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New York, NY — 5/16/2025 — Dragin , the automation engine behind some of the fastest-growing and largest revenue-based financing companies, announces the launch of its latest breakthrough: True AI Web-Based Pre-Underwriting. This powerful new AI tool delivers real-time digital presence analysis to deal teams just before offers are made. Designed for Revenue-Based Financing In an industry where speed, accuracy, trust, and decision confidence drive every dollar moved, Dragin’s new AI functionality equips funders with a clear picture of a merchant’s online credibility and activity, automatically pulled before a human ever touches the file. Here ’s what it uncovers: Ownership and business addresses Business website, social media pages, storefront images, and location markers Incorporation information, SOS details, and NAICS codes Legal exposure including lawsuits, arbitration, and personal risk News coverage and media presence Financial signals and business health Registrations and licenses Customer reviews (Google, Yelp, Trustpilot, etc.) Top social media posts and engagement How It Works The moment a deal hits your inbox, Dragin’s proprietary automation stack kicks in, extracting deal info, organizing docs, applying pre-decline logic, and now, launching the AI agent.  In under 30 seconds, it builds a hyperlinked, easy-to-read Digital Presence Report and attaches it directly to the CRM deal view.  No clicks, no searches, no lag . Why It Matters to Funders For revenue-based financing companies, every delay risks a lost deal. Every gap in diligence risks a burned book. Dragin AI closes those loops.  ✔️Cost savings ✔️ Faster pre-qual checks ✔️ Early fraud detection ✔️ Deal confidence pre and post contracts ✔️ Fewer merchant falloffs post contracts ✔️ Streamlined ISO and internal decisioning From Dragin’s Founder “ In the revenue-based financing space, you need to move fast without missing the red flags ,” said Mark Ross, CEO of Dragin. “ This tool gives funders real time signals, whether the merchant is real, active, and viable, before you send an offer. No more hours of review .” Part of a Larger Ecosystem Dragin AI is just one tool in Dragin’s full-stack deal automation platform, which includes: Email parsing and file classification Bank PDF and application extraction Pre-qualification, auto-approve, and pre-decline logic Instant CRM syncing Auto-contract generation Merchant offer portal for real-time negotiation and much more About Dragin Technologies Developed specifically for the revenue-based financing, alternative lending, banking, and insurance spaces, Dragin’s suite of underwriting tools automate deal intake, streamline underwriting, and gives funders a smarter way to scale. With its Machine Learning and AI-driven tech stack and its powerful CRM suite, DraginForce, Dragin is powering the next wave of fast, AI-powered, and compliant funding operations. Learn more about Dragin Schedule Demo

The Consumer Financial Protection Bureau (CFPB) is poised to revisit its open banking rule, a move that could reignite tensions between traditional banks and fintech companies. This rule, established in October 2024 under Section 1033 of the Dodd-Frank Act, mandates that banks provide consumers with the ability to share their financial data with third-party providers securely and without fees. The intent is to foster competition and innovation in the financial sector by empowering consumers with greater control over their data. However, the rule has faced criticism from banking institutions concerned about data security, potential liabilities, and the costs associated with implementing the necessary infrastructure. Banks argue that prohibiting charging fees for data access prevents them from recouping these expenses and managing related risks. Conversely, fintech firms advocate for the rule, emphasizing the benefits of seamless data sharing for developing innovative financial products and services. The CFPB's decision to re-examine the rule comes amidst legal challenges and a shifting regulatory landscape. As reported by PYMNTS on May 13, 2025, the review could potentially alter the dynamics of data sharing between banks and fintechs, with consumers caught in the middle of this debate. Despite the regulatory uncertainty, the adoption of open banking practices continues to grow. The Financial Data Exchange reported a significant increase in secure customer connections between financial institutions and fintechs, indicating a market-driven momentum towards open banking solutions. As the CFPB deliberates on potential revisions to the open banking rule, stakeholders across the financial industry must navigate the evolving landscape carefully. Balancing the need for innovation with concerns over data security and equitable cost distribution remains a central challenge. The outcome of this review will likely shape the future of consumer data rights and the competitive dynamics between banks and fintech companies.

