Park Bank Announces Expansion of Small Business Lending Efforts

PRESS RELEASE

Park Bank Announces Expansion of Small Business Lending Efforts

Provides Greater Opportunity for Park Bank to Serve Small Businesses in the Community

Offers Simple Loan Terms, Quick Application Process and World-Class Customer Service

MILWAUKEE, Wis. and NEW YORK – November 1, 2017 – Park Bank announced today that it has joined the Small Business Loan Program created by BancAlliance and Fundation.

The Small Business Loan Program introduces a new financial technology platform that allows small businesses to access an online portal that will guide each small business customer to the products that best meet its unique need. This program is designed to enable banks to address the challenges of underwriting small businesses by providing a simplified and streamlined borrowing experience. Park Bank’s small business customers now have the ability to apply online by visiting ParkBankOnline.com/apply and certain eligible customers may receive approval in as little as one business day.

Tracy Meeks, Vice President – Small Business Banking at Park Bank, commented, “Park Bank was founded by business owners to address a lack of financing opportunities in their community on Milwaukee’s west side. Over 100 years later, we continue to evolve to meet the changing needs of the business community. With this new capability, we’re providing the small business community easier access to get the funding that will keep their businesses running.”

Fundation provides credit for working capital and expansion purposes to a wide array of businesses nationally. Unlike most non-bank lenders, Fundation’s products are conventional loan products but using its best-in-class technology platform, Fundation makes the process for applying for credit an extremely efficient and customer friendly process. Fundation has been the recipient of the “Best Working Capital” loan award by Business News Daily for three years in a row because of its outstanding online application process and dedicated customer relationship management.

Sam Graziano, CEO of Fundation, said, “We are invested in driving the success of small business owners and partnering with Park Bank to do just that. The program we have created with our partner BancAlliance is unmatched within the industry, empowering community banks like Park Bank to serve their small business customer base and their local communities in an unparalleled way.” Brian Graham, CEO of BancAlliance, stated: “Our commitment is to the asset growth and diversification of the community banks we serve with a focus on expanding their relevance to their customers. This unique partnership with Fundation puts community banks at the forefront to be competitive with larger lending institutions without changing the traditional mission of community banking.”

About Park Bank
Established in 1915, Park Bank is a privately held commercial bank serving southeastern Wisconsin businesses and individuals. With over $900 million in assets, Park Bank has continued to increase its lending capacity, currently set at $18.5 million, to any one relationship. Park Bank’s core focus is the independent business market with revenues up to $100 million. As a full-service bank, services include commercial lending, commercial relationship banking, treasury management, private banking, equipment leasing, personal banking, residential mortgage, and personal and corporate investments. Park Bank is a member of the FDIC and an Equal Housing Lender. To see how we serve the Milwaukee region, visit ParkBankOnline.com.

About Fundation
Fundation Group LLC is a digitally-enabled lender and credit solutions provider. The Company develops integrated small business lending solutions with banks, enabling them to deliver credit online, drive cost efficiency into their lending programs, and maximize customer retention by providing a positive customer experience and meeting the needs of the small businesses they serve. The Company also partners with a wide array of organizations that serve the small business market in various capacities to deliver credit products to the business community nationwide. For more information, please visit www.fundation.com.

About BancAlliance
BancAlliance is a collaborative network of community banks that offers an array of lending programs and business services that might not otherwise be available to its members. The services of BancAlliance are designed to expand the impact and reach of member banks, enhancing their profitability, serving their customers in new ways, and growing and diversifying their loan portfolios. BancAlliance’s mission is to enable its members, the banks that direct its activities, to prudently diversify into high-quality loans in a manner consistent with the highest commercial and regulatory standards – without changing the nature or mission of the traditional community bank. BancAlliance has member banks located throughout our country. Learn more at www.bancalliance.com.

Media Contacts:

Park Bank
Beth Borst
ElizabethB@ParkBankOnline.com
262-827-5118

Fundation
Barry Feierstein
barry.feierstein@fundation.com
571-418-6387


Defining, Adopting and Executing on Fintech

Defining, Adopting and Executing on Fintech
By: Sam Graziano, CEO of Fundation
SEPTEMBER 5TH, 2017 www.bankdirector.com

Fintech has become a convenient (and amorphous) term applied to virtually any technology or technology-enabled process that is, or might be, applied within financial services. While the technologies are complex, the vast array of the current wave of fintech boils down to three simple dynamics: (1) leveraging technology to measure or predict customer need or behavior; (2) meeting customer need through the best customer experience possible; and (3) the ability to execute more nimbly to evolve products and services and how they are delivered.

