The Rise of Unregistered Securities

crowdcheck

The SEC issued a white paper titled “Capital Raising in the USA: An Analysis of the Market for Unregistered Securities Offerings, 2009‐2017.” This white paper presents some pretty interesting numbers. Capital formation through unregistered securities exceeds that from registered securities; 2017 saw unregistered securities raise over $3 trillion versus registered offerings’ $1.5 trillion. Also, according to […]

The post The Rise of Unregistered Securities appeared first on Lending Times.

crowdcheck

The SEC issued a white paper titled “Capital Raising in the USA: An Analysis of the Market for
Unregistered Securities Offerings, 2009‐2017
.” This white paper presents some pretty interesting numbers. Capital formation through unregistered securities exceeds that from registered securities; 2017 saw unregistered securities raise over $3 trillion versus registered offerings’ $1.5 trillion. Also, according to the report, the JOBS Act has had a booster effect on the ecosystem. This is evident by the hundreds of crowdfunding websites launched since its passing. Regulations CF, A+, and D have unshackled entrepreneurs and democratized fundraising. But a critical part of investing in unregistered securities is the due diligence behind whether the companies seeking the funding are genuine or not. CrowdCheck, incorporated in 2012, aims to verify the credibility of companies seeking such investments.

In a chat with CEO and Founder Sara Hanks, we uncovered how CrowdCheck has become the go-to player for due-diligence, compliance, and disclosure.

The Problem With Unregistered Securities

Hanks understood the need for building the trust layer between online investor and issuer since investors will buy shares in unknown companies online. Moreover, there is a list of legal requirements that a capital raising company and an investor need to meet to ensure everything is above board and handled according to these regulations.

CrowdCheck specializes in online capital raising. It serves the entrepreneur, the crowdfunding platform, and the investor in ensuring that the transaction is handled according to current laws and all necessary approvals are in place. From handling drafting and disclosures for Reg D, A+, and CF to filing the relevant notices, CrowdCheck is a one-stop shop. The company has executed 40 Reg A+, 50 Reg D, and about 450 Reg CF offerings.

The Relevant Regulations

Regulation A+

This regulation allows companies to generate income under two tiers representing two different types of investments.

  • Tier 1 – A company is permitted to offer a maximum of $20 million in any one year. The issuing company must also provide an offering circular, which must be filed with the SEC and subject to a vetting process by the commission and securities regulators relevant to the offering. Companies issuing under Tier 1 are not required to produce reports frequently. Instead, they are only required to issue a report on the final status of the offering.
  • Tier 2 – A company can offer up to $50 million in any one-year period. Though an offering circular is required and is subject to review and vetting by the SEC, it doesn’t have to be qualified by any state securities regulators. Companies issuing under Tier 2 must produce continual reports on the offering as well as its final status.

The offering can be marketed to both accredited and non-accredited investors.

Regulation CF Crowdfunding

The company must be incorporated in the US.

  • Allows only $1 million in fundraising.
  • An investor is limited in the amount to be invested in crowdfunding securities in any one-year period. If either the annual income or net worth of the investor is less than $100,000, the investor is limited to the greater of $2,000 or 5% of the lesser of the annual income or net worth. If greater, limited to 10% of the lesser of annual income or net worth, to a maximum of $100,000.

Regulation D

Rules under 506(b)

  • The company cannot use advertising to market securities.
  • No maximum fundraising limit.
  • Securities can be sold to an unlimited number of accredited investors and up to 35 non-accredited investors.

Rules under 506(c)

A company can generally advertise the offering and still be deemed to be in compliance with the exemption requirements if:

  • All the investors are accredited investors.
  • The company should review various documents like tax returns, W-2s, bank and brokerage statements, credit reports, etc. to verify that investors are accredited investors.
  • Companies that comply with the above requirements do not have to register their securities offering with the SEC.

Insights from CrowdCheck

Suitability

  • Reg CF is most suitable for complete startups. It is a cost effective way of raising capital due to the low threshold and regulatory requirements for fund raising. CrowdCheck offers complete services for this segment for just $5000.
  • The investee company needs to decide if it is happy with hundreds of shareholders or would just like to focus on a few accredited investors. Reg A+ is thus suited for companies looking to IPO in a few years.
  • Reg A+ is slightly more expensive than Reg D due to the requirement of SEC compliance. CrowdCheck offers a complete Reg A+ package for $60,000 whereas Reg D fees range from $25,000 to $40,000.

Platforms

There are multiple platforms available in the market, but the entrepreneur needs to choose carefully. Some specialize in a particular industry or particular regulation funding. Hanks believes StartEngine, Wefunder, Seed Invest, Next Seed, Micro Ventures, and Net Capital are the market leaders in the space.

