Capital Shoots Up in Business Loan Originations

Intuit’s fiscal year ending July 31, 2024 revealed a stunning detail, $2.4B in financing through QuickBooks Capital over 12 months. This was up 28% from the prior year. That number likely puts Intuit’s business loan volume ahead of Shopify’s but that’s still less than Enova and Square. Customers of QuickBooks Capital can apply for financing by clicking a button right in their QuickBooks software.

QuickBooks Online accounting revenue grew 17% in Q4 and 19% in fiscal 2024, the company reported. Intuit has the advantage of many related QuickBooks services slowly merging into one such as payments, payroll, capital, and Mailchimp. Intuit also owns Credit Karma.

Navigating SBA Lending at B2B Finance Expo

Looking to do more in SBA lending? Make sure you attend this panel of SBA lending professionals at B2B Finance Expo, taking place on Day 1 of the conference on September 23!

Moderated by Bob Coleman of the Coleman Report, this discussion will feature Carissa Sousa, Adam Seery, Jared Weitz, and Ryan Baderian.

The full agenda of the conference can be found here.

Media and Trade Associations With Representation at B2B Finance Expo

Coming to B2B Finance Expo on September 23-24 in Las Vegas? Here are some of the news publishers and trade associations that will have representatives there! (SEE AGENDA HERE)

Small Business Finance Association

National Private Lenders Association

Innovative Lending Platform Association

Coleman Report

Equipment Finance News

deBanked

Registration is still open at: b2bfinexpo.com

Airborne Capital Closes Its Debut Investment-Grade Corporate Note Financing

21 August 2024 – Airborne Capital Limited (“Airborne Capital”), a leading global aircraft asset manager, announced the closing of a US$20.0 million investment-grade rated corporate note financing offered through its U.S. subsidiary Airborne Capital USA LLC. Proceeds from the transaction will be used to refinance existing debt and for growth capital.

Airborne Capital currently manages in excess of US$2 billion of aircraft assets for a wide variety of institutional investors and airlines across the globe.

“This new capital raise paves the way for further growth and allows us to continue expanding our asset management business. This financing reflects our strong commercial position, and better positions us to serve our clients in the increasingly evolving aviation space” said Hari Raghavan, Partner at Airborne Capital. “This transaction marks a significant milestone for Airborne. It represents the confidence that institutional investors have in Airborne Capital.”

Brean Capital, LLC served as Airborne Capital’s Exclusive Financial Advisor and Sole Placement Agent in connection with the transaction.

About Airborne Capital Limited
Airborne Capital is a specialist aircraft leasing and asset management business headquartered in Ireland and with a presence in Shannon, Dublin, London, New York, Hong Kong and Tokyo. Airborne Capital manages approximately US$2 billion of aircraft assets through active relationships with a global set of investors. Airborne Capital is substantially owned by the management of the group.

For additional information about Airborne Capital, visit: https://airborne.capital/

Contact:
Christopher Simmons – Portland Communications
Christopher.simmons@portland-communications.com

California Bill Aims to Add Consumer Debt Collection Protections to Commercial Debts

Among several commercial finance bills currently making their way through the legislature in California is SB1286, which would apply consumer debt collection protections to commercial debts.

If this bill were to eventually pass commercial debt collectors would need to obtain the same license currently required under existing law for consumer collectors. In addition, it would be a crime for a collector of a commercial debt “to send a communication that simulates legal or judicial process or that gives the appearance of being authorized, issued, or approved by a governmental agency or attorney if it is not.”

There are still more components that would require compliance as well. Like the fact that under current law a debt collector is required to stop collecting a consumer debt when an alleged debtor provides the debt collector with certain information, including information relating to the debtor’s status as an alleged victim of identity theft. This would also apply to commercial debts. The full language of the bill can be read here.

Another bill moving along right now is SB1482, which would “would impose various duties on commercial financing providers and brokers, including, among other things, prohibiting the taking of a confession of judgment or power of attorney at any time before a default.”

Although both bills were introduced all the way back in February, they are currently being passed through committees.

When $10 Million Was Lost In MCA Deals

David Roitblat is the founder and CEO of Better Accounting Solutions, an accounting firm based in New York City, and a leading authority in specialized accounting for merchant cash advance companies.To connect with David or schedule a call about working with Better Accounting Solutions, email david@betteraccountingsolutions.com.