Every reasonably well-versed person in fintech knows that the ability to predict customer need or behavior is achieved through a strong data infrastructure combined with a high-quality analytics function. But what defines the quality of the customer experience? At Fundation, we believe the quality of the customer experience within financial services is determined by the convenience, simplicity, transparency, intuitiveness and security of the process by which a product or service is delivered. The challenge for many financial services companies in developing the optimal customer experience lies in the rigidity of their legacy systems. They lack the flexibility to continually innovate products and services and how they are delivered.

The distinct advantage that fintech firms like Fundation have over traditional financial services companies is the flexibility gained from building their technology infrastructures from scratch on modern technology. With in-house application development and data operations capabilities, fintechs can rapidly engineer and, more importantly, reengineer the customer experience and their business processes. The capacity to reengineer user interface (UI), user experience (UX) and back-end processes is a major factor in the ability of financial services companies to maintain a competitive edge in the digital era where customers are accustomed to engaging with the likes of Google, Amazon, Facebook and Apple in their digital lives.

Banks Remain Well Positioned to Win With Fintech
Armed with these capabilities, we, like so many fintechs, could be thumping our chests about how we are going to transform banking. But at Fundation, we see the future differently. We believe that the biggest disruption to banking is not going to come from outside of the banking industry—it’s going to come from the inside. A handful of banks (and maybe more) will reengineer their technology and data infrastructure using modern systems and processes, developed internally and augmented through highly integrated partnerships with fintechs. As a result, these banks will generate superior financial returns and take market share as customers migrate to firms that provide the experiences they expect.

In addition to enjoying a lower cost of capital advantage versus fintechs, we believe banks are well positioned for three other reasons. First, banks will remain the dominant choice of customers for financial products given their brand strength and existing market share. Second, banks have far more data than the average fintech that can be used to develop predictive analytics to determine customer need or behavior. Third, and perhaps most important, banks have what we at Fundation call the “trust asset:” their customers trust that they will protect their information and privacy and that they will recommend products best suited to their needs.

Be the Manufacturer or the General Contractor
Banks are in a strong position to win the fintech revolution but what remains are the complexities of how to execute. There are a few basic strategies:
1. Do nothing
2. Manufacture your own capabilities
3. Operate as the general contractor, aligning your institution with third parties that can do the manufacturing
4. Some combination of manufacturing and general contracting

For banks that are predominantly in relationship-driven lines of business rather than transactional lines of business, doing nothing is viable for now. The pressures on your business are not as severe, and a wait-and-see approach may enable you to make more informed decisions when the time is right.

For others, doing nothing is fraught with peril. Assuming that you choose one of the remaining three options, the implementation process will be hard, but what may be even harder is the change in organizational psychology necessary to execute on your decision. Resistance to change is natural.

That is why fintech initiatives should be driven top-down. Executive leadership should command these initiatives and set the vision. More important, executive leaders should explain why the institution is pursuing a fintech initiative and why it has decided to build, partner or outsource. Explaining why can reduce the natural resistance to, and fear of, change.

Manufacturing your own capabilities is hard work but has advantages. It provides maximum control over the project and limits your vendor management risk. The downside is that the skill sets required to execute are wide-ranging. That said, building in-house doesn’t mean that everything needs to be proprietary technology. Most fintech platforms are a combination of proprietary technology along with third-party customized components. Should you elect to build off of third-party software, you must ensure that the platform is highly configurable and customizable. If you don’t have significant influence over customization, you will lose the opportunity to reengineer the processes necessary to rapidly innovate and evolve.

Being the general contractor isn’t easy, either, but banks are very adept at it. You could make the argument that most banks are just an amalgamation of business lines, each of which employs a different system (mostly third-party) and are already operating as general contractors. The business line leaders we have come to know have significant experience managing critical third-party vendors and therefore have the skill set and knowledge to manage even the most innovative financial technology partners. What’s more, they often know what they would want their operating platforms to do, as opposed to what they are built to do today.
Should your institution decide to outsource services to a fintech firm, it is paramount to align interests. Banks should embrace their fintech counterparty as a partner, not simply a vendor. Welcome the flexibility that they offer, and allow them to empower your institution to innovate and evolve.

Don’t Squander the “Trust Asset”
In a world where Amazon, Google, Facebook and Apple dominate the digital landscape, deliver ideal customer experiences, and may possess a “trust asset” of their own, the status quo is not an option, no matter how painful change can be. If your financial institution intends to compete over the long term, executing on a fintech road map is vital, moving towards infrastructures with a foundation of flexibility. Over the next decade, flexibility will allow financial services companies to compete more effectively by delivering the products, services and experiences that customers will demand. Flexibility is what will allow your institution to maintain its competitive position over the long term.

