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We talked to Trey Markel, VP of Sales and Marketing at Centrex, a software company offering a complete suite of fintech solutions, about a few important topics for those in the business lending industry. We dive into what reconciliation is for revenue based financing, why it's making headlines, and the changes funders need to implement. We then discuss the threats out there against the security of your data and other systems, tips to prevent problems, and how you should be preparing for the future. Contact information Trey Markel VP Sales & Marketing Phone: (888) 622-5810 Ex: 101 Email: TMarkel@CentrexSoftware.com Web: www.CentrexSoftware.com

The vibrant energy crackled in the air as attendees of the Funder Intel Mixer converged at Bar Rita in Ft. Lauderdale. Conversations buzzed with excitement as industry leaders mingled with rising stars, all eager to explore the future of business lending. Connections were forged, ideas exchanged, and partnerships ignited. The Funder Intel Mixer was a night of powerful connections and endless possibilities. Scroll through the following photos and relive the electric atmosphere. Stay tuned for the announcement of the location for our next event!

In the ever-evolving world of revenue-based financing, also known as merchant cash advance (MCA), understanding the intricacies of portfolio performance can be the key to unlocking greater success. That's why we're thrilled to bring you an exclusive interview with Rodrigo Fritis, the visionary CEO of Niso, a leading provider of strategic portfolio solutions using Data Science, AI, and vast experience. In this insightful video, Rodrigo delves into how a portfolio performs compared to expectations, common pitfalls, the advanced data analysis strategies he uses to improve performance, the KPIs like ROE & Final RTR% funders, investors, and syndicators need to track, and much more. Whether you're a seasoned MCA executive or just starting your journey, this interview is a must-watch. By understanding the inner workings of this dynamic market, you'll gain a competitive edge and be better equipped to navigate the challenges and opportunities that arise. Click the play button and get ready to unlock the secrets of merchant cash advance with Rodrigo Fritis. If you want a chance to meet Rodrigo Fritis in person, he will be at our industry Mixer on May 9th in Fort Lauderdale, Florida. So depending on when you see this, you will have time to get a ticket and take advantage of an opportunity to network with Rodrigo and others to improve your business. To contact Rodrigo Fritis: Niso website c. 305.205.8465 rodrigo.fritis@nisocorp.com

The recent earnings report from PayPal reveals a few interesting stories about the companies' lending and working capital offerings and how they describe them in their earnings calls versus what's on their financial statements. The drop in receivables is certainly a focus but we also want to discuss why they keep the word merchant cash advance out of reports. Paypal's Merchant Receivables and Lending Products Paypal's 10-Q filing provides insights into the company's Merchant Receivables segment, including its PayPal Working Capital (PPWC) and PayPal Business Loan (PPBL) products. In the quarter ending March 2024, it's reported that PayPal purchased $419 million of receivables, however in the same quarter of 2023 it was $666 million, a large 37% drop. They didn't explain why this was and I did not uncover their expectations for the future but one thing I know is there are more business financing products out there than ever before so origination is a fierce battle. The PayPal Working Capital product allows merchants to borrow a certain percentage of their annual payment volume processed by PayPal, with a fixed fee charged based on the merchant's credit assessment. Repayment is made through a fixed percentage of the merchant's future payment volume processed by PayPal. So in other words this is a merchant cash advance but Paypal and many other companies use this different terminology because of the negative connotations associated with the term with its history of high cost and predatory lending business practices. PayPal uses the word 'advance' on its financial statements but refrains as much as possible when speaking publically about the product given the negative connotations. Webank is the bank behind the PPWC but PayPal does all servicing. PayPal can classify and market the PPWC as a loan on their website but also as Working Capital which leads to them even defining what working capital is in their FAQs. "Generally, working capital is the difference between your business's assets and liabilities. Businesses use working capital to run their business and pay for everyday expenses as well as invest in new projects and initiatives". Working capital is described by most as the 'usage of funds', not a type of loan. However, the term working capital has become popular to substitute for the term merchant cash advance or revenue based financing so that customers aren't scared away. I think it's important to point this out because most mainstream media misses or ignores this information when they discuss MCAs. I will continue to point out, as others should, that there are tiers to the MCA/Revenue Based Financing market. PayPal is in the top tier and then I categorize funders in a middle and a low tier. It is the low end where most of the problems are but the public needs to be informed that these top-tier companies are offering the same product helping thousands of businesses gain access to billions in capital every year so they aren't pushed away from the product overall. Beyond the top tier, there are dozens if not hundreds of direct funding companies that operate successful businesses with reasonable cost offerings given the risk that help small businesses gain the capital they need. Lastly, on PayPal earnings, they reported that in 2023, its gross charge-offs for these lending products declined to $38 million, down from $228 million in 2022.