In the high-stakes world of merchant cash advances (MCA), trust is a precious commodity, and when that trust is shattered by a longtime partner, the fallout can be catastrophic. Imagine investing tens of millions in what you believe to be a thriving MCA business, only to discover someone you know is siphoning funds through an intricate web of deceit. This isn’t a hypothetical scenario—it’s a grim reality many MCA investors face, and it serves as a stark warning to us all.

Here’s one story from a couple of years back that an industry friend of mine told me:

The betrayal began innocuously enough. The investor trusted the MCA company he was syndicating deals with well, and the owner seemed competent and trustworthy. But beneath this carefully cultivated facade lurked a sinister scheme. This owner had also secretly established his own ISO and collection agency. With access to insider knowledge and an unchecked commission structure, he was in a prime position to execute a brazen and ongoing theft.

The owner submitted deals to his own funding company through his ISO and then funded them with syndication from investors. Then the deals would default. For months, the ISO maintained an exceptional high default rate. When the investor asked the owner what was going on, the owner would express his own puzzlement. He would show his syndicators how deals looked like they were progressing well initially, before they would inevitably crash out and default. Confident that they were backing the right man for the job, the syndicators kept on giving him money. Yet these deals were doomed from the start and designed to fail. By intentionally backing poor investments, he set the stage for his collection agency to step in once the deals inevitably defaulted.

The brilliance—and the horror—of his scheme lay in its simplicity. He manipulated the commission structure, securing an arrangement where he received full commission if a deal stayed active for just over a week. The deals only needed to appear stable for a short period before crumbling. Once the facade of success faded, the deals were swiftly handed over to his collection agency, ensuring he reaped the benefits from every angle.

In effect, he was stealing from his investors and partners in four ways. The first, he was stealing part of their investments before he ever put it into deals, and then of the deals that worked out, he skimmed off as well. The rest he put it into purposefully bad deals- after collecting a quick commission on- and then promptly stole from his own collections firm to top it all off.

As I delved into this case, the warning signs became glaringly apparent. Unusual commission arrangements should have raised immediate red flags. A commission structure that disproportionately rewards short-term success is ripe for exploitation. Moreover, conflicts of interest, like owning related businesses, should never be overlooked. The funder’s ownership of an ISO and a collection agency created an inherent conflict, one that he deftly exploited.

Another alarming sign was the pattern of poor-performing deals. Consistently funding bad deals isn’t just bad luck; it’s a symptom of deeper issues. High turnover in collections, especially when tied to the same individual, is another glaring indicator. A deeper investigation into these patterns could have unearthed the fraud much sooner.

To identify potential issues with your own ISOs, run a report over a three-month period detailing the total dollar amount and number of deals funded by each ISO. Compare these figures to the defaults from each ISO. If the percentage of defaults from an ISO significantly exceeds their contribution to your portfolio, it indicates a potential problem. Additionally, track the recovery rate from your collection firm; less than 25% recovery may signal issues with the contracts, merchants, or the collection firm itself. Conduct periodic audits to ensure that funded merchants are legitimate and not misrepresented.

Preventing such betrayal demands vigilance and a multi-faceted approach. Background checks should be thorough and updated regularly to catch any emerging conflicts of interest. Transparent and standardized commission policies are essential, avoiding complex arrangements that can be manipulated. Regular audits and monitoring can serve as an early warning system. Advanced analytics and an industry CRM such as Orgmeter or MCA Track can detect irregular patterns, flagging potential issues before they escalate. Beyond the technical measures, fostering a culture of honesty and transparency is vital, and employees should be trained to recognize and report suspicious activities.

This true story of betrayal within this company serves as a dramatic reminder of the dangers lurking within our businesses. Trust, once broken, is difficult to rebuild. By remaining vigilant and proactive, we can protect our companies from those who seek to exploit our trust for their gain. With the right measures, we can safeguard our investments and ensure the integrity of our industry.

Prosper Continues to Chug Along

Prosper originated $512.2M in consumer loans in Q2 of 2024, which was down 14% from the same period last year. This was “primarily due to the reduced usage of our Warehouse Lines to purchase loans, as well as decreased third-party investor demand,” the company said in its quarterly report.

Prosper rates its borrowers from AA (best) to HR (worst). They are AA, A, B, C, D, E, HR. Twenty two percent of their borrowers in the first half of 2024 were given a B rating. 15% had an E rating and only 10% had a AA rating.

Overall, Prosper has been chugging along, generating an insignificant net loss of only $500,000 for the quarter. The fact that it supplies public quarterly reports is unique in that the company is not public but continues to sell notes to retail investors, making it more-or-less the only remaining peer-to-peer lender to remain from what is now a bygone era.