Sam Graziano, a highly experienced financial services executive and entrepreneur, is the co-founder and chief executive officer with Fundation Group LLC, a digitally-enabled lender and credit solutions provider.


Fundation CEO Talks Partnership Strategy

As published in Smallbusinesslending.io

Fundation CEO Sam Graziano says he prefers to stay under the radar and does not want to discuss hard numbers on his firm’s loan volume — but he makes it clear that Fundation’s partnership strategy has helped it take market share from rivals.

Graziano says his company, a credit solutions provider, is not an online lender in the traditional sense and does not invest in direct-to-customer marketing strategies. Fundation’s growth has come through partnerships with big banks and referral sources. “We’re trying to create a convenient way for those partners to bring customers to us,” Graziano says.

This seems to have given Fundation the edge on rivals such as OnDeck, despite the latter’s relationship with JPMorgan Chase. Rather than work with one megabank, Fundation has relationships with multiple banks across a broad product spectrum, Graziano says.

Fundation’s partnerships with big banks, which began in late 2015, have gained momentum, he says. Typically the banks source the transactions or Fundation performs lending activities on behalf of the bank, and in the future in the name of the bank, he says. “We will originate for the benefit of the bank’s balance sheet as well as our own,” Graziano says. “We’ve been able to do that while no other firms in the market have.”

One reason why banking institutions wanted to partner with Fundation, he says, is banks need to re-engineer their credit delivery process for small commercial loans and lines of credit. Working with a firm such as Fundation, which does the heavy lifting on behalf of the bank, is one option. Another route is to find a software solution that meets the bank’s need.

Fundation does business with big banks as well as groups of small banks to “move the needle” in terms of the volume the company does, Graziano says. His company also works with other firms that sell products and services or provide consulting to a small business. This lets Fundation introduce its own products through its partners. “We’re trying to build a defensible, strong portfolio as opposed to growth for growth’s sake,” Graziano says.

Capital backing for Fundation comes from private equity firm Garrison Investment Group and debt facilities with Goldman Sachs and Midcap Financial. Graziano says Fundation made a decision several years ago to adopt the partnership-driven strategy with regulated banks. It was a harder route to take, he says but offered the potential for a strong payoff.

Despite some turmoil among companies in the market for traditional customers, Graziano says Fundation actually took market share from competitors by not getting aggressive on pricing loans or loan approval rates — a mistake he says overzealous competitors made. “They wanted to grow for the sake of growing originations without making sure they had the right credit risk management framework in place,” he says.

More difficulties may lie ahead for online lenders as fatigue sets in among the investor community, who have grown weary of companies with little differentiation in their growth plans, the executive says. “There’s too many companies out there that do the same thing. That’s why you’re seeing companies try and exit, shut down, or run into walls.”

A crackdown on this market may also be in the works from state regulators, who are less hesitant about taking action. “There are some companies that have gotten away with things they shouldn’t have for a long time,” Graziano says. “The regulatory environment will start to shift to make it more challenging.”


EY announces Finalists for the Entrepreneur Of The Year® 2017 Award in the New York Region

NEW YORK, May 25, 2017 /PRNewswire/ — EY today announced the finalists for the Entrepreneur Of The Year 2017 Award in the New York region. The awards program recognizes entrepreneurs who are excelling in areas such as innovation, financial performance and personal commitment to their businesses and communities. These business leaders were selected by a panel of independent judges. Award winners will be announced at a special gala on June 22, 2017 at the New York Marriott Marquis.

The finalists are:
Morgan Hermand-Waiche – Adore Me
Jonathan Stein – Betterment
David Heath – Bombas
Ryan Urban – BounceX
Ken Colao – CNY Group
David Klein – CommonBond
Robert Reffkin – Compass
Dr. Joan Fallon – Curemark, LLC
Ran Sarig – Datorama, Inc.
Mike Brown – Death Wish Coffee
Nadia Boujarwah – Dia&Co
Thomas Majewski – Eagle Point Credit Management LLC
Michael Nardy – Electronic Payments Inc.
Nat Turner and Zach Weinberg – Flatiron Health
Doug Gordon and Sam Graziano – Fundation
Sonny Kalsi – GreenOak Real Estate
Jeffrey Snyder – Inspira Marketing Group, LLC
Daniel Teran – Managed by Q
Jonah Goodhart and Noah Goodhart – Moat
Dev Ittycheria – MongoDB, Inc.
Shafqat Islam – NewsCred
Mary-Jean Eastman and Bradford Perkins – Perkins Eastman
James Mastronardi and Andrew Vagenas – Pharmapacks, LLC
Seph Skerritt – Proper Cloth
Ricky Joshi and Ronald Rudzin – Saatva
Daniel Siegel – Safe Passage
Joe Reilly – The Community Development Trust, Inc.
Tom Patterson – Tommy John
Michael Batt – Travel Leaders Group
Nick Romito – VTS
Jeff Rosenzweig – Wet Brush
Kenny Dichter – Wheels Up
Stephen J. Fanning – Z-Medica, LLC

