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"Here’s what to expect next year" KEY POINTS Top-tier startups that have three to four years of funding can ride out the storm, according to Point72 Ventures partner Pete Casella. The flood of venture money during the past few years led to copycat companies getting funded anytime a successful niche was identified. Many private companies created in recent years had one central assumption: low interest rates forever, according to TSVC partner Spencer Greene. Eventually, incumbents and well-financed startups will benefit, either by purchasing fintechs outright to accelerate their own development, or picking off their talent as startup workers return to banks and asset managers. Agree or disagree??

The financial giant is suing the founder of a Mark Rowan-backed startup it acquired, claiming the fintech, Frank, had sold the financial giant on a “lie.” JPMorgan Chase is suing the 30-year-old founder of Frank, a buzzy fintech startup it acquired for $175 million, for allegedly lying about its scale and success by creating an enormous list of fake users to entice the financial giant to buy it. Frank, founded by former CEO Charlie Javice in 2016, offers software aimed at improving the student loan application process for young Americans seeking financial aid. Her lofty goals to build the startup into “an Amazon for higher education” won support from billionaire Marc Rowan, Frank’s lead investor according to Crunchbase, and prominent venture backers including Aleph, Chegg, Reach Capital, Gingerbread Capital and SWAT Equity Partners. The lawsuit, which was filed late last year in U.S. District Court in Delaware, claims that Javice pitched JP Morgan in 2021 on the “lie” that more than 4 million users had signed up to use Frank’s tools to apply for federal aid. When JP Morgan asked for proof during due diligence, Javice allegedly created an enormous roster of “fake customers – a list of names, addresses, dates of birth, and other personal information for 4.265 million ‘students’ who did not actually exist.” In reality, according to the suit, Frank had fewer than 300,000 customer accounts at that time.

" Dive Brief: The Federal Reserve fined New York-based Popular Bank $2.3 million for failing to detect “significant indications of potential fraud” in six Paycheck Protection Program loans the bank processed in 2020, the regulator announced Wednesday. The bank, a subsidiary of Puerto Rico-based Popular Inc., also failed to report the potential fraud in a timely manner, the Fed said. While the central bank has issued penalties against individuals linked to PPP fraud, Popular’s fine represents the first action the regulator has taken against a bank in connection with the pandemic relief program, a Fed spokesperson told The Wall Street Journal. "

"Regional lenders and banks with big credit-card businesses continued to profit from borrowers who ran up credit balances at higher interest rates in the fourth quarter. But many tightened their lending standards and set aside more money to cover potential loan losses, signs that they don't expect the good times to last. Capital One Financial Corp. set aside roughly $1 billion to cover potential loan losses in the fourth quarter, a 33% increase from the previous quarter. American Express Co. increased its reserves by more than 25%, setting aside nearly half a billion dollars. Both had drawn down those rainy-day funds a year earlier." READ REST OF ARTICLE HERE: https://www.foxbusiness.com/economy/banks-brace-more-consumers-fall-behind-on-loans

FORT LAUDERDALE, Fla., Aug. 31, 2023 /PRNewswire/ -- iBusiness Funding, LLC, a leader in innovative lending solutions such as LenderAI and Lending as a Service (LaaS), is thrilled to unveil their groundbreaking new product, LenderAI Insights. Although LenderAI Insights shares a name with iBusiness Funding's flagship SBA lending software, LenderAI, it is a separate product designed as a standalone experience. This state-of-the-art platform exclusively uses public data sources and transforms them using proprietary internal models to offer unprecedented, actionable reporting on the Small Business Administration (SBA) lending industry. As part of iBusiness Funding's commitment to industry leadership and innovation, LenderAI Insights is being offered FREE of charge for all SBA lenders nationwide. In addition, lenders do not need to be an existing LenderAI client to get access. Being at the forefront of data analytics and AI technologies in the SBA lending space, iBusiness Funding is launching the platform with a core set of functionalities with plans to continuously roll out additional capabilities based on an existing roadmap and customer requests. Some of the planned enhancements arriving on the platform over the next several weeks include loan level pricing and terms, franchise and funding data segmented by region, and additional competitive insights. Empowering SBA Lenders with Industry Insights "We believe that public data should be both public and free. Some companies charge for access to this kind of publicly available information; we think it should be accessible to all. We've invested our resources, expertise, and time into transforming complex sets of data into actionable insights, not as a revenue stream for us but as a catalyst to propel the entire SBA lending industry forward. We're offering a free, straightforward way for lenders to leverage this invaluable data to directly impact their business growth," says Justin Levy, CEO of iBusiness Funding. "We're committed to democratizing access to public information by providing LenderAI Insights FREE of charge to SBA lenders nationwide." Customizable Models and Dashboards "LenderAI Insights is unique in its adaptability. We're able to build additional models and dashboards as requested by customers using the platform with exclusively public data. We're launching LenderAI Insights as a standalone product, but clients will be able to access all the functionality directly in LenderAI itself in the near future using their existing client logins. We're excited to see how lenders will leverage the data to impact their businesses, and we are committed to continuously enhancing the product," adds Chris McCay, VP of Product for iBusiness Funding. Platform Features • Industry Trend Analysis: Real-time trend forecasting to aid strategic decision-making • Risk Assessment: Comprehensive risk profiles offering insights for portfolio management • Market Segmentation: Detailed analyses of market sectors for targeted business growth • Predictive Analytics: Proprietary models that anticipate market changes derived from public data Read Full Story below https://finance.yahoo.com/news/ibusiness-funding-launches-lenderai-insights-140000148.html

