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Picture this: A small, family-owned manufacturing business in the heartland of America. For years, they've been struggling with high-interest debt, their dreams of expansion constantly pushed to the back burner. But today, there's a glimmer of hope on the horizon. The Small Business Administration (SBA) has just unveiled a rule change that could be the lifeline many small businesses have been waiting for. On October 1, 2024, the SBA announced a significant overhaul to its 504 Loan Program, set to take effect on November 14. This change promises to improve small business financing, offering a beacon of hope for entrepreneurs across the nation. Breaking Down the Barriers At the core of this change is a commitment to making debt refinancing more accessible and affordable. SBA Administrator Isabel Casillas Guzman put it succinctly: "Coupled with the recent Federal Reserve interest rate cut, SBA's new rule will help business owners lower costs by streamlining access to debt refinancing so they can reduce payments and access more affordable capital." But what does this mean in practical terms? Let's break it down: Easier Refinancing: Small businesses will find it simpler to refinance physical property such as land, machinery, or facilities. Flexible Fund Usage: The rule broadens how businesses can use refinancing funds, especially for expansion purposes. Reduced Red Tape: Gone is the requirement for borrowers to prove a minimum reduction in loan payments from refinancing. A Timely Intervention This rule change couldn't come at a more crucial time. Recent PYMNTS Intelligence research paints a stark picture of the challenges facing small and medium-sized businesses (SMBs): A staggering 71% of American SMBs are grappling with cash shortfalls. Only about 8% of SMBs find it easy to secure working capital loans from banks. Many small businesses lack sophisticated financial systems, making it difficult for lenders to assess their potential accurately. Looking Ahead As we look to the future, this rule change could be the catalyst for a broader transformation in small business financing. It opens the door for more tailored financial products and services, potentially spurring innovation in the fintech sector. Moreover, it aligns with a growing trend among SMBs towards digital banking solutions. As businesses become more tech-savvy, there's an increasing demand for modern, user-friendly financial tools. For small business owners, this change represents more than just a policy shift—it's an opportunity to breathe new life into their dreams and ambitions.

Access to credit remains a critical issue for small businesses. The OnDeck + Ocrolus Small Business Cash Flow Trend Report reveals that a significant number of businesses are turning to alternative lenders, driven by the need for faster and more accessible funding options. Lets explore the report a bit more. Methodology The Q2 2024 report is based on: Survey responses from 413 small businesses with working capital loans from OnDeck Cash flow data from over 2.3 million small business applications for working capital financing during a 13-month period (in part from Ocrolus). Survey conducted between June 23 - 28, 2024 Noteworthy results and my comments: Nearly 75% of small businesses reported bypassing a traditional bank loan, seeking out alternative lenders as their primary funding option — up from 71.6% in Q1. My take: Yet another data point showing banks are behind, even though they may not care if the deal size is too small. But there is a market for those deals that are being serviced by alternative lenders. Small business owners remain optimistic with 91.5% anticipating moderate to significant growth over the next six months, slightly lower than the 93% reported in Q1. My take: A positive sign for the economy when small business owners remain optimistic given an election is coming up. 61% of businesses reported accepting alternative and real-time payment methods in the Q2 customer survey, up from 55% in Q1 of 2024. 71% of businesses reported having enough cash to cover at least one or more months of operating expenses, similar to Q1’s 70%. My take: This really should be higher but lets you know how small businesses are operating on a short runway The primary reason for not applying for bank funding is the hassle of paperwork, cited by 50% of respondents. Among those who did apply (25%), one-third were denied, highlighting ongoing difficulties in securing loans from traditional banks. My take: See my comments on the first bullet point but in addition when business owners have been in existence for 20+ years and still getting denied by banks there is a major problem. Payroll-to-Revenue Ratio: at 18.63%, which is about the same (plus or minute 1 pt) has been for about 1 year. My take: An Underrated statistic that should be at the forefront when growing a team. For the full Small Business Cash Flow Trend Report, click HERE.