Crowdfunding success is difficult to measure as startups usually have a low minimum threshold. Sites like Kickstarter are different from Wefunder as they do not provide any financial interest in the company being funded.

Numbers (as of Mid- 2018)

  • Reg CF has seen 960 offerings with 390 completed. Many of them are still under process.
  • The average amount raised via Reg CF is $236,000.
  • Reg A+ has seen 325 filings and 232 have qualified to raise funding.
  • Reg A+ has helped companies raise $1.1 billion, and 108 fundraisings are completed with the average fundraising around $10 million.

Conclusion

Hanks has 30 years in the corporate and securities field. Prior to CrowdCheck, she was general counsel of the bipartisan congressional oversight panel for TARP. The company has a core team of 19 people out of which six are full-time employees in core management, and others are paid consultants having backgrounds in securities law and finance.

As investors become more comfortable with online crowdfunding, the quality of companies looking to raise capital has improved. Many startups are skipping VC money to test crowdfunding. CrowdCheck acts as an important “check” to ensure the sanctity of the process. The entire ecosystem, from entrepreneurs to investors to platforms, depend on their validation for making online capital raising work.

Author:

Written by Heena Dhir.

The post The Rise of Unregistered Securities appeared first on Lending Times.

Connecting Small Dollar Lenders With Borrowers Through a Mobile App

Hundy small dollar lending

After the Great Recession from 2007-2009, income growth nearly flattened for the average American while prices have been continuously rising. Almost half of America is unable to raise $400 for an emergency. With payday loans turning out to be predatory debt traps, it is almost impossible to raise a small loan for a short period […]

Hundy small dollar lending

After the Great Recession from 2007-2009, income growth nearly flattened for the average American while prices have been continuously rising. Almost half of America is unable to raise $400 for an emergency. With payday loans turning out to be predatory debt traps, it is almost impossible to raise a small loan for a short period of time.

Realizing the fact that almost two thirds of the country is under a non-prime credit risk, Hundy wanted to reduce the grievances of the new middle class. The idea was to build a true peer-to-peer lending marketplace which would serve as a platform for raising loans of up to a few hundred dollars at a low interest rate. The platform is open to everyone and is easy to access. It is a friendly, convenient, and transparent way to borrow money from peers.

The mobile application is a community-based model which facilitates interaction between the borrower and lender. The company’s long term goal is to build a network where people can borrow, save and invest, all at the same place.

Focused on small dollar loans in the marketplace lending market, Hundy is based out of San Francisco. The mobile native platform was launched in 2016 and focuses on providing loans to the underserved at a fair price. It has raised over $400,000 in a friends and family round. In a conversation, Pete Budlong, the founder and CEO of the company, discussed how instability has become the new normal after 10 years of recession and how Hundy addresses this issue.

How Hundy Works

Getting a loan over the Hundy application is a very simple process. Users sign up using Facebook. After signing up, they sign agreements and link bank accounts. After a credit approval process, their profile is ready and they can start applying for loans. The company offers the option of hard and soft credit pulls so as not to adversely affect the user’s credit score.

On getting credit approval, users can immediately request their first loan of up to $100. However, if not approved automatically, they’ll get approved based upon their participation in the community over time. Once approved and a request for a loan has been made, the user’s application is processed within minutes and the loan amount transferred into their bank account by the next business day.

Loan payments, along with a repayment fee, will be withdrawn from the user’s bank account on the selected date of repayment, which can be up to four weeks after the date of loan issuance. If the user can’t pay off the loan on time, there is an option to convert the loan into a 60-day installment loan with no penalty. Every time a loan is paid off, the borrower’s credit limit will go up until it reaches the maximum of $250. The borrower is updated throughout the process via e-mails and text messages, making all transactions over the platform transparent and fair.

The company has originated over 1,000 loans and has an APR of 180% as compared to 350% for traditional payday lenders. Its main competitor in the online space is LendUp, and it competes with payday lenders in the offline market.

Hundy’s Reach and Market Stats

Currently holding a full lending license in California, Hundy is planning to expand its services to other states in the US. The app will be launched in Texas and Florida by the end of this year. The mobile application was ranked as high as 89 in the app store under the finance category with about 70K registered installs. Around 60,000 downloads are wait-listed. This is a massive reach considering that the company is not engaged in any kind of advertising activity. Another co-founder of the company, Ram Hegde has been operating a developer team in India, and a team of two in the US is helping Pete with the marketing.

The community currently has a monthly growth rate of 30%, which is doubling every two to three months. Most of its traffic, about 95%, comes from iOS devices.