Asset-based lending (ABL) offers businesses an excellent avenue to unlock capital using their tangible assets. However, the underwriting process can become lengthy and frustrating to clients if they are not properly prepared going into the application. Brokers, consultants, and advisors can expedite the process and minimize administrative headaches by helping clients to understand "bank-ready" requirements as soon as a financial need is anticipated. We spoke with Curtis Sutherland, Head of Sales and Business Development at TAB Bank and a seasoned expert in ABL financing, to better understand what clients need to be ready for an asset-based loan. Q: What exactly is asset-based lending (ABL)? A: Asset-based lending is a financing method that allows businesses to leverage tangible assets—such as accounts receivable (A/R), inventory, and equipment—as collateral. Unlike traditional loans that heavily weigh credit history, ABL primarily considers the value and marketability of these assets. Q: What are the main things TAB Bank evaluates when underwriting an ABL deal? A: We look at several key areas: Eligible Collateral:  We assess the quality, age, and marketability of accounts receivable, inventory valuation, and equipment. Borrowing Base Calculation:  We determine how much a business can borrow based on eligible collateral, typically calculated by multiplying eligible invoices by an advance rate. Risk Factors:  We evaluate risks such as customer concentration (particularly if any customer represents more than 25% of A/R) and the age of invoices, focusing on those less than 90 days old. Q: Why is financial record-keeping so important in the ABL approval process? A: Accurate financial record-keeping is crucial because it directly impacts the borrowing base calculation and the assessment of collateral eligibility. Clients must maintain detailed accounts receivable records, perform regular customer concentration analyses, and ensure timely updates to receivables and payables. Q: Can you elaborate on what clients should include in their financial reporting? A: Absolutely. Clients should: Generate consistent, ideally monthly, financial statements. Be prepared to provide audited financial statements for credit facilities above $8 million. Be ready for field examinations to verify internal controls and financial practices. For smaller companies lacking internal financial reporting capabilities, we recommend considering outsourced solutions like fractional CFO services to maintain consistency and accuracy. Q: What internal financial controls are needed for ABL? A: Strong internal controls are critical. Clients should: Have a dedicated accounting professional or team scaled to their business size. For loans exceeding $5 million, we generally expect a CFO-level oversight. Document and implement effective accounting controls to ensure accuracy and reliability. Participate in regular financial reviews and third-party audits to demonstrate the robustness of their financial practices. Q: How important are loan covenants, and what should clients do to manage them? A: Loan covenants are essential commitments required by the lender. To manage covenants effectively, businesses should: Maintain a clear, documented process for monitoring covenant adherence. Use spreadsheets or other tools to keep track of compliance. Provide realistic cash flow projections and clearly articulate their business strategy, particularly concerning how they'll manage collateral and improve cash flow if needed. Q: If a client isn’t quite ready for traditional ABL, what alternative do you suggest? A: For clients who aren't ready due to limited internal financial systems or controls, factoring or accounts receivable financing can be a viable alternative. Factoring involves selling accounts receivable invoices to a third party in exchange for immediate cash, typically with fewer requirements and simpler paperwork. Q: What does your "bank-ready" checklist entail? A: Our concise "bank-ready" checklist includes: Monthly financial statement production (internal or outsourced). Audited financial statements if required. Detailed accounts receivable calculations and understanding of borrowing base. Regular customer concentration analysis. Accurate payment matching processes. Use of standardized financial ratio templates. An appropriately scaled accounting team. Strong internal controls and clear covenant management processes. A well-defined business strategy and accurate cash flow projections. Consideration of factoring alternatives when internal capabilities are lacking. Q: What can a broker, advisor, or consultant do to help their clients become bank-ready? A: Brokers, advisors, and consultants can assist their clients tremendously by educating them on lenders’ expectations, guiding them through the preparation of accurate and timely financial documentation, and ensuring the implementation of necessary internal controls. They can also help clients manage customer concentration risks, develop clear strategies for meeting covenant requirements, and explore factoring as an alternative if traditional ABL isn't immediately suitable. Essentially, financial professionals and partners serve as critical intermediaries who streamline the preparation process, enhancing the likelihood of successful loan approvals. Q: Any final thoughts for financial professionals working with ABL clients? A: Yes. At TAB Bank, we highly value collaboration with financial teams that proactively prepare and demonstrate robust financial planning. The better prepared your client is, the quicker they can access capital for growth. Encouraging clients to fully engage with the bank readiness process not only improves their chances of securing financing but also strengthens their financial stability and operational efficiency. For more detailed insights on becoming bank-ready, including the aforementioned “Bank-Ready Checklist,” download TAB Bank’s eBook: Achieving Bank Readiness for Asset Based Lending .  To learn more about working with TAB Bank or referring a deal for ABL, visit the TAB Bank Broker Partnerships page .