Now in its 31st year, the program has expanded to recognize business leaders in over 145 cities and more than 60 countries throughout the world.

Regional award winners are eligible for consideration for the Entrepreneur Of The Year national program.  Award winners in several national categories, as well as the Entrepreneur Of The Year Overall National Award winner, will be announced at the Entrepreneur Of The Year National Awards gala in Palm Springs, California on November 18, 2017. The awards are the culminating event of the Strategic Growth Forum™, the nation’s most prestigious gathering of high-growth, market-leading companies. The Entrepreneur Of The Year Overall Award winner then moves on to compete for the World Entrepreneur Of The Year Award in Monaco in June 2018.

About Entrepreneur Of The Year®
Entrepreneur Of The Year®, founded by EY, is the world’s most prestigious business awards program for entrepreneurs, chosen from an independent panel of judges including entrepreneurs and prominent leaders from business, finance, and the local community. The program makes a difference through the way it encourages entrepreneurial activity among those with potential and recognizes the contribution of people who inspire others with their vision, leadership and achievement. As the first and only truly global awards program of its kind, Entrepreneur Of The Year celebrates those who are building and leading successful, growing and dynamic businesses, recognizing them through regional, national and global awards programs in over 145 cities and more than 60 countries. ey.com/eoy


Pacific Mercantile Bank Partners with Fundation to Offer Simplified Online Applications for Small Business Loans

Costa Mesa, CA – May 11, 2017 – Pacific Mercantile Bank (“the Bank”), the wholly owned subsidiary of Pacific Mercantile Bancorp (NASDAQ: PMBC), today announced that it has partnered with Fundation® to offer small businesses a fast, convenient way to apply for a wide variety of financing options.

By leveraging the financial technology platform developed by Fundation, Pacific Mercantile Bank’s online Small Business Loan Solutions program offers companies the ability to apply for financing quickly using a convenient and secure digital loan processing system.   Qualified customers may receive approval in as little as one to three business days.

Through the Small Business Loan Solutions program, Pacific Mercantile Bank provides small businesses with the financing that meets their unique borrowing needs – from revolving lines of credit up to $100,000 to term loans of up to $1 million.

“Our new Small Business Loan Solutions program uses best-in-class technology to eliminate the tedious paperwork and to streamline the loan application process,” said Tom Vertin, President and Chief Executive Officer of Pacific Mercantile Bank.  “Through our simplified online loan application, we are combining cutting-edge financial technology with our commitment to exceptional client service, enabling Pacific Mercantile Bank to say ‘yes’ faster and more often to small business owners.”

To apply for a small business loan, visit https://www.pmbank.com/Financing/SmallBusinessLoans.aspx.

 

About Pacific Mercantile Bank

Pacific Mercantile Bank opened for business March 1, 1999. The Bank, which is FDIC insured and a member of the Federal Reserve System, provides a wide range of commercial banking services to businesses, business owners and business professionals through its combination of traditional banking offices and comprehensive, sophisticated electronic banking services.

The Bank, headquartered in Orange County, operates a total of nine offices in Southern California, located in Orange, Los Angeles, San Diego, and San Bernardino counties. In addition, the Bank offers comprehensive online banking services accessible at www.pmbank.com.  Pacific Mercantile Bancorp (NASDAQ: PMBC) is the parent holding company of Pacific Mercantile Bank.

About Fundation

Fundation Group LLC is a digitally-enabled lender and credit solutions provider. The Company develops integrated small business lending solutions with banks, enabling them to deliver credit online, drive cost efficiency into their lending programs and maximize customer retention by providing a positive customer experience and meeting the needs of the small businesses they serve.  The Company also partners with a wide array of organizations that serve the small business market in various capacities to deliver credit products to the business community nationwide. For more information, please visit www.fundation.com.

