Coleman Small Business Lending Podcast

June 27, 2016

By Bob Coleman

Editor, Hot Topic Tuesday

Hot Topic Tuesday — Big Data Serve Main Street

Bob Coleman: John Brandow, Principle, Founder, BizMiner. John, you’re a big data guy, aren’t you? I’m looking at these numbers, 200,000 data points. Actually, it’s more than that. What is BizMiner and tell us about your big data.

John Brandow: Well, the company’s been around per say for over 20 years now and we’ve been selling data analysis online since 2000, 2001 primarily at first to small business owners directly and increasingly through licenses to accountants, valuation professionals, a small number of banks, insurance companies, et cetera. But we have content in two very different areas. One, we started as and continue to be a financial benchmarking analyst. We cover about 5,000 lines of business which really dwarfs most of the other data vendors out there and financial analysis work and maybe 12 sales classes for most of those 5,000 segments. We cover them at national, state, and local levels and we have full financial reporting available, 22 line, P&L 16 line, balance sheets, 33 financial ratios in each one of our corporate reports. We also have a whole set of sole proprietorship reports to benchmark those micro firms as well. That content is available online in a variety of formats with all sorts of custom formatting and scoring and inputting available to those who desire it.

Bob Coleman: But it’s very robust, the information that’s available. So you listed a number of different entities, but let’s just talk about pure marketing. What could a pure marketing person wanting to get into a specific NAISC code in a specific geographic territory – how can they use your data?

Read the rest of the transcript here.

May 23, 2016

By Bob Coleman

Editor, Main Street Monday

Fountainhead Commercial Capital secures $23 Million for SBA 504 lending.

Alternative asset manager Magnetar Capital, through its affiliated funds, invested $23 million in a Series A round of financing, joining an affiliate of 20 Gates Management, an asset management firm based in New York, as the first two institutional investors in Fountainhead.

Episode 19 — Chris Hurn, CEO and Founder, Fountainhead Commercial Capital

Bob Coleman: “Commercial real estate ownership is an important wealth creation strategy and we fully believe every healthy small business in America should consider it,” says Chris Hurn, founder of Fountainhead Commercial Capital. Chris, you’re an expert on financing Main Street dreams, but the big news today is you yourself are being financed. You’re getting an investment of $23 million. Tell me about that.

Chris Hurn: Yeah, Bob, thanks for having me by the way. That was big news. We actually announced a couple of weeks ago Magnetar Capital, a large hedge fund based actually outside Chicago, we deal with folks up in New York. But they basically invested $23 million of a series A in our company and we will be able to lever that capital a good eight to ten times on an annual basis to do small business loans, so that’s going to translate well with us focusing predominantly on SBA 504. That means we’ll probably be able to do about $300 million or so in small business loans as a result of that investment.

We actually had a seed investment when we first started about 16 months ago that was another group called 20 Gates Management which is an asset manager out of New York that also invested in us, so we feel we’ve got a couple of great partners and we’re hitting the ground running with lots of powder and are excited to do this. Obviously, this allows us to go nationwide which is something we’ve wanted to do since we started Fountainhead and have been limited to some extent. We launched with the minimal viable product which meant 504 loans in only a few states initially, but we’ve been working real hard to bring this to market and, I guess, better late than never.

Bob Coleman: Chris, that’s going to set the stage for you to become one of the largest, if not the largest, 504 lender in the country.

Chris Hurn: That’s exactly our goal, that’s what we’ve stated from day one. Yeah, we want to be the leading 504 lender in the country, no question. And that’s just 504s for now, we’ll actually be able to do low loan-to-value conventional loans as well and I may have a few other things up my sleeve that I’m not quite ready to announce just yet, but things are coming. It’s going to be very exciting.

Bob Coleman: Chris, why did you pick the 504 product as the flagship product that you offer?

Chris Hurn: Well, I’ve become known in the industry for doing this. I’ve probably been doing this now for 18, 19 years. Most people know me as synonymous with the program, written the only book on it, I’ve testified before Congress a few times. I’ve done billions of production on this product, started another company that was a specialist in this space as well as my own here with Fountainhead. It’s still one of those products that suffers from a little bit of an identity crisis unfortunately.