Major news in the case Revenue Based Finance Coalition v Consumer Financial Protection Bureau, et al.. Judge David Leibowitz from the Southern District of Florida has just granted the RBFC's motion to Stay the 1071 rule as to RBFC and its members. This is a very critical decision for the RBFC and all of its members because, with this motion, they don't have to meet the July 18th deadline when commercial lenders of all sorts across the nation are supposed to be in compliance. Any lender/funder not part of the RBFC is not included in this Stay and is at risk if they do not comply with 1071 by the deadline. Do seek legal advice, though, because other rulings and discussions about the enforcement of 1071 have come out of other cases, such as the below-mentioned Texas Bankers Association v CFPB case. Here are a few snippets from the case: "Plaintiff’s Unopposed Motion to Stay the Section 1071 Rule and Holding Proceedings in Abeyance [ECF No. 72] is GRANTED. The Court hereby stays the Section 1071 Rule and tolls the Rule’s compliance deadlines with respect to Plaintiff and its members for the length of time that the Fifth Circuit stay order in Tex. Bankers Ass’n v. CFPB , No. 24-40705, ECF No. 134 (5th Cir. Feb. 7, 2025), is in effect, subject to modification at any time by the Court." "The parties shall provide status reports to the Court every 60 days on the status of the Fifth Circuit case and the rulemaking process. Upon the stay being lifted in Tex. Bankers Ass’n, the parties shall notify the Court within seven (7) days on how they wish to proceed." This is a developing story, and for further information you may contact the RBFC by visiting their website .

Drew Piers, Partner at Sachs Media, joins us for a dynamic conversation on the evolving world of strategic communications in business finance and beyond. From the latest in social media law to the intersection of finance, technology, and public affairs, this video is packed with insights for anyone interested in how high-stakes messaging is crafted and delivered today. Watch now to stay ahead of the curve!

Revenue-based financing (RBF) has emerged as a significant alternative capital market. Major players like PayPal and Amazon have deployed substantial funds to support small businesses. For example, PayPal has funded over $30 billion globally, issuing more than 1.4 million loans to over 420,000 merchants as of March 2025. On the other hand, Amazon offers its own RBF solutions, contributing significantly to this rapidly growing market. The Growth of Revenue-Based Financing Despite its growth, the RBF space remains fragmented. It lacks the institutional infrastructure found in traditional lending markets. Funders often operate on a deal-by-deal basis, recycling capital manually. Syndication typically happens through informal channels such as emails or calls. This leads to inefficiencies and missed opportunities. The Syndication Bottleneck In traditional finance, syndicated loans involve multiple lenders pooling their resources to fund large loans, coordinated by a lead bank. This structure allows for risk-sharing and efficient capital deployment. However, the RBF sector often lacks such formal structures. Deals are frequently syndicated through informal networks, relying on personal relationships and manual processes. This approach can lead to delays and limited scalability. Additionally, it creates challenges in risk assessment. The absence of standardized documentation and centralized platforms means that funders may miss lucrative opportunities. They often cannot mobilize capital quickly enough. The lack of transparency in deal terms and performance metrics can also deter potential syndicate members. As a result, liquidity is further constrained. Capital Constraints and Infrastructure Gaps Many RBF funders face capital ceilings. These ceilings limit their ability to scale. Unlike traditional lenders with access to vast capital markets, RBF providers may rely on limited pools of capital. They recycle funds as repayments are received. This model can hinder growth, especially when demand for financing outpaces the rate at which capital is replenished. Additionally, the infrastructure supporting RBF transactions can be underdeveloped. Without robust platforms for deal origination, underwriting, and servicing, funders may struggle with operational inefficiencies. The lack of integrated systems can lead to errors, compliance issues, and increased operational costs. These factors further strain resources. The Promise of Tokenization Tokenization offers a compelling solution to these challenges. By representing receivables as digital tokens on a blockchain, tokenization can facilitate faster, more transparent, and efficient syndication. Tokens can be easily transferred, fractionalized, and traded on secondary markets. This enhances liquidity and enables funders to access a broader investor base. Moreover, tokenization introduces standardized documentation and real-time performance tracking. This increases transparency and trust among participants. Smart contracts can automate key processes, such as payment distributions and compliance checks. This reduces operational burdens and mitigates risks. The potential of tokenization in RBF is already being explored. For instance, EVIDENT and IDA Finance Hong Kong Limited have partnered to tokenize and distribute RBF investment products. Their aim is to enhance liquidity and accessibility in the market. Building a More Liquid Future Embracing tokenization could transform the RBF landscape. It addresses the current limitations in syndication practices, infrastructure, and capital access. By leveraging blockchain technology, funders can create more efficient, transparent, and scalable financing models. As the RBF market continues to grow, projections estimate significant expansion in the coming years. Adopting innovative solutions like tokenization will be crucial for funders. By doing so, they can unlock new opportunities and better serve small businesses. This will contribute to a more dynamic and inclusive financial ecosystem. Conclusion: The Future of Financing In conclusion, tokenization represents a pivotal development in the realm of revenue-based financing. By streamlining operations and enhancing liquidity, it promises to reshape how funders and syndicators operate. Those who adopt this innovative approach will be best positioned to thrive in the evolving landscape of alternative finance. Scott Goldman, CEO Receivabull Inc.

