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Our guest in this video is Brinen LeFevre, Marketing & Operations Manager at Kearns Brinen & Monaghan. We dive into Brinen's thoughts on the warnings from the CFPB, the future of commercial collections, hiring trends, and more. You can reach Brinen LeFevre at: blefevre@kbmcollect.com 302-736-6481 kbmcollect.com

In today's video, we are going to discuss ERTCs, Employee Retention Tax Credits, with guest Michael Slabitcher, founder of Complete Capital Network, a business finance company based in Miami. Topics of discussion: What does Michael's business do ERTC, what is it and how can it help business owners How other brokers can work with him to get the ERTCs done Any trends in the market Lastly, a memorable deal, good or bad. Michael Slabitcher Complete Capital Network Especialista en Finanzas Empresariales Direct: (786) 350-2728 Office: (800) 456-4152 Ext. 101 mslabitcher@completecapitalnetwork.com michael@PrestamosdelSBA.com www.completecapitalnetwork.com www.PrestamosdelSBA.com

It was a pleasure speaking to Xan Myburgh, CEO of Backd Business Funding. Here's what we get into in this video: How Xan became CEO of Backd What does Backd do? Current business finance trends What are debt and equity financing Pros + Cons of Debt Financing What are some documents a business owner needs for an MCA or Line of Credit? What should a business owner consider when deciding financing types? You can reach out to Xan Myburgh or his team at: xan@backd.com (513) 394-0619 backd.com

1) The press release from Amazon about the new Merchant Cash Advance program they will be offering in partnership with Parafin mentions a fixed capital fee but it doesn't use the phrasing of 'buying future receivables at a discount', which is the common legal definition from previous court cases. This fee structure is similar to how companies like Stripe explain their similar product. 2) Amazon gives an enormous amount of publicity and credibility to the merchant cash advance product. There are other big names who offer MCAs or products that work the same, like PayPal or the aforementioned Stripe for example, but Amazon is in a class of its own really so they have provided a new level of market awareness and legitimacy. 3) Other eCommerce funders need to adjust if much of their business was coming from Amazon sellers. 4) While Parafin was an unfamiliar name to me in the market not long ago, they must be doing a lot of things right with their technology and credit risk model to gain this partnership. They have a 10 million max advance! 5) Amazon now has a portfolio of term loans, interest-only loans, and lines of credit in conjunction with its third-party financing partners. I would imagine that if all goes well with the new MCA product they will expand these offerings beyond sellers on their platform. 6) Looking forward to seeing how the Q1 2023 numbers compare to the other big fintechs. 7) MCAs are here to stay! With some regulation of course. But too many big players are involved for the MCA product to be destroyed somehow, and that's a good thing for the industry.

I previously wrote on BFS Capital's conversion to Nuula, so I was astonished to say the least when I saw their CEO Mark Ruddock's article on LinkedIn announcing that Nuula is selling all of its assets. The main reason given for them having to do so is their Series A funding round fell through. They announced a $120 million capital raise last year to build their ‘Superapp’ for small businesses. This was a very unfortunate thing for all involved and I feel for all their employees. It is never easy to lose a job but certainly a shock when a whole company shuts down at a moment's notice. I worked for BFS Capital back in 2016 in Florida so this is a company that I had a good understanding of and developed many working relationships with at the time. They had success for almost 2 decades as BFS Capital, even at one point was rumored to be seeking to go public, and the future looked bright as Nuula came to form. The news was even more surprising to me because as I wrote last year, I believed that the package of services and embedded finance application Nuula was planning on offering in their Superapp was going to be used as a template for other funders going forward. That model is not what went wrong here with Nuula so I still think that certain services, embedded finance, and other verticals are an opportunity for growth for funders. However, it's possible that funders won't package too many services until they are receiving sufficient returns and have secured the funding necessary. This situation is another example of how unforeseen circumstances in any economic condition can drastically affect a growing business. Best of luck to all affected.

The new bill for Florida being rushed to the Senate floor called ‘Don't Say MCA’ will have lasting effects on all those who want to be successful in business. The bill is being passed through the Florida Senate with lightning speed after concerned business owners raised the issue about children being taught about merchant cash advances way too early in school even though there is little evidence of this. These business owners are worried that children will find out how to get working capital to grow their businesses if they decide to become entrepreneurs to control their own destiny one day. Concerned business owners and state officials gave examples of how some children right now are starting their own businesses at ages less than 18 years old and doing better than their parents. The concerned parents do not like this at all! They are ok with financial literacy being taught in school, but just not MCAs and other products that they view as destructive to society. They claim MCAs are predatory, and those that endorse them are also predatory, but the real concern is that business owners and state officials don't want people to know about MCAs until they are old enough to make decisions for themselves. That is when they can take on the responsibility of growing their businesses. The bill would allow parents and any business owner to file lawsuits against ANYONE who teaches their kids about MCAs including teachers, janitors, equipment suppliers, Amazon Prime delivery persons, cafeteria workers, coaches, the debate team, and the cheerleaders. Notably, no mention of the term revenue-based financing in the bill. So instead everyone can just learn about that. APRIL FOOLS!