The notion that new commercial financing companies are going to ‘fill a hole in the market’ for SMBs to gain access to capital is a constant but I don’t think it's accurate any longer. I see this repeatedly in press releases for a new entrant to the business lending market. The need for capital by small businesses is certainly there but most new lenders are not inventing a new product or disrupting a segment in any way. They may improve on products in some way however there is established competition at every turn. There are a wide variety of lending options available. So is there really still a large gap in the market of financing options for small to medium-sized companies or is it the lack of knowledge by business owners and entrepreneurs? I would argue the latter given studies that have come out and my experience with business owners directly and industry professionals.  It's important to distinguish between the variety of financing options from the volume of lenders. For certain products, there is room for more lenders to offer them. For others, there are too many to count which is a positive thing for merchants. Pathward study According to a survey by Pathward ( 1,000 Nationally Representative US Small Business Owners with 10-200 employees ), 60% of business owners can explain to another person what an SBA loan is, and 57% what a Business Line of Credit is. The percentages to explain the other loan products drop substantially after that. My interpretation of this:  SBA loans at the top should be no surprise given the history of the federal government backing it, business owners have traditional banking relationships so they are usually made aware of it, and SBA loans have the lowest rates if you can qualify. A Business Line of Credit is not too unlike a personal one so it's not complicated. But besides the term loans, other business financing options are a bit more specific, newer to the market, or aren’t an obvious solution to the problem. Less than 40% of business owners in general know what equity financing is or what asset-based loans are enough to explain to someone else. That's very telling for the opportunities that are there if business owners become more educated. I don’t have a similar study from 20 years ago but I think we can all agree these percentages were much less and the options were far fewer. Educating business owners This is where the education comes in. Of those on the front lines in the lending process are business loan brokers. They are more aware of the business loan options which should then be passed on to the business owner. If the business loan broker is doing their job well, they educate the business owner and help solve their financing problem. The same can be said for anyone else communicating directly with business owners. This creates the broadening of awareness of all of the financing options that are alternative to traditional bank loans.  The right fit Brokers should be able to take a file and find a suitable loan option for it but if they don’t it's not that there is a hole in the market. It just may be that the client doesn’t currently pass underwriting for any lending option. There are countless individual situations where a company won’t qualify because of factors including credit, revenue, time in business, or industry.  Does that mean someone could invent or adjust a product for that client, sure, but at what risk and cost of capital? To fill a niche space is still possible however now it's more about improving by technology, innovative underwriting, and reducing friction in the loan application process. Newest segment Embedded lending is the newest lending segment in the market. It is an example of a breakthrough in business lending. The embedded lending options have increased because the technology has improved so much and it has become the go-to option for many business owners. Some business owners might only stumble upon an embedded lending option as they are using their Quickbooks or Stripe payment processing account, but once they do it's one of the most frictionless ways of obtaining working capital. The cost of capital may be slightly higher than other options but the advantages of the service make up for that difference. Embedded lending has a low default rate that's very attractive to providers. Traditional banks are partnering with embedded lending providers and alternative lending companies are doing the same.  Marketplace providers or other middlemen are creating their own embedded lending platforms for others to use, for example, Lendio and Rapid Finance. When a business owner goes through Lendio directly or through a partner, there aren't many deals that don't have a potential home for their financing given the over 75 lenders that they have access to. When someone does not qualify, again, it doesn’t mean there is a hole in the market or that a new product needs to be invented. It may just mean that the business owner has lots of work to do before they can qualify for any financing. Going forward Knowing lending options isn’t inherit as a business owner, they have to seek it. It can be a daunting task for many small business owners to find out what options are available and to narrow it down to the best one for their situation. With so much information (and misinformation) online it’s our duty as industry members to educate entrepreneurs in any way possible by spreading awareness of the various loan products. While new entrants to the business lending market are providing a need, they aren’t filling a gaping hole. The hole is in education on the various lending products.