Recent Top Stories Stay up-to-date with the latest news and trends Paypal and Block Earnings Analysis PayPal and Block have each built formidable fintech lending operations, but Q1 2025 highlights a divergence in their recent trajectories. PayPal, after years of rapid growth in merchant lending, took a breather to refine its approach – and is now tiptoeing back into expansion with a focus on quality over quantity. Its commentary and metrics suggest a healthier portfolio and a deliberate strategy to support merchants’ financing needs without incurring outsized risk. The company is sending a message that it will grow this business line on its own terms: leveraging its data advantages and customer relationships, but being ready to pump the brakes if the economic climate worsens. Block, meanwhile, has been in growth mode, using its ecosystem leverage to become a leading small-business lender while mostly sidestepping the balance-sheet risks. By innovating in underwriting and funding, Block has managed to scale up lending quickly (even outpacing some large banks in the under-$250k loan segment) and still report loss rates that rival those of far more conservative lenders. The Q1 2025 results of $1.59B in originations show Block’s confidence in its credit engine – it’s investing in new lending products and greater scale (especially in consumer micro-lending via Cash App) because it sees strong unit economics and low default rates as validation. Block’s challenge ahead will be maintaining that credit performance as it reaches more borrowers and as macroeconomic variables shift. While no one was looking, Intuit has built a fintech empire From Tearsheet: 'Behind the scenes, Intuit is doing what many seasoned companies with established customer bases aim to do: build out an end-to-end ecosystem so sticky and essential that customers don’t want — or need — to leave. The firm is likely on that trajectory, making a shift from that tax company into something more expansive: a full-spectrum financial operating system. And it’s doing that through carefully chosen, strategic acquisitions. The acquisition spree: In April, Intuit announced plans to acquire Deserve, a mobile-first credit card platform, and also signed an agreement to acquire HR platform GoCo. The press releases were tidy, but the impact of these moves is anything but small. They signal a clear thesis: Intuit is doubling down on owning more of the financial lifecycle, especially for small to midsize businesses (SMBs), where it already holds a strong foothold with QuickBooks. But instead of reinventing the wheel, it’s opting to buy the ones that are already spinning efficiently.' In FY24, QuickBooks Capital facilitated $2.4 billion in loans, marking a 28% year-over-year increase. Intuit holds a sizable portion of these loans on its balance sheet, originating both directly and through loan purchases from partners. As of fiscal year-end, net notes receivable for term loans stood at $912 million, up 20% YoY. This balance rose to $1.2 billion by Q2 FY25, up 31.6%, and now accounts for approximately 15% of Intuit’s tangible assets. It’s important to note that these are unsecured loans that expose Intuit to potential credit losses in the event of a downturn. This risk is heightened by current trade policies, where tariffs fuel recession concerns. Small businesses, which are Intuit’s core lending base, are typically more vulnerable than large enterprises during economic stress, making this segment particularly exposed. Key Highlights from Wayflyer's $5B Milestone One thing that stood out from the article recently by Fintech Nexus about Wayflyer is that people continue to say on a global level that 'major banks pulling back' presents an opportunity for other lenders to fill the gap in the SMB lending market. This honestly has been said countless times since the financial crisis of 2008-09. Why is that? A simple reason is that it's true in part because of the demand that's there, and also because technology outside of traditional banks is moving and able to fix the problems more quickly and better serve SMBs. Here are a few key points from the article: 1. Strategic Expansion Beyond E-commerce Initially focusing on e-commerce businesses, Wayflyer has expanded its services to include companies that sell through third-party retailers and across multiple platforms. This strategic move allows Wayflyer to tap into a broader market of small businesses seeking flexible financing solutions. 2. Filling the Gap Left by Traditional Banks Wayflyer's growth is partly attributed to the withdrawal of major banks from small business lending. For instance, in Q1 of the previous year, JPMorgan Chase originated approximately $1.2 billion in small business loans, while Wayflyer deployed about $400 million—a significant figure for a fintech company. 3. Innovative Financing Model Wayflyer's financing model involves structured partnerships with major banks like JPMorgan Chase, which provide a significant portion of the capital Wayflyer deploys. This model allows Wayflyer to offer fast, flexible, non-dilutive funding to small businesses, particularly in the e-commerce sector. 4. Global Presence and Recognition With operations in 11 countries and offices in Dublin, London, New York, and Sydney, Wayflyer has established a strong global presence. The company was recognized as Ireland's fastest-growing technology company in Deloitte's annual ranking in November 2024  Featured Providers Easify CFG Merchant Solutions Viking Funding Thoro Corp Stafford Business Funding True Advance Centrex Software To be a featured provider, go here . Industry Stocks To Watch These are prices from Monday, May 5th Small Business Stats Source: PYMNTS: SMB Growth Report - April 2025 Survival at Risk One in five SMBs is worried about staying open. If you want to showcase deals that you've completed or see your company featured here, please contact us .

