Nuula, Still in the Business Lending Game, Lays Groundwork for Larger Ecosystem
December 29, 2021
Nuula, formerly known as BFS Capital, has 5,000 merchants on a waitlist to access a line of credit after just four months of its application process being made available.
But there’s more.
“Nuula is built to not only deliver our own financial products, but it’s developed to help us provision and deploy third party financial products that come from our ecosystem,” said Mark Ruddock, Nuula’s CEO. “So what we’re trying to do here is not really be a broker, but we will carefully curate products.”
“That could be larger, longer loans from one partner, it could be insurance from another partner, it could be entrepreneur wealth management from a third partner,” he continued.
“So we bring those partners onto the platform, and then we expose their functionality within the app, in a way that’s consistent with all the other tools in the app. So yes, there is room for third party lenders.”
Ruddock spoke about how as of now, Nuula’s infrastructure only offers opportunities to those interested in directly funding businesses. The company profits via revenue sharing when businesses are provided with capital from a third party funder on the platform.
Despite not being available yet, he hinted at possibly incorporating broker-esque products as the app’s financial product suite grows.
“Today, we don’t see a near term role for brokers on the app, because we’re not really trying to create a marketplace of a multitude of products, we’re really trying to curate things very, very carefully,” said Ruddock. “However that’s not to say say that we will not over time provide the ability for the more digital brokers or intermediaries to play a role as we seek to broaden the portfolio of tools that we offer.”
“I would say no to brokers in the sense that we really don’t have a compelling offer for them at the moment, but yes to other financial services providers.”
Ruddock described how Nuula is serving a niche customer base, a tech-centric merchant who is looking for an easy-to-use mobile software that can manage their businesses’ X’s and O’s. Not only is this type of merchant underserved and beginning to substantiate in numbers according to Ruddock, but they are extremely eager for access to capital.
“It’s a fundamental change in the way underwriting has been done, away from kind of a rearward looking model, towards a real-time forward looking model, and that’s what we believe is going to be required to unlock capital to this new generation of businesses.”
“[Nuula] reimagines underwriting in a way that says ‘don’t just look at the last six months of bank statements’,” Ruddock said. “[We] look on not only of the day of lending, but the lifetime of your relationship, and how those businesses are recovering, growing, and thriving.”
He spoke about how with real-time data being accessible through Nuula, businesses that are building their creditworthiness can have a mobile reference point for the data that they need to see their real-time financial state, while simultaneously giving lenders a live picture of the businesses’ books.
“So even if a business is not strong enough for credit today, it might be in three months, and we can go watch your progression through this period and unlock the capital when the time is right, and then if that business grows out of the pandemic and recovers and is stronger, we’re going to be able to a broader and richer portfolio of credit.”
Although their target customer seems to be a digitally native merchant, Ruddock says that Nuula’s onboarding process is designed to be simple enough for a merchant who may not be as familiar with fintech.
“I’m a fifty-plus year-old CEO of a fintech company, and I would say I’m as digitally savvy as a twenty year-old, so it isn’t really about age anymore,” said Ruddock. “It’s by the way which [merchants] have embraced technology.”
“What we’ve done with Nuula is we’ve tried to make this product intuitive and simple for a first time app user and we’ve tried to help these folks get access to the data that now is sitting in a multitude of systems. While we believe people who have grown up in an app-centric world are going to be amongst the first adopters, we’re trying to make this product accessible for the fifty year-old restaurant owner too.”
Nuula plans on expanding their data harnessing tools with other fintechs early next year. “Over the next two weeks, we will actually unlock the ability for [merchant] sales data from Shopify or Square,” said Ruddock.
Lender is Providing $5K Incentive to Veteran-Owned Businesses
November 10, 2021
In an effort to promote veteran entrepreneurship, Fountainhead, the nation’s leading SBA 7(a) and 504 non-bank lender, is providing funds to veterans to assist them with closing costs of the deal should they pursue funding through the company.
Fountainhead’s CEO Chris Hurn spoke exclusively to AltFinanceDaily Wednesday about what Veterans Day means to him, his business, and how giving this group a break on the cost of capital is not just a marketing ploy, but a genuine attempt to give back to an underserved and under-recognized community.
“We have always been very supportive of veterans getting into entrepreneurship,” said Hurn. “[The promotion] is basically us gifting $5,000 on a transaction if they close with us.”