I often have called it the best kept secret in commercial financing. I think it’s the product that wins nine times out of ten when all available products are identified and put in front of a small business borrower who’s wanting to buy their owner occupied commercial real estate. I’m a big believer in niches as you know, we’ve talked about that many times. I’d rather be the dominant leading player in this space than be a generalist and try to do everything for all people.

April 4, 2016

Main Street Monday — Small Business Fin Tech Lenders Form Alliance Ahead of CFPB Ruling

By Bob Coleman

Editor, Main Street Monday

Episode 18 — Tom Sullivan, Executive Director for the Coalition for Responsible Business Finance

Welcome to Coleman’s Small Business Lending Podcast with your host Bob Coleman.

Today’s guest is Tom Sullivan, Executive Director for the Coalition for Responsible Business Finance.

The Coalition for Responsible Business Finance (CRBF) is a group of businesses and service providers that advocate for the value of nontraditional lending opportunities for small businesses.

Mr. Sullivan is an attorney in the government relations practice of Nelson Mullins Riley & Scarborough, LLP in Washington, DC.

Previously, upon confirmation by the Senate in 2002, Mr. Sullivan served as the highest­ranking government official charged with exclusively advocating the views and needs of small business before government agencies and Congress.

Bob Coleman: Non-traditional sources of capital provide small businesses with the ability to start, grow, and thrive in the economy. Small business owners expect and deserve choices for credit and we at the coalition believe that a better understanding of non-traditional small business lending will lead to greater acceptance by customers, regulators, and local state and federal elected officials says Tom Sullivan, Executive Director of the Coalition for Responsible Business Finance. Tom, welcome. By the way, another shut out. You were formerly with the SBA with the Office of Chief Advocacies, so welcome. What is that statement all about? Tell us what’s going on.

Tom Sullivan: Well, Bob, I couldn’t have said it better myself. I did say it, so –

Bob Coleman: You did, yes. It says Sullivan says right there, okay.

Tom Sullivan: Yeah, it’s really just – this is an answer to the curiosity that Washington has about non-traditional small business lending. The good news is that Washington, D.C. policymakers and Congress and in federal agencies are curious about non-bank lending, alternative lending, thin tech lending, all those different terms. So that’s the good news, the bad news is that Congress and federal agencies are curious about non-traditional lending.

Bob Coleman: You took the next question right out of my notes. Set this up for us. Why is Congress curious about this? What’s happening on the hill that the industry should know about? What future pressures are going to occur?

Tom Sullivan: Well, there’s a small business lending gap or there’s a small business cash gap that exists and some would argue that that gap has gotten bigger after Dodd-Frank. You have community banks that, unfortunately, are not able to make loans at a profit for under $150,000 or $100,000, but small businesses still need that capital. They need that capital from $10,000 up to $250,000 and anywhere in between and so Congress wants small business to be successful. They know that that success sometimes hinges on access to capital and so how to fill in that gap is a question that policymakers have.

The non-traditional small business lenders, the thin tech folks who were using innovation to get money to small business quicker and in a way that is less expensive they’re uniquely positioned to fill that gap. So Congress wants to know about them, they want to help them and so do federal agencies, but the curiosity and sometimes the misinformation on how they are basing their assumptions really has to be satisfied and that’s what this coalition is all about. The coalition is getting in front of Congress, getting in front of the alphabet of federal regulators and explaining the value of innovation in the fin...

March 28, 2016

By Bob Coleman

Editor, Main Street Monday

Episode 17 — Michael Carter, Founder and CEO of BizEquity

Mike Carter has over 15 years experience in enterprise software and technology services. He’s founded three software companies. Mike was chief marketing officer of a publicly traded billion dollar Internet company and has been called one of the top 100 people globally in Fin-tech.

