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( BUSINESS WIRE )-- Reliance Financial , a leading provider of revenue-based financing solutions for small and mid-sized businesses, announced today that it has secured an institutional capital source with a prominent specialty finance firm. This new program will support Reliance Financial’s continued growth and enable the company to significantly increase its origination capacity across the U.S. With deal sizes up to $5,000,000, Reliance Financial offers non-dilutive funding solutions by enabling businesses to sell a portion of their future revenues in exchange for immediate working capital. Known in the market for its honesty, transparency, and ease of doing business, Reliance has helped thousands of businesses secure flexible, fast, and responsible funding. “This program is a milestone moment for Reliance Financial and a testament to the strength of our platform, our team, and the trust we've built in the market,” said Aryeh Miller , CEO of Reliance Financial. “We are deeply grateful to both our internal team members—whose tireless dedication made this possible—and our external partners and stakeholders for their continued belief in our vision. This program equips us with the resources to serve more businesses and deepen our role as a trusted capital provider in the revenue-based financing space.” The relationship reinforces Reliance Financial’s strong performance and its position as a high-integrity originator in the alternative finance industry. As the demand for flexible, non-dilutive working capital continues to grow, Reliance is well-positioned to meet the evolving needs of business owners across industries. About Reliance Financial Reliance Financial is a U.S.-based provider of revenue-based financing solutions offering up to $5,000,000 per transaction. The company is committed to delivering fast, transparent, and flexible funding to growing businesses nationwide. Led by industry veteran Aryeh Miller, Reliance has helped thousands of companies unlock working capital without giving up equity or control. Contacts For media inquiries, please contact: Jeremy Baum Jeremy@reliancef.com (862) 219-2969 https://reliancef.com/

Jerry Cocuzzo of FundAll Capital and John DiCanio of Fund My Biz join me to discuss current regulatory news, including the important bill Texas   HB 700  and the  7(a) Loan Agent Oversight Act  ( H.R. 1804) , as well as the tech business loan brokers need to know about, and other best practices for brokers.

Federal prosecutors continue their aggressive pursuit of Paycheck Protection Program (PPP) fraud, with two recent high-profile convictions demonstrating that the Department of Justice remains committed to holding fraudsters accountable nearly five years after the pandemic began. From Colorado to Michigan, these cases illustrate the sophisticated schemes that continue to draw federal attention and the serious consequences awaiting those who exploited pandemic relief programs. Tale of Two Fraudsters: Morrison Contractor and Southfield Doctor The contrasts between Richard Nieto of Morrison, Colorado, and Dr. Reginald Eburuche of Southfield, Michigan, highlight the diverse range of professionals who attempted to defraud the PPP program. Yet their methods and outcomes share striking similarities that reveal common patterns in pandemic fraud prosecutions. The Morrison Scheme: Multiple Businesses, Multiple Lies Nieto's case exemplifies the multi-layered approach many fraudsters employed. The 39-year-old contractor didn't simply inflate numbers for one business; he orchestrated a comprehensive scheme involving both legitimate and entirely fictitious companies to secure nearly $914,000 in PPP loans. For his legitimate business, Denver Pro Painting & Contracting, Nieto inflated employee counts and payroll figures while creating fraudulent Form 941s that didn't align with actual IRS filings. More audaciously, he fabricated an entirely fictitious business called DenPro, claiming over $1.7 million in annual payroll for a company with zero employees and no operations. Perhaps most damaging was the forgiveness fraud that followed. Nieto created 87 fake payroll checks and pay stubs to support loan forgiveness applications, successfully obtaining full forgiveness on one loan before his scheme unraveled. Rather than using funds for legitimate business expenses, he diverted money through multiple accounts to purchase Bitcoin, precious metals, and real estate investments. The result : 46 months in federal prison and $962,438.85 in restitution. The Southfield Strategy: Professional Credentials, Fraudulent Claims Dr. Eburuche's approach was more straightforward but equally deceptive. After failing to obtain a line of credit for his startup business Renovis Healthcare in 2019, he turned to the PPP program as "potential seed-funding—$1.7M at 1% interest." To secure the funds, he "grossly