Hundy’s Future Plans

The company’s goals are structured into three milestones. The first leg constitutes the launch of the social feed, which is already finished. Almost one-third of Hundy’s borrowers participate on this social feed. The second leg accounts for a non-profit lending product. The company made a formal announcement for the non-profit product at the Money 20/20 startup academy. The third leg involves for-profit crowdfunding, and the company aims to accomplish this by the end of this year.

As of now, the company is not looking to raise money but to originate borrowers. Once the application manages to strengthen its hold on the borrower side, it will focus on engaging lenders. The aim is to build a community-based lending platform where borrowers and lenders can directly interact with each other. These communications between various stakeholders also help create a database for developing machine learning- and artificial intelligence-driven algorithms for the platform. Currently, the company is serving accredited investors through a Reg D exemption but will soon leverage Reg CF and Reg A+ for allowing unaccredited investors to pool their money for loaning to potential borrowers.

Conclusion

People find it difficult to take out small loans at a reasonable rate of interest. The Hundy application proves to be a great platform in such scenarios, offering short-term loans at a fair price. It is aiming to provide affordable loans, not just in California but all across the US, by building a community where borrowers and lenders can communicate directly with each other through the app.

Author:

Written by Heena Dhir.

Crowdfunding Alongside Experienced Real Estate Investors

ArborCrowd

The concept of crowd funding really came to the fore with the passing of the Jobs Act of 2012. The Act relaxed regulations for private funding and encouraged businesses and startups to raise money from private investors through online portals. As per a Massalution report, the real estate crowd funding industry was valued at $1 billion […]

ArborCrowd

The concept of crowd funding really came to the fore with the passing of the Jobs Act of 2012. The Act relaxed regulations for private funding and encouraged businesses and startups to raise money from private investors through online portals. As per a Massalution report, the real estate crowd funding industry was valued at $1 billion in 2014, $2.5 billion in 2015, and is projected to reach more than $300 billion by the end of year 2025. By combining online crowdfunding, technology, and real estate, platforms are providing comparatively small investors the opportunity to partake in much larger real estate deals that they would otherwise never get to invest directly.

A Look at ArborCrowd Services

The company came up with its first deal, 1413 York Avenue, in 2016. After a successful launch, they launched six more deals and generated $20 million in equity capital to finance multifamily real estate projects.

Multifamily properties have the ability to generate healthy returns and survive in adverse market cycles because of the low level of risk involved. According to the founders, a new generation of investors will find it a secure way of investing in real estate.

ArborCrowd investors co-invest with a network of professional sponsors having an extensive knowledge base. Each deal is financed with different amount of contribution from sponsors ranging from 30% to 80% while the share of crowdfunding investors is dependent upon projected IRR of each project. The company has built strong relationships with industry leaders over the years as it has worked with institutional investors.

Crowdfunders’ pool of money is invested in capital stacks of $2 to $6 million. Sponsors at Arbor bring money up-front and raise the balance from accredited investors. This assures the viability of the project to outside investors. The minimum investment per deal is $25,000. All investors are invited to invest on a deal basis so they can analyze where there money is being invested. The company aims for an IRR from 10%-15% for its projects.

Philosophy on Debt Investing

P2P lending, or debt crowdfunding, is the traditional method of arranging finance for customers and businesses. Despite offering steady income and priority of payment over other capital stacks, real estate debt crowdfunding is considered risky by ArborCrowd’s founding team. Most of the tech companies that offer debt on their RECF platforms are operating in a precarious environment. Debt investors sacrifice the potential of higher returns, which can be enjoyed only in equity financing, whereas faltering projects can usually wipe out equity and debt investors.

How ArborCrowd Works

Sponsors approach ArborCrowd with investment deals that are best suited for crowdfunding. Market presence of group companies including Arbor Realty Trust, Arbor Commercial Mortgage, and AMAC has helped ArborCrowd leverage their relationships with industry leaders. The whole group is determined to deliver one-stop solutions customers. The entire procedure of sourcing, underwriting, and closing the deal takes approximately one month, after which the distribution takes place.

The current strategy is to partner with people having extensive industry experience and a sound track record. People interested in crowd investments can register on the company’s online portal and download the details about the business plan as well as current and past deals financed to get an idea about the underwriting process.

Investors participate in the deals through effective marketing techniques including email, marketing pitch design, and organizing webinars while focusing on providing them with the best-sourced deals and sponsors.

ArborCrowd offers these investment opportunities to only accredited investors and ensures a proper vetting of these prospective clients. The process of online verification takes one hour for potential investors.

Each ArborCrowd project is tested on different parameters depending upon the nature of the underlying property. Most money lending institutions use inappropriate tools to evaluate each deal. Automated analytical tools are helpful in this regard, but no algorithm can replace the human touch. Arbor brings its management’s decades of experience and industry contacts to ensure that it can capture the deal first.