“Oftentimes, that’ll be enough to cover a real estate appraisal, enough to cover the environmental reports, it may be able to cover some of the credit reports, different things like that. We do put a cap on it, we are still a for-profit enterprise, but we are covering up to $5,000 of the closing costs.”
As a lender with more than two decades of experience, Hurn believes that veterans are some of the most trustworthy and reliable business owners to do business with. “Some lenders feel like veterans don’t have business experience, I disagree with that,” he said. “I think the military teaches people to be very organized, very disciplined, which are two critical pieces for entrepreneurship.”
From the lender’s perspective, Hurn believes that it is not only good business practices that military experience can provide, but honesty and creditworthiness when it comes to paying back a loan.
“Veteran business owners tend to be extremely organized, extremely disciplined in terms of operating the business. I’m not saying [non-veteran] business owners don’t have aspects of that, but I think the military does a tremendous job on teaching those character traits, which as a lender I find very helpful to make sure I’m getting repaid.”
According to Hurn, about a fifth of his clients are veterans, and he is hoping to increase that number with this promotion.
“[Veterans] are a very good credit risk, we want to encourage them to get into entrepreneurship, and I think it’s the right thing for the business community to do all they can to help veterans.”
Mississippi Fintech is Innovating Small Business Lending with Brokers in Mind
November 3, 2021
Vergent, a loan management software, is creating a space where brokers and lenders alike can manage all aspects of a deal in one place. Based in Ridgefield, Mississippi, Vergent is trying to innovate the industry with brokers in mind, pairing the small town values of interpersonal engagement and getting to know your customer with the big city ideas of fintech and automation.
“Really what we provide is the technology infrastructure for lenders to reach their end user,” said Bradley Tompkins, Chief Information Officer at Vergent. “Whether that be a small business looking for a loan, we facilitate that acquisition, the origination of that loan, and the servicing of that loan. That could mean recurring payment setups, based upon the lender’s requirements, communication with that customer via email, text, however that is facilitated, and all the different payment options.”
Tompkins talked about how his software is one of the few that brokers in his area are already utilizing to start making deals smoother. With access to all aspects of the deal, Vergent provides an all-in-one suite of options that can turn the process of analyzing a deal or checking out a deal post-funding into a couple of clicks.
“We actually have brokers who use our software to accept applications, originate loans, and then we can either transfer that to a separate portfolio that the lender then manages for servicing, or sometimes we have brokers that service the loans themselves,” Tompkins said. “So there are really a lot of options on how to set that up in the platform, so the lender can have a separate site where they accept applications from multiple brokers, or really any combination of those things.”
The value of a direct relationship with the customer is top-tier according to Tompkins, as he spoke about the next great innovations in fintech not being how to weed the human interaction out, but finding its role that will find the balance between human touch and AI power. “Once you know your customer, you can give them the option to pay you back in the easiest way possible. Understanding how they get paid, their pay cycles, when they have money and being flexible to accept that money when they have it, and giving them those repayment options is the next great innovation.”
When talking about the ability to market his product to a wide audience, Tompkins acknowledged the difficulty due to the size of the industry itself, but touched on the value of networking events like Money 20/20, where Tompkins was pitching Vergent to an international audience.
“We’ve been pleasantly surprised by the amount of lenders we’ve seen, and the amount of opportunities that have come our way from [Money 20/20]. We came here pretty open minded, maybe talk to some payment processors and other vendors that may be able to integrate to us and kind of help expand our network, but really it’s just getting our name out, seeing a little bit of a different segment than what we normally see, and looking at other market opportunities.”
Appalachian Crowdfunder Gives Take on Business Lending
November 2, 2021
View from outside of Pittsburgh, PAGeorge Cook, whose family has been running a small community bank in rural Appalachia for over 130 years, has grown up in a world surrounded by banking in some of the most rural parts of America. Now the CEO of Honeycomb Credit, Cook has taken to a crowdfunding platform to start lending to businesses in his area. Cook shared his thoughts with AltFinanceDaily about the state of lending, and how his product competes with ones already available on the lending market.
Cook spoke about how when he growing up, he always had a fascination with the relationship between the consumer and their banks combined with the difficulties for those consumers to get access to capital. “I spent a lot of time thinking about community banking, especially local capital,” said Cook.
When discussing competing products in the lending space, Cook thinks that his product will innovate his area with a style of lending that benefits both the borrower and investor. It appears that he thinks products like MCAs have become partially antiquated.
“I think the downside of [MCA] is inherently when your value proposition is fast money, you’re going to have a negative selection,” said Cook, when asked about fintech’s role in innovating small business lending. “You’re going to have a lot of desperate businesses who need money fast, which means you inherently have to charge a high interest rate and that has [deterred] a lot of business owners.”