Forward-Looking Information

This news release contains statements regarding our expectations, beliefs and views about our plans to continue to build our loan portfolio and supporting systems and processes.  These statements, which constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, can be identified by the fact that they do not relate strictly to historical or current facts. Often, they include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” These forward-looking statements are subject to numerous risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements because such statements are inherently subject to significant assumptions, risks and uncertainties, many of which are difficult to predict and are generally beyond our control. These risks and uncertainties include, but are not limited to, the following: the impact of interest rates and other external economic factors and competition among financial services providers. We undertake no obligation (and expressly disclaim any such obligation) to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. For additional information concerning factors that could cause actual conditions, events or results to materially differ from those described in the forward-looking statements, please refer to the factors set forth under the headings “Risk Factors” in our most recent Form 10-K and 10-Q reports and to our most recent Form 8-K reports, which are available online at www.sec.gov. No assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition.

###

Pacific Mercantile Bank Contact:

Robert Anderson

EVP & Chief Banking Officer

714-438-2500

 

Fundation Contact:

Barry Feierstein
barry.feierstein@fundation.com
571-418-6387


Fundation Awarded Semifinalist for EY Entrepreneur Of The Year® 2017 in New York

Fundation Awarded Semifinalist for EY
Entrepreneur Of The Year® 2017 in New York

Recognition of Excellence in Innovation and Commitment to Communities

NEW YORK, April 27, 2017 – EY today announced that Sam Graziano, CEO of Fundation, and Doug Gordon, Executive Director, Platform Operations of Fundation, are semifinalists for the Entrepreneur Of The Year® 2017 Award in the New York Region. The awards program, which is celebrating its 31st year, recognizes entrepreneurs who are excelling in areas such as innovation, financial performance and personal commitment to their businesses and communities. Sam Graziano and Doug Gordon were selected as semifinalists by a panel of independent judges. Award winners will be announced at a special gala event on Thursday, June 22, 2017 at the Marriott Marquis.

Sam Graziano, CEO of Fundation said, “We are honored to be recognized by EY as semifinalists for this prestigious award. While this award may ultimately recognize Doug and I as individuals, every successful entrepreneur recognizes that people are the greatest asset to any company. We have been fortunate to build Fundation with the most talented people in our industry who are hard at work building the best digital lending company in the small business market.”

Now in its 31st year, the program has expanded to recognize business leaders in over 145 cities and more than 60 countries throughout the world.
About Fundation
Fundation Group LLC is a digitally-enabled lender and credit solutions provider. The Company develops integrated small business lending solutions with banks, enabling them to deliver credit online, drive cost efficiency into their lending programs and maximize customer retention by providing a positive customer experience and meeting the needs of the small businesses they serve. The Company also partners with a variety of organizations that serve the small business market in various capacities to deliver small balance commercial credit products. For more information, please visit www.fundation.com.

About Entrepreneur Of The Year®
Entrepreneur Of The Year®, founded by EY, is the world’s most prestigious business awards program for entrepreneurs, chosen from an independent panel of judges including entrepreneurs and prominent leaders from business, finance, and the local community. The program makes a difference through the way it encourages entrepreneurial activity among those with potential and recognizes the contribution of people who inspire others with their vision, leadership and achievement. As the first and only truly global awards program of its kind, Entrepreneur Of The Year celebrates those who are building and leading successful, growing and dynamic businesses, recognizing them through regional, national and global awards programs in over 145 cities and more than 60 countries. ey.com/eoy
About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
Media Contact:
Fundation
Barry Feierstein
barry.feierstein@fundation.com
571-418-6387


Ixonia Bank Announces Expansion of Small Business Lending Efforts

Ixonia Bank Announces Expansion of Small Business Lending Efforts

Provides Greater Opportunity for Ixonia Bank to Serve Small Businesses in the Community Offers Simple Loan Terms, Quick Application Process and World-Class Customer Service

IXONIA, WISCONSIN and NEW YORK – April 18, 2017 – Ixonia Bank announced today that it has joined the Small Business Loan Program created by BancAlliance and Fundation.

The Small Business Loan Program introduces a new financial technology platform that allows small businesses to access an online portal that will guide each small business customer to the products that best meet its unique need. This program is designed to enable banks to address the challenges of underwriting small businesses by providing a simplified and streamlined borrowing experience. Ixonia Bank’s small business customers now have the ability to apply online by visiting www.IxoniaBank.com and certain eligible customers may receive approval in as little as one business day.

Mark Wierman, President of Ixonia Bank, commented, “Our partnership with Fundation will provide a quick and efficient way for small business owners to apply for loans online in a way that is convenient for them. While our focus on personalized customer service and relationship banking remains as strong as always, the online lending market is rapidly evolving and this program helps us meet the needs of small businesses that may not otherwise be aware of our products and services.”