Who Are ArborCrowd Investors?

The company’s investor ecosystem includes tech millionaires, investment clubs analyzing different real estate opportunities in multiple markets, and real estate brokers. The founders shared an experience where an investor took out his life insurance money to invest with the platform. This highlights the trust the ArborCrowd brand name has in the market.

Who Are ArborCrowd?

ArborCrowd, a part of Arbor family of real estate companies that include Arbor Realty Trust, Inc. (NYSE: ABR), Arbor Commercial Mortgage, and Arbor Residential Mortgage, is focused on providing diversified real estate investment opportunities to accredited investors. Their deals are sponsored by sophisticated and experienced real estate deal makers and were previously available to only institutional and high net worth individuals. All the documents and reports related to financial projections, timelines, and business plans are made available to the investors to enhance transparency and build investor confidence.

ArborCrowd allows real estate crowdfunders opportunities to invest alongside experienced real estate investors

Ivan and Adam Kaufman founded ArborCrowd with a motive to source investors in real estate through the amalgamation of technology and crowd funding. In the initial phase of real estate crowdfunding (RECF), the father-son team consciously stayed out of RECF. They were happy to let other tech-focused startups enter the space first. Their aim was to understand how the market evolved online and learn the best practices jumping into a nascent industry. In 2016, they entered the market with their own product offering.

Their ArborCrowd ethos involves a real estate company leveraging technology as opposed to a technology company leveraging real estate. The founders are experienced operators in the field and understand the nuances that will act as a moat to their business.

CEO and Co-Founder Ivan Kaufman has more than three decades of experience working in residential and commercial real estate. His background in mortgage loans, asset management, and real estate financing is an important asset to the company. His background and the Arbor brand name help attract top quality sponsor and marquee real estate deals.

Adam has worked with leading technology and real estate companies and has experience in marketing and business development.

ArborCrowd is privately owned and no outside investors other than the Arbor Group has a stake in the crowdfunding platform.

The Future of Real Estate Crowdfunding

Introduction of advanced tools, a growing fintech world, and a massive demand for online and user-friendly platforms assisting people to access commercial real estate transactions is expected to reshape the real estate industry. The long-term vision of the company is not to just increase the quantity of projects financed through its platform, but to be known for financing viable projects concentrating on quality.

Author:

Written by Heena Dhir.

Wednesday June 13 2018, Daily News Digest

Financial Strain by category

News Comments Today’s main news: Money360 surpasses $750M in commercial real estate loans closed. Attorneys defend $16M LendingClub fee. Funding Circle lending unlocked 75K jobs in 2017. Westpac ends Prospa relationship. Today’s main analysis: Should financial advice be tailored along credit and gender lines? Today’s thought-provoking articles: GreenSky look fairly valued, but there are competitive risks. 4 companies driving […]

Financial Strain by category

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News Summary

United States

Money360 Surpasses $ 750 Million in Commercial Real Estate Loans Closed (Globe Newswire), Rated: AAA

Money360, a technology-enabled direct lender specializing in commercial real estate loans, today announced it has surpassed $750 million in loans closed since inception. This includes $82.5 million in loans closed in May 2018.

Notable loans closed in 2018 include:

  • A $26 million bridge loan for a specialty retail center in Punta Gorda, FL, brought to Money360 by Mark Reichter at Q10 / Triad Capital Advisors, Inc.
  • A $15.6 million bridge loan for an office building in Houston, TX, brought to Money360 by Rich Perry at Churchill Commercial Capital
  • A $17.25 million bridge loan for a medical office in Newport Beach, CA, brought to Money360 by Scott Monroe at NorthMarq Capital, Inc.
  • A $7.9 million bridge loan for Raytheon’s industrial space in Albuquerque, NM, brought to Money360 by Jake Clopton at Clopton Capital
  • A $9.2 million bridge loan for a neighborhood center in Tulsa, OK, brought to Money360 by Mark Reichter at Q10 / Triad Capital Advisors, Inc.
  • A $5 million bridge loan for an office park property in South Bend, IN, brought to Money360 by Dean Giannakopoulos at Marcus & Millichap Capital Corp.
  • A $5 million bridge loan for a manufactured housing property and park in West Sacramento, CA, brought to Money360 by Jake Clopton at Clopton Capital
  • A $3 million bridge loan for a mid/high rise multifamily building in Detroit, MI, brought to Money360 by Robert Krupka at Gelt Financial
  • A $2.3 million bridge loan to a self-storage building in Panama City Beach, FL, brought to Money360 by Doug Brooks at Marcus & Millichap Capital Corporation
  • A $1.6 million bridge loan to a multifamily building in Macon, GA, brought to Money360 by Naveed Khan

Attys Defend $ 16M LendingClub Fee Bid That ‘Shocked’ Judge (Law360) Rated: AAA

Attorneys seeking $16 million for representing LendingClub Corp. investors in securities class actions against the peer-to-peer lending company defended their fee bid Monday to a California federal judge who previously said the amount “shocked” him, saying their work produced an “outstanding result under any measure.”