Bob Coleman: Around 98 percent of all small business owners do not know what the value of their business is despite the fact that it typically is the largest, single asset in their foundation for retirement. Michael Carter, CEO, BizEquity. That’s an alarming statistic, isn’t it?

Michael Carter: Yeah, absolutely, Bob.

Bob Coleman: Tell me what you do. What do you offer to that small business, that Main Street entrepreneur that gets that number down from 98 percent to a more reasonable level?

Michael Carter:  We offer a better, faster, and cheaper way to find out that knowledge. And if you think about it and we make this analogy an awful lot is the old way 10 years ago, 12 years ago to figure out what your home was worth you had to get an appraiser to come into your house, you would take a couple of weeks to schedule that, you’d have to wait for the person to tour your house, then you’d have to wait a week or two to get an appraisal from the appraiser on the biggest asset for consumers which is their home.

Now the biggest asset for business owners is their business and before us there wasn’t a Zillow type of an approach to do it, so I always make that analogy because I think it’s a clean one. The old way to value your home was offline, time-intensive, and expensive. Similarly the old way to value your business was the same thing and like Zillow and Realtor.com ushered in a whole new way to do it using big data, the earliest users I think of big data where it was really Zillow in the states and Zoopla in the United Kingdom in the real estate market. We’re doing the same thing but for business valuations and we’re doing that for the business owner. But we’re delivering it through this network of advisors that include your local community banker, your wealth advisor, your insurance agent, your trust and estates counselor or your business coach, so that’s what we do.

Bob Coleman: Well, you learn something new every day. Zoopla, is that in the UK? I’ve never heard that before. Is that the UK equivalent of Zillow?

Michael Carter: We have an office in London, Bob, so if you say Zillow you get these blank stares. And a very close friend of mine and our investor, when I would go to these meetings with him in London when we were first launching the office there he would say Mike, these US-centric companies and I’d say what do you mean? He goes your Zillow is our Zoopla. I said, okay, note to self.

Bob Coleman: Now I know what my house is worth sort of.

Michael Carter: Yeah.

Bob Coleman: My neighbor sells it down the street, it’s being listed, so that’s a fairly easy metric. Mike, I run a dry cleaner, next door is a pizza shop and then maybe down the street is a car dealership or a Firestone tire dealership, so I don’t have a sense of what my business is worth. So you said big data, how do you bring all this together to separate those three different type of entities?

Michael Carter: Yeah, awesome question. So we constantly – we do something called machine learning which is a fancy way to say that we constantly scrape anonymized private company information that’s made public and that can become in certain states it’s mandatory when a company sells over a certain size, that some of that information is known. But there’s also loads of different databases that exist that professional,

March 16, 2016

By Bob Coleman

Editor, C-Suite Wednesday

Episode 16 — Charles Yorke, President, Paragon Small Business Capital Group

Welcome to Coleman Small Business Lending Podcast with your host, Bob Coleman. Today’s guest is Charles Yorke, President of the Paragon Small Business Capital Group. With 34 years experience in banking and 16 years in SBA lending Yorke is an industry veteran. Prior to working for Paragon, Yorke was Managing Director of the Small Business Capital Group at Cornerstone Bank. He held leadership positions with Haven Trust Bank and Regions Bank. He’s been active in the Dekalb County Chamber of Commerce for several years serving on the Board of Directors and as the 2009 chairman.

Bob Coleman: Charles Yorke, President, Small Business Capital Group, but Charles, I have to ask you what’s a Paragon, explain how this all works to me.

Charles Yorke: Well, Paragon is a 300 plus million dollar asset bank in Memphis, Tennessee and our group, the Small Business Capital Group consists of 15 SBA professionals and we were with a former – another institution and we joined Paragon about a year and a half ago and created the group. We were out of Atlanta and the bank is headquartered in Memphis.

Bob Coleman: What’s your footprint? What geographic area do you cover?

Charles Yorke: We cover Southeast, Midwest to Denver. We have lenders in Atlanta. Most of them are in Atlanta, but we have a lender in St. Louis and in Denver, so we cover from the Southeast over to the Denver market.