Recent Top Stories Stay up-to-date with the latest news and trends Banks, fintech, and crypto are colliding The convergence is picking up momentum as the new administration loosens restrictions on both crypto operations and traditional banking giants. The latest evidence of this mashup is that crypto upstarts Circle, BitGo, Coinbase Global (COIN), and Paxos are all either considering or planning to seek a US bank license in some form, according to a report in the Wall Street Journal. "This is something Coinbase is actively considering but has not made any formal decisions yet," a Coinbase spokesperson told Yahoo Finance. Other traditional banks and payments providers are also testing or considering a deeper involvement with stablecoins, from Standard Chartered to PayPal (PYPL) to Stripe. Money management giant Fidelity Investments has also begun testing its own stablecoin, according to the Financial Times. "Some of the traditional banks, they're going to embrace and start offering crypto-related products directly," BitGo CEO Mike Belshe told Yahoo Finance. "We're also going to see crypto moving more towards traditional finance as well, which is crypto companies like BitGo offering more traditional services." Third Defendant Charged with Orchestrating Nearly $1 Million Loan Fraud Scheme The United States Secret Service, New York Field Office, announced the unsealing of superseding information from a prior indictment charging SAMUEL SELMAR for his role in running an advance-fee loan fraud scheme through which dozens upon dozens of victims were defrauded of almost $1 million. SELMAR surrendered and was presented before U.S. District Magistrate Judge Jennifer Willis. The previous arrests were charging YISROEL HEBER, a/k/a “Scott Heber,” and YECHIEL MESHI-ZAHAV with running the advance-fee loan fraud scheme. From at least in or about March 2021 through at least in or about December 2021, YISROEL HEBER and YECHIEL MESHI-ZAHAV participated in an advance-fee loan fraud scheme that defrauded dozens of victims of at least approximately $2 million. HEBER and MESHI-ZAHAV operated this fraudulent scheme through purported lending companies called Blue Ribbon Funding, Tru Capital Funding, Fund Capital LLC, a/k/a “Fund Cap LLC,” and Ameriquest Capital (collectively, the “Fraudulent Lenders”). During the course of the scheme, HEBER and MESHI-ZAHAV, through their control of the Fraudulent Lenders, induced victims to provide their bank account information in order to make payments related to loans that the Fraudulent Lenders promised to issue to the victims. Instead, however, HEBER and MESHI-ZAHAV defrauded the victims by withdrawing thousands of dollars from each of the victims’ bank accounts without issuing the promised loans. Consumer confidence plunges for fifth straight month Consumer confidence fell for the fifth straight month in April, dropping to its lowest level since the early days of the COVID-19 pandemic as uncertainty surrounding President Trump’s trade policy pushed inflation expectations higher and weighed on the labor outlook. The Conference Board's Consumer Confidence Index for April came in at a reading of 86, a significant drop from March's revised 92.9 reading and short of the 88 reading expected by economists. Ocrolus CEO Sam Bobley: His path and what's next for Ocrolus I recently had the pleasure of speaking with Sam Bobley, CEO of Ocrolus, the fintech company he founded at about the same time I entered the alternative business funding space. Watch to the end to see what's next for Ocrolus! Featured Providers CFG Merchant Solutions Viking Funding Thoro Corp Stafford Business Funding True Advance Centrex Software Easify To be a featured provider, see our Pro Plans . Industry Stocks To Watch These are prices from Tuesday, April 29th Small Business Stats Source: PYMNTS: SMB Growth Report - April 2025 Financing for Navigating Economic Troubles SMBs with access to financing are more confident in their ability to weather economic turbulence. If you want to showcase deals that you've completed or see your company featured here, please contact us .

If you want to understand how fintech company Ocrolus came about, its impact on business lending and other markets, and where it's going, this video is for you. I recently had the pleasure of speaking with Sam Bobley, CEO of Ocrolus , the fintech company he founded at about the same time I entered the alternative business funding space. Watch to the end to see what's next for Ocrolus!