The 28-page motion filed by attorneys for Robbins Geller Rudman & Dowd LLP, lead counsel for the lead plaintiff, argues that the requested 13.1 percent cut of the $125 million settlement is reasonable in light of the results achieved, the risks…

GreenSky Looks Fairly Valued, But Competitive Risks Remain (Forbes) Rated: AAA

GreenSky followed through with its plans to go public within weeks of confidentially filing with the SEC last month – making it the largest fintech IPO in the country since LendingClub and OnDeck went public nearly four years ago. The company offered 38 million shares at $23 per share to raise $874 million (with the actual proceeds being $830 million after underwriting fees). The company’s shares have largely traded around this level since then. This points to a valuation of $4.4 billion for GreenSky – around the figure .

GreenSky’s role as an intermediary between lenders and potential borrowers with strong credit histories makes its overall business model a risk-averse one, as it bears negligible credit risk. At the same time, the relationships it has built with banks, home improvement companies and healthcare providers promise to drive growth at a steady pace over the foreseeable future, even as the company explores other growth segments.

Four companies driving the bank tech discussion, with only one a FAANG (American Banker) Rated: AAA

Facebook, Apple, Amazon, Netflix and Google garner so much attention that they have their own collective shorthand, FAANG. But at American Banker’s Digital Banking conference this week, a mostly different set of companies were top of mind: Call them SASA, or Starbucks, Amazon, Sears and Acorns.

More than 40% of the 55 million U.S. smartphone users will have made an in-store mobile payment through Starbucks’s app, and that just over 23 million consumers over the age of 14 will use the Starbucks app to make a point-of-sale purchase at least once every six months, according to Gavin Michael, head of technology for Citigroup’s Global Consumer Bank, citing data from research firm eMarketer.

Should financial advice be tailored along credit and gender lines? (American Banker) Rated: AAA

Women with credit scores below 700, according to an analysis conducted by Elevate’s Center for the New Middle Class, an independent research arm of the online lender.

Source: American Banker/Elevate

Fifty-six percent of women with subprime scores say their finances cause them significant stress. About 45% of men with subprime credit scores say the same, as well as only 23% of women with prime ratings and 16% of men with prime ratings.

Seventy percent of women with subprime credit scores work full time, versus 62% of women with prime scores.

The woman with subprime credit is 41% more likely to have children in her home than a prime woman. She is also 79% more likely to have an elderly parent living with her.

Only 39% of Non-Prime Women Believe They Have the Skills to Manage Their Finances (SC Now) Rated: A

Most surprisingly, only 39% of this group believe they have the skills to manage their finances, despite the fact that ongoing research from myriad sources have found women to be the primary financial stewards of their households.

Key findings in the research include:

  • Two-thirds of non-prime women live paycheck to paycheck.
  • They are 3x more likely to have lost a job in the last year compared to prime women
  • Only 34% of non-prime women hold salaried jobs
  • They are 4x more likely to have trouble predicting next month’s income compared to prime women
  • More than 4 out of 5 non-prime women admit to running out of money at least once a year
  • More than one quarter admit to running out of money every month
  • They are 24% more likely to say their finances cause them stress compared to non-prime men
  • Only 13% of non-prime women would have money on-hand to cover an emergency of $1200
  • Non-prime women are 6x more likely to have used a payday loan

But another myth persists: Seasonal businesses suffer most of all. SBA’s data doesn’t bear this out, showing companies across varied industries tend to follow similar patterns in terms of failure. Manufacturing-based businesses, for example, are no more protected from failure than seasonally driven businesses like restaurants and retail stores, meaning other factors determine companies’ likelihood of long-term success.

An Ohio State University study indicated that  of restaurants don’t make it past the first year. Another 2005 study amended that, saying that the 60 percent figure applied to the first three years.

With CB Insights finding that  of small business failures can be attributed to cash flow problems, it’s imperative that seasonal business owners find ways to “spread the wealth.”

Kabbage, for example, ties its line of credit to a small business’s live data, allowing the company to adjust lines of credit in real time to match a business’s seasonal needs.

Why Digital Lenders Are Tightening Their Lending Criteria (PYMNTS) Rated: AAA

In the early days of online lending, the big appeal was access to funds for potential borrowers with few, if any, options for securing capital.