inflated the number of employees and the average monthly payroll for his fledgling company" and "created and uploaded fraudulent tax documents" to make his false claims appear legitimate. The federal jury convicted Dr. Eburuche on May 29, 2025, with a large portion of the fraudulent funds frozen and seized in advance of trial. His sentencing is pending, but the conviction sends a clear message about professional accountability. Current State of PPP Fraud Prosecutions These recent convictions reflect broader enforcement trends that continue to accelerate across the country. The DOJ's COVID-19 Fraud Enforcement Task Force has charged over 3,500 defendants with federal crimes, recovered more than $1.4 billion in government funds, and filed over 400 civil suits since May 2021. The Small Business Administration's Office of Inspector General reports approximately 1,255 criminal indictments, 985 arrests, and 683 convictions as of December 2023. These numbers represent a significant escalation from earlier enforcement efforts, indicating that investigations have reached a critical mass. What makes these cases particularly notable is their geographic and professional diversity. From contractors in Colorado to doctors in Michigan, federal prosecutors are demonstrating that no region or profession is immune from scrutiny. The enforcement landscape encompasses both criminal prosecutions and civil recovery actions, with Fiscal Year 2024 seeing the highest number of qui tam actions filed in history. Evolving Enforcement Patterns and Prosecution Strategies The Nieto and Eburuche cases reveal several emerging patterns in federal PPP fraud prosecutions. First, prosecutors are increasingly focusing on defendants who created entirely fictitious businesses or grossly misrepresented legitimate ones. The fabrication of supporting documents—particularly tax forms and payroll records—appears to be drawing particularly harsh treatment from courts. Second, the use of professional credentials or business sophistication does not provide defendants with any advantage. If anything, prosecutors seem to be emphasizing how professionals like Dr. Eburuche violated public trust during a national emergency. Third, asset recovery is becoming increasingly sophisticated. The freezing and seizure of funds in the Eburuche case before trial demonstrates improved coordination between investigative agencies and asset recovery efforts. Challenges and Complexities in Current Investigations PPP fraud investigations present unique challenges that distinguish them from traditional financial crimes. The program's expedited approval process during the pandemic emergency created extensive documentation gaps that investigators must now navigate methodically. However, certain factors work in favor of law enforcement. PPP loan cases are generally easier to investigate than other fraud types due to the centralized nature of the lending program and standardized application processes. The digital paper trail created by online applications provides investigators with comprehensive evidence of fraudulent claims. The challenge lies in volume. With nearly $1.2 billion recovered between criminal and civil enforcement actions, approximately $62.8 billion in potentially fraudulent loans remain under investigation. This massive gap between recovered and outstanding funds illustrates the enforcement mountain that remains. Looking Forward: Sustained Enforcement Through 2030 Several factors suggest that PPP fraud enforcement will remain a federal priority for years to come. The 10-year statute of limitations for PPP and EIDL fraud means investigations can continue through 2030-2031, providing ample time for thorough case development. As U.S. Attorney Jerome F. Gorgon Jr. stated in the Eburuche case: "When a licensed professional chooses fraud over integrity, the harm runs deeper than dollars... This Office will continue to pursue those who exploited these programs for personal gain." Legal experts expect the trend of increasingly complex civil PPP fraud actions to continue in 2025. Federal investigators confirm that PPP loan fraud investigations are ongoing, with new charges filed regularly, indicating sustained enforcement momentum. The government's approach is becoming more sophisticated as well. Recent cases demonstrate improved inter-agency cooperation, with the FBI, SBA Office of Inspector General, and Treasury Inspector General for Tax Administration working together more effectively than in earlier investigations. With billions in potentially fraudulent loans still under investigation and a decade-long enforcement window remaining, these recent cases serve as both cautionary tales and enforcement previews. The message from federal prosecutors across the country is clear: PPP fraud investigations are far from over, and the consequences for those who exploited pandemic relief programs remain severe and swift.