While news of individuals exploiting the Economic Injury Disaster Loans (EIDLs) and Paycheck Protection Program (PPP) during the pandemic garnered significant headlines, a Maryland man's recent guilty plea to defrauding both programs sheds light on a lesser-known but persistent issue: equipment financing fraud. Andra Shirone Thompson, 47, of Silver Spring, admitted to his role in a scheme that defrauded commercial equipment financing companies of an estimated $813,362.  He faces a maximum of 5 years in prison for each of two counts of conspiracy to commit wire fraud. No sentencing date has been set. This case serves as a valuable reminder for equipment financing professionals and lenders to stay vigilant against such fraudulent activity. According to a press release by the DOJ, Thompson and his co-conspirators created a web of deceit.  They fabricated invoices for substantial quantities of computer servers and related equipment that were never actually sold.  These invoices were then presented by borrowers to secure loans, with the loan proceeds ultimately ending up in accounts controlled by Thompson and his associates.  In some instances, Thompson allegedly offered kickbacks to borrowers who participated in the scheme. Thompson spent some of the ill-gotten gains on home renovations and a 2014 Lamborghini Aventador, because of course he did. Thompson's case highlights a critical point: equipment financing fraud happens with a frequency similar to overall commercial finance fraud, yet it often flies under the radar. This lack of public awareness underscores the importance of implementing strong internal controls within equipment financing companies and lending institutions. Here are some key takeaways for industry professionals: Scrutinize Invoices:  Verify the legitimacy of invoices with the supposed vendor directly. Maintain Strong Borrower Relationships:  Regular communication can help identify potential red flags. Implement Risk Management Protocols:  Establish clear procedures for reviewing loan applications and monitoring borrower activity. By staying informed and proactive, equipment financing professionals and lenders can play a vital role in mitigating the impact of fraudulent schemes like the one orchestrated by Andra Shirone Thompson.

In Albany, New York, a newly detailed financial assessment suggests the scope of alleged fraud from Prime Capital Ventures could be much more extensive than initially feared, with customer losses potentially topping $120 million. Overview of Prime Capital Ventures and the Investigation Prime Capital Ventures, led by Kris Roglieri of Queensbury, offered business owners attractive loan terms that required a 20% cash deposit of the loan’s value, purportedly to cover interest payments, without the need for a personal guarantee. This structure made the loans highly appealing but also unusually risky for the lenders. The firm is now at the center of a federal criminal investigation triggered by customer complaints alleging that Roglieri misappropriated tens of millions in deposits meant to secure these loans. These developments followed several customers claiming that they never received the loans they applied for and that their deposits were never returned. Details from the Receiver’s Investigation Paul Levine, a Saratoga Springs attorney appointed as the receiver in January by a federal judge, has been diligently working to untangle the firm’s complex financial web. His findings have led to a stark reassessment of the situation: Financial Discrepancies Initially, the estimated missing funds were about $50 million, but recent investigations have revealed even more severe discrepancies. Levine’s detailed scrutiny of Roglieri’s personal and business bank accounts showed a troubling picture, with $99 million initially deposited at Farmers Bank and $83 million at KeyBank and Citibank. Recovery Efforts Although about $57 million has been returned to customers, there remains approximately $125 million unaccounted for. Levine's efforts to trace and secure assets to repay customers continue, assisted by the area accounting firm BST & Co. CPAs. Timeline of Events The timeline highlighted by Levine’s reports shows that the bulk of the questionable financial transactions occurred between September 2022 and January 2023. During this period, over $140 million cycled through Prime Capital Venture’s Citibank account alone. Luxurious Expenditures and Legal Issues In addition to the financial irregularities, Levine’s reports also outline significant spending by Kris Roglieri on luxury items such as cars, watches, artwork, and chartered plane travel. The FBI has seized much of Roglieri's luxury car collection during raids in early 2023. Though currently not charged with financial crimes in federal court, Roglieri faces two felony weapons charges after an assault rifle and a high-capacity magazine were found at his residence. NACLB Affected One of the businesses owned by Kris Roglieri is the NACLB ( National Association of Commercial Loan Brokers). Recently we noticed some information about the NACLB website and registration page. It says Registration is Closed for the Nov 3 NACLB Conference, which is extremely unusual this far out. When trying to visit the regular NACLB website on Google Chrome it says it cannot provide a secure connection and in the web browser Microsoft Edge it says 'the connection for this site is not secure'. This isn't a promising sign for the conference. Update: Former employees of the NACLB have started a new conference and the NACLB conference is no longer going forward although we have not seen a formal announcement. Interestingly, one of the people involved with the new conference was also recently named in new court proceedings as being involved in the fraud.