According to recent reports, some of the largest marketplace lending players in the field — SoFi, LendingClub, AvantProsper — are being pushed by their investors to batten down their credit hatches and demand better credit scores from their borrowers, as well as shorter maturities so they can make more attractive offerings to investors as they look to repackage those loans into asset-backed securities.

According to KBRA, the weighted average of FICO credit scores of Prosper’s loans, packaged in ABS, increased to 717 in a March 2018 deal from 704 in a sale two years earlier. And they weren’t the only lender to see its average score go up — SoFi, increased the weighted average of its FICO credit scores to 744 in a sale earlier this year from 732 in a deal at the start of last year.

Overlooked Millionaires: Finding A Home In The Democratized Family Office Model Of Financial Advice (Forbes) Rated: A

Over the last 20 years, the number of American investors with between $2 million and $20 million in investible assets has grown remarkably. According to 

Optimal Blue, Finastra partner for pricing integration (Mortgage Professional America) Rated: B

Optimal Blue and Finastra have announced an expansion of their relationship under which Optimal Blue will be integrated Finastra’s Fusion MortgagebotPOS product.

The new integration enables banks and credit unions to provide mortgage applicants with Optimal Blue’s live pricing searches via any point-of-sale channel. Fusion MortgagebotPOS is a web-based platform that allows lenders to receive applications through every point-of-sale channel: consumer-direct via the internet, in the branch or call center, or through professional loan officers.

Direct 1031 Exchange Launches New Online Platform for Accredited Investors (Sys-Con Media) Rated: A

A new online platform is now available for accredited investors seeking direct access to Section 1031 exchange investment opportunities with the launch of real estate investment sponsor Direct 1031 Exchange. The company provides Section 1031 exchange offerings directly to investors using the Delaware statutory trust structure under SEC Rule 506(c).

Through Direct 1031 Exchange’s online investment portal, accredited investors can participate in 506(c) DST offerings sponsored by the firm with no upfront load or commission paid by the investor.

LendStreet and Its Unique Approach to the Debt Settlement Space (Lend Academy) Rated: A

LendStreet is a lender that works with consumers who are experiencing financial difficulties. These are people who have taken on too much debt and find themselves in a hole, unable to pay it all back. But rather than declaring bankruptcy, these people want to work things out and reduce their debt through a debt settlement.

This is the point when the debt settlement companies come in. LendStreet lends only to customers whose debt is being or will be negotiated by a debt settlement company. Most of LendStreet’s customers are already enrolled with debt settlement companies before getting to LendStreet. Those who come directly to LendStreet are paired with a debt settlement company to negotiate down their debt, which will be funded by a LendStreet loan.

Chris Sugden of Edison Partners (Lend Academy) Rated: A

Chris Sugden is the Managing Partner of Edison Partners, a growth equity firm based in Princeton, New Jersey. They provide growth capital for small business doing $5 million to $20 million in annual revenue, typically based on the east coast between DC and Boston. They have never invested in a Silicon Valley startup.

In this podcast you will learn:

  • The history of Edison Partners and their unique New Jersey location.
  • The difference between East Coast and West Coast entrepreneurs.
  • The three different verticals they cover.
  • The impact that Marcus will have on the broader fintech space.
  • The shift Chris has seen with the banks as they embrace fintech.
  • The interesting fintech trends Chris is focused on right now.

Radius in Boston working with fintech firm on online business checking platform (American Banker) Rated: A

Radius Bank in Boston has lined up its next fintech project.

The $1.2 billion-asset online bank is working with a Treasury Prime, a San Francisco startup, to create a business checking account. The Tailored Checking Account will allow business owners around the country to quickly open accounts online.

SME smartphone lending set to take off (P2P Finance News), Rated: A

Fintech platform Kabbage predicts that 20 per cent of US dollars lent to SMEs will be via smartphone apps by the end of 2018.

Kabbage analysed nearly 150,000 US small businesses and found an increasing trend towards lending organised via mobile devices, with the number of loans increasing more than 300 per cent.

Online Lender Accused Of Using Tribe To Shield Illegal Loans (Law 360) Rated: A

An internet lending company and others have engaged in a plot to charge illegally high interest rates on loans while attempting to use a Michigan tribe’s sovereign immunity as a shield from suit, a group of borrowers said in a proposed class action filed in California federal court Monday.

Four plaintiffs from various states claimed in their complaint that even though Big Picture Loans LLC said it was owned and operated by the Lac Vieux Desert Band of Lake Superior Chippewa Indians, loans made in Big…

Nobel laureate Kahneman says human financial advisors are still crucial (CNBC) Rated: A

Daniel Kahneman, a Nobel Prize-winning economist, said Tuesday financial advisors still play a major role in the finance world — despite recent technological disruptions in the industry — as they act as therapists for investors.