Fundation provides credit for working capital and expansion purposes to a wide array of businesses nationally. Unlike most non-bank lenders, Fundation’s products are conventional loan products but using its best-in-class technology platform, Fundation makes the process for applying for credit an extremely efficient and customer friendly process. Fundation has been the recipient of the “Best Working Capital” loan award by Business News Daily for three years in a row because of its outstanding online application process and dedicated customer relationship management.

Sam Graziano, CEO of Fundation, said, “We are invested in driving the success of small business owners and partnering with Ixonia Bank to do just that. The program we have created with our partner BancAlliance is unmatched within the industry, empowering community banks like Ixonia Bank to serve their small business customer base and their local communities in an unparalleled way.” Brian Graham, CEO of BancAlliance, stated: “Our commitment is to the asset growth and diversification of the community banks we serve with a focus on expanding their relevance to their customers. This unique partnership with Fundation puts community banks at the forefront to be competitive with larger lending institutions without changing the traditional mission of community banking.”
Ixonia Bank
W1046 Marietta Avenue • PO Box 110
Ixonia, WI 53036
(920) 262-6959 | (262) 567-7509

About Ixonia Bank
For nearly 100 years, Ixonia Bank has been offering a full suite of business banking products and an a wide array of financial services including personal checking, savings, personal loans, and wealth management services. Ixonia Bank was established in 1918 in Ixonia, Wisconsin; since then the Bank has grown to offer services at six locations throughout Waukesha and Jefferson Counties. To learn more about Ixonia Bank, please visit the Bank’s website at www.ixoniabank.com. Member FDIC. Ixonia Bank NMLS#: 423065

About Fundation
Fundation Group LLC is a digitally-enabled lender and credit solutions provider. The Company develops integrated small business lending solutions with banks, enabling them to deliver credit online, drive cost efficiency into their lending programs, and maximizing customer retention by providing a positive customer experience and meeting the needs of the small businesses they serve. The Company also partners with a wide array of organizations that serve the small business market in various capacities to deliver credit products to the business community nationwide. For more information, please visit www.fundation.com.

About BancAlliance
BancAlliance is a collaborative network of community banks that offers an array of lending programs and business services that might not otherwise be available to its members. The services of BancAlliance are designed to expand the impact and reach of member banks, enhancing their profitability, serving their customers in new ways, and growing and diversifying their loan portfolios. BancAlliance’s mission is to enable its members, the banks that direct its activities, to prudently diversify into high-quality loans in a manner consistent with the highest commercial and regulatory standards – without changing the nature or mission of the traditional community bank. BancAlliance has member banks located throughout our country. Learn more at www.bancalliance.com.

Media Contacts:

Ixonia Bank
Mark Wierman, President mwierman@ixoniabank.com 262-560-7352

Fundation
Barry Feierstein
barry.feierstein@fundation.com
571-418-6387


Fundation works with, not in place of, banks

Fundation works with, not in place of, banks

Tony Zerucha, March 27, 2017

 

In fintech’s early moments much of the talk was how these new tech upstarts were going to eliminate the big banks. Emboldened by spending their formative years in the midst of recession, many entrepreneurs (and rightly so) worked to create trust in finance by providing products and services from outside the system to meet the needs of those disaffected by it.

You don’t hear so much talk about the banks going away any more. In some corners you never did.

There definitely isn’t such talk at Fundation, CEO Sam Graziano said. A direct lender, Fundation commits their own capital to finance institutions’ small business loans. They hold them on their balance sheet and manage the loan servicing.

“We made a conscious decision a couple of years ago that we were going to build an enterprise that is an integrated part of the banking system,” Mr. Graziano said. “At the time the talk was technology was going to replace the banking system. You don’t hear that now.”

Many institutions find small business lending problematic as they seek to balance cost efficiency and reward. If you spend the same to underwrite both a $50,000 loan and a $250,000 loan, and there is enough business in the latter range, why swim with the small fish?

Advancements in technology make it worthwhile to work with those seeking small sums, Mr. Graziano said.

“Fundation helps banks engineer the small business lending process. We assist our partners with leveraging technology to improve service or expand their products and services.”

The recipe is a successful one. Fundation has grown over the past 18 months as they’ve cemented integrated lending partnerships with Regions Bank in the fall of 2015 and Citizens Bank last December. Expect more such announcements in the future.

Bank executives have of course noticed developments in fintech but, especially at the largest institutions, change is easier said than done, Mr. Graziano said. But they do have choices as they look to capitalize on the technology. Some develop their own capabilities while others acquire companies that have developed the technology they need. A third option is to outsource their technology needs by working with providers to develop white label solutions that work for their environment.

