Tuesday, February 18, 2014
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OnDeck Launches 24 Month Loan Product
Tech-Powered Lender Expands Product Offering to Serve More Businesses ---including lower APR & Funding in 24 Hours
NEW YORK, -- OnDeck (www.ondeck.com), the technology-powered Main Street lender, unveiled today its new loan product called OnDeck Term 24 to better serve the increasing needs of established small businesses nationwide. This new term loan is the first-of-its-kind on the market. Qualified businesses can quickly and seamlessly get approved for larger loans with two-year terms and pricing that is competitive with traditional lenders.
The success of OnDeck’s existing loan product, OnDeck Term, has demonstrated the significant demand there is for an evolved product aimed at businesses with more established credit profiles and larger investment needs. The new Term 24 loan product targets businesses that have been in operation for at least 3 years, have over $1M in annual revenues and value speed and convenience when accessing capital. Typical uses of the capital are for growth opportunities, such as: expanding store locations, purchasing large pieces of equipment, or making major business investments.
“Term 24 supports businesses that need larger loans for expansions and upgrades or have bigger working capital needs,” said Noah Breslow, chief executive officer, OnDeck. “This marks a significant evolution of our business, where we can offer longstanding businesses a far faster alternative to bank loans and pricing competitive with credit cards. This type of speed and service is unheard of in the lending industry, and we are looking forward to serving more of Main Street with Term 24.”
OnDeck’s innovative lending platform allows the company to leverage big data to better evaluate business creditworthiness. Their technology has transformed small business lending, making the entire lending process exponentially faster, easier, and more transparent for the business owner.
OnDeck Term 24 details:
To be eligible, businesses must have: at least 3 years of continuous operations; revenues of at least $100K per month; strong business and personal credit; and stable business checking account balances.
To learn more about OnDeck, please visit www.ondeck.com.
Launched in 2007, OnDeck uses data aggregation and electronic payment technology to evaluate the financial health of small and medium sized businesses and efficiently deliver capital to a market underserved by banks. Through the OnDeck platform, millions of small businesses can obtain affordable loans with a fraction of the time and effort that it takes through traditional channels. The company's proprietary credit models look deeper into the health of businesses, focusing on overall business performance, rather than the owner's personal credit history. The OnDeck system also provides a critically needed mechanism for financial institutions and other business service providers to efficiently reach the Main Street small business market.
OnDeck has deployed over $825 million in capital to tens of thousands of businesses across 725 different industries. The company is growing at greater than 100 percent annually, and was recently named to Forbes' 100 Most Promising Companies in America list and the Inc. 500/5000 for a second year in a row. The company also has earned an A+ rating with the Better Business Bureau. OnDeck is financed by some of the nation's leading venture capital firms, including Google Ventures, SAP Ventures, RRE Ventures and Institutional Venture Partners.
######Press Release ########################
Due to the request from readers, who are new leasing brokers, this is the start of a new list of funders who accept business from those new in the leasing business. Many funders require a minimum of time as well as a volume of business. The follow are on the Leasing News Funder List, a requirement to be on this list:
A -Accepts Broker Business | B -Requires Broker be Licensed | C -Sub-Broker Program
Leasing Industry Help Wanted
“Outside Interests Often Asked by Employers”
Question: Do employers really look at a candidate’s outside interests when considering new hires?
Answer: Employers are always on the lookout for candidates that engage in community service, have association memberships, etc... Having interests outside of work indicates a well-rounded individual.
Outside interests provide the employer information about the candidate’s values, motivation, and they demonstrate the candidate’s breadth of interests. Additionally, they give an employer an idea of how a candidate is likely to use her/his time and whether she/he is well balanced.
Many organizations look to hire leaders and potential leaders involved in the community, e.g. volunteerism. This type of activity can teach new and important skills to executives, rising starts and future leaders and may expose them to cultural diversity, which is indicative of today’s work environments.