Defense counsel for Johanna Michely Garcia, who pleaded guilty to 1 charge of conspiracy to commit mail fraud and wire fraud this past July, filed a motion to continue the sentencing hearing for Ms Garcia that was scheduled for Friday, September 20th. The former CEO of MJ Capital will now learn her sentence on October 31st after the judge granted the motion. She faces a maximum of 20 years in prison and 3 years of supervisory release after the prison sentence ends. It seems that the defendant Johanna Garcia no longer has the same attorney, Kate Taylor, who represented her at the plea agreement hearing. On the court documents now are two public defenders. The public defenders filed the motion in part because they hired a forensic accountant to go through the "voluminous financial records in this case" which will require more time. Also mentioned was they just recently obtained the Presentence Investigation Report (PSI) which had "unanticipated enhancements that require further review." We will be in the courtroom for the sentencing on October 31st, so stay tuned for our coverage.

In this video, I talk to CEO Ryan Campbell about the recent acquisition of MoneyThumb, the company's history, its future, and where the technology they use is taking the lending industry. Contact Information: Moneythumb.com 533 2nd Street, Suite 227 Encinitas, CA 92024-3558 Corporate: 858-461-9766

Another successful networking event in the books! That's the feedback from our guests about our Sold Out mixer and some say it was the best one yet! Couldn't say thank you enough to everyone for joining us Tuesday and to our wonderful sponsors! See pictures from the event below. And congratulations to the winner of our raffle for a catered lunch on us , Pedro Arriaga of Rysup Capital!! Stay tuned for the final dates of our next event in the early part of December! Have pics of your own from the mixer? Post them on LinkedIn or IG and tag @funderintel.

In Bluevine's mid-year BOSS (Business Owner Success Survey) report there were some helpful statistics and at least one surprising one. This report is intended to help business owners plan and budget better given the info on their peers. However, this information also benefits business loan brokers and lenders who deal with business owners to assist them with their capital needs. The BOSS is a survey of 1,200 respondents across the U.S. between June 5-18, 2024. Respondents are company owners, founders, partners, CEOs, or presidents of businesses with annual revenue between $100,000 and $5,000,000 Here are a few interesting points from the report: 66% - Percentage of SBOs received the additional capital they applied for via loan, line of credit, or credit card in the first half of 2024. A surprising result was that of those approved for any credit, 95% were approved for the amount of credit they applied for. To me, this is high when considering all financing products. 34% - Only one-third of SBOs have established access to a line of credit to use as a buffer for working capital (e.g., payroll, expenses, etc.) or for company growth (e.g., adding employees, developing new products/services, etc.) A new business credit card leads the way for preferred forms of credit, which is in line with other reports. 83% received the APR they sought For the full report, visit the Bluevine site here.

Small business lending fraud experienced a significant surge in 2023, with a 13.6% increase compared to the previous year, according to the 2024 Small Business Lending Fraud study by LexisNexis Risk Solutions. The study, which surveyed 135 lenders, paints a concerning picture of the current state of fraud in the SMB lending sector. One of the most striking findings is that 64% of respondents expect fraud to continue growing over the next 12 months. This projection highlights the ongoing challenges faced by the industry in combating fraudulent activities. The study also revealed a shift in fraud detection timelines. While most fraudulent activities are identified within the first month of the customer relationship, there has been a decrease in early detection rates. In 2023, only 27% of fraudsters were caught at the account origination stage, down from 32% in 2022. This trend suggests that fraudsters are becoming more sophisticated in their approaches, potentially exploiting vulnerabilities in existing onboarding processes. Despite these challenges, there is a positive shift in the industry's perception of fraud prevention. Half of the respondents now believe that SMB lending fraud can be prevented, a significant increase from 31% in 2022. This change in mindset is crucial for driving proactive measures against fraud. The impact of SMB lending fraud is expected to be substantial, with overall losses projected to increase by 6% to 10% across industries. In response to these challenges, 72% of respondents plan to increase their investment in fraud prevention technologies. This commitment to technological solutions reflects the growing recognition of the role of advanced tools in mitigating fraud risks. The study's findings underscore the importance of implementing robust fraud detection and prevention strategies, particularly at the account origination stage. As the SMB lending landscape continues to evolve, it is crucial to adopt multi-layered approaches that combine advanced identity verification techniques, real-time transaction monitoring, and machine learning algorithms to stay ahead of evolving fraud tactics.

