Flushing Bank Announces Expansion of Small Business Lending Efforts

UNIONDALE, N.Y., Feb. 01, 2017 (GLOBE NEWSWIRE) -- Flushing Financial Corporation (the “Company”) (Nasdaq:FFIC), the parent holding company for Flushing Bank (the “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. Flushing Bank’s small business customers now have the ability to apply online by visiting flushingbank.com/small-business-loans and may receive approval in as little as one to three business day.

John R. Buran, President and Chief Executive Officer, stated: “We have been serving the small business market for over ten years. Our participation in the Small Business Loan Program allows us to expand our offering to better serve the rapidly evolving small business lending market.”

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.

Sam Graziano, CEO of Fundation, said, “We are invested in driving the success of small business owners and partnering with Flushing Bank to do just that. The program we have created with our partner BancAlliance is unmatched within the industry, empowering community banks like Flushing 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 Flushing Financial Corporation

Flushing Financial Corporation (Nasdaq:FFIC) is the holding company for Flushing Bank®, a New York State-chartered commercial bank insured by the Federal Deposit Insurance Corporation. The Bank serves consumers, businesses, professionals, corporate clients, and public entities by offering a full complement of deposit, loan, and cash management services through its 19 banking offices located in Queens, Brooklyn, Manhattan, and Nassau County. As a leader in real estate lending, the Bank’s experienced lending team creates mortgage solutions for real estate owners and property managers both within and outside the New York City metropolitan area. The Bank also operates an online banking division, iGObanking.com®, which offers competitively priced deposit products to consumers nationwide. Additional information on Flushing Bank and Flushing Financial Corporation may be obtained by visiting the Company’s website at http://www.flushingbank.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.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Press Release that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as "may", "will", "should", "could", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "forecasts", "potential" or "continue" or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements.

Contact:
Maria A. Grasso
Senior Executive Vice President, Chief Operating Officer
Flushing Bank
718-961-5400


Fundation Review: Best Alternative Lender for Working Capital Loans (3rd Consecutive Year)

Our 2017 research and analysis of alternative lenders leads us to again recommend Fundation as the best alternative lender for working capital loans. We chose Fundation from dozens of alternative lenders. To understand how we selected our best picks, you can find our methodology and a comprehensive list of alternative lenders on our best picks page.

Why Fundation?

Fundation offers an easy application and approval process, simple loan terms and impressive customer service. Here is a breakdown of why it's our best pick.

Application and Approval Process

Applying for a loan with Fundation is quick and simple. The application can be completed online in less than 10 minutes. In addition to asking the basics about you and your business — name, address, email address, social security number, phone number, etc. — Fundation requests a few other details up front to help determine if you have a reasonable chance of being approved for a loan, including:

    • What your business does.
    • How long the business has been open.
    • Annual sales.
    • Annual business profit before taxes.

Based on that information, Fundation provides an instant profile analysis that includes how much of a borrowing risk businesses in your industry are, whether the amount of time you have been in business meets the company's guidelines and how your business profit before tax compares with other, similar businesses.

Moving forward, Fundation's online application asks you a number of other questions, including:

  • The type of legal entity your business is.
  • The percentage of the business you own.
  • How you plan to use the money.
  • If your business has any outstanding debt.
  • How many employees you have.
  • Whether you own or rent your primary office space.
  • If you have property or liability insurance.
  • The type of benefits you offer your employees (health, retirement, etc.).
  • The value of your personal bank and retirement accounts.
  • Household income.
  • Annual charitable giving.
  • If you have personal life insurance.

Fundation's proprietary application software then automatically captures additional information from credit, public-record and government-database sources in order to see if you might be a good fit for a loan. The software provides real-time, interactive feedback so you know where you stand. Based on this data, Fundation can give you a preliminary decision within minutes.

Businesses that get preliminary approval then work with a loan specialist, who gathers more specific financial data. Among the items Fundation will ask to see are three months of bank statements, a debt schedule for any outstanding debt, two years of tax returns and year-to-date financials. You have the option of sending this information to Fundation, or letting the company's system electronically retrieve these documents directly from the IRS and your bank.