It is not necessary to indicate interests in your resume; this information can be included in your Cover Letter or in your formal application with the employer. Should you decide to include … list after your Education / Training / Certification Section. Always include if you are continuing your education or taking specific classes to improve your career or health.
Do not indicate on resumes your religious or political views - organizations that indicate your affiliation (s) / belief (s) should not be present anywhere in your resume.
Career Crossroads Previous Columns
True Leasing in Bankruptcy
If your lessee files for bankruptcy protection there is a big difference between Article 9 leases with bargain purchase options and Article 2A true leases. This is “not” a tax issue, or an accounting issue. It is a legal manner and must follow the bankruptcy requirements.
True leases are called “Executory contracts and unexpired leases.” This means the trustee, subject to the court’s approval, may “assume or reject” any executory contracts and unexpired leases. The trustee may not assume such contract or lease unless, at the time of assumption, the trustee:
The trustee shall timely perform all of the obligations of the lessee. First arising from or after 60 days after the order for relief in a case under chapter 11 of this title, under an unexpired lease of personal property until such lease is assumed or rejected, the trustee may affirm or reject the property
The Lessee bankrupt has 60 days from the date of filing (called an “order for relief”) to assume or reject the lease, after which the lease is rejected and the lessor may move to obtain relief from stay, unless there is a formal rejection by the bankrupt. Then once relief from stay or rejection occurs, the lessor may move in State Court to obtain possession.
Generally speaking, the faster you can retrieve the equipment, the better the chance of recovering your balance. So you need to file your request for relief as soon as you can after receiving the bankruptcy notice of rejection.
If the trustee needs the equipment because the lessee is trying to reorganize, and believes the equipment is necessary to the continuance of the bankrupt, the trustee may assume the lease, however the trustee has the right to lower the lease payment to current levels. The lessor can petition the court to retain the lease payment so long as the petition contains information that shows the harm it will do to the lessor’s position.
If the transaction is a lease intended as a security agreement (Article 9) the bankruptcy will follow the same requirements as a loan requiring the lessor to have filed a UCC1 to be the first lien holder on the equipment. Then after the bankruptcy court takes its time to run its course you may get your equipment back sometime in the far future.
The weaker the credit, the more you should think about using true leasing to protect your options if a default happens. It would also be important to review your remedies section with your attorney to make sure it is up to current requirements.
Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty years and can be reached at firstname.lastname@example.org or 502-649-0448.
He invites your questions and queries.
Previous #102 Columns:
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Four Oaks Bank Tagged by Regulators for Lack of Supervision
ACH Transactions Have a High Incidence of Fraud, and Bank Which
United States v Four Oaks Bank 5:14 cv 00014-BO (USDC Eastern District of North Carolina 2014)
ACH payment transfers are easy and generally unregulated by any government agency. Their simplicity and lack of outside control make ACH debits subject to misuse. In today’s case, a North Carolina Bank was tagged for over one million dollars for failing to supervise third party ACH processors.
The ACH System
The ACH system is done, in large part, outside the auspices of the banking system, and is governed by a biblical size document called NACHA Rules. This governs the member banks which agree to participate in receiving and sending ACH debits subject to those rules. Some of these ACH debits come from individual, one-off transactions. Other ACH debits come from larger institutions which process hundreds of these a day, either for themselves or on behalf of smaller one-off creditors.
Instituting an ACH debit is very easy, and is done by an Outgoing Deposit Financial Institution (ODFI) and sent through the Federal Reserve to a Receiving Deposit Financial Institution (RDFI). The ODFI generally receives the ACH from a Third Party Processor which acts on behalf of other creditors.
Accounts are debited and credited within the Fed, and reconciled usually in a matter of a day.
Conversely, checks are cumbersome and require a written piece of paper, an endorsement, and a trip to the bank. While checks also clear through the Fed, the process can take several days or even weeks if the MICR line is damaged.