Business confidence in the U.S. has taken a sharp dive, reflecting a growing unease among small and mid-sized business owners. According to ABL Advisor, citing the latest Principal Financial Well-Being Index , the overall confidence level has dropped to 6.02, the lowest it’s been since November 2020. While economic headlines often paint a mixed picture, this decline cuts through the noise, revealing real anxiety about inflation, recession risk, and the ability to secure financing in a volatile environment. Key Findings The overall confidence index  has plummeted from 7.8 in November 2024  to 6.02 in June 2025   Small and mid-sized businesses (SMBs) saw their sub-index drop by 14% , from 7.38 to 5.69, the steepest dive yet. Only 16% of employers  believe the national economy is growing, a sharp decline from last year. Meanwhile, 56% report their own businesses are growing , and 29% see local economic expansion , although both metrics are trending downward. SMB concerns are centered on inflation (55%) , economic stability (55%) , and recession fears (49%) . Broader Landscape: More Than Just a Numbers Drop This trend is not isolated. The NFIB Optimism Index  also slid further in April , landing at 95.8 , marking its fourth consecutive monthly decline below the 51-year average. Job openings levels fell to their lowest in over four years, signaling a cooling labor market. Still, there were early signs of stabilization in May; the NFIB index ticked up to 98.8 , and small-business sentiment improved slightly amid softening tariffs and renewed trade optimism. What’s Driving the Decline? Macroeconomic Jitters : Persistent inflation, volatile trade dynamics, and mixed policy signals are keeping business leaders on edge. Echoes from 2020 : The shake-up in confidence mirrors patterns seen during the early COVID-19 wave, except this time, layoffs are rare. Employers are choosing to hold onto staff , cutting discretionary spending instead. Policy Ambiguity : With uncertainty over tariffs, the economic stability index, and the timing of potential policy interventions, businesses are in a "wait-and-see" mode. What It Means for SMB Finance and Funders Funding strategies  should reflect caution: expect longer sales cycles, reduced capital expenditures, and elevated risk sensitivity. Lenders will likely tighten underwriting standards , prioritizing cash flow and existing borrower stability. Fee structures may come under pressure , as borrowers resist higher costs in an uncertain environment. Looking Ahead: Signals and Strategies Trade Prospects : Continued de-escalation (e.g., lower tariffs with China) could boost sentiment, as seen in May’s NFIB uptick. Policy Clarity : Clear direction on tax reform, trade, and inflation relief could restore confidence, but delays may prolong the stagnation. Tech and Automation : SMBs focused on efficiency, like automation and AI, may outperform peers. According to other surveys, 91% of small businesses believe in investing in tech to thrive. Future Expectations Stabilization followed by regional divergence : Some areas might bounce back faster due to local economic strength, while others lag. Leaner SMB operations : Expect business owners to maintain staffing levels but tighten budgets, focusing on productivity. Renewed focus on resilience : Financial products that support working capital flexibility, cost management, and risk mitigation will be in demand. Final Take This isn’t just another confidence dip, it’s a caution flag. Small and mid-sized businesses are signaling caution, not collapse. For funders and fintech platforms, the path forward lies in being agile, empathetic, and prepared. Tailored solutions that address liquidity, flexibility, and scale can make all the difference in building resilience on Main Street.