The loan specialist also talks with you to get a better understanding of your business and how it operates. The specialist wants to get the "story" of your business, so he or she can advocate on your behalf if an underwriter has questions. We like that these specialists take the time to put some context to your financial info. We didn't see this type of personal attention with many of the other lenders we examined.

An underwriter then reviews the application and financial data and makes a final approval decision. The underwriting process typically takes about 24 hours, which is faster than some of the other lenders we investigated. If you're approved, the company emails you loan documents to sign. Once signed, the money is typically deposited into your account the same day.

Who Qualifies

There are a wide variety of variables that determine which businesses qualify for loans. The business's profitability, how much debt it has, how much money you need and what it will be used for are all taken into consideration.
While there are no hard-and-fast rules about who gets approved, there are several minimum requirements that must be met before you can even be considered. You must:

  • Have been in business at least two years.
  • Have at least three employees.
  • Have annual revenue of at least $100,000.
  • Have personal credit above 600.

We found it especially useful that Fundation clearly defines its minimum requirements; some of the other lenders were a little vague about theirs.

Loan Terms

Fundation offers conventional fixed-rate loans. This means that the interest rate remains the same for the entire length of the loan, regardless of whether market conditions change. We found it appealing that you know exactly how much the loan will end up costing you from the beginning. Some of the other lenders we looked into had variable-rate loans, which could end up costing you a lot more than you were envisioning at the start.

Fundation offers loans between $20,000 and $500,000. The money can be used for a variety of purposes, including working capital, business expansion and inventory purchases.

Since each business receives different loan rates, it is impossible for us to say how much a loan will cost you. However, Fundation's annual percentage rates (APR) range from 7.99 to 29.99 percent. Fundation was one of the few lenders we examined that even provided an APR range. The total APR rates include origination and closing fees.

Repayment terms are between one and four years. Shorter terms are for working-capital and cash-flow-management loans, while longer terms are for loans for business growth and expansion purposes.

To repay the loan, borrowers make fixed-amount payments twice a month. The payment is automatically deducted from your bank account, which helps ensure you pay on time each month. Depending on the terms of your loan, you're eligible to refinance after nine months of good payment history.

Fundation gives businesses the option of paying off the loan early for no additional costs. Many of the other online lenders we analyzed charged businesses a fee for repaying their loan amount early.

Customer Service

We were very impressed with Fundation's customer service. To test the type of support you can expect, we called the lender on several occasions and posed as a business owner interested in a loan.

A loan specialist, who was happy and able to answer all of our questions, immediately answered our initial call. Many of the other lenders we talked with wanted us to answer their questions — how much money we needed, how soon we wanted the money, if we were ready to apply over the phone, etc. — before addressing any of ours.

During our first call, we talked about the application process, the types of documents we would need to provide, what went into the underwriting process, how quickly we could get our money, how the repayment process worked and the types of loans offered. Our questions were answered clearly and in enough detail to make us feel confident about Fundation's processes. Some of the other lenders we spoke with gave us only one- or two-word answers that left us puzzled about their loans and how they operated.

When we made subsequent customer service calls, a friendly loan specialist answered, and spoke with us in great length about the Fundation loans, the process to get approved and repayment terms.

These loan specialists were also the only ones we spoke with who encouraged us to investigate other, alternative lenders to make sure we would be comfortable with Fundation. They explained what made their loans different and listed some specific questions we should ask other lenders. We liked that they were so confident that they had the best offering that they were willing to so far as to invite us to investigate other options.

Fundation also offers live-chat support, and is one of only a handful of lenders we looked into that made this option available. When we tested this service, our questions were quickly answered and they gave as much detail as when we spoke to the company representative over the phone.

In addition to being available via phone and live chat, Fundation loan specialists can also discuss loan options via email and an online form.

Limitations

The biggest limitation with Fundation is that some businesses might not meet the lender's minimum requirements. If your business hasn't been open for at least two years, doesn't have at least three employees and doesn't bring in at least $100,000 a year, Fundation won't even consider you for a loan. We would encourage businesses that don't meet these criteria to check out our second-place winner in this category, OnDeck, which only requires at least one year of operation and $100,000 in revenue over the past two years. If your business has been open for less than a year, you should consider our best pick for startups, Accion.