It is for this reason that equipment lessors have fallen in love with ACH payments in lieu of checks. The lessors no longer have to wait for a piece of paper, and even if the customer has disputed the appropriateness of the charge, the lessor can run through an ACH debit and worry about the consequences later. Chances are that the lessee won’t contest the lessor’s authority to issue an ACH debit.
In the pay-day Loan field, ACH debits are subject to enormous abuse, with some pay-day lenders making usurious or unlicensed loans and charging fees and penalties which while technically authorized, are inappropriate. Indeed, the ACH system has become the backbone of pay-day lending and the adult entertainment industry.(1)
The ACH Processors are not members of NACHA (but are certainly well-versed in its terms), and are required to use the services of an NACHA National Bank to process to process the ACH through the Fed. In 2012 there were over 21 billion ACH transactions involving over $37 trillion. National Banks receive enormous fee revenue for handling the ACH debits, which, in turn, are passed on to the Third Party Processors.
The Four Oaks Case
Four Oaks bank is located in Four Oaks, North Carolina. According to FDIC records, the bank was founded January 12, 1912 and as of September 30, 2013, had 14 offices in North Carolina with 179 employees. Total assets were $809 million, net equity $44.9 million, showing a $994,000 net profit. The bank had a charge off of almost $12 million year-end, almost all which was in real estate ($11.5 million) and $4.2 million September 30, 2013, again almost all in real estate loans.
In today’s case, Four Oaks Bank had as customers a number of third party ACH Payment Processors and did little to supervise the accounts. The Bank banked a Third Party Processor called TPPP-TX which by-passed the Bank’s conduit to the Fed, and sent the ACH’s themselves, while the Bank merely monitoring the debits and it was legally responsible for their contents. The Bank processed more than $2.4 billion dollars of ACH payments and the Bank received $850,000 in fee income.
When customers complained to the Consumer Financial Protection Board (a Bank oversight agency), the Department of Justice commenced an investigation and made the following findings:
• Many of the ACH Payment Processors committed misrepresentations and fraud in connection with the ACH debits.
• Federal laws prohibit a National Bank from giving aid to third parties which are engaged in unlawful conduct.
• The Bank failed to implement “know your customer rules” for those Third Party ACH Processors.
• The Bank failed to follow FDIC Guidelines to monitor returns, to review the Third Party ACH Processor’s promotional materials and policies, and to obtain specific information from the Third Party as to the specific customers which use the ACH services.
• Some of TPPP’s customers included a Ponzi scheme, gambling interests, and illegal pay-day lenders.
• Hundreds of the ACH debits were not authorized by the customers and the Bank stopped keeping a copy of the Authorizations. The Bank experienced a high volume of ACH returns, which is indicative of fraud. NACHA has a 1% rule, above which NACHA sends a warning to the financial institution. The Bank, on the other hand, had a 30% threshold.
• The Bank used pre-authorized ACH Authorizations, when Federal Law prohibits lenders from conditioning a loan upon a pre-authorized ACH Authorization.
• The Bank was aware that TPPP used a “sub-processor” to conceal identities of the pay-day lenders operating outside the United States. Those sub-processors were given the same direct contact to the Fed as TPPP was, without any oversight.
• One of the complaints included a statement from an Arkansas borrower who borrower $400 but paid the lender $1,140 over a twelve month period, and when the Bank was confronted with the borrower’s complaint was told not to respond as it would create a legal can of worms.
After a lengthy Department of Justice investigation, the Federal Reserve issued a Cease and Desist Order to the Bank and the Bank agreed to a fine of
That’s one million dollars.
What are the lessons from this train wreck case?
First, if the reader is a bank which processes Third Party Payment Processors, review the bullet point list and understand that the bank is required to know its customer and to know its customer’s customer. High returns are indicative of fraud. Off shore customers are probably a no-no. Under no circumstances should the Bank allow a Third Party access to its account at the Federal Reserve. NACHA has just come out with a new rule which requires a bank to retain Proofs of Authorization for two years from the termination of that authorization, in large part because of this case.