Bob Coleman: Very good. Just 7(a) or what other type of lending do you do?

Charles Yorke: Bob, we’ll do 7(a), 504 and a little bit of conventional lending as well.

Bob Coleman: USDA B&I program?

Charles Yorke: We’d like to. We haven’t been doing much of that so far, but it’s been – in the last year and a half it’s been a challenge, but we would certainly like to get in touch with some lenders that have some experience in that.

Bob Coleman: Yeah, as you know or may not know I’m a fan of that program. It’s a little bit different than SBA, but there’s times when it’s a nice fit for one of your borrowers, a little bit higher. I especially like the fact that you can take a hotel owner and he wants to expand to a second or third location and they’re on some Interstate out in the middle of nowhere and bam, you can do B&I very nicely for those people.

Charles Yorke: Very nice.

Bob Coleman: Tell me about your start. I’m always fascinated in how we always end up in our niches. How did you get into the SBA lending world?

Charles Yorke: Well, as a 30-year plus banker I had done a lot of C&I lending and in that arena you always dabble in the SBA group and I guess about 15 years ago I was with a bank here in Atlanta that was predominantly Indian owned and I did a lot of SBA lending through that and, therefore, I started that group and got it going and then started another group, so this is our third go over the last 15 years setting up a group.

Bob Coleman: Very good. And I guess the question is how specifically did you migrate from a C&I conventional lender to an SBA lender? What happened? What was the metamorphosis?

Charles Yorke: It’s the benefit to the consumer, it’s the credit elsewhere, I guess, if you know about the SBA. It gets you the ability to provide customers with longer terms, a lower down payment. It’s a great product. It’s a great benefit to the small business person in this country.

Bob Coleman: Credit box, what is your appetite, what do you like to do, what do you shy away from?

Charles Yorke: We are predominantly a – we get a lot of franchise lending. As I’ve looked at how to differentiate ourselves from other lenders one avenue that –...

March 9, 2016

C-Suite Wednesday — SBA 7(a) Secondary Market Outlook for 2016

By Bob Coleman

Editor, C-Suite Wednesday

Episode 15 — Bob Judge, CEO of Government Loan Solutions

Coleman Small Business Lending Podcast

Today’s guest is Bob Judge, CEO of Government Loan Solutions, Inc. In October 2006, Bob co-founded Government Loan Solutions for the purpose of bringing greater transparency, efficiency, and productivity to the SBA marketplace. Bob is a recognized expert in the valuation of SBA-related assets as well as the SBA secondary market. GLS was acquired by Live Oak Bank in September, 2013.

Bob Coleman: “On September 15, 2008 Lehman Brothers filed for bankruptcy.” Bob wasn’t September 15, 2008 also the day of our first SBA Secondary Market Summit in New York?

Bob Judge: Yes it was, thank god we didn’t have anyone from Lehman there.

Bob Coleman: I think we did a disservice to the 60 people in attendance talking about SBA Secondary Markets. We should have been talking about how to outfit our caves with electricity, air conditioning and a wine cellar.

Bob Judge: Especially the wine cellar.

Bob Coleman: Bob you have carved out a very specialty niche in your profession. I always loved the Jack Welch line, “Where does your parachute end up?” So tell us what you do, what is a secondary market?

Bob Judge: Basically a secondary market is a financial market which in this case allows the sale of small business loans. Lenders need to be able to sell loans in order to make more loans. This is similar to how a mortgage market works. When a mortgage lender makes a conventional loan that is guaranteed by Fannie or Freddie then they sell it to free up capital. It is the same thing with a small business lender. Many of them need to recycle the capital in order to make more loans. If you don’t have a secondary market you are going to have many fewer loans created regardless of whether you have an SBA Loan or a conventional loan.

Bob Coleman: Well we certainly lived in that back in 2009, I alluded to our first Secondary Market Summit when the secondary market seized up with all of these bankruptcies and small business lending plummeted, not only in SBA lending, but nationwide conventional small business lending. How much did we lose in available capital for Main Street in 2009?