As most of you know, we have a weekly newsletter that goes out on Thursdays. Now we will be bringing you a similar type of update on Mondays, but published here on our Blog. If you want to showcase deals that you've completed or see your company featured here, please contact us . Recent Top Stories Stay up-to-date with the latest news and trends Eight Individuals Charged with Multi-Million Dollar Fraudulent Lending Scheme Targeting Small Business Owners From the DOJ Press Release: " NEWARK, N.J. – Eight individuals have been charged in connection with a large-scale lending scheme that targeted the owners of small businesses from across the United States, U.S. Attorney Alina Habba announced. The complaint charges the defendants with multiple counts of conspiracy to commit wire fraud. Joseph Rosenthal, 33, of Holmdel, New Jersey; Nicholas Smith, 31, of Bradley Beach, New Jersey; James Missry, 40, of New York City, New York; Paul Cotogno, 31, of Long Branch, New Jersey; Blaise Cotogno, 32, of Tinton Falls, New Jersey; and Adam Akel, 30, of Long Branch, New Jersey, appeared before U.S. Magistrate Judge James B. Clark, III in Newark federal court and were released on bail. Matthew Robertson, 31, of Miami, Florida, who was arrested in the Southern District of Florida, appeared before U.S. Magistrate Judge Enjoliqué A. Lett and was released on bail. Nicholas Winter, 38, of Asbury Park, New Jersey is currently in custody on unrelated state charges. According to documents filed in this case and statements made in court : Since June 2020, the defendants enriched themselves by defrauding small business owners interested in obtaining financing for their businesses. Through misrepresentations and falsehoods, the defendants promised their victims that in exchange for money provided upfront, the defendants would ultimately extend a loan or line of credit to the victims. In reality, once a victim provided the upfront payment to the defendants, the defendants did not extend financing to the victim. Instead, the defendants kept the victims’ money and broke off communication. As a result of the scheme, the defendants defrauded thousands of victims out of millions of dollars." What the falling US dollar has historically meant for stocks: By the numbers A weak US dollar isn't a good thing for stocks, if history is any guide. The US dollar touched a three-year low on Monday as President Trump ramped up his attacks on Federal Reserve Chair Jerome Powell. The US Dollar Index (DX-Y.NYB) has declined 9% year to date. C orporate Lending and Spending in ‘Wait and See’ Mode but Credit Quality Strong American Express indicated last week that, in the words of CFO Christophe Le Caillec, “SME spending at wholesale merchants saw a modest acceleration in growth over the quarter, possibly reflecting higher purchases in advance of potential price increases. International card services spend was up 14%. This strong growth was seen across geographies with each of our top five markets growing by double digits.” Legislative Notes With Congress in recess for the holidays, the following are some business lending developments from various states: Texas Senate Bill 2677 is being debated still before the State House. There has been some positive signs of the bill changing from its current form but too early to say. Louisiana has introduced a Total Cost of Capital bill. Maryland is done for the year legislatively without any new commercial financing laws. South Carolina has a Total Cost of Capital bill in a subcommittee. Featured Providers True Advance CFG Merchant Solutions Viking Funding Thoro Corp Stafford Business Funding To be a featured provider, see our Pro Plans . Industry Stocks To Watch These are prices from Monday, April 21st, midday Small Business Stats Source: PYMNTS: SMB Growth Report - April 2025 SMBs Weigh Risky Financing Options Business credit cards are a favorite source of financing, but many SMBs turn to riskier options when they are desperate.

Whether new to the revenue based financing, also called a merchant cash advance or Sales-Based Financing, or a veteran who may train or manage others in the industry, we present to you a glossary of the most common terms used for these products. Some Merchant Cash Advance companies might keep a glossary for internal use only but we created this merchant cash advance glossary to benefit the whole industry and potential new entrants. These aren't considered legal interpretations of any of the terms by any stretch, so please do not consider using any in legal documents unless consulting an attorney. Actually, in some examples, you might notice a little humor as working in the merchant cash advance industry is needed sometimes. If you have any MCA terms or most used merchant cash advance acronyms that we may have missed, leave a comment below or contact us. The merchant cash advance glossary is to be shared with your coworkers and mca industry colleagues far and wide. ACH - stands for Automated Clearing House. which is the way transactions are processed between banks, typically taking 1-2 days. ADB - Average Daily Balance, a key metric that is calculated when underwriting bank statements. Broker - a sales representative that sells business financing products such as MCAs, loans and lines of credit. Buyer - in a mca contract the buyer is the funding company who is buying future receivables from the seller . Buy Rate - The factor rate that a funder will go no lower than and the broker is at zero commission. Ex: broker says to a funder, "I have an offer with a lower buy rate, can you drop your rate BUT I'm still going to upsell 15 points??" CC Split - Credit Card Split, is a merchant cash advance where the structure of paying back the money is in agreeing to split the gross sales from credit card processing to a fixed % that goes to the buyer and seller of the future receivables. This is typically used when there is a high volume of credit card sales when compared to regular bank deposit revenue. This is not a loan. Clawback - when a commission