While no one can predict with certainty that a recession is going to take place in the near future, we can discuss what funders might do if an economic slowdown occurs as many are saying will happen, including Deutsche Bank yesterday and Wells Fargo on March 24th. The story yesterday out of Deutsche Bank is their forecast of a recession happening in the latter part of 2023 due to rising interest rates as the Fed fights inflation. “We no longer see the Fed achieving a soft landing. Instead, we anticipate that a more aggressive tightening of monetary policy will push the economy into a recession,” per the report by Deutsche Bank economists led by Matthew Luzzetti. Worsening the situation is the war in Ukraine which has caused further increase in consumer prices by backlogs or even canceled shipments in the global supply markets. So what effect will this have on business lenders? Right now on business loan products of one year or less, it should not have much impact on any decisions made. Towards the end of this year while evaluating the economic situation is when some changes might be made for those short-term products. Lenders with loan products over a year have to start thinking about the ability of merchants to pay back after a year if certain types of businesses are expected to slow down or lay off employees due to shrinking demand. As the fed raises rates the cost of capital for new credit facilities will increase therefore rates for some business owners seeking capital will be higher. The length of a contract could be shorter depending on the industry. Requirements such as time in business will lengthen and more historical financial data will be needed. Previous client status will not be as impactful. All of these things have been dealt with in some form or fashion since the pandemic and even before in other economic slowdowns. However, all is not negative. If it's a minor recession, then many business types won’t be affected all that much. Some financing products could do even better than before. Businesses could find a way to take advantage of the economic situation with additional capital, buy a competitor out, or just use bridge capital to get through to the other side of a slowdown. There are too many strategies to list that can take place given an endless number of circumstances involved. This will be an ongoing evaluation of the US and global economy which may sound typical but it’s different in the sense that inflation is rising faster than it has in 40 years. That must be dealt with, but some experts warn of stagflation. Hopefully, Russia's invasion of Ukraine is over soon so at least that part of the global situation can resolve some of the problems, although I understand that is an optimistic view. One thing is for sure, lenders of all types are watching this play out with an eagle eye.

(Play to watch/listen to this article) Something funders deal with constantly is managing the relationship with their ISOs(brokers) and other referral partners. Funders have ISO Relationship Managers and other representatives to manage those relationships with ISOs. Often ISOs will work extremely well with their representatives at the direct funding company and everyone is happy. However, sometimes they clash or have instances of disagreement, whether a small issue in underwriting or bigger issues like deals getting declined at the last minute. Neither of which is always the responsibility of the ISO representative. But what happens when an ISO doesn’t feel they are getting the best treatment or flat out requests another ISO rep or manager? This question applies to a larger point in business in general. When do you make sure you support and back your employees over the client or the clients’ customer? The answer to this has many variables but since this is a decision that could lead to a business losing a great employee, it’s one that should be well thought out. Now, this doesn’t mean you ignore the clients’ issues or not do as they ask. Nor does it mean that issues like this should be a frequent occurrence because then that could mean a real problem with the employees’ performance. It simply means that whatever the decision, it should be understood by the employee whether or not they have support from the employer. If they did nothing wrong and you still side with the client, that employee needs to understand if you supported their handling of the situation but you are still doing what’s best for the relationship and the business overall. So to play out a hypothetical example using an ISO Manager from a Funding company and an ISO. I’ll refer to the individual at the ISO as a broker. Let’s say this broker has been funding a lot of deals with XYZ Funder for a couple of years. His contact at XYZ Funder is the ISO Rep who reports to an ISO department manager. Suppose a couple of issues came up between the broker and the ISO Rep that it made the broker upset enough that he didn’t want to deal with the ISO rep any longer. The broker requests from the ISO Manager that he be assigned to someone else. That ISO Manager takes it under consideration given the ISO is a valuable referral partner. The ISO Manager decides that, after hearing both sides of the situation and careful review of everything else, he will switch the broker to another ISO rep effective immediately. This is where a proper discussion needs to happen even if it is very short. One way of handling it that will work for everyone is to make sure the ISO rep understands that the ISO Manager doesn’t think they did anything wrong but will still honor the broker’s request because it’s best for the business. The ISO rep should understand this position and move forward. Another way of handling it is to say nothing to the ISO rep and switch the broker to another ISO rep. This usually won’t sit well. Ignoring a conversation on what happened will lead the rep to believe they are at fault and the ISO Manager is not supporting their actions. Further tensions could develop from this down the line especially if other issues of any sort are not discussed. Lastly, if the ISO Manager felt the ISO rep did not handle the situation well then the decision to switch to another ISO rep is simple yet a discussion is still made. This way the rep learns from their actions and performs better in the future. These are decisions that sometimes mean the difference between keeping a valuable employee long-term or not. Your employee is the one you really need to keep happy first as they perform their duties to keep the company running. The broker, although valuable, is not first priority in the circumstances when the employee did nothing discernible wrong. As mentioned earlier there are many variables in these types of situations. Just be aware of how these decisions affect your ISO representatives and are there to support them.