Our upcoming Networking Mixer on September 10th   will be a fantastic opportunity to connect with some amazing individuals, including representatives from our generous sponsors. We're incredibly grateful for their support and can't wait for you to meet them.   Join us at Moxies in Fort Lauderdale at 6:30 pm for an evening of networking with representatives from our sponsors listed below. Triton Recovery Group - Leo Vargas: Leo Vargas is the CEO and founder of Triton Recovery Group established in 2019. Triton Recovery Group is a fully insured and bonded commercial collections firm licensed in the State of Florida that concentrates its practice in the Merchant Cash Advance industry and all other areas of commercial debt collections throughout the country. We are dedicated to collecting outstanding accounts receivables promptly and professionally. CFG Merchant Solutions - Joshua T. Karp: Josh Karp is the Senior Vice President of Production & Revenue at CFG. Mr. Karp began his financial services career in 2006 as a Collateral Manager at Goldman Sachs Asset Management. In 2011, he moved on to an Executive role at Macquarie Bank Securities Group. In 2014 Mr. Karp was named Chief Operating Officer of Yellowstone Capital, LLC, a leading capital provider in the merchant cash advance industry at the time. In late 2015, Mr. Karp was hired as the Head of Operations at CFG to staff the production & operations teams, and architect the firm’s NetSuite operating system and infrastructure. Mr. Karp obtained his B.S. from Yeshiva University in 2005. Liquidibee - Dylan Howell CEO: Liquidibee is a Fintech company that directly provides non-dilutive working capital to small and medium-sized businesses nationwide. I founded Liquidibee in 2020 after pivoting from the public trading markets, where I had over two decades of experience as a portfolio manager. My mission is to empower independent sales brokers and businesses with quick, secure, transparent, and critical capital. Revenue Based Finance Coalition - Mary Donohue: Mary Donohue is the Executive Director for the Revenue Based Finance Coalition (RBFC). Before joining RBFC, Mary worked as a government relations specialist for CATALYST Government Affairs. At CATALYST, Mary managed various client portfolios in areas ranging from a variety of financial services issues to foster care policy in many states across the country as well as in Washington, DC. Her prior work also consists of developing and managing the federal and state public policy strategies for the small business lending brands within Enova International (NYSE: ENVA) (OnDeck, Headway Capital, The Business Backer). Everest Business Funding - Chastity Gonzalez: Over the past 9 years in this space, Chastity has been a leader in cultivating relationships with Independent Sales Organizations to facilitate business owners in achieving their financial goals. A Miami, FL native, Chastity attended Florida International University. In her down time, she enjoys spending time with her family and 2 Bulldogs. WeFund - Claude Darmony: At WeFund, we consider ourselves a tight-knit family. With extensive expertise in providing same-day funding, we operate as a direct funder, extending working capital to businesses throughout the United States. We accomplish this by empowering our ISOs to assume responsibility, oversee and nurture client relationships, effectively becoming an extension of the WeFund team. Meridian Leads - Bob Squiers: The owner and founder of Meridian Leads has over 20 years of experience marketing for the financial services industry. Mr. Squiers excels in blending data, technology, and creativity to generate powerful direct response marketing campaigns that produce results. Mr Squiers resides in Florida and enjoys golfing, fishing, and spending time with his family in his spare time. Hunter Caroline - Cody Roth: Cody Roth is a founding member of Hunter Caroline, which recently celebrated its 10th anniversary in the MCA industry. The company has flourished over the past decade by nurturing strong relationships with brokers and merchants through a personalized, boutique lending approach. Cody, a proud FSU graduate, enjoys spending his free time with friends, family, and his dogs, and is also passionate about playing competitive pickleball.