is required, per ISO agreement, to be paid back from the broker because of a default by the merchant within the agreed-upon time. Ex: Funder," Hi Joe, your 100K deal that funded last week which you said the guy was a perfect payer closed his bank account and won't pay, so we are going to have to clawback the $10k commission." COJ - Confession Of Judgement, is a written agreement, signed by the defendant(merchant), that accepts the liability and amount of damages that was agreed on, specifically used in only certain states in case of a default on a merchant cash advance Ex: Almost everyone rejoiced when COJs were banned in NY besides certain funding companies who depended on them. Debt Service - The total outstanding debt payments that a business is obligated to pay back. Default - when a merchant violates their contract with their funding company. Terms of default vary by the funder. Double Funding - typically used in the same manner as stacking (see below), but many think of this as one MCA funding right after another MCA funding, typically the same day to 7 days after an advance is deposited. The first MCA funder does not know about the second, and this process can be done for several positions after. This can be deceiving and can be considered a default of the contract as well as a clawback of commission if the same broker proves to be the source of the second funding. Early Payoff Discount - an amount that is calculated at the time of contract to reduce the cost of the advance if paid early according to the terms disclosed. Factor Rate - the cost applied to a merchant cash advance or other factoring product where the amount of money approved to advance is multiplied by this cost or discounted in the case of a mca. Ex : Factor rates at zero commission range from 1.05 to 1.49. Funder - a business funding company that directly provides a Merchant Cash Advance, which is not a loan, and therefore not a lender. They provide the capital directly. Holdback - is the % amount set in a credit card split agreement in which that amount goes to the buyer of receivables. Ex: A 15% Holdback(HB) would mean the funder is getting 15% of the total credit card sales in each batch. ISO - Independent Sales Organization, which is a company that operates to sell MCAs along with other loan products and employs brokers and other personnel. ISOs are essentially the same thing as business loan brokers and commercial finance brokers how ISO is referring to a whole company whereas a broker refers to an individual. The use of the term ISO originated in the card payments space. Learn More Lockbox - 3rd party bank account where funds from payment processor are held until properly distributed to the merchant and to the lien holder. Merchant Cash Advance (MCA) - the sale of future receivables at a discount (by upfront payment) where the payback is either by a set daily/weekly ACH payment or by splitting the business owner's credit card sales at a fixed percentage. It is not a loan. Ex: Business owner needs $100,000, he's offered an MCA at a 1.30 factor rate over 10 months, meaning the total payback is $130,000. 21 payments per month totaling 210 daily payments at $619 each payment. Payoff Letter - a letter from a funding company that provides the amount for the merchant to pay the balance in full. Ex: "The merchant says the other funder won't give him the letter, can you fund him anyway??" Payback Months - a term used when requesting the bank statements from the previous year that would be coming up during the payback period of the advance being offered. Percentage of Gross - the percentage of total relevant debt service payments paid monthly divided by the gross sales deposits per month. Ex: A business owner wants $50,000, has gross revenue of $50,000/month, and the MCA funder approves a %10 Percentage of Gross equaling $5,000 worth of debt total payments per month the merchant can afford to make. Points - are the percentage number that is added to the factor rate for a commission paid to a broker. 1 point is 1% of the total advanced amount. A point can also be added by the funder to increase the Buy Rate. Position - derives from the legal place in the hierarchy a debtor has to collect according to any UCCs filed on a business. In everyday use in MCA, it's known as an advance that a merchant has where 1 MCA would be 1 position, 2 mcas would be 2 positions, and so on. PSF - Professional Service Fee, a fee some brokers charge merchants for their service. Ex: Most funders won't allow an exorbitant PSF fee, which could be 3-5% Purchase Price - is the advance amount Purchase Amount - is the total payback amount Remittance - The percentage of sales that are being withdrawn from the business bank account daily or weekly. There are other synonymous terms like 'pull'. Renewals reduce CPA Renewal - When a merchant takes another advance from the same funding company at a point when eligible, typically about 50% of the way paid in. Renewals are where the most profit is made. Seller - is the merchant who is selling his future receivables to the buyer(the funder). Sell Rate - The total factor rate at which the broker has their commission added in, which would also be the rate reflected in the contracts. Stacking - Refers to the funding of an additional advance behind one or more already existing advances. Often times this can be considered a default to the existing merchant advance agreement (not the same as double funding). Stips - or Stipulations are items that are required to close on the advance. They include documents and other key information like proof of ownership. Ex : "Why so many stips? I have another offer that hardly had any stips" Syndication- is a program that direct lenders offer to some ISOs to invest their capital into their own cash advance submissions. Term - this is not the correct word to use for MCA's when describing the scheduled time in months or payments in which the client has to pay back the MCA. This would be the terminology used for a loan, that when combined with other