Fintech Ideas Festival Rapid Fire Emerging Tech Panel

Fundation’s CEO, Sam Graziano, spoke at the Financial Services Roundtable’s FinTech Ideas Festival on Tuesday, January 10, 2017 as a participant on the Rapid Fire Emerging Tech Panel. Other panel participants included Anil Arora (CEO of Yodlee) and Bo Lu (CEO of BlackRock-owned FutureAdvisor). The panel was moderated by Deirdre Bosa of CNBC.

Click the image below to watch the full panel.


Fundation CEO Sam Graziano to Present at Financial Services Roundtable’s Inaugural FinTech Ideas Festival on January 10, 2017

January 9, 2017 09:00 AM Eastern Daylight Time

What: Fundation Group CEO Sam Graziano will be speaking on the “Rapid Fire Emerging Tech” Panel at the Financial Services Roundtable’s inaugural FinTech Ideas Festival. The panel discussion will focus on how FinTech companies are partnering with banks to change the financial landscape and help banks meet the evolving, complex needs of their customers. The panelists will also discuss their views on the future of the FinTech Industry.

Who:
• Sam Graziano, CEO, Fundation
• Anil Arora, CEO, Yodlee
• Bo Lu, CEO, Future Advisor
• Moderator: Diedre Bosa, CNBC

Why: Fundation Group LLC is one of the nation’s leading digitally-enabled small business lenders and credit solutions providers that offers conventional term loans and lines of credit for small businesses through its banking and other strategic partnerships. Mr. Graziano will share his unique perspective on the industry and describe Fundation’s innovative approach, which has enabled it to become the leader in bank partnerships, with long-term agreements now in place with top banks and financial institutions, including Regions Bank, BancAlliance and, most recently, Citizens Bank.

When: The panel will be held in San Francisco, CA and live streamed on CNBC.com from 11:45am-12:15pm ET (8:45am-9:15am PT) on Tuesday, January 10, 2017.

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.

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


Citizens Bank Next To Take The Leap With Alt-Lender

Traditional banks are beginning to embrace their alternative lending competitors as a way to reach more borrowers and get a jumpstart on the technology and digitization behind the lending industry.

The latest bank to take part is Citizens Bank, which announced Tuesday (Dec. 20) a partnership with Fundation Group.

Fundation has emerged with a reputation to collaborate with banks, not work against them, by offering up its credit solutions and lending technologies to traditional FIs. For Citizens, this means small businesses can apply for loans and lines of credit through an online application at Citizens’ website, with Fundation powering the technology that enables the online application and a faster process. According to the companies, applicants can see approval within a few minutes and get their cash within three business days.

Fundation will also offer up its own lending services to SMEs that don’t meet Citizens’ requirements.

“We know that time is valuable for our business banking customers,” said Citizens Bank Head of Business Banking Chris Ward in a statement. “This simple digital application process will be quicker and more efficient for customers making smaller requests for credit, enabling them to get back to running their businesses sooner.”

“We believe that our new, automated lending platform will complement the tailored, advice-based services available through relationship managers and bankers to our customers who need larger loans or have more complex needs, such as cash management,” Ward added.

The partnership with Fundation mirrors an initiative in the U.K. that sees traditional lenders guide SMEs that have been rejected for a bank loan to an alternative lender to fill cash flow gaps.

The deal with Citizens follows recent partnerships inked between Fundation, Regions Bank and the Department of Commerce’s Minority Business Development Agency. The company also recently secured a $100 million credit facility from Goldman Sachs, it added.


Citizens Bank to Add Digital Lending Capability for Small Business Customers

Collaboration with Fundation will expedite and expand small business loan approvals

PROVIDENCE, RI – Citizens Bank today announced that it will offer digital lending capabilities to small business customers through a collaboration with Fundation Group LLC, a leading digitally-enabled lender and credit solutions provider to regional and community banks. This continues Citizens’ strategy of leveraging innovative digital technologies that create better end-to-end customer experiences. The service is expected to be available in mid-2017.

