Tags: , , , , ,

Credibly Financial News Roundup for the Week of March 14, 2016


Ben Goldstein

With the world of small business finance changing so quickly, who can stay on top of it all? Here at Credibly, we sift through hundreds of blogs, news alerts, and emerging Fintech trends every day, selecting the most important industry updates so you don’t have to. Here’s the financial news that caught our attention this week.

You’ve Bought a Small Business. Now What? by Alina Tugend, New York Times

“While most people tend to think of start-ups as a way to be your own boss, an increasing number of people — some fresh out of business school and others looking for a second career — are buying small businesses, or buying into them.

“The average price of such a business in 2015 was just under $200,000 according to BizBuySell.com, the largest small-business marketplace in North America…Such small business may not be as trendy as start-ups, but for many eager to be their own bosses, they can be more rewarding than working in the corporate world. And they are less risky.”

Why Banks and Investors Don’t Like Lines of Credit by Marc Prosser, Forbes

“Over the last few years, the decline of bank lending and the rise of alternative online lenders has been at the forefront of the news. We hear a lot of talk about small businesses and consumers getting term loans, easily and quickly online. What we don’t hear a lot about are lines of credit, whether issued by banks or alternative lenders.

“The reason? Lines of credit can be less profitable for lenders and investors. In this article, I explain some of the key differences between term loans and lines of credit and why the latter can be problematic for lenders and investors.”

7 Tips to Build a Business While Working a Day Job by Grace Bluerock, Entrepreneur

“Many people dream of leaving their nine-to-five jobs to start their own businesses. Many successful entrepreneurs had to keep their day jobs until they reached a point in their businesses when it was feasible to quit. This transition time can be stressful and difficult, especially when you don’t enjoy your job, but it doesn’t have to be…Here are some actions you can start taking immediately while you’re still at your day job that will keep you on track and moving forward.”

Why Marketplace Platforms Need Skin in the Game: An Interview With Glenn Goldman by David Gustin, SpendMatters

“I recently spoke with Glenn Goldman, former CEO of Credibly. Glenn pioneered merchant cash advance lending at CAN Capital in early 2001, starting out lending to restaurants in three states. Fast forward to when he left CAN Capital in March 2013, and Glenn had built a business on its way to originating over $1 billion a year. CAN Capital became the largest non bank small business lender in the USA.

“Glenn likes to build companies, so he set off on his next adventure. He met with many consumer and small business Peer to Peer lending platforms in both the UK and USA – the management teams, lenders, board members, and data scientists. And along the way Glenn developed an investment thesis around marketplace lending.”

Entrepreneurship: One Issue Both Political Parties Can Agree On by Robert Bennett and Dan Glickman, senior fellows with the Bipartisan Policy Center

“While innovative new companies seem to be popping up daily, the reality is that entrepreneurship is in decline. As the Ewing Marion Kauffman Foundation has pointed out recently, the rate of new business creation in the United States today is much lower than it was in the 1980s. This long-term slowdown can be self-reinforcing – the lack of experience with working in a start-up environment makes it less likely people decide to strike out on their own.

“We have a few ideas for what can be done to reverse the disturbing decline in entrepreneurship. And we’re confident these common-sense reforms can win broad bipartisan support.”

Reality Check for Marketplace Lenders by Todd H. Baker, American Banker

“Social Finance Inc., or SoFi, the San Francisco startup ‘unicorn’ focused on lending to high-earning graduates of elite universities, recently disclosed that it had started a hedge fund to buy the loans it originates. This effort by SoFi should set off alarm bells among online lending cheerleaders in venture capital and stock markets, but also points the way to a long-term future for best-of-breed alternative lenders.

“The new hedge fund, called SoFi Credit Opportunities Fund, has ‘a real chance to solve the balance-sheet problems facing the industry,’ SoFi Chief Executive Mike Cagney told The Wall Street Journal. ‘In normal environments, we wouldn’t have brought a deal into the market,’ Cagney told the Journal. ‘But we have to lend. This is the problem with our space’…

“This marks the official end of the era where alternative lender finance companies claimed exemption from two of the core laws of financial gravity: that stable liquidity is the key to long-term survival, and that ever-accelerating loan growth is a recipe for trouble.”


Have you checked out our small business education blog, InCredibly?

Over at In.Credibly we’re helping small businesses evaluate their working capital needs, source the right funding, and put those dollars to use more efficiently. This week, we looked at 12 surprising reasons why startup businesses fail, and contributing editor Joe Tagliente shared his advice on how to pick locations for your franchise business.