SEP 12, 2023 " Small business loan approval percentages at big banks (more than $10 billion in assets) fell from 13.3% in July to 13.2% in August, according to the latest Biz2Credit Small Business Lending Index. August’s figure represents a nearly 2% drop from August 2022, when approvals from the largest banks stood at 15.1%. Big bank lending to small businesses has now dipped every month since June 2022. “If you are a small business looking for funding, you will have a difficult time securing it from big banks. We have seen it for more than a year,” Rohit Arora, CEO of Biz2Credit, said. “Big banks always had deposit money on hand. They always thought of it as permanent cheap capital. Now the interest rates are higher. “Further, the branch systems that big banks built are expensive to maintain, and I expect that they will shrink. Banking has increasingly gone digital, especially post-COVID, and it’s not going back.” Small banks are still more reliable sources of small business loans because they typically process more government-backed SBA loans that reduce lenders’ exposure to risk. Regional and community banks continue to experience approval percentage increases, with approval rates rising from 18.9% in July to 19.1% in August. However, the figures are far below where they were before the COVID-19 pandemic. For instance, in February 2019, small banks granted more than half (50.3%) of their business funding requests. “Following the collapse of [Silicon Valley Bank] and other mid-sized banks, we increasingly see depositors taking money out of banks and putting it into U.S. treasuries, money market accounts and elsewhere. They have less money available to lend,” Arora said. “In recent years, smaller banks became more active in commercial real estate loans and did not see the bottom falling out in the commercial real estate market. I suspect we will see downsizing and forced acquisitions in the coming months. Many mid-sized banks have high exposure in commercial real estate. This situation can only hurt small business lending.” The approval rates of institutional investors rose from 27.3% in July to 27.4% in August, while alternative lenders improved from 29.3% in July to 29.5% in August. " Read Full Article https://www.monitordaily.com/news-posts/small-business-loan-approval-rates-continue-to-slide-at-big-banks/

In a significant development regarding the Employee Retention Credit (ERC) program, lawmakers are proposing to end the ERC in the new 2024 federal budget bill. This move aims to redirect funds to other areas, reflecting a shift in legislative priorities and a response to issues surrounding the program, including fraudulent claims and processing challenges. Key points Proposal to End ERC Program Key among the proposed changes in the 2024 federal budget is the early termination of the ERC program, potentially on January 31, 2024. This decision, supported by bipartisan agreement, is part of a larger strategy to reallocate funds to expand other tax credits, including the child tax credit. Ongoing Moratorium on ERC Claims Processing The IRS continues its moratorium on processing ERC claims received after September 14, 2023. The IRS Commissioner has stated there is no definitive timetable for ending this moratorium. Efforts to Combat Fraudulent Claims In response to rampant ERC fraud, the IRS is employing new technologies and processes to manage and prevent illegitimate claims. Increased Penalties and Requirements for ERC Promoters Proposed legislative changes include stricter penalties for ERC promoters and enhanced due diligence requirements to curb abuse of the program. Taxpayer Advocate's Push for Faster Processing The Taxpayer Advocate is advocating for speedier processing of ERC claims to ensure timely aid to eligible taxpayers. Uncertainty Over the Program's Future Despite the bipartisan support for ending the ERC program, its future remains uncertain with Congress's focus on preventing a government shutdown. Potential Government Shutdown A government shutdown looms if a new budget or continuing resolution is not signed, with a shutdown starting January 20, 2024, and a complete shutdown possible by February 3, 2024.