Bill Sponsor Rep Daniel Meuser (R-PA-9) In a move to address fraud within the Small Business Administration's (SBA) lending programs, the U.S. House of Representatives has passed the 7(a) Loan Agent Oversight Act ( H.R. 1804) . This legislation aims to enhance transparency and accountability in the SBA's 7(a) loan program, which has been marred by significant fraudulent activities involving loan agents. Understanding the Loan Agent Oversight Act The 7(A) Loan Agent Oversight Act mandates the SBA's Office of Credit Risk Management to submit an annual report to Congress. This report must detail: The number of agents assisting loan applicants. The number of fraudulent loans linked to agent involvement. Referral fees paid by lenders to agents. This initiative stems from findings that, in 2023 alone, the SBA's 7(a) program issued 47,700 loans totaling $25.7 billion, with $335 million identified as fraudulent due to loan agent malpractices . The Broader Context: Challenges in Small Business Financing The legislation arrives at a time when small and medium-sized businesses (SMBs) face significant hurdles in securing financing. According to PYMNTS Intelligence, half of U.S. SMBs rely on daily revenue to stay afloat, and 7% fear they might not survive the next two years. Furthermore, fewer than half of these firms have access to financing, with 13% of those without access considering their survival at risk. The SBA's 7(a) loan program serves as a crucial lifeline for these businesses, offering guarantees to private lenders to support small business growth. However, the integrity of this program is compromised when fraudulent activities siphon off funds meant for legitimate enterprises. Watch Congressman Dan Meuser speak about the Bill (2 min) Implications for Stakeholders For the SBA and Policymakers: The Act underscores the need for robust oversight mechanisms within federal lending programs. By mandating detailed reporting, it aims to identify and mitigate fraudulent activities, ensuring that funds reach their intended recipients. For Lenders and Loan Agents: The legislation signals increased scrutiny of loan agents' roles in the application process. Lenders must exercise due diligence in their partnerships, ensuring compliance with ethical standards and regulatory requirements. For Small Businesses: Enhanced oversight can restore confidence in the SBA's lending programs, assuring SMBs that the system is designed to support their growth and not hinder it through fraudulent intermediaries. Looking Ahead: Strengthening the Financial Ecosystem The passage of the 7(a) Loan Agent Oversight Act is a step toward fortifying the financial infrastructure that supports small businesses. However, continuous efforts are required to adapt to evolving fraudulent tactics. Implementing advanced verification technologies, fostering transparency, and promoting financial literacy among SMBs can collectively enhance the resilience of the lending ecosystem. As the bill moves to the Senate for consideration, stakeholders must collaborate to ensure that the final legislation effectively addresses the complexities of loan fraud without imposing undue burdens on legitimate agents and lenders.

If you’ve been keeping an eye on regulatory rumblings in the alternative finance world, you may have heard by now that North Dakota recently passed a law that’s shaking things up. House Bill 1127 amends the state’s Money Brokers Act, and while the bill itself may not have made national headlines, the implications are significant, especially for funders and fintech companies offering products like merchant cash advances, factoring, and revenue-based financing. The crux of the law? North Dakota now has the authority to define these alternative finance products as “loans,” putting them under the same regulatory umbrella as traditional lenders. This includes licensing requirements and interest rate caps, up to 36% annually. What’s more, the state’s financial regulator, the Department of Financial Institutions (DFI), has been granted the discretion to classify these products through administrative orders. Not Just Semantics On the surface, this might seem like a minor legislative tweak. However, in practice, it represents a significant shift in how one state chooses to treat non-loan financial products, ones that have historically operated outside of traditional lending laws. Merchant cash advances, for instance, have long skirted usury laws because they are technically purchases of future receivables, not loans. By redefining these arrangements as loans based on their operational characteristics rather than their labels, North Dakota is setting a new tone in the regulatory conversation. For now, this only affects businesses operating in North Dakota. But the move adds to a growing list of state-level efforts to regulate or scrutinize alternative financing. California, New York, and Connecticut have passed disclosure laws aimed at improving transparency. Now, North Dakota is taking it a step further by targeting the legal classification of the products themselves. Why This Matters There are a few reasons this matters more than it might appear: 1. Precedent-Setting: Other states could follow North Dakota’s lead. If more state regulators begin reclassifying alternative financing as loans, it could trigger a broader compliance reckoning across the industry. 