The added capability will enable small businesses to apply for loans and lines of credit through a simple online application at citizensbank.com. In most cases approval is provided within minutes, and loans are funded in as little as three business days. Additionally, Fundation will offer credit to some customers that do not meet Citizens’ credit guidelines, helping the bank to serve more of its small business customers’ credit needs.

“We know that time is valuable for our business banking customers. This simple digital application process will be quicker and more efficient for customers making smaller requests for credit, enabling them to get back to running their businesses sooner,” said Chris Ward, head of business banking for Citizens Bank. “We believe that our new, automated lending platform will complement the tailored, advice-based services available through relationship managers and bankers to our customers who need larger loans or have more complex needs such as cash management.”

Sam Graziano, CEO of Fundation, added, “At Fundation, our mission is to enable our strategic partners to serve their small business customers more efficiently and more broadly. This collaboration does exactly that. The combination of Citizens Bank’s powerful customer-facing brand and our digital lending platform will allow us to collectively serve more customers with best-in-class products and a best-in-class customer experience.”

Citizens Bank recently announced a partnership with digital wealth management service SigFig, to offer customers integrated banking and digital investment services starting in early 2017.

Fundation recently announced strategic partnerships with Regions Bank, the BancAlliance community bank network, and the Department of Commerce’s Minority Business Development Agency. Fundation also recently secured a $100 million credit facility from Goldman Sachs, which bolsters its capacity to extend credit to small businesses across the United States through its banking and other strategic partnerships.

The digital lending service is subject to the negotiation of a definitive agreement between Citizens Bank and Fundation.

About Citizens Financial Group, Inc.
Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $147.0 billion in assets as of September 30, 2016. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. In Consumer Banking, Citizens helps its retail customers “bank better” with mobile and online banking, a 24/7 customer contact center and the convenience of approximately 3,200 ATMs and approximately 1,200 Citizens Bank branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Citizens also provides wealth management, mortgage lending, auto lending, student lending and commercial banking services in select markets nationwide. In Commercial Banking, Citizens offers corporate, institutional and not-for-profit clients a full range of wholesale banking products and services including lending and deposits, capital markets, treasury services, foreign exchange and interest hedging, leasing and asset finance, specialty finance and trade finance. Citizens operates through its subsidiaries Citizens Bank, N.A. and Citizens Bank of Pennsylvania as Citizens Bank, Citizens Commercial Banking and Citizens One. Additional information about Citizens and its full line of products and services can be found at citizensbank.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.


Regions Eyes Small Business Loans in Latest Tech Deal

Regions' latest partnership will increase loan opportunities for underserved businesses.

A unique partnership between Regions and two other companies could be the start of even bigger things for the company.

A partnership that has been ongoing for more than a decade between Regions Bank and TruFund recently became the latest avenue for Regions to tap into financial technology.

Regions (NYSE: RF), TruFund and online lender Fundation Group struck a deal to work together on a new initiative to provide small-dollar loans for underserved small businesses.

It’s a deal executives say could lead to even more tech-based offerings from Birmingham’s largest bank.

The new agreement will allow small businesses that may not be eligible for traditional bank loans to have access to small loans for working capital or expansion activities. Using Fundation’s platform, small businesses could access funds in as little as 48 hours from their applications.

“This is taking something we were already doing and bringing it into the digital age,” said Joe DiNicolantonio, head of Regions Business Banking. “We have worked with TruFund for over 10 years now, and this was a great way to bring a service to our customers that was much-needed.”

Regions has been working with TruFund since 2002, and inked its deal with Fundation in October of last year.

While Regions doesn’t have a public dollar target for the program, the company told the Birmingham Business Journal that the intent will be to provide microloans between $15,000 and $50,000 through the agreement. Fundation will make the loans, with Regions purchasing them on the back end. TruFund does not currently offer those smaller dollar loans.

DiNicolantonio said the new agreement gives Regions the ability to strengthen small businesses in the communities in which the bank serves.