As the NFL kicks off its 2024 season tonight, a significant off-field development has caught the attention of fans and investors alike. The league recently approved private equity investments in team ownership, marking a new era for America's most popular sport. Then this morning a new valuation of the Dallas Cowboys at over $11 Billion was published, making the private equity news seem all the more logical. With valuations like that, the problem is not many people can afford a team anymore. As a lifelong NFL fan (and Dolphins fan-woe is me since 2000), I wanted to dig into what some had to say about the pros and cons of this new policy. Let's get to it. Private Equity Enters the NFL Arena Last week, NFL team owners voted to allow select private equity firms to acquire up to 10% stakes in franchises. This decision makes the NFL the last major U.S. sports league to permit such investments, following similar moves by the NBA, MLB, NHL, and MLS. Potential Benefits The introduction of private equity into NFL ownership structures offers several advantages: 1. Increased Liquidity: With team valuations soaring (averaging $6.49 billion in 2024), private equity investments provide much-needed liquidity for current owners[1]. 2. Stadium Improvements: The influx of capital could fund stadium enhancements and construction projects, potentially improving the fan experience[1]. 3. Broader Ownership Base: This move opens up team ownership to a wider pool of investors, potentially driving up valuations further. 4. Financial Expertise: Private equity firms bring sophisticated financial management skills to team operations. Potential Drawbacks However, some concerns have been raised: 1. Limited Influence: Private equity firms will have minimal say in team decisions and there is no voting power attached to the transaction limiting their ability to drive change. 2. Profit-Driven Approach: There are concerns that a focus on financial returns could overshadow team performance and fan interests. 3. Increased Commercialization: Some fear that increased private equity involvement could lead to more aggressive monetization strategies. Think brand logos all over player jerseys! Impact on Fans The immediate impact on fans is expected to be minimal. The NFL has set strict guidelines to ensure that private equity investments remain passive, with no direct influence on team operations or decision-making. However, fans may see indirect benefits through improved stadium facilities and potentially more competitive teams due to increased financial resources. Looking Ahead As the 2024 NFL season begins, this new chapter in league ownership structure adds an intriguing subplot to the on-field action. While the full effects of private equity involvement may take years to materialize, it's clear that the business of football is evolving alongside the game itself.