George Cook, CEO, Honeycomb CreditCook referenced how the complexity of some MCA deals prevent small businesses from using them. “We talk to a lot of business owners who really don’t understand what a merchant cash advance is, they get caught in a debt trap, and it’s not a good situation. For me, I think the next evolution is, not saying merchant cash advances are going away, but I think they’ve been over extended. I think they’ve been overapplied in places where they don’t make sense.”
Cook hinted at new fintech loan products that have elements of MCA popping up in the lending world, as fintech innovates the industry.
“I think now we’re going to see the fintech space start to right the issue, come up with other capital solutions that make sense for small businesses for longer term capital. I think we’re going to see a lot of term loan products that act with different data and different attributes coming to bear, [thus] being able to bank these businesses.”
After working in fintech building big data credit analytics products prior to starting Honeycomb, Cook claims he saw a major issue with small businesses having access to capital long ago. He saw that the qualifications needed for business loans were the same as ones needed for consumer loans, and many small businesses just didn’t qualify for the capital they needed.
“[The system] didn’t work as well for small business lending because you know, small businesses don’t have as much operating history, they don’t have clean data sets, they’re not keeping their books really well, there’s not really a good data aggregator of small business data.”
Cook continued to speak about the issues with banks evaluating a small businesses’ credit and how this was causing a low approval rating. “A coffee shop looks a lot different than a fitness studio and those look a lot different than a manufacturing plant,” he said. “We were actually seeing a really large decrease in small business lending across the country.”
According to Cook, his company allows investors to take their money and put it right back into the community. He also claims that each one of his customers can expect returns ranging from six to twelve percent on an investment.
Honeycomb makes money on success fees, which are the closing costs on the loan. There’s also an investor fee to get a foot in the door.
“One of the things we’ve found is whenever you have retail investors, you have local people in the community voting with their wallets on these small business loans,” said Cook. “So we’re able to do small business loans in a way that no one else has been able to.”
Ireland is Funding Fintech Through Government Investment
November 2, 2021
The Irish government has taken a serious liking to fintech. With a broad history of being active in financial services, the nation believes they can attract companies from around the world to reap the benefits of employing Irish citizens, while also tapping a major source of export revenue through an up-and-coming industry.
With access to capital for small businesses just as difficult here as it is in the US, a new fintech company looking for start-up cash may be able to turn to Dublin to get a major investment, rather than dealing with a retail investor or a venture capital firm here in the states. Enterprise Ireland, the organzation that runs these programs, is trying to tempt fintech companies looking for a fresh start or an international expansion to start that process in Ireland.
“Enterprise Ireland is the trade development and venture capital arm of the Irish Government,” said Claire Verville, Senior Vice President of Fintech and Financial Services at Enterprise Ireland. “We are a semi state agency and our mandate is to help support indigenous Irish enterprise to grow and expand in global markets.”
Just like in the United States, it is extremely difficult for an Irish business to walk into a big bank and get a loan. It’s in these situations where the Irish government has decided to make a direct investment themselves. Through Enterprise Ireland, according to Verville, the Irish government can provide capital to startups across a range of areas, in exchange for things like loan repayment or government equity in the company.
“In addition to the kind of more traditional trade development stuff that you would see from any government promoting their indigenous businesses abroad, we do invest directly in companies through equity and participate directly as a [limited partner] in funds to funds.”
Verville spoke about how the Irish government has been looking to extend funding to fintech startups for some time. “Our fintech portfolio is over 200 companies now, we have been one of the most active investors in Europe in a long time. We are one of the most active global investors across all sectors, and we’re really focused on early stage capital for fintech.”
When asked about the decision making process that goes into Irish investments, Verville portrayed it the same as if it was a private firm making the same move. “We will vet like any other investment, make sure we’re comfortable with it, make sure that the business is verifiable, and that we understand the track record of the team,” she said.
Through investing in fintech, Enterprise Ireland appears to believe they will give their small business owners better access to capital. If the industry can create a Euro-American hub in Ireland, the latest tech and funding innovations will develop there, giving access to that technology to Irish businesses first. If Irish small business lenders can use Irish technology to help an Irish merchant, everyone wins.
With financial innovation in Europe being leaps ahead of the US, Verville believes the Irish employees working in finance would be better suited to deal with some of these new innovations over Americans because of their familiarity with these systems that are already in place. She hinted at things like EMV cards being around in Ireland for years at the consumer level before they ever made it to the United States.