“What this relationship does is give more access to capital in the communities we serve, and meets the needs of these small businesses,” he said.
DiNicolantonio said when the bank finalized a deal with Fundation last fall that 20 percent of small business owners in the U.S. are already turning to online lenders to meet their credit needs.

In addition to expanding loan product offerings and methods of delivery for businesses, DiNicolantonio said the partnership will also cultivate long-term revenue and loan growth opportunities for Regions.

Boosting revenue and loans is something analysts have regularly said is important for Regions, which has been able to boost its profits in recent years largely on the strength of reduced expenses.

The agreement is one of many ways Regions and other Birmingham banks have embraced financial technology and online lenders. BBVA, the parent company of Birmingham’s BBVA Compass purchased Simple - a major player in the online banking industry - in 2014, and recently took a 29.5 percent strategic partner stake in Atom, the UK’s first mobile-only bank.

Financial technology has been one of the methods banks such as Regions and BBVA Compass have been able to grow outside of Alabama, and reach a broader customer base.

DiNicolantonio said all of the deals similar to this one are made with customer demand in mind.

“We did a lot of due diligence with this,” he said. “Just like everything else, this came about after we identified a need. We spent months looking at data and what the need was and where we could go with it.” DiNicolantonio added that he believes the success of this new partnership might clear the way for more such technology-driven financial products with the bank.

“We do think this is a progression and something that can be leveraged into something bigger,” he said.

Stephen Yoder, assistant professor at the University of Alabama at Birmingham and of counsel at Balch & Bingham, said he thinks you’ll see more similar agreements pop up in the banking world.

“When gathering deposits was more important to banks in the early 2000s, banks had arrangements for brokered deposits. Now that loans are more important and there are a growing number of online, nonbank lenders, it makes sense that banks would join forces with them to find borrowers,” he said. “The fintech companies need the banks because they usually lack capital.”


Regions Bank, Fundation and TruFund Work Together to Provide Loans to Underserved Small Businesses

September 14, 2016 09:00 AM Eastern Daylight Time

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Regions Bank, together with Fundation Group LLC, a digitally-enabled small business lender, and TruFund, a Community Development Financial Institution (CDFI), today jointly announced a first-of-its-kind agreement to provide small dollar loans to underserved small businesses.

Through this unique and collaborative agreement among a regional bank, a digitally-enabled lender and a CDFI, underserved small businesses that may not be eligible for traditional bank loans will have the opportunity to apply for small dollar loans for working capital and expansion activities.

This agreement allows more small businesses to benefit from TruFund’s hands-on approach to helping small businesses. Using the online lending expertise of Fundation, small business clients will have increased availability and access to funding, in as fast as 48 hours from application. Regions has also pledged to provide capital, assisting both TruFund and small business customers.

“Regions has worked with both TruFund and Fundation in the past, and bringing these two organizations together is a natural fit. It expands both of their abilities to meet client needs and provides more access to credit for small businesses,” said Joe DiNicolantonio, Executive Vice President, Commercial Banking at Regions Bank.

Sam Graziano, CEO of Fundation Group LLC, said, “This program is exactly what Fundation is built for, combining our technology and small business lending expertise with the capabilities of our partners to expand access to capital for small businesses.”

In 2015, Regions and Fundation announced an agreement that expanded both companies’ abilities to provide credit to small business borrowers.

“This unique partnership will provide small business owners with an affordable source of microloan capital,” said James H. Bason, President of TruFund Financial services. “The way small businesses borrow money is being transformed, with faster and easier ways to access credit, and TruFund is proud to have worked with Regions Bank and Fundation to find an innovative solution that supports economic growth and increases access to credit in the small business community.”

About Regions Financial Corporation

Regions Financial Corporation (NYSE:RF), with $126 billion in assets, is a member of the S&P 500 Index and is one of the nation’s largest full-service providers of consumer and commercial banking, wealth management, mortgage, and insurance products and services. Regions serves customers across the South, Midwest and Texas, and through its subsidiary, Regions Bank, operates approximately 1,600 banking offices and 2,000 ATMs. Additional information about Regions and its full line of products and services can be found at www.regions.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 and partners with a wide array of other 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 TruFund Financial Services

TruFund Financial Services, Inc. is a wholly independent national non-profit Community Development Financial Institution (CDFI). TruFund seeks to stimulate economic development in communities that are underserved by traditional banking institutions by providing fair and accessible capital, hands-on technical assistance and innovative solutions to small businesses and nonprofit organizations.