2. Licensing and Rate Caps : For MCA providers and fintech platforms, a 36% APR cap and mandatory licensing could drastically change underwriting models, risk assessment, and funding structures. 3. Regulatory Uncertainty : The DFI’s discretionary authority leaves funders guessing. Which products will be targeted? Will it apply only to consumer-facing offers, or will it bleed into commercial products as well? Looking Ahead This kind of reclassification may be just the beginning. In the broader landscape, regulators are clearly growing more cautious about products that operate in legal gray areas, particularly when those products are used by small businesses that may not fully understand the terms or consequences. If you're in the MCA or alternative lending space, the time to adapt is now. Expect increased legal scrutiny, evolving compliance requirements, and potentially more legal challenges around how these products are marketed and structured. That said, regulation isn’t inherently bad for the industry. Clearer standards can create a more level playing field and build trust with borrowers. The key is transparency, fair terms, and a willingness to evolve with the regulatory climate. North Dakota might not be a major hub for alternative finance, but its decision to quietly redefine the game may echo louder than expected in the months ahead. *Source: “North Dakota Law Regulates ‘Alternative Financing’ as a ‘Loan’” by Hudson Cook, LLP

It’s said that things are bigger in Texas, but for Sales-Based Financing, that may no longer be a possibility. Thanks to a Texas billionaire, financing options for businesses are set to be reduced if Texas Governor Greg Abbott signs HB 700 into law before Saturday, June 22nd, although hope remains for something to change.  The bill, as passed by the State House late on Wednesday 5/28, sets new policy for all Sales-Based Financing transactions, which range from registration for funders and brokers, financial penalties for violations, to the most important restriction- a ban on automatic ACH debits on the business owner's deposit account with some exceptions. Those exceptions and how everything in this bill applies to new sales-based financing transactions are going to be the hot topic of discussion for the foreseeable future, not only for what it means in Texas, but what ripple effect it could have in other states. Amendment with ACH debit restrictions Party Votes This bill was sponsored by two Republicans. The Texas House is made up of 88 Republicans and 62 Democrats. The vote for Yea was R=71, D=27, and the Nay votes at R=8, D=15, with the remaining absent or not voting. Most think of Republicans as the party of less regulation, providing businesses with more freedom to operate and enabling businesses to gain more access to capital, but this bill does the opposite. This whole process has been a lesson on how things operate when the incentive and determination to make certain changes are there. Who's behind this bill? This bill was backed by a Texas billionaire, who made his fortune in the oil and gas industry after playing college football at Texas Tech, who has part ownership with his brother of a factoring company. Given his determination to restrict the capabilities of the sales-based financing (revenue-based financing, merchant cash advance) industry and thus competition, he got the main Factoring industry associations, the International Factoring Association (IFA) & American Factoring Association (AFA), to support this bill. They moved swiftly to get something done and, within the last couple of weeks, added the amendment regarding ACH debits to the bill that was the game changer.    Whats next We shall see if anything prevents Governor Abbott from signing this into law or not by June 22nd. If you are against this bill, you are encouraged to contact the Governor's office. This is not legal advice, so seek counsel, but since the law has not been signed yet, funding can still take place. There does not seem to be a retroactive component to this bill, so existing funding agreements would not be affected even if it does become law, which would take effect September 1, 2025. Initial rules will need to be in place by September 1st of 2026, and provider registrations will be required no later than December 31, 2026.