As far as incentive for profit, Enterprise Ireland isn’t concerned with the success of their investment from a financial perspective as other investment groups are. They instead focus on things like employment numbers and longterm sustainability for those jobs acquired through their efforts in investing in industries like fintech.
“Because we are attached to the government, we aren’t a money-making mission as far as venture capitalists go. We are focused on employment in Ireland, which is partly why it’s so important that the companies are founded in Ireland and that they are building their employee base in Ireland, and on export revenue.”
Verville spoke about how only when businesses in Ireland do well, Enterprise Ireland only does well, too. “We do make money off some of our investments, and that’s government money. We get our budget set by the government department every year, just like any other government agency.”
To be eligible for funding from Enterprise Ireland, a business needs to be based in Ireland, have an Irish LLC, and must have a significant amount of Irish employees. According to Verville, the Irish market is ripe for American small businesses, especially alternative finance.
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.
National Funding Announces the Upsize of Their Bank Credit Facility and the Issuance of Corporate Notes
October 12, 2021
SAN DIEGO, Calif. October 12, 2021 – National Funding, Inc., one of the largest U.S. specialty finance companies serving small- and medium-sized businesses, announced the recent renewal and upsize of a $60.0 million senior secured warehouse line of credit. The facility, which includes an accordion to expand to $75.0 million, was provided by a prominent U.S.-based commercial bank. The facility will continue to be used by the Company to fund new originations and support additional growth of the platform.
Concurrent with the transaction, National Funding also secured a $55.0 million investment-grade rated corporate note financing provided by a consortium of institutional investors. The transaction was assigned a BBB+ rating by a nationally recognized statistical ratings organization. Having closed this additional financing, National Funding is well positioned to support its partners and enhances the Company’s ability to take advantage of significant market opportunities.
To date, National Funding has provided more than $4.3 billion in working capital and equipment leasing for more than 75,000 small- to medium-sized businesses nationwide.
“As the economy recovers from the pandemic, this challenging environment is creating opportunities for National Funding to accelerate our growth plans and at the same time provide flexible capital solutions to our client base seeking to expand their businesses,” stated Dave Gilbert, CEO of the Company. “Our ability to close these transactions with multiple institutional partners has substantially expanded our financial capacity and flexibility and is a validation of the strength of the robust platform that National Funding has built.”
Joe Gaudio, President of National Funding, stated, “These new facilities represent the continued evolution of the Company’s funding sources, providing National Funding with a unique opportunity to reduce our cost of funding and access more diversified sources of capital. Both investments are a strong endorsement of the stability and success of our Company and of our mission to transform the way small businesses access the capital they need to grow.”
Brean Capital, LLC served as the Company’s Exclusive Financial Advisor and Placement Agent in connection with the note transaction.
About National Funding
Founded in 1999, National Funding is a leading U.S. specialty finance company serving small- and medium-sized businesses. The Company’s foundation serves American small business owners by providing funding solutions to meet their needs to reinvest in their day-to-day operations and help them grow. National Funding’s digital funding process has elevated its digital capabilities by delivering a fast and simple online application. For more information about National Funding, visit https://www.nationalfunding.com.
Contact:
Susan Almon-Pesch
Publicist for National Funding
sue@speschialpr.com
MJ Capital Funding Had More Than 5,000 Investors
October 8, 2021Investigations carried out by the Receiver for Pompano-based MJ Capital Funding, have revealed that the number of investors in the alleged ponzi is more than double than originally believed.
In August, the SEC successfully persuaded a judge to place MJ Capital in Receivership after providing a convincing argument that the company was engaged in an active securities fraud and that the assets should be preserved. At the time, the SEC estimated that there were as many as 2,150 investors and that the amount raised ranged somewhere between $70M and $129M.
Now with better access to the internal workings of the business, the Receiver says that there are actually more than 5,000 investors and that they expect this number to increase, according to recent court filings.
Also revealed is that more than 400 individuals were tasked with recruiting investors.
“While MJ Capital claimed to use investor funds to provide small business loans called Merchant Cash Advances, the Receiver’s investigation to date has revealed virtually no evidence of legitimate business activity involving the funding and collection of Merchant Cash Advances which proceeds could have funded the payments to investors,” the Receiver said in official papers.
The case is ongoing.
More than 3,200 people have come out in support of MJ Capital Funding’s CEO, believing that she is also a victim in what has befallen the company.