Exciting news for MoneyThumb! I have known about them for years and they are a great organization with great people. You can find them listed on our Document Automation page as one of the few fintech providers of this technology that has been transformative for many financial institutions over the last decade. So without further ado, the following is the Press Release published this morning. Partnership to Accelerate Future Growth and Innovation of MoneyThumb's SaaS Document Evaluation Technology SAN DIEGO, Aug. 29, 2024 /PRNewswire/ --  MoneyThumb , a leader in automated document evaluation and fraud detection solutions announced today that it has been acquired by  Iron Creek Partners LLC ("Iron Creek"), a private investment firm with a focus on investments in the software, data, communications, and business services industries. Iron Creek led the investment group, which also included Main Street Capital Corporation (NYSE: MAIN ). The transaction will provide growth capital to help meet MoneyThumb's strong industry demand, which has recently produced 100% year-over-year annual growth. The transaction closed on August 19, 2024. Ryan Campbell, previously heading up MoneyThumb's business development since 2017, has been named as the new chief executive officer and has joined the investor group. Ryan has played an integral role in leading MoneyThumb's sales, marketing and business development strategy. Ralph Mayer, the company's founder will step down as CEO and assume an advisory role and retain his board seat.  Founded in 2014, MoneyThumb is an industry leading underwriting automation software that improves workflows for funders, lenders, and accountants by converting and analyzing pdf financial documents in seconds. The company also helps detect fraud with its AI file tampering detection tool that identifies fraudulent activity in seconds, giving lenders a powerful defense against risk and loan losses. "This acquisition underscores MoneyThumb's proven technology and strong industry demand, and supports our long-term growth objectives," said Ryan Campbell. "This partnership marks an exciting milestone for our company and with the support of Iron Creek, we are well-poised to accelerate our growth, continue to deliver exceptional software solutions for our customers and help lenders manage risk and deliver more capital faster to small businesses." "MoneyThumb has built a highly successful business through its algorithm-driven software, product innovation and a meticulous approach to delivering value and service to their customers," said John Bingaman, Founder and Managing Principal of Iron Creek Partners LLC. "We look forward to working closely with MoneyThumb's talented team to continue to grow the business and broaden the product suite." Financial terms of the transaction were not disclosed. For more information on MoneyThumb, please visit www.moneythumb.com . About MoneyThumb MoneyThumb is an advanced automation software solution that streamlines the lending underwriting process by converting bank statements instantly into actionable data. By exponentially increasing efficiency, accuracy and the detection of fraud – MoneyThumb empowers lenders and accountants to make faster, more informed and accurate decisions. MoneyThumb is headquartered in Encinitas, California, and serves customers globally. For more information visit  www.moneythumb.com . About Icon Creek Iron Creek is a sector-focused, stage-independent private investment firm based in Santa Fe, NM, seeking attractive investment opportunities primarily in the software, data, communications, and business services industries. Iron Creek seeks to partner with strong management teams and to support its portfolio companies' growth by leveraging its network of relationships and its sector experience. About Main Street Capital Corporation Main Street ( www.mainstcapital.com ) is a principal investment firm that primarily provides long-term debt and equity capital to lower middle market companies and debt capital to middle market companies. Main Street's portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. Main Street seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its lower middle market investment strategy. Main Street's lower middle market companies generally have annual revenues between $10 million and $150 million. Main Street's middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies. Main Street, through its wholly owned portfolio company MSC Adviser I, LLC ("MSC Adviser"), also maintains an asset management business through which it manages investments for external parties. MSC Adviser is registered as an investment adviser under the Investment Advisers Act of 1940. Media Contact Tracy Rubin  JCUTLER media group  Tracy@jcmg.com SOURCE MoneyThumb

California Senate Bill 1286, currently under consideration in the state legislature, could bring notable changes to business lenders, according to a recent analysis by Hudson Cook, LLP published on JD Supra. The proposed legislation aims to expand the scope of the Rosenthal Fair Debt Collection Practices Act (RFDCPA) to include certain commercial-purpose debts, a development that would affect small business financing providers. Points of interest include: 1. Expanded Coverage: The bill would extend the RFDCPA's application to "covered commercial credit" and "covered commercial debt," encompassing transactions up to $500,000 that are primarily for non-personal purposes. 2. Broader Impact: Unlike the federal Fair Debt Collection Practices Act, the RFDCPA applies to entities collecting their own debts. This means small business financing providers who service and collect their own transactions would be subject to the new regulations. 3. Inclusive Definition: The proposed legislation's definition of covered transactions includes sales-based financing and leases, in addition to traditional loans. 4. Guarantor Inclusion: The bill would define "debtor" to include guarantors of covered commercial credit transactions. 5. Additional Requirements: If passed, the law would impose RFDCPA-style restrictions on debt collection practices for these commercial debts, including prohibitions on certain types of threats and harassment, as well as specific disclosure requirements. 6. Potential Liabilities: Violations of the expanded RFDCPA could result in lawsuits from debtors and statutory damages ranging from $100 to $1,000 per violation. For business financing companies operating in California, the implications of this bill are important to consider. They would need to review their collection practices for transactions under $500,000, regardless of whether they originated the debt or are collecting on behalf of others. The inclusive definition of covered transactions means that many businesses owing money could potentially have rights under the amended RFDCPA. If passed, the law could take effect on January 1, 2025.