Federal prosecutors are investigating internal practices at Block, the financial technology firm founded by Twitter co-founder Jack Dorsey, according to a report from NBC. A former employee has provided documents to prosecutors from the Southern District of New York, alleging that Block's two main units, Square and Cash App, have faced years of compliance lapses. The former employee claims that Block has failed to collect sufficient information from customers to assess their risks, has processed thousands of transactions involving sanctioned countries, and has even processed multiple cryptocurrency transactions for terrorist groups. Most of these transactions were allegedly not reported to the government as required, and Block did not address the breaches when alerted to them. Key Points: Prosecutors are investigating compliance issues at Block, the fintech company founded by Jack Dorsey. A former employee has provided documents to prosecutors, alleging widespread and long-standing compliance failures at Square and Cash App. The former employee claims that Block has failed to collect adequate customer information, processed transactions with sanctioned countries, and even facilitated cryptocurrency transactions for terrorist groups. Most of these transactions were allegedly not reported to the government as required, and Block did not address the breaches when alerted to them. A second person with direct knowledge of Block's monitoring programs and practices echoed the former employee's assessment of the company's compliance issues. The allegations made by the former Block employee paint a concerning picture of a fintech giant struggling to maintain the integrity of its compliance practices. If the claims are substantiated, it could have serious implications for Block's reputation, regulatory standing, and customer trust. The company's response, acknowledging the need to "continually improve the safety and security of our ecosystem," suggests an awareness of the gravity of the situation. As the investigation unfolds, the fintech industry and the public will be watching closely to see how Block addresses these alleged compliance lapses and works to regain confidence in its operations.

The equipment leasing and finance industry faced a mixed bag of results in March, with new business volume down year-over-year but up from the previous month, according to the latest ELFA Monthly Leasing and Finance Index (MLFI-25). The industry's overall new business volume for March was $9.3 billion, a 7% decrease compared to March 2023, but an 18% increase from February 2022. Key Findings Year-to-date, cumulative new business volume was up 0.5% compared to 2023. Receivables over 30 days were 2.1%, down from 2.2% the previous month but up from 1.9% in the same period in 2023. Charge-offs were 0.5%, up from 0.4% the previous month and 0.3% in the year-earlier period. Credit approvals totaled 77%, up from 76% in February. Total headcount for equipment finance companies was up 1.5% year-over-year. Industry Insights ELFA President and CEO Leigh Lytle attributed the pullback in new business volume to banks tightening their lending, with originations falling more than 20% in March. However, other respondents enjoyed a stronger month. Credit quality showed mixed results, with receivables continuing to improve while charge-offs ticked back up. Miles Herman, Chief Executive Officer of LEAF Commercial Capital, Inc., noted that the equipment leasing and finance industry has historically been an excellent predictor of economic times. He expressed concern about the potential impact of higher inflation and delayed Fed rate cuts on small business optimism and middle market business spending. Analysis The equipment leasing and finance industry's performance in March reflects the ongoing economic uncertainty and shifting market conditions. While the year-to-date cumulative new business volume remains positive, the decline in March's new business volume compared to the previous year suggests that businesses may be cautious about equipment acquisitions due to rising interest rates and economic concerns. The mixed credit quality results, with improving receivables but increasing charge-offs, highlight the need for industry players to closely monitor portfolio performance and adapt their risk management strategies accordingly. The industry's confidence index, which decreased from March to April, further underscores the cautious optimism among equipment finance companies. As the industry navigates these changing economic tides, it will be crucial for companies to stay agile, closely monitor market trends, and make data-driven decisions to maintain growth and profitability.