Robo-advisors are growing at a very fast rate, surpassing $200 billion in assets under management last year, according to BackEnd Benchmarking, which releases quarterly data on robo-advisors.

Lending Express Opens Shop in Silicon Valley & Adds Moshe Kazimirsky to Team (Crowdfund Insider) Rated: B

Lending Express, an AI-powered marketplace for business loans, has opened a new Silicon Valley office in San Mateo, as well as the appointment of Moshe Kazimirsky to VP of Strategic Partnerships and Business Development to support the West Coast team. The announcement comes on the heels of Lending Express’ May $2.7 million seed funding round led by Entrée Capital, iAngels, and existing investors.

PeerStreet’s CEO Brew Johnson and Leadership Team Wins Comparably’s 2018 Culture Awards in Multiple Categories (Business Wire) Rated: B

PeerStreet, a marketplace for investing in real estate backed loans, is honored to announce that it has won Comparably’s 2018 Culture Awards in the following categories:

  • Best CEOs for Diversity
  • Best CEOs for Women
  • Best Managers
  • Best Leadership Team

Robots could replace as many as 10,000 jobs at Citi’s investment bank (Business Insider) Rated: A

Robots could replace as many as 10,000 human jobs at the banking giant Citi within five years, its president told the Financial Times.

Wells Fargo bans cryptocurrency purchases on its credit cards (Payments Source) Rated: B

Wells Fargo & Co. customers hoping to use their credit cards to buy Bitcoin will have to look elsewhere.

United Kingdom

Lending through Funding Circle unlocked 75,000 jobs in 2017 (Pr Newswire) Rated: AAA

A new report published today by Oxford Economics reveals that lending through Funding Circle, the global small business loans platform, unlocked 75,000 jobs in the United States and Europe in 2017.

Peer-to-peer lender Funding Circle to create 200 UK jobs (B Daily) Rated: A

Peer-to-peer lending platform Funding Circle is creating 200 jobs in the UK.

The London-headquartered firm has this morning (June 13) confirmed plans to take on 400 new employees in 2018, half of whom will be recruited in the UK.

LendInvest’s path from adversity to opportunity (City A.M.) Rated: A

Although the online marketplace model had been proven to work – Amazon and eBay had been established over a decade earlier – LendInvest was initially both “offline” and “pretty uninteresting”. It wasn’t until 2012, with £30m investors’ capital under management, that the founders became intrigued by the role tech could play.

The path to success is littered with unforeseen obstacles, good days can follow bad, tailwinds become headwinds. LendInvest is no exception. When the company was young, raising debt finance often felt like an uphill struggle. It took many air miles and international calls, but eventually an eastern European bank offered a £2m funding line, later increased to £6m.

Ranger Direct shares end higher after bowing to activist pressure to wind up (Financial Times) Rated: A

Ranger Direct Lending operates a £128 million investment company which has faced pressure from activist investors who own almost 30% of the company.

The board proposed yesterday of winding down the company as Ares Management withdrew itself from consideration to manage the trust. Ranger’s board also suggested shareholders vote against newly nominated directors by activist investors.

Ranger Direct Lending has struggled as defaults have crept up in the sector.

Monzo launches task automation with IFTTT (Tearsheet) Rated: A

Personal finance apps offer customers insights into their budgeting and spending habits, but U.K.-based digital bank Monzo is taking that a step further by letting its customers design their own rules on how they want to interact with their money.

Monzo’s tie-up with If This Then That, rolled out in early June, lets customers automate tasks using their financial data through personalized rules. IFTTT is a web and app-based platform to help customers get apps and devices to work together. It lets users set up “if, then” rules; for example, “if I post an Instagram, post it as a native photo on Twitter,” or “if I add a new task to an Amazon Alexa to-do list, add it to the iPhone reminders app,” and so on. IFTTT’s integration with consumer financial data lets them experiment with new use cases for financial data and lets the bank learn more about customer preferences and behavior.

Collateral investors may have to join queue of creditors (Peer2Peer Finance) Rated: A

COLLATERAL investors may end up having to recoup any unpaid interest owed as a creditor of the company, the administrator of the closed peer-to-peer lending platform has revealed.

An update from BDO said its initial view was that due to section 26 of the Financial Services and Markets Act – which deems that agreements with unregulated parties are unenforceable – investors would be treated as creditors.

This means they would have to submit documentation to BDO on what they are owed and wait to see what funds can be recouped through the administration.

