Two recent changes to established funding companies have caught my eye and here's what it means for funders and the business lending industry at large. In April of this year, BFS Capital essentially transformed into Nuula, which was a new venture started from within BFS Capital as a software application project and now is the new company. Less than two months ago they announced they had raised $120 million to build out their new software application. Yes Lender just announced they have rebranded to Fintegra. The reason for the rebranding according to the company’s CEO is “serves as a daily reminder to our customers and colleagues of our mission and values”(Yes Lender Rebrands, 2021). While these major changes may seem similar on the surface, they really are not, although they may be commonplace in business in general.
Rebranding to Fintegra is a smart move although some might argue overdue given their main product offering of an MCA not being a loan, thus not being a ‘Lender’. We’ve seen similar changes in the past like when Rapid Advance went to Rapid Finance partly due to the product offerings they had and were planning on in the future.
This rebranding to Fintegra is simply that, not a major structural change or pivot or expansion in product offerings as far as could be gleaned from the press release. They do mention their investment in technology as being key to their business model as it should with any credit provider. Still, it should serve the company well in the marketplace as being a business finance company that leads with its technology and professes its integrity. If most funders offering MCA products put more integrity into their core values this industry would be much better off.
I would also expect more rebranding in the future with this type of product shift taking place. I can think of several that should do so especially if they offer more than just merchant cash advances already.
With regards to Nuula, which could be a case study in “Intrapreneurship”, their changes are a pivot and structural from top to bottom. Nuula aims to be a super app offering many services to businesses that will not only help them gain financing at the more exact time needed but also help in decision making and analysis. They will offer third-party banking and white label products through their app, customer sentiment tracking like ratings and reviews for their business from various sites, cashflow forecasting, and on the roadmap are payments and e-commerce data(Linden, 2021). Think of this as being like the consumer finance application Mint, which offers a broad range of services besides linking your bank accounts and tracking transactions like credit scores, insurance products, budgeting, etc.
The business owners' payments and e-commerce transaction data are the key for any underwriting model and gaining real-time access to it are at the top of the priority list for all. Funders, really of any credit product, would like that access but it isn’t always easy to gain when using third-party services on the market like Decision Logic. It's much better to create something that you have direct access to the data, but that takes a large capital investment that not all can or will make.
Companies like Stripe for example, make it so simple when a merchant is using their payments platform to offer that merchant working capital when they are eligible. The merchant gets a notification via their dashboard or email when they are eligible initially or for renewal. The user experience is so frictionless that a business owner can get a renewal application completed within 10 minutes without credit being pulled, supporting documents added, or other stipulations, and then get funds within the same day. Then their progress on the ‘loan’ is displayed and updated in real-time after every transaction on their dashboard.
Nuula’s CEO Mark Ruddock sees an opportunity for innovation in the services being offered to small and medium-sized businesses throughout the US as well as most parts of the world(Lunden, 2021). They will release the app to the US first then Canada, the UK, and other parts of Europe. They moved their digital headquarters to Canada from south Florida(full disclosure I worked at BFS years ago), stopped funding new loans, and shut down their ISO partner channel. The shutting down of their ISO channel be very notable and a warning sign to brokers out there.
The amount of capital raised for the development and growth of this app should put them at the forefront of the small business lending industry and be very successful if everything goes as planned.
Much of the rest of the industry will be playing catchup if they aren’t already innovating or adding other verticals to their product offerings.
The bigger players are likely already on this path. The rest may have the business and credit model that works for them now for a certain volume of clients, but where are the clients going in the future if these funders don’t enhance their ability to differentiate themselves by offering new related services that create value for the business owner?
Technology is moving so fast companies must keep up or get left behind. Time will tell, but Nuula and Fintegra are moving in the right direction.
Lunden, I. (2021). Nuula raises $120M to build out a financial services ‘super app’ aimed at SMBs. Retrieved from https://techcrunch.com/2021/09/09/nuula-raises- 120m-to-build-out-a-financial-services-superapp-aimed-at-smbs/
Yes Lender Rebrands as Fintegra and Signs Roger W. Ferguson, Jr. as an Investor and Advisor. (2021). Retrieved from https://www.prnewswire.com/news-releases/yes-lender-rebrands-as-fintegra-and-signs-roger-w-ferguson-jr-as-an-investor-and-advisor-301423160.html
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