In a move aimed at supporting small businesses in California, the state has launched a new tool called the "California Small Business Loan Match", according to a press release on April 24th. The tool, provided by the California Infrastructure and Economic Development Bank (IBank), connects entrepreneurs with trusted lenders to help them access capital more easily. The California Small Business Loan Match is a no-cost, user-friendly platform that allows business owners to connect with lenders that specialize in their specific industry or location with one application. By providing a centralized database of vetted lenders, most of which are Community Development Financial Institutions (CDFI's), the tool simplifies the often-complex process of securing financing for small businesses. "Access to capital is critical for small business success, and we're committed to making that process as straightforward as possible for entrepreneurs in California," said Scott Wu, Executive Director of IBank. "The California Small Business Loan Match puts the power of choice in the hands of business owners and connects them with lenders who understand their unique needs." The platform features a directory of the lenders in the program. They are the following: 3CORE, INC. Accessity Access Plus Capital Arcata Economic Development Corporation California Capital Financial Development Corporation California Coastal Rural Developmet Corporation CDC Small Business Finance Clearinghouse CDFI DreamSpring Lendistry LENDonate Main Street Launch National Asian American Coalition NCRC Community Development Fund, Inc. PACE PACE Finance Corporation PCR Business Finance Pacific Community Ventures Working Solutions CDFI One thing I noticed on the Loan Match site in the 'responsible lending' section was a dig at online lenders and Merchant Cash Advances, even saying "MCA loan", which they are not loans. They lump online lenders and MCAs together when saying they tend to have high "interest", while MCAs have no "interest" and there are plenty of Online Lenders that have lower cost loan products. Yes, they are correct that MCAs have a higher cost of capital than traditional bank loans. Still, some MCAs can be very reasonable depending on who you go to and the opportunity cost involved. IBank should be more accurate when describing alternative products given the laws surrounding commercial finance recently enacted. California Small Business Loan Match is brought to you by IBank California Small Business Loan Match is a new lender-match tool provided by IBank’s Small Business Finance Center as an extension of our Loan Guarantee Program. We created Loan Match to ease the process of finding trusted loans for California entrepreneurs, gathering dozens of lenders on one platform for a one-stop experience. All lenders have been pre-vetted and enrolled in IBank’s Loan Guarantee Program, which specializes in bridging the gap between responsible lenders and small businesses.

Stripe, the fintech with $1 trillion in total processed payment volume in 2023 and a 65 billion dollar valuation, announced many new features and services at its big developer conference called Sessions yesterday in San Francisco. Among them is an embedded financing service called Stripe Connect that it will offer to clients to allow them to provide business financing to its customers. This strategy is part of a larger movement to embedded financing from fintech and Saas providers to fill the gaps in small business financing across the country and beyond. Stripe not only fills in the gaps but makes it very easy for business owners to get financing where the model is similar to others such as Paypal and Shopify. Stripe mentions on their site that a client can offer business financing to its customers without any 'financial liability for credit losses as all credit losses are absorbed by Stripe Capital.' It goes on to say that there is a revenue share for the partner platforms, the loans are issued by a partner bank, and they have an in-house loan servicing team. For more information visit their site Stripe Capital.