European Union

B2B FinTech Could Earn Index Ventures $ 2 Billion This Year (PYMNTS) Rated: A

Venture capitalist (VC) firm Index Ventures is on its way to earn $1.6 billion from its early investments in B2B FinTech, according to Forbesreports Monday (June 11). Index Ventures’ portfolio includes iZettle and Adyen, with unconfirmed reports of a Funding Circle initial public offering (IPO) that could push Index Ventures into the $2 billion mark.

LendInvest joins Luxembourg fintech hub (Finextra) Rated: B

LendInvest, the UK’s leading online marketplace platform for property finance, has become a fellow of the Luxembourg House of Financial Technology (LHoFT), the country’s leading FinTech innovation hub.

LendInvest has had a presence in Luxembourg since 2014 when it established its first Luxembourg-domiciled fund.

Fintech threatens to eclipse banks that do not adapt digitally (Financial Times) Rated: A

Writing an opinion piece for the FT BBVA Executive Chairman Francisco Gonzalez talks about the rise of fintech and big tech in banking. He explains that banks still have an advantage when it comes to security, privacy and compliance.

A new regulatory model is needed for the new era of digital banking and data. Banks need to build on what they do best and evolve to ensure they stay relevant. He believes there is a paradigm shift occurring in banking and that banks need to find a new way to support customers and build out their assets

Australia

Westpac Ends Prospa Collaboration After IPO Postponement (PYMNTS) Rated: AAA

Days after Australian alternative lending platform Prospa delayed its Initial Public Offering (IPO) indefinitely, one of its bank partners, Westpac, announced it was ending its relationship with the FinTech.

Reports in The Australian Financial Review (AFR) on Monday (June 11) said Westpac is ending its referral program that sees small business owners rejected for a bank loan linked to the Prospa platform.

Dover Financial Group calls in outstanding debts from financial planners (Australian Financial Review) Rated: A

Dover Financial Group lured financial advisers by offering to postpone payment of annual licence fees for a year or more, but the collapsed company is now calling for immediate payments of those debts, leaving planners, who are already worried about their future, furious.

India

With Rs 35 cr in disbursals, Lendbox is creating a new asset class for investors (Your Story) Rated: AAA

Basing only 20 percent of its risk assessment engine on the CIBIL score, the platform assesses a borrower’s credit-worthiness based on their social, professional, behavioural analysis, including their salary expenditure trends and limits on credit card. The founders claim that the platform takes close to 130 data points into consideration before deciding on a suitable interest rate.

The borrowers are then classified between A1 (A2 and A3) and B3, with the rate of interest ranging from 12 to 36 percent.

Ekmeet says that close to 85 percent of loan requests are denied by the platform, and only 20 percent of their total users are from Tier II towns and cities.

Asia

Kakao Bank’s chatbot will answer up to 80% of requests (Fintech Futures) Rated: A

Kakao Bank, South Korea’s largest internet-only bank, is already showing the beta version of its customer support chatbot, which is scheduled to be launched sometime this month.

The bank says that the tech will help relieve the stress on its customer services department, which receives up to 80% of requests that could be automated.

Canada

Luge Capital goes huge with $ 75m fintech funding (Fintech Futures) Rated: AAA

Initially, $50 million of the raised capital was announced in October 2017 by the Caisse de dépôt et placement du Québec (CDPQ) and Desjardins Group, two of the fund’s major investors.

Sun Life Financial, the Fonds de Solidarité FTQ and La Capitale are also “significant” participants. Luge says it may expand the fund up to $100 million in the coming months.

Real estate crowdfunding in Canada: portal insights for 2017/18 (IT Business Blog) Rated: A

Real estate online investment or crowdfunding has been a sector that has attracted significant interest in the U.S. over the last several years, with more than 100 portals launched to serve rapidly growing developer and investor interest. In fact, industry research hub crowdsourcing.org estimates that the industry will be worth more than $300 billion USD by 2025.

Latin America

Defaults the largest driver of Brazil banking spreads -cenbank (Reuters) Rated: AAA

Credit defaults have been the main factor keeping Brazilian banks from cutting interest rates to households and companies, the central bank said on Tuesday, even as benchmark rates have fallen to all-time lows.

The average cost of credit fell 1.3 percentage points in 2017 to 21.3 percent, according to a central bank report, compared with a 6.75 percentage point decline in the benchmark Selic interest rate. Spreads fell 3.8 percentage points to 18.9 percentage points.

Defaults, which reached 3.2 percent at the end of 2017 according to a widely used metric, forced banks to keep interest rates high to account for potential losses, the central bank said.

Defaults were behind an average 37.4 percent of banking spreads in 2015-2017, the largest contributor to bumping up credit costs to consumers. Other reasons were administrative expenses, taxes and financial margins, a central bank report showed.

Authors:

George Popescu
Allen Taylor