Before jumping in there a many factors to consider, Mr. Graziano said. First, decide how important this investment is to your business, because you are about to embark on a complex, and potentially expensive, decision-making process.

Are your expectations reasonable? Is their a justifiable ROI?

Mobile banking is growing in popularity and will serve some needs, but Mr. Graziano said he has yet to hear from one mobile banking provider who is delivering everything customers want to do via mobile. He sees customers mostly wanting to conduct more routine transactions through their mobile devices.

“For the more emotional decisions like borrowing and wealth management people want to talk to someone,” Mr. Graziano said.

But not all aspects of wealth management, Mr. Graziano explained. He sees advisors losing huge fees through systematic robo advisory services as customers move to lower cost investment vehicles such as ETFs. Some aspects of mortgages, insurance and deposit accounts are other areas that can be automated.

“I also think biometrics are one of those trends where you are going to see a lot of change happen,” Mr. Graziano continued. “People have to remember hundreds of passwords. Biometrics create a more convenient way for consumers


Fundation Secures Credit Facility from MidCap Financial

Fundation Secures Credit Facility from MidCap Financial
Additional Credit Facility Provides Funding to Support Acceleration of Company’s Growth
Business Wire
21 March 2017

NEW YORK--(BUSINESS WIRE)--Fundation Group LLC, a leading digitally-enabled lender and credit solutions provider, today announced that it has secured an asset backed credit facility from MidCap Financial, a leading specialty finance firm focused on the middle market. This credit facility meaningfully enhances Fundation’s capacity to extend credit to small businesses across the United States.

Sam Graziano, CEO of Fundation said, “We are thrilled to add another world-class institutional investor to our capital base. Our new relationship with MidCap provides us with substantial new lending capacity and diversifies our funding sources, allowing us to strengthen our competitive position in the small business lending market.”

Fundation focuses on delivering credit to small businesses through various forms of strategic partnerships, including banks, other financial institutions, and various service providers to the small business market. Fundation currently has strategic partnerships with Regions Bank, Citizens Bank, the BancAlliance community, the Minority Business Development Agency and a host of other partners.

”We are excited to begin this new relationship with Fundation. Fundation has built an excellent business, with a unique approach to providing credit to small businesses. We look forward to continuing to grow and evolve our relationship with Fundation,” said Michael Cheng, Managing Director of MidCap Financial Services, LLC.

Fundation, majority-owned by New York based private equity firm Garrison Investment Group, retains the vast majority of loans that it originates on its balance sheet. In August 2016, Fundation secured a $100 million asset backed credit facility with Goldman Sachs Bank USA.

About Fundation

Fundation Group LLC is a digitally-enabled lender and credit solutions provider. The Company develops integrated small business lending solutions with banks, enabling them to deliver credit online, drive cost efficiency into their lending programs and maximize customer retention by providing a positive customer experience and meeting the needs of the small businesses they serve. The Company also partners with a variety of organizations that serve the small business market in various capacities to deliver small balance commercial credit products. For more information, please visit www.fundation.com.

About MidCap Financial

MidCap Financial is a middle market-focused, balance sheet lender that provides debt solutions to companies across all industries. The company’s subsidiary, MidCap Financial Services, LLC is headquartered in Bethesda, MD, with regional offices in Atlanta, Charlotte, Chicago, Los Angeles, New York and San Francisco. The company focuses on the debt needs of the middle market in five areas:

• General Asset-Based: working capital loans collateralized by third-party accounts receivable, inventory, and other assets;
• Leveraged Finance: cash flow based loans to Financial Sponsor backed companies;
• Life Sciences: financing for venture backed and micro/small cap pharmaceutical, biotech, and medical device companies;
• Lender Finance: loans provided across the consumer and commercial finance sectors; and
• Real Estate: loans for the acquisition, refinance and recapitalization of healthcare and commercial real estate properties.

MidCap Financial refers to MidCap FinCo Limited, a private limited company domiciled in Ireland, and its subsidiaries. MidCap Financial is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management, pursuant to an investment management agreement between Apollo Capital Management, L.P. and MidCap FinCo Limited. References to MidCap Financial prior to January 2015 are to its predecessor, MidCap Financial, LLC.

Additional information about MidCap Financial can be found at www.midcapfinancial.com

Contacts
Media:
Fundation
Barry Feierstein
barry.feierstein@fundation.com
571-418-6387
or
MidCap Financial
David Moore, 301-760-7600
dmoore@midcapfinancial.com


Where the money is: A small business lending gap

Washington Business Journal
By Andy Medici
3 March 2017

 

Martine Rostan had won a new contract.