Getting back to our interviews with industry members, recently we had a conversation with Matthew Feit, President of High Power Capital Group. We cover a number of topics including how he got started in business lending, the current dynamics he is experiencing, a lighting round of off-topic questions, and maybe most importantly what he thinks will help improve the industry. Let's get to it! Shane Mahabir: Tell me who you are, where you're from, and why you are in Finance. Matthew Feit, High Power Capital group. I'm from the New Jersey shore, the best place on earth. Why I'm in finance, I would say, the simple answer is just to help entrepreneurs, to assist them, to give them some value when it comes to obtaining capital outside the bank. Shane Mahabir: What were you doing before this? Matt F: I've been in sales since I was twenty years old but directly before this I was doing commercial roofing. Shane: Tell me how it is currently in the business lending industry. Matt F: So it's fairly consistent. Right now I would say that the units going out are less, but the average deal amount has gone up. So for instance, in the first quarter of this year, our average deal size is over 55k. For the last 2 years, it was always hovering between about 35 to $40,000. Also better quality deals. Shane: And these are a variety of products? Matt F: Yes, our main 3 products are an MCA, a loan, or a line of credit. Those are the 3 products we focus on. We can do SBAs, and we can even do actual factoring, but those are the 3 main products that we do weekly. Shane: And what do your days consist of? Matt F: So on a typical day. I wake up. I drink a good amount of caffeine, and then I begin my morning routine. I check in and do my Zoom Meetings with my office in New Jersey. Constant check-ins with current clients. There's always time scheduled to work on follow-ups and things of that nature, but for the most part, for the last so many months, Shane, I've been working on a new brand which is a Florida-based funding company. So that's been consuming a lot of my day-to-day time over the last 6 months or so. Shane: And what's the reason for the new company? Matt F: Well, in 2024 especially, branding is so important. And we're just bringing the same authenticity that we have currently with High Power. We're very keen on having transparency. We are big on having a presence online including Google reviews. So what we're doing is essentially to revamp things, keep it fresh and keep it interesting. Shane: So is it more of a rebrand? Matt F: So a rebrand, and also to target Southern businesses, the Southern demographic, like Georgia, Alabama, Florida, even Louisiana. These States, I've noticed particularly have fundable small businesses. They are super hardworking Americans and they seem to really benefit most from our products. Shane: What are your goals for your company this year? Matt F: I'm not looking to have a massive call center of a hundred people on the phone. I'm looking for a basketball team worth of people, a starting 5 worth of solid people. Be genuine and honest, and people that wanna work with long term and looking to do that down here in Tampa, where I moved in July of 23. Shane: What type of things keep you motivated? Matt F: My family. Providing for my family, being there for them, and being a problem solver for people around me, my team, and my beautiful girlfriend. Shane: Now time for the lightning round. What's your largest deal so far in your career? Matt F: So MCA 750K, a loan of 1.25 million. Shane: Do you use Generative AI? Matt F: No. Shane: Do you prefer cold calls or email campaigns? Matt F: Prefer email. But I love a good cold call, too, so I could say both. But I will go with the email, it's a little easier. Shane: What is your favorite country you have visited? Matt F: Man I'm a travel junkie, so it's very hard, but I love Gibraltar. It's between Gibraltar and Bermuda. They're so cool and very similar. Shane:  If you could go anywhere, where would it be? Matt F: Man, that's a tough question anywhere. Possibly Dubai. That would be amazing. Shane: OK are you a sports fan? Matt F: A hardcore sports fan. Giants, Nets, Devils, and also UFC. Shane Mahabir: Last question. Please give me your state of the industry and things that could be changed. Matt F: So I would say that in this constantly evolving industry, the regulations are rapidly changing from State to State. The main thing that would help is truly holding ISOs accountable for sales tactics, and even regulating who is allowed to be a broker. There should be a fiduciary duty of being a broker, because, like in real estate. I wish that type of motto and credo was instilled in funding brokers. I just think we need to clean up the industry and keep people accountable. The RBFC is a group that is helping with that. It's a great coalition of very forward-thinking, politically minded people who care about the best interest of this industry. So you just can't get every Tom, Dick, and Harry in this industry cold calling because there are some bad apples. To contact Matthew Feit, visit High Power Capital Group

At Funder Intel, we believe that professional networking events shouldn’t feel like a second shift at work. That’s why we’ve tailored our next mixer to be light on the lectures and heavy on the hors d’oeuvres and humor. Mark your calendars for an evening at Bar Rita in Fort Lauderdale that might just redefine your idea of a business mixer! Why This Mixer Should Be Your Next Business Date Forget stiff handshakes and stuffier conversations; our event is all about making genuine connections without the awkward "so what do you do?" dance. Imagine a place where you can laugh over a well-mixed Margarita and maybe meet your next business partner — that's the kind of evening we’re hosting. Event Details: Date: Thursday, May 9th Time: 6:30 to 8:30 PM Venue: Bar Rita: Fort Lauderdale, Florida Evening Highlights Laugh and Lounge: Bar Rita isn’t just a bar; it’s an experience. With its vibrant decor and rooftop views, it’s the perfect backdrop for both unwinding and engaging. Craft Cocktails and Clever Conversations: Enjoy custom drinks that are almost as mixed as our networking. No matter your role you’ll find your tribe here. Meet, Greet, Repeat: Encounter a dynamic crowd from various niches of the business lending and fintech industries—each ready to swap tales more colorful than the drinks. Become your client's funding champion Are you a CPA who sees clients yearning to take their business to the next level? A lawyer whose clients crave the capital to fuel expansion? A realtor whose clients dream of transforming dreams into thriving businesses? The Funder Intel Mixer equips you with the knowledge and connections to become a champion for your clients. Help them unlock the financial resources needed to achieve their ambitions. Dress Code Come as you are but feel free to dress to impress or express—whichever helps you network best. And yes, bringing business cards is old school, but hey, so is vintage wine, and everyone loves that! Hotel Options The Dalmar, Fort Lauderdale, a Tribute Portfolio Hotel Embassy Suites by Hilton Fort Lauderdale 17th Street Four Points by Sheraton Fort Lauderdale Airport RSVP Now We’ve got the scene, the drinks, and the people. All that’s missing is you. RSVP to make sure your name’s on the list and not stuck in the spam folder. Join us at Bar Rita where the only icebreakers needed are the ones chilling the glasses. Let’s make networking fun again!