Contacts

Regions Bank
Mel Campbell, 205-264-4551
mel.campbell@regions.com

or

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

or

Trufund Financial Services, Inc.
Kim Carter Evans, 646-385-6946
kevans@trufund.org


Is The Future Of Alt-Lending Playing Well With Others?

No one knows who exactly first said, “if you can’t beat ’em, join ’em.”

So far as the finest minds on the subject can gather, the original phrasing was “if you can’t lick ’em, join ’em,” and it was first used in the 1940’s by anti-New Dealers who were beginning to understand that beating FDR was not in their immediate future. By the 1960’s, the phrase had taken the modern form we all know it to be —apparently permanently burned into the American consciousness by a series of advertisements for cigarettes.

However it came into popular use — it’s not a bad slogan for how 2016 has gone so far.

Sure, there have been some big outliers — the Brexit is not exactly a ringing endorsement of the concept of unity — but actually, on the whole, it’s been a good 12 months for joining up.

The biggest and most surprising change of direction on the “beating” vs “joining” question doubtlessly comes from the rapidly evolving world of online lending.

Until very recently, online banking was widely believed to be an unstoppable bank slayer. As recently as a year ago, alt lending CEOs were commonly touting as inevitable the ascension of online lenders over big and inefficient banks in regards to consumers and SMB lending.

These days the claims have gotten a bit less lofty, and victory focused — with a lot more founding CEOs sounding a bit like Fundation’s founder Sam Graziano, and touting their ability to cooperate rather than crush.

“Marketplace lending was going to change the state of banking, but that’s not really the case,” Graziano noted.

The banks, for a variety of reasons, aren’t going anywhere, which means a lot of lenders like Fundation are looking more into joining — and to connecting their lending platform to those banks customers.

But Fundation is unique in that unlike other lenders that still work to attract consumers to their own individualized offerings, Fundation is content to stay entirely in the background and work purely through their partners.

And while that approach is unusual in its segment, the SMB lending start-up obtained a $100 million asset-backed credit facility from Goldman Sachs that it plans to use to expand its capacity to extend credit to small businesses via strategic partnerships with banks. And, according to Graziano, it is a path that will likely become more common as the lending marketplace continues to evolve.

The Mounting Pressures To Be Good Cooperators Instead Of Competitors

Offering better credit scoring, faster decisions and more flexible platforms for borrowers, online lending managed to show up in one of the all-time most right places at the most right time. Consumers and small businesses needed access to credit, banks burned badly by the financial crisis weren’t offering it and various investors had no way to make any money because efforts to stimulate the economy left the interest rate at a less than inspiring zero.

Online lending, particularly its marketplace variant, solved a lot of problems at once and quickly attracted interest from all corners. By 2015 it seemed certain to many sober judges that lending was a business that technologists were going to slowly devour out from under the banks.

But a year can make a big difference, and the summer of 2016 is a very different place than the summer of 2015.

Today, investors have more options — less risky ones (more on that in a second) — and that has resulted in fewer marketplace loans getting bought.

Borrowers also have more options as credit has thawed for even sub-prime buyers.

Compounding matters, online lenders have suffered some severe reputational damage in 2016. Despite widely touted credit evaluation tools, various platforms have seen increases in default rates, in some cases at high enough rates to take a serious bite out investors’ bottom lines. That was already background noise when the Lending Club debacle unfolded — and left even a lot of online lending boosters wondering if perhaps the Wild West environment of tech-based lending had gotten a bit out of control.

And then, As Graziano notes, there is the other structural problem with the marketplace — it is way too popular a place to be.

“It’s saturated. Hundreds of platforms are going after the same pool of customers.”

So the choice was simple for Fundation: It could fight for a slice of the market that is static at best — shrinking at worst — with a massive number of competitors.