Second, if the reader is a Third party Processor, then it should review the bullet points above and should always know your customer. Pay-day lenders, Gambling sites, and adult entertainment merchants are susceptible to fraud. Again, high returns are indicative of fraud. Expect the bank to ask more questions.
Third, if the reader is a creditor using ACH, pick a responsible Third Party Processor. You may not pre-condition the approval of a lease on the basis of a pre-authorization of an ACH debit for consumer transactions. While I understand that the Federal law applies only to consumer transactions, its application to commercial deals is not out of the question. ACH Authorizations should be explicit and may not be altered, changed, filled in, or signed in blank. The discontinuance of the ACH Authorization should probably not be a condition of default. Expect the Third Party Processor to ask more questions and look at your documents.
The bottom line is that while ACH debits have been largely unregulated by the Federal Government, the Four Oaks decision has become the poster child for more stringent regulation by the Federal Government.
NACHA Operating Rules
Four Oaks Complaint:
Tom McCurnin is a partner at Barton, Klugman & Oetting in Los Angeles, California.
Previous Tom McCurnin Articles:
Bank Credit Quality Remains a Positive
SNL Special Report
The repeated dose of good news that the banking industry has relied upon the past few years — improving credit quality — continued to boost lenders in the final quarter of 2013, though the benefits of that improvement could wane this year.
An SNL Financial analysis of regulatory filings found that adjusted nonaccrual loans across the U.S. commercial banking landscape declined in the fourth quarter of 2013 when compared with the previous period. They are down substantially from the final quarter of 2011. Net charge-offs in the fourth quarter, meanwhile, also fell and were down to a level that was less than half of where net charge-offs stood at the end of 2011.
Zions Bancorp., for example, reported that its measure of nonperforming assets plus loans that are 90 days or more past due and still accruing improved by nearly 40% in 2013, including a 13% improvement in the fourth quarter.
"Credit quality improved significantly during the past year," Zions Chairman, President and CEO Harris Simmons told analysts during a fourth-quarter earnings call. "I continue to be very encouraged with the results that we are seeing there," he continued, adding that there is "a lot of underlying strengthening."
Across the country, bankers and analysts attribute the positive momentum to an improving economy — albeit slowly improving — and tighter underwriting standards in the aftermath of the 2008 financial crisis.
"For most, credit is quite positive," Sterne Agee & Leach Inc. analyst Matthew Kelley told SNL.
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Deposits remain cheap for bank and thrifts, with interest rates paid on both checking and savings accounts about as low as they can get.
Short-term interest rates have been low for years, thanks in large part to downward pressure from Federal Reserve policymakers. This has allowed the typical lender to focus heavily on transaction accounts, rather than on more costly CDs, while still hauling in plenty of deposits in a post-recession era in which many bank customers have spent less while sitting on more cash than in the past.
But observers say rates will eventually rise, as the Fed has indicated that it could ease its pressure next year. If the economy gains steam before then, policymakers might be forced to act earlier. Either way, says Charles Wendel, president of Financial Institutions Consulting Inc., bankers should be positioned to at least weather a changing rate environment — and "hopefully" to take advantage of it. But he said many banks are not ready yet.
"When rates rise, the cost of funds will go up and the question is whether banks can move up their loan rates even faster than that to capitalize on this," he told SNL, referring to the spread between what bankers pay for deposits and what they earn on loans. "But I think in many cases, they won't be able to. There are some badly managed banks out there that are slow to move, slow to make decisions, and they will lag reality."
Starting out 2014, he said, many banks are almost sitting idle, dealing more with heightened compliance challenges and cost-cutting than growing loans. And the latter is difficult regardless, Wendel added, with the economy only jogging forward.
But if the economy gathers momentum and loan demand not only builds up but is sustained at a higher level, changes are likely to occur in tandem, he said. Short-term interest rates would probably rise and competition for deposits to fund those loans would eventually build as well.