NEW YORK--( BUSINESS WIRE )-- VOX Funding , a leading provider of flexible financing options for U.S. businesses, today announced closing a $150 million credit facility with Raven Capital, a New York-based investment firm specializing in asset-based direct lending. This transaction marks a major milestone in VOX Funding’s ongoing expansion and reflects the strength of its platform, which has delivered consistent results across market cycles. The added capacity will support the firm’s continued scaling, further strengthening its position as a leader in alternative credit. Founded in 2018, VOX Funding has built a reputation for reliability, flexibility, and innovation. The company blends cutting-edge infrastructure and technology with a human-centered approach, valuing relationships, intelligent underwriting, and a genuine customer focus. To date, VOX has funded over $750 million through its platform. “This partnership arising from Raven Capital’s expertise and deep understanding of our business marks a significant step forward in our long-term vision,” said Adam Benowitz, Chief Executive Officer of VOX Funding. “It enables us to continue our mission, deepen the value we offer to our partners, and maintain the standard of what alternative financing should look like in 2025 and beyond.” “We see tremendous opportunity for VOX Funding to expand and further assist businesses in obtaining the capital they need to grow. We are thrilled to partner with the VOX Funding team on its mission to accelerate capital access for entrepreneurs,” said John Shaheen, Managing Director of Raven Capital. About VOX Funding Founded in 2018, VOX Funding is a privately held alternative financing company headquartered in New York. The company provides working capital solutions to businesses across the United States and operates offices in New York, Pennsylvania, and South Carolina. VOX Funding works directly with business owners and through an established network of brokers, offering non-dilutive funding options supported by in-house underwriting and a relationship-driven approach. About Raven Capital Raven Capital is an alternative investment firm specializing in asset-based credit solutions across the private credit spectrum. For more than a decade, Raven Capital has been a trusted partner to its borrowers, offering tailored financing to meet complex or underserved capital needs. Raven Capital provides flexible, bespoke credit solutions designed to support growth, liquidity, and strategic initiatives. The firm leverages its deep bench of experience combined with a highly collaborative approach to deliver capital with speed, creativity, and certainty. For more information, please visit www.ravencm.com . Contacts Media Contact Matilda Ivarsson, STHLMNYC Agency matilda@sthlmnycagency.com +1 917 420 4285

Several important stories have come out since we left for the holiday weekend that I want to catch you up on, including a critical amendment in TX HB 700. Centrex lawsuit dismissed A company called Fundmerica was suing software company Centrex, a related company named Forth, and stakeholders Trey Markel and Kris Kehler for an alleged data breach. After a years-long court battle, FundMerica dismissed the case and had to release the following statement: "MINEOLA, NEW YORK / ACCESS Newswire / May 23, 2025 / The Lawsuit commenced by FundMerica against Centrex, Forth, Trey Markel, and Kris Kehler in California state court has been dismissed by FundMerica. FundMerica does not dispute that the data incident that compromised the Forth and/or Centrex platforms was caused by and attributable only to malicious third-party actors who were not associated with Centrex, Forth, Trey Markel, and Kris Kehler. FundMerica accepts as true that neither Forth nor Centrex had any involvement in the data incident at issue. Any prior statements made by FundMerica to the contrary are retracted and withdrawn. Contact Information Andrew Kamins Attorney akamins@murraylegalpllc.com " Without getting into any legal issues, this is a critical win for Centrex and its stakeholder as it clears their name of fault in this incident. I think the statement tells you what you need to know in regards to the positive outcome for Centrex, Forth, Trey Markel, and Kris Kehler. Now they can put all of this behind them and focus on growing their business, which services commercial lending. Kris Roglieris' Co-Conspirator Pleads Guilty The Kris Roglieri case just got more interesting. Someone who worked with him, Christopher Snyder, pleaded guilty recently in the Northern District of New York court to 1 count of conspiracy to commit wire fraud. Safe to say that this is not a good development for Roglieri. What Christopher Snyder did From Count 1 : 'In furtherance of their scheme to defraud, SNYDER, Roglieri, and Co-Conspirator-1 transmitted and caused to be transmitted numerous interstate wire communications, including a wire transfer that Roglieri initiated from his Warren County residence to KeyBank, N.A. servers in Ohio on or about December 22, 2023, transferring $950,000 of a new Prime client’s $5 million ICA payment to an older Prime client as partial loan funding for the older client’s real estate project.' Amount of money stolen From the Plea Agreement : "The parties agree that the offense involved a loss of more than $25 million but less than $65 million." Penalty and restitution Christopher Snyder is looking at a sentence of 87 months in prison as written in the plea agreement, but the judge has the final say. There will also be a period of up to 3 years supervised release, and he is ordered to pay a $233,000 judgment. Mr. Snyder's sentencing is set for Sept 16th. With all of this information, we still can't be sure whether Mr. Syder will testify against Kris Roglieri. Roglieri's trial was pushed back until January 5th because the prosecution says they needed more time. Unnamed Co-Conspirator As mentioned above, there is a 3rd unnamed co-conspirator who used the title of Executive Vice President for Prime Capital. A search on LinkedIn can give you some possible names, but I won't mention any of those. Whoever it is will likely have charges against them soon, as the government made mention that a superseding indictment is expected shortly. There are several things that could be related to, but one could guess it would be charges for more of the credit line transactions. The prosecution only started with 1 transaction, the egg farm project which Prime Capital required a $5 million deposit, possibly because that was the path of least resistance to proving a crime was committed. One name I have been asked about for those following the case, because her house was raided, is Kimmy Humphrey, a business partner  of Kris Roglieri. Her name has not come up in recent court documents or published articles. What happened to Berone Capital Fund LP? In the early days of this case, it was reported that Kris Roglieri was blaming a hedge fund named Berone Capital Fund for the issues with not providing the Line of credit as promised in his agreements with clients, but that hedge fund has not been mentioned anywhere recently in this case. They supposedly were his backer for the funding. To sum it up, it wasn't a thing, just as I suspected when I wrote that Kris' story didn't make sense. Texas proceeds with Sales-Based Financing Bill HB 700 with one major amendment This Texas bill has already made headlines with some of the disclosures and restrictions initially, which fortunately have been reduced to a certain extent, where people could see some of the benefits and were wary of other aspects of it. Well, last night there was an amendment brought by Senator Charles Perry (R) that could make it all but impossible to make Sales-Based Financing (see revenue-based financing and mca) in the state of Texas. The amendment is as follows: "Sec. 398.056. CERTAIN AUTOMATIC DEBITS PROHIBITED. A provider or commercial sales-based financing broker may not establish a mechanism for automatically debiting a recipient's deposit account unless the provider or broker holds a valid perfected security interest in the recipient's account under Chapter 9, Business & Commerce Code, with a first priority against the claims of all other persons." What does that mean? It means that if passed with this amendment, it would create a barrier to these types of commercial transactions that is higher than any other state. It would mean that a funder would have to agree with the merchant on the security interest in the deposit account as mentioned above, or find other legal ways to make these transactions. One thing that comes to mind is having to perform old-fashioned Credit Card Splits. However, those used to take 1-3 days to set up. There may be more options, but for now, we will have to wait to see what happens before the Texas Legislature adjourns on June 2nd, 2025. The Revenue Based Finance Coalition has been very active in working on this bill and is currently educating lawmakers on how major an impact this would be for revenue-based financing transactions if this were to pass. Stay tuned for more updates on this as we continue to get them from the RBFC.

The Securities and Exchange Commission has filed a complaint in the Nevada District Court against two men for what amounts to a Ponzi scheme similar in concept to the  MJ Capital case   we covered last year in Miami Federal Court. Joel Natario and Jefferson Scott (aka Patch) Baker are allegedly to have duped investors into providing them with funds that they would then provide capital to small businesses in the form of merchant cash advances and earn a return for their investment. With promises of 16-18% every 12 weeks, investors were eager to put their money into the investment opportunity. The amount they raised ended up being approximately $10 million from February 2020 to August 2021. (That timeline overlaps with when MJ Capital did the same thing.) The problem is that investors were only paid with new investor money. A classic Ponzi scheme. I do want to say this shouldn’t shine a bad light on the funding product used to lure investors, MCAs, because it's simply the product that was involved. Everything was in place for the scheme. Joel Natario and Patch Baker developed all of the written agreements with the promise to pay the investor the return; however, they never provided any funding to small businesses, and thus no MCA venture, per the complaint. Roles in the Scheme Joel Natario was a self proclaimed successful