Bob Judge: At least 50%. A lot of lenders needed the secondary markets so a lot of them basically had to shut down.

Bob Coleman: Well let’s fast forward to 2016, what does the secondary market look like now, what are we facing?

Bob Judge: If we are looking at SBA 7(a) lending it’s great. In fact the last three years have set a record high for amount of loans sold into the secondary market. In 7(a) lending, the guaranteed portion, last year was the first year we went over $7 billion. So that market is in excellent shape both from a price perspective and a prepayment and default perspective. Turning to the 504 market, that one is in need of a little bit more help. Mostly because it does not have a government guaranty. Even though it is slowly coming back it is definitely nowhere near what it was pre-credit crisis. I would say that is similar with other non-guaranteed sectors. There is still a lot of work to be done getting it back to the pre-credit crisis levels.

Bob Coleman: Let’s define some of these terms, when you say prepayment, what are you talking about?

Bob Judge: There are two elements to prepayment. One is loan defaults. In the case of a guaranteed security that is when the SBA will pay you off. The other element is the voluntary prepayment of the loan where the borrower pays the loan prior to maturity. These things are important to track because most markets trade a premium to par. The people that are buying these loans at a premium need these loans to hang around for as long as possible s...

February 1, 2016

By Bob Coleman

Editor, Main Street Monday

Main Street Monday — Can Capital Surpasses $5 Billion in Small Business Fundings

Daniel DeMeo is CEO of CAN Capital, the market share leader in alternative small business finance. He has held this position since early 2013, after joining the company as CFO in 2010.

During his tenure, DeMeo has led CAN Capital to continued growth and profitability as the company strengthens its position at the forefront of the financial technology industry. During the past five years, CAN Capital has grown originations by 29 percent (CAGR) and revenue by 24 percent (CAGR), with commensurate growth in earnings. It has also experienced a 600 percent increase in its digital business since 2014.

In 2015, CAN Capital reached the significant milestone of providing small businesses with access to more than $5 billion of working capital, more than any other company in the space. To date, CAN Capital has facilitated more than 156,000 small business fundings in more than 540 unique industries.

December 21, 2015

By Bob Coleman

Editor, Main Street Monday

Main Street Monday — Dealstuck Combines Alternative Lending Market Strategies with Old School Touch

As CEO, Ethan leads all institutional and marketplace lending relationships and drives the company’s product strategy. Before founding Dealstruck, Ethan ran Internet marketing for lead generation startup Ampush Media, growing annual spend to $15M in less than two years. Prior to Ampush, he worked as a distressed credit analyst at Lehman Brothers, where he started his career. Ethan graduated Summa Cum Laude from The Wharton School.

December 14, 2015

By Bob Coleman

Editor, Main Street Monday

Main Street Monday — Why Transparency is Critical for Main Street Borrowers

Ami Kassar, CEO and Founder of MultiFunding, is a nationally renowned small business advocate and leader. He is committed to ensuring that small business owners have the best possible access to the capital they need to help grow and manage their businesses.

Kassar has been featured in renowned publications including the New York Times, The Huffington Post, INC., The Wall Street Journal, Entrepreneur, and Forbes, and has appeared as a guest on Fox Business News. Kassar is the 2014, 2013 recipient of the Small Business Influencer Award as well as the 2012 Small Business Advocate Award.

Kassar earned his MBA from the University of Southern California and graduated with a B.A. in American Studies from Brandeis University. He currently lives in the suburbs of Philadelphia with his wife, two children and his corgi-spaniel.

December 7, 2015

By Bob Coleman

Editor, Main Street Monday

Main Street Monday -- Alternative Lenders Access Online Bank Data for Quick Loan Approvals

Marc Glazer is President and CEO of BFS Capital, a technology-enabled financing platform that provides loans of up to $2 million for small businesses in all 50 states, Canada, and the United Kingdom. Bringing more than 26 years of leadership experience in both distribution and financial services to his executive role at BFS Capital, Mr. Glazer is a recognized thought leader on small business financing and is a frequent speaker on topics related to small and medium-sized enterprises.