Dedicated Financial GBC today announced that Sarah Kelly has joined the company as its Director of Servicing. With over a decade of experience in the equipment leasing and finance industry, Sarah will spearhead the expansion of Dedicated's servicing business. Using her extensive systems and technology project management skills, Sarah will focus on developing an industry-leading, cradle-to-grave experience for Dedicated’s servicing clients. Sarah’s extensive experience includes positions at KLC Financial, K2 Capital, and–most recently–KSK Consulting. “Sarah is a commercial finance industry veteran,” said Shawn Smith. “Heck, she was raised in commercial finance, so it’s in her blood. That, combined with her passion and excitement for giving back to those in need, makes her a perfect fit to head up our growing servicing division, and we are truly excited and thankful to have her on board!” From the Dedicated Financial GBC Press Release

All lenders are constantly seeking ways to reduce risk. Whether it be through technology or better training for their personnel or some combination of both. The ones who have the most data on past or present clients have an advantage. Machine learning and artificial intelligence have been used for a number of years in lending to calculate risk in credit models among many other reasons. There are still manual processes in business lending underwriting but predictive behavioral technology could be the next level of risk-reducing tools a lending institution uses to its advantage to minimize default rates. Background First arriving from one company in 2019, behavioral voice analytics products are built on technology that has existed for years but the enhanced features are now gaining traction in the lending industry to enable lenders to reduce risk by analyzing the voice and speech patterns of a customer. Voice analytics technology has mostly been used in call centers to interpret the level of satisfaction a customer had on a call by measuring tone and other data points, but this predictive behavioral technology has found more use cases such as in predicting loan defaults in lending, in human resources, sales, and collections. Who offers this software The claim by one of the software providers called Voicesense is that by combining signal processing, psychology, and machine learning with an algorithm, you can predict to a certain level of accuracy that a loan applicant will default. Interestingly the software does not interpret the words or content of a conversation, instead, it examines the pace, intonation, and more than 200 prosodic parameters of a person’s speech in seconds. It connects speech patterns to types of behaviors that would typically follow. A complete personality profile is sent to your CRM in seconds for analysis in real-time or can analyze post-conversation. There will be many other applications as the technology gains traction and proves its benefits to allow companies to improve their operations and bottom line. Voicesense indicates they provide businesses with clear-cut conclusions like whether a customer will buy. This information could be an ideal solution to enhance your sales team operation or if not used appropriately might be data just taking up time and resources. Voicesense, an Israeli company, already has clients in the alternative business lending industry and they are working on more. They developed some of the software by working in Israeli government intelligence and major corporations. Their Risk Management product is described as helping a funder make smarter loan decisions and improved risk management. They understand the manual tasks that underwriting teams go through but want to be able to provide you with more actionable information at the top of the application process. If you get a Voicesense report early in the underwriting process, you then would be able to adjust the requirements for a certain applicant or decline them altogether. This is similar to finding out about something in a tax return and then asking for more stipulations to compensate for the increased risk. According to the Voicesense website, “The VoiceSense Loan Default Predictor assesses a customer’s risk stratification based on different behavioral tendencies – risk taking tendency, impulsiveness, personal integrity, conscientiousness, rule abiding tendencies, coping, well-being and more.” In their Collections product, they note that Collection agencies can enhance their performance dramatically by ignoring particular statements and focusing on a customer's emotional behavior and interaction patterns. The voice data collected can be used to determine who is most likely to pay on their past-due debt. Summary These products by Voicesense and others are very enticing. For a lender, if you could save ten percent on every million dollars worth of loans then the return on investment makes it worthwhile. The technology and products will only get better from here. Voice analytics will grow as the Internet of Things(IoT) expands into more products providing an immense amount of voice data to integrate into machine learning algorithms like the ones used in behavioral voice analytics. To learn more about Voicesense, click below to set up a call. *Funder Intel is an affiliate partner with Voicesense.

Founder Shane Mahabir discusses his background, updates on the platform, future plans, and the impact of new financial disclosure laws.

Block Inc(Square) Q2 earnings are out. From their shareholder letter, "Square Loans: Square Loans achieved strong revenue and gross profit growth during the second quarter of 2022, facilitating approximately 122,000 loans totaling $1.01 billion in originations, up 30% year over year. Square Loans benefited from $9 million of Paycheck Protection Program (PPP) loan forgiveness revenue and gross profit during the second quarter, compared to $51 million of revenue and gross profit in the first quarter. PPP loan forgiveness revenue is primarily a near-term benefit as revenue is recognized in the period PPP loans are forgiven." More on these numbers from Block Inc. later.