entrepreneur in Mining and Environmental services. Jefferson Scott Baker lised himself as a USMC Veteran, Investor, Business Development Consultant, Speaker and Writer on his LinkedIn profile. Natario controlled the bank accounts, and Baker was the main person controlling the software platform they built called Flowallet and soliciting investors. Most of the investors were people they met in a private networking group called Board of Advisors, which is where they met back in the 2019-2020 timeframe. Prominent figures like Kevin Harrington were members of this group in the past, where there was an annual membership cost of $25,000. Image from BA networking group Sections from the Complaint: 10. Defendants also used investor funds to enrich themselves. Natario sent Baker over $1 million during the life of the scheme, and Natario also used investor funds to pay credit card bills, purchase real property, and pay for personal travel and vacations. 11. By February 2021, investor withdrawal requests were outpacing Defendants’ ability to fraudulently solicit additional investments. In response to investor questions and complaints, Baker and Natario offered various false and misleading excuses, including that the bank had frozen the relevant account. 12. Later in 2021, Baker stopped responding to investors altogether, and Natario continued to deceive investors. For example, in August 2021, Natario sent one investor a sham monthly bank statement that he had doctored to reflect a fictitious account balance of approximately $5.8 million. In truth, the balance for that account at the time was $18. 13. By engaging in this conduct and as alleged further herein, the Defendants each violated Section 17(a) of the Securities Act [15 U.S.C. § 77q], and Section 10(b) of the Exchange Act, [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. §240.10b-5] thereunder. Florida Civil Case This is just the beginning of this civil case, but there was a civil case brought in Florida against Joel Natario in August of 2022 in Florida state court that revealed some information: In November 2021 , Natario executed release agreements and promissory notes with multiple investors, including Investors A, B, C, and D (or entities they controlled and through which their MCA investments had been made). In the release agreements, Natario “accepted responsibility and “agree[d] to be personally liable for” repaying the plaintiffs’ invested principal. 130 . Natario never made any of the payments owed on the promissory notes. 131 . As a result of this conduct, on August 24, 2022, a group of investors brought a civil action against Natario in Florida State court, suing for breach of the promissory notes, captioned Roka Solo 401k Trust, et al. v. Natario, Case No. 22-CA-003326. 132. As reflected in the Consent Judgment and Final Order entered in that case on September 19, 2022, Natario and plaintiffs reached a settlement agreement requiring Natario pay the plaintiffs approximately $5.65 million , plus interest. The plaintiff investors have thus far been unable to collect any of the amounts owed to them by Natario. Website - PatchBakerFraud Someone created a website  that was registered in April of 2021 that is dedicated to exposing Patch Baker fraud, with all negative testimonials about him and his reported actions, lying, scams, etc.  Snapshot from the website He supposedly lied about everything from the house he lived in, which turned out to be a rental, his being in the special forces, that he put $8 million of his own money into this venture, and numerous other outlandish stories from alleged victims of his. Ponzi Scheme Collapses More snippets from the complaint: III. DEFENDANTS OFFERED AND SOLD THE MCA INVESTMENTS AS SECURITIES 133. Natario and Baker offered and sold the MCA investments, including the MCA Purchase Agreements, as investment contracts and thus securities. 134. An “investment contract” is “a contract, transaction, or scheme” whereby the investor (1) invests his or her money, (2) in a “common enterprise” and (3) is “led to expect profits” derived “from the efforts of the promoter or a third party.” SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946). 135. These three prongs of the Howey test are satisfied here. There is nothing found on whether a criminal case is being pursued or not but I would anticipate one at some point, given the very similar type of case of MJ Capital, although she raised almost 20x as much from investors. Video Interview of Patch Baker Video clip from interview with Patch Baker

Washington State is making waves with a new program: the Revenue Based Financing Fund, launched through their Small Business Credit Initiative (SSBCI). It’s the first fund of its kind I’ve come across—have you seen anything like it elsewhere? If so, I’d love to hear about it in the comments! This Fund will work with a nonprofit called Grow America and will offer two different types of loans. The loans will range from $10k to $500k, with an exception up to $1m. The total amount dedicated to this fund is $13 million. Do you agree with what I said in the video, which is that this gives RBF more credibility? Would you want this offered in your state?

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