words like loan, interest rate, etc., could be used in court to say an MCA Funder is actually offering loans as a lender. Turn - the scheduled time in months or payments in which the client has to pay back an MCA. This was the word used initially but has been lost to the normalized 'term'. True-up - its the reduction of payment amounts being made to the funding company to more accurately reflect the ability to pay back based on sales, which is required for all MCA products. UCC - the Uniform Commercial Code has been called “the backbone of American commerce”. Its a comprehensive set of laws governing all commercial transactions in the United States. A UCC filing is used to stake a place in line to collect a debt. Usury - is the act of lending money and requiring repayment at an exorbitant interest rate above the legal cap ZBL - Zero Balance Letter, typically requested in order to use for more credit opportunities and confirm the balance is zero. Ex: We will need a ZBL from 'ABC Funder' before we can complete funding"

(Take Quiz at the Bottom To Test Your Knowledge) What Is An ISO? An Independent Sales Organization , ISO, within the business lending space is a company that operates as an intermediary between business owners and the funding companies that provide capital directly to them. The term is derived from the merchant services and credit card processing industry but has evolved into business lending. ISOs will offer several financing products for businesses such as short-term loans, merchant cash advances, and lines of credit. Some will still offer merchant services for credit card processing. Employees working within an ISO are mostly sales reps, also known as brokers, who contact small business owners to meet a need for non-traditional financing that can be accessed swiftly. Other positions are admins, underwriters, and the normal other small business operational staff. Click to learn today What Do ISOs/Brokers Do? Brokers use their connections with various direct funders to connect business owners with the right one so that as seamlessly as possible, the business owner gets the funding they need, the direct funder makes a profitable transaction, and the ISO makes a commission for being the matchmaker for the transaction. An ISO is only paid its fee or commission once a loan or other product is closed. Independent Sales Organizations have played a vital role in the growth of the small business lending industry as they often act as the eyes and ears of direct funding companies which can help with underwriting and adapting to market changes. Sometimes people refer to an ISO and a loan broker as the same but they aren't really. More accurately the ISO is the organization or whole company that functions as a middleman, a broker is a sales rep that is an employee of the ISO company. Either way, the brokers that close the deals are the main driving force for revenue in an ISO. Some ways they have impactful roles: 1) Establish trust with the business owner and then leverage that trust to sell them on a direct funder in the best position to meet their business loan needs. The goal is a long-term client that renews several times. 2) They are the main communication between the business owner and the direct funder whether it be specific documents needed, questions about the business that need to be answered, or negotiating the terms of the offer so that it will be a win-win for the customer and the funder. 3) They work with the funding company if there are issues after funding such as missed payments, especially if it is still within the commission clawback period or early payoff requests, 4) Most importantly a good loan broker who is honest and does the best for the business owner and the direct funder becomes a positive ambassador for our industry at large which will only help all of us in the long run grow and become more profitable over time. ISOs can come in many different shapes and sizes. The following provides you with a look at the most common sizes and operational setup: 1) The 1-4 person office: One or two-person shops start small and many like to stay that way with just a few more people total. This type of operation is common for newbies or even veterans and allows for little overhead and great flexibility. You can work from home, a shared workspace, or get a small office, but all you need is a phone and a computer to start. 2) Medium size office: Typically between 5-15 people on the smaller end each broker will work on their deals from initial contact to the closing and renewals, on the larger end the office may have separate functions for reps who open the file and others who close it and do renewals. 3) Large operation: For this article, we use over 15 but usually 20-50 staff, where the owners have built out all of the technological infrastructure, file flow, job functions, partner agreements, funder matrix, lead sources, marketing, and any other operational strategies. An example of a larger operation organizational format would be: -many different openers who cold call businesses or handle initial contact, -An admin will also be necessary and some will have underwriters that review bank statements and credit reports so that the file goes to the best funder for that type of file. -Finally, there would be a renewals team that is proactive in renewing clients as this is the biggest profit maker and an accounting team to handle all financial responsibilities. Wrap Up So as you can see, ISOs are key stakeholders in the alternative finance ecosystem that help forge working relationships between business owners and direct funders to create win-win outcomes for all involved. ISOs are opening up all the time and some are shutting down. Owning and operating an ISO or working as a broker can be very lucrative but one should research it much further before getting into it. However, there's no denying their vital role in establishing trust, facilitating communication, and being an ambassador at large for our industry is not easy nor easily replaceable.