By Lori Smith "December 19, 2023 - The last 18 months have been a challenging time for private equity and venture capital funds and their portfolio companies across the globe, impacting the availability and cost of capital, deal valuations and exit opportunities. High inflation, rapidly increasing interest rates, volatility in the public equity markets, the collapse of certain banks that support the PE and VC ecosystem and significant reductions in valuations of portfolio companies post-pandemic has led to massive economic challenges; U.S. and global political unrest has created uncertainty in the markets; and unions across the United States have led strikes driven in part by the current macroeconomic environment as well as innovative technologies that are changing the way that many companies do business. Despite these challenges, moving forward to 2024, many are predicting some uptick in investment and mergers and acquisitions activity. The legal and compliance landscape is evolving in a way that must be considered in pursuing such transactions. U.S. laws are trying to adapt as rapidly as possible to an ever-changing environment to balance protection for workers, consumers and innovators with the need to allow the world and technological innovations to evolve and improve the way we live and do business. The first of this two-part series explores key items that should be on the radar of private equity (PE) and venture capital (VC) funds and their portfolio companies for 2024 and beyond — including novel reporting obligations for U.S. and foreign businesses and a continued increase in antitrust enforcement. CTA creates new reporting requirements Historically, U.S. and foreign entities doing business in the United States had minimal, if any, legal compliance reporting obligations as to their ownership. Most states do not require any information at the time of formation or when filing annual reports regarding the owners, officers, or directors of an entity. This is in vast contrast to laws in other countries. Based on concerns over illegal activity such as money laundering, terrorism financing and other criminal activity engaged in through shell companies, the U.S. requirements are changing effective Jan. 1, 2024. Read full story: https://www.reuters.com/legal/legalindustry/times-private-equity-venture-capital-transactions-are-a-changin-2024-challenges-2023-12-19/(https://www.reuters.com/legal/legalindustry/times-private-equity-venture-capital-transactions-are-a-changin-2024-challenges-2023-12-19/)

Notable details: • Total revenue increased 20% from the fourth quarter of 2022 to $584 million • Total company combined loans and finance receivables increased 16% from the end of fourth quarter of 2022 to $3.3 billion as total company originations reached a quarterly record of $1.4 billion • Continued solid credit performance and outlook with a fourth quarter net revenue margin of 56% https://www.prnewswire.com/news-releases/enova-reports-fourth-quarter-and-full-year-2023-results-302048192.html

A new document that examines AI in the banking space is out from PYMNTS, read on. "83% of Bank Execs Eye GenAI With Hope and Hesitation GenAI is rapidly gaining traction in the financial services sector, but executives worry about the risk of spreading financial misinformation and exposing sensitive data to security breaches. The latest “Generative AI Tracker®,” a collaboration with AI-ID, examines what experts and bankers say is needed to get bankers over the hump." Visit the page and download the report here: https://www.pymnts.com/tracker/generative-ai-banking-financial-services-baas/

Stripe Co-founder John Collison announced they processed 1 trillion in payment volume, which is insane when you have been following the company for years from the startup they were not too long ago. Formed in 2009, Stripe currently has a valuation of 65 Billion but many don't see them going public soon. In 2019 Stripe started Stripe Capital, which offered MCAs to its clients. This is a huge advantage to anyone who processes with Stripe.

From PYMNTS.COM(http://PYMNTS.COM) The July launch of the FedNow® Service (https://www.frbservices.org/financial-services/fednow)— and the fact that The Clearing House’(https://www.theclearinghouse.org/)s RTP®(https://www.theclearinghouse.org/payment-systems/rtp) (https://www.frbservices.org/financial-services/fednow)network (https://www.theclearinghouse.org/payment-systems/rtp)has been operational for six years — underscores the need for banks to examine their legacy payments architecture, Form3 (https://www.form3.tech/)U.S. CEO Dave Scola (https://www.linkedin.com/in/davidscola/)told PYMNTS. Scola’s remarks came as part of the continuing “What’s Next” series, examining the looming trends in payments demand and innovations. And that means looking at what works, what doesn’t and where changes need to be made. “There’s the desire to meet client demand for real-time payments for enhanced data to capture, and to leverage some additional services on top of the payments,” Scola said. Addressing the Pain Points and ‘Creaking’ Systems The “creaking, older legacy platforms,” he noted, are struggling to adapt to new demands, particularly the technological demands that come with 24/7/365 operations. The volumes that are crossing and are expected to cross real-time rails may not be huge at the moment, but there will be a groundswell through the next year, with momentum accelerating into 2025. The dynamics and demands are leading financial services execs to earmark money for innovation in the year ahead, he said. Among the key initiatives lies a continued shift to the cloud to access core platforms and payments gateways and to use more off-premise options to help them move to market more quickly with new products and services. “APIs are now moving into the ‘center frame’ in order to facilitate the interaction of those core components,” he said. No conversation about payments innovation would seem to be complete without at least some discussion of artificial intelligence (AI). Scola observed that AI and machine learning have been tools leveraged in innovation and will continue to prove useful in fraud prevention and risk management. “AI opens up new avenues for fraud analytics, though the application of AI to payments has yet to be seen,” he said. Read full story: https://www.pymnts.com/real-time-payments/2023/instant-payments-force-banks-to-examine-limitations-of-creaky-legacy-systems/