Bank customers typically do not shift their money around often, given the hassle of doing so, but after a prolonged period of earning very little interest on deposits, many will start shopping around for higher rates and will park their money where they get the best deal, Wendel said. As this develops, banks will try to raise rates on loans more quickly and more notably than they do on deposits, but some could struggle on this front, he said.
Larger banks, Wendel said, tend to have more leeway to pay higher rates on deposits because they earn income from a variety of business lines, not just traditional lending, and at the same time they can compete on loan pricing. Big banks also have the luxury of focusing resources on growth markets or certain products that are in high demand to drive growth. Community lenders tend to be more reliant on bread-and-butter lending and the health of their local economies.
All of that would mean fierce competition for deposits in the future for many community banks.
"There will be an adjustment period," Wendel said. "For the smaller banks, in particular, it could be difficult to pass along the higher rates quickly."
As this new reality lurks, analysts note, many banks have been focused on cost-cutting, including closing branches. The U.S. branch total declined by 1,487 locations in 2013, a recent SNL analysis found.
Branch consolidation has come as banks look to both cut costs and as they react to customers increasingly doing more of their business online or via mobile devices. Americans every year do less routine business in branches, making it necessary for banks to downsize some locations and close others.
It is "clear that customers want to do business with us in very different ways than in the past, and we're working to align our products and services to meet these needs," PNC Financial Services Group Inc. CFO Robert Reilly said at a conference this week. PNC last year reduced its branch count by 160, according to SNL data. "Today retail banking is less about where you go and more about what you want to do."
But banks must strike a balance. While fewer branches are necessary, they still serve as the public face of banks and are therefore important marketing tools. When the need to drum up more deposits surfaces, branches will still play a role. And community lenders, with far fewer branches than the likes of PNC, have to be particularly careful about making cuts, Wendel said.
The good news on the interest rate front is that banks still have some breathing room, as Boenning & Scattergood analyst Matthew Schultheis notes.
Rates have yet to move and when they do, they may rise only slowly. That would be the Fed's preference, he told SNL, to avoid any shocks to both banks and customers. Most banks are flush with deposits right now and could sustain some run-off when rates rise, particularly if loan demand is not strong.
But at some point, both loan demand and deposit costs will rise. "And then you'll have to compete for funding," Schultheis said. "If it all happens at a measured pace, I think they can weather this, but if there is more of a sudden shift, it could be difficult for a lot of banks."
Animal ID: A285250
"Hi, the Shelter named me Harrystyles. I am an approximately 3 year old black neutered male. I am friendly and I have not been tested for heartworms. I weigh approximately 40 pounds. I have been at Orange County Animal Services since Friday, February 14, 2014. My due out date is Saturday, February 22, 2014.
"If you are looking for me, please come to Orange County Animal Services at 2769 Conroy Rd., Orlando, FL. The phone number is (407)836-3111"
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This Day in History
1571- A group of Spanish Jesuits in the Chesapeake Bay area, led by Fray Batista Segura, were murdered by the Indians to whom they had come six months earlier to convert. The massacre led ultimately to the withdrawal of all Jesuits living in Florida as well. On September 8, 1565, the first white colony in what is now the US was founded at St. Augustine, Florida, by the Spanish under Pedro Menendez de Aviles. The first Catholic parish was founded by Fr. Don Martin Francisco Lopez de Mendoza Grajales, chaplain of the Spanish expeditionary forces. The first introduction of European livestock such as black cattle, horses, sheep and swine, into America was made by the Spanish in Florida. The Spanish began to settle the area, including fighting all those who had laid claim to the land. On September 20th, Menéndez destroyed Fort Caroline, and massacred most of its inhabitants. He renamed it San Mateo and in the next two years built a string of forts to Tampa Bay while looking for a water passage across Florida. The once “peaceful” Indians were either converted to Christianity or tortured and killed by the Spanish on their quest in the New World.
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