Her company, Silver Spring-based Professional Business Interiors LLC, has helped firms pick furniture and lay out their new offices for more than 20 years. She needed a loan to purchase furniture as her latest client, a federal agency, would only pay once the contract was fulfilled.

So, she went to an online lender, Fundation. In her experience, traditional banks took too long to get back to her, and their answer might have been no. In that time, the client may have taken its business elsewhere. The Fundation dollars took just a few days.

“You only can get funding when you get the order,” Rostan said. “And when you get the order, you don’t have time to go to a bank for funding.”

She’s encountered online lenders that were less than clear about their loans or charged exorbitant rates. Fundation, she said, was transparent about both, and she walked away happy.

It’s a growing sentiment. In recent years, Greater Washington has seen a wave of community banking consolidation — conditions that could spell trouble for small businesses looking for loans at lower rates than those charged at national bank brands. It’s caused smaller businesses to increasingly turn to alternative financing, including equity sales and online lenders such as New York-based Fundation.

A shrinking pool

At the heart of this is the wave of banking industry consolidation.

In 1992, there were 11,463 banks across America, according to the Federal Deposit Insurance Corp. That shrunk more than half to 5,170 by 2016. Locally, there were 70 banks headquartered in the region in 1999. That was halved to 36 last year.

Much of the consolidation can be attributed to survival and better prospects for growth, especially thanks to increased regulations since the Great Recession that industry leaders say have weighed more heavily on smaller banks with fewer resources. Many banks retrenched a bit in the wake of the financial crisis, while others have since been absorbed.

And small business loan amounts, at least in Greater Washington, dipped last year. Banks loaned $290 million to small businesses in fiscal 2015, but that slipped to $240 million in fiscal 2016, according to the Small Business Administration. That was lower than fiscal years 2012 and 2013.

As banks become larger, the amount of overhead needed for each loan is the same regardless of the loan’s size, which means the banks gravitate toward larger loans, according to Sam Graziano, CEO of Fundation.

Fundation is a direct lender that partners with banks to provide the small business loans the banks cannot or are unable to do themselves, Graziano said. Banks often refer borrowers to Fundation, which can make the loans while keeping that small business customer at the partner bank.

While banks meet about 90 percent of the demand for small business loans from $250,000 to $500,000, they fall short on the smaller loans, according to Graziano. There is about $80 billion in demand for small business loans less than $250,000, and banks only fill about $52 billion, he added. Three-quarters of Fundation’s loans are for $150,000 or less, he said.

Another factor that could have slowed small business lending is the historically low interest rates that have lasted for prolonged periods. They make the profit margins on small business loans razor thin, making banks even more hesitant to lend nowadays.

“It’s rarely, if ever, because they don’t want to,” Graziano said. “It’s always been a challenging thing for banks to do small business loans.”

And yet, demand grows

He said the problem hits the youngest businesses the hardest.

Those without a long-term credit profile or those in service industries, such as restaurants, construction, florists or even nail salons, might fail a typical bank underwriting test. But some online lenders use their own private capital, which comes with a different level of underwriting. Fundation said it tries to provide transparent loan terms so businesses know what they're paying across the loan's lifetime.

“There is a really broad ecosystem of companies that are trying to serve the unmet need for capital from the small business market,” Graziano said.

Another funding source has been peer-to-peer lending and other digital lenders that are targeting equity in a business — much like the venture capital community, but on a smaller, more informal scale, said Anirban Basu, economic consultant and CEO of the Sage Policy Group. Essentially, small businesses can get funding by giving up a portion of the equity in their business.

“It’s not so much about lending to these emerging businesses. It’s taking an equity stake in them — and not debt,” Basu said. “You are buying into an idea.”

But Basu also thinks community banks are doubling down on efforts to build up their small business lending. The current loan crunch in that niche, he said, is mostly a holdover from the financial crisis, and small banks are now trying to diversify their portfolios.

“Many banks are working very hard to migrate their loan portfolio from real estate toward commercial lending,” he said. “And many banks want to be aligned with a rapidly growing businesses.”

That goes for a few larger banks, too, who remained some of the region's top small business lenders in 2016. Brian Smith, senior vice president of small business lending at Capital One Financial Corp., said the company has created an online loan application system where small business owners get an answer within 24 hours.

“The big thing that we found is that many small business owners care how long it takes to get an answer as the absolute criteria,” Smith said. “We are trying to address that situation. We are trying to make it easier.”