Or it could do something else.

Working Behind The Banks

Unsurprisingly, Fundation went with the option behind door number two.

“We decided to be an integrated partner of the banking system,” Graziano noted.

Similar to competitors in the space, Fundation offers loans to small businesses of $500K or less, with annual rates around 30 percent. Some of the loan is kept as a fee — but the profit center is loans held on its balance sheet from its own capital.

But Graziano describes Fundation as a “credit solutions provider” more than a lender — noting that the power of its offering is in the tools it offers around online applications and data-intensive credit algorithms to partners.

“It’s not a disintermediation story, but we can still help make more loans,” he said.

How Fundation — which eschews marketplace models for bank-partner lending — has grown is hard to measure since the firm declines to disclose lending volumes or revenues. But given billions loaned out by marketplace lenders last year, it can be safely assumed that Fundation has a lot of growing to do before it’s in the same category.

But Fundation is growing – now with credit facility from Goldman.

“We are excited to have garnered Goldman Sachs’ support. This transaction further strengthens our balance sheet and reinforces our unique position in the small business lending marketplace,” Graiziano noted.

His position is that Fundation is content to grow more slowly and steadily than the more explosive players in online lending.

Joining the banks might not be as exciting as beating them — but if it turns out to be less volatile and more broadly profitable, calm cooperation might just trump the competitive fireworks.


Goldman Inks $100 Million Credit Facility For Online Lender Fundation

The new credit line will help the firm expand its recent partnerships

 

By TELIS DEMOS
Aug. 23, 2016 9:29 a.m. ET

Another lending upstart has declared that joining banks—rather than beating them—is the way to go.

Fundation Group LLC, which makes online business loans, this week completed a $100 million credit facility with Goldman Sachs Group Inc., according to the lender’s chief executive.

The new credit line will help the firm expand its recent partnerships, including those with traditional banks, such as Regions Financial Corp. and a network of community banks, to extend loans to the banks’ business customers.

Fundation, launched in 2013, is the latest hopeful lending startup to argue that joining with banks to fund loans and find customers is a better model than seeking out customers by advertising on the web and then selling the loans directly to investors, the so-called marketplace model.

“Marketplace lending was going to change the state of banking, but that’s not really the case,” said Fundation CEO and co-founder Sam Graziano, a former investment banker at Centerview Partners and Keefe, Bruyette & Woods.

“It’s saturated. Hundreds of platforms are going after the same pool of customers,” he said. “We decided to be an integrated partner of the banking system.”

Other startup lenders, including On Deck Capital Inc., Kabbage Inc., and LendingClub Corp., have likewise joined with banks, but also seek to get borrowers to apply directly through their websites and mobile apps.

Marketplaces have had a difficult 2016, finding fewer buyers for their loans. On Deck, for example, has moved to fund more of its loans with its own capital, rather than selling them, citing tough market conditions.

Mr. Graziano describes Fundation as a “credit solutions provider” rather than a lender, providing digital tools like online applications and data-intensive credit algorithms to partners. “It’s not a disintermediation story, but we can still help make more loans,” he said.

Through its partners, Fundation offers term loans of up to $500,000 with annual rates under 30%. It keeps a small percentage of the loan as a fee, and makes money from the loans it holds with its own capital.

It isn’t yet clear whether bank-partner lenders can grow as big as marketplaces, which originated billions of loans last year. Mr. Graziano declined to provide total lending volume or revenue figures.

In addition to banks, and a small amount via its own website, Fundation partners with business-service providers such as Wolters Kluwer N.V. to make loans. It also recently began working with the U.S. Department of Commerce’s Minority Business Development Agency to facilitate lending.

Fundation is majority owned by Garrison Investment Group, a credit investment firm. Garrison was an early institutional investor in LendingClub loans. The company initially holds loans before selling them to bank partners, who in some cases agree to buy them in advance, and in other cases have an option to do so. Fundation will now place a portion of the loans it holds with Goldman in the new credit facility. The Wall Street firm will also be paid a fee in the arrangement. The loans could later be sold to investors via securitization, but there is no current plan to do so, Mr. Graziano said.