Banker’s Guide to New Small Business Finance The Wiley Finance series contains books written specifically for finance and investment professionals as well as sophisticated individual investors and their financial advisors Book topics range from portfolio management to e-commerce, risk management, financial engineering, valuation and financial instrument analysis, as well as much more For a list of available titles, visit our Web site at www.WileyFinance.com Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding Banker’s Guide to New Small Business Finance Venture Deals, Crowdfunding, Private Equity, and Technology CHARLES H GREEN Cover image: © iStock.com/hidesy Cover design: Wiley Copyright © 2014 by Charles H Green All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with a professional where appropriate Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002 Wiley publishes in a variety of print and electronic formats and by print-on-demand Some material included with standard print versions of this book may not be included in e-books or in print-on-demand If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com For more information about Wiley products, visit www.wiley.com Library of Congress Cataloging-in-Publication Data: ISBN 978-1-118-83787-0 (Hardcover) ISBN 978-1-118-94086-0 (ePDF) ISBN 978-1-118-94085-3 (ePub) Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 This book is dedicated to the tireless women and men who perform the detailed tasks required to deliver financing to small businesses To all those lenders and brokers who engage in countless conversations, answer thousands of questions, and drive hundreds of miles, and whose work takes them to diverse places like dry cleaners, convenience stores, doughnut shops, mills, loading docks, funeral homes, dentist offices, manufacturing plants, highway motels, and every other door on Main Street An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill —Dr Clayton Christensen Contents Figures and Tables xi Preface xiii Acknowledgments xix About the Author xxi PART ONE Survey of Funding Small Business CHAPTER How Small Businesses Are Funded Defining Small Business ABCs of Small Business Funding Usual Suspects Providing Business Capital The Rise of Alternative Financing CHAPTER Elusive Nature of Bank Funding Risk Appetite Is an Oxymoron Source of Bank Funding Limits Its Use Small Business Credit Is Difficult to Scale Loan and Bank Size Are Inversely Related CHAPTER Capital Market Disruptions, Post-2008 Didn’t Anyone See Bubble Coming? This Time Was Different Where Did Main Street Funding Go? SBA—Main Street’s Federal Bailout? 3 10 12 15 16 17 19 20 23 23 25 29 30 vii viii CONTENTS Supply versus Demand—Did Anyone Ask for a Loan (and What Was the Answer)? Post-Crisis Reflections on Financial Regulation 33 37 PART TWO A Perfect Storm Rising CHAPTER A Paradigm Shift Created by Amazon, Google, and Facebook Amazon Creates Digital Trust Who Answered All Those Questions Before? Your Opinion Is (In)valuable How Do These Changes Affect Small Business Lending? CHAPTER Private Equity In Search of ROI The Fed’s Low Interest Policy and the Effects on the Private Investor Wall Street Isn’t Main Street First Buy In, Then Invest Up A Cautionary Note about a 72 Percent APR CHAPTER First Change the Marketplace, Then Change the Market Old Thinking/Technology Can Stifle Credit Morality and Money The Unintended Consequences of Old Law Capital Markets Go Digital Pattern Recognition—Data Is the Game Changer Different Processes and Different Views Crowdfunding versus the Crowd That Got Funding The Rise in Alternative Paths to Source Funding Billions Went Missing and No One Noticed? 43 45 46 49 51 54 59 60 60 62 67 71 72 78 79 81 82 84 86 88 89 PART THREE Digital Dynamics in Small Business Funding CHAPTER Funders and Lenders—Online Capital Providers Innovative Funding Marketplace Online Funders: Purchasing Future Receipts Online Lenders: Money from the Cloud 93 95 95 97 106 What Innovation Means for Bank Lending 187 The days of relying on such simple measurements are winding down rapidly as several information service companies are developing behavioral analytics, to provide more detailed predictive profiles for individuals that will offer an accurate assessment of a person’s character according to customized traits How will this work? From the information that’s already being collected in multiple places where we shop, ship, chat, write, correspond, read, browse, donate, support, and even where we’re governed ProPublica provides a glimpse of the kind of data and sources that are already being collected in a 2013 article titled “Everything We Know About What Data Brokers Know About You.”4 It’s been estimated that more than 1,600 different data bits can be collected on individuals, including basic identification, physical traits, personal interest, job history, romantic interests, hobbies, and whether they’re left or right handed Obviously, bankers will steer clear of any assessment that uses sensitive data points that one might construe as discriminatory, but other data that has never been quantified can make a meaningful contribution to their analysis When will these models be available? One has already launched from the Entrepreneurial Finance Lab, which is the outgrowth of a Harvard doctoral project.5 The enterprise started using a psychometric test to predict future behavior that has been deployed in 16 countries where there are no credit bureaus To date, over 70,000 small businesses have taken the test in an effort to qualify for credit The article details how this model asks questions that don’t necessarily have a right answer; using an algorithm, it aims to predict whether an individual is likely to default based on how the answers relate to one another For example, to assess their sense of personal control over outcomes— which tends to correlate with loan repayment—respondents might be asked to rate how much they agree or disagree with the statement: “I believe in the power of fate.” Another question on risk tolerance might ask them to choose between opposing responses with equal social desirability, such as: “I plan for every eventuality,” “I’m in between,” or “Planning takes the fun out of life.” There are some unexpected findings: Optimism and self-confidence are good signs among seasoned entrepreneurs, but high levels in younger business owners not bode well, statistically And the math and reasoning questions meant to measure fluid intelligence can also assess integrity—of the loan officer Too many correct answers can reveal that an applicant was coached.6 Expect these kinds of platforms to slowly creep into banks through familiar names including Experian, Equifax, and TransUnion While they 188 DIGITAL DYNAMICS IN SMALL BUSINESS FUNDING are already providing some credit scoring models that analyze credit reports and some limited environmental data, wait for this information to be much more revealing about who to lend to and who to avoid Cash Substitutes Payments and money transfers have historically been of little interest to business lenders, who are glad to leave that to the other side of the house But the growing number of disruptive technologies facilitating the movement and storage of capital may impact lenders in the next few years Lenders will need to be able to understand and find confidence in multiple new ways that business owners generate payments and store their cash Balance sheets will begin listing new accounts and even currencies that will rarely intersect with checking accounts and other places bankers could readily confirm For example, consider two rapidly growing options for people to store value and transfer payments: ■■ ■■ PayPal: This alternative money service is well known and an early disruptive technology to facilitate the movement of payments among Internetbased retailers and their customers Without the benefit of federal deposit insurance, PayPal has millions of customers storing billions of dollars there And now, instant access to those funds is beginning to appear with retail merchants like Uber, the personal transportation service, and Home Depot, which includes PayPal as a point-of-sale payment option Bitcoin: Perhaps the oddest innovation that’s arisen in years, Bitcoin is a new digital currency created by an anonymous programmer (or group of programmers) known as Satoshi Nakamoto In a story that sounds like it must have been from a B movie, Bitcoins are “mined” from a network that releases a block of Bitcoins every 10 minutes until the finite supply of 21 million is exhausted How they derive value? Who issues, regulates, or controls Bitcoins? Actually, part of their purpose and appeal for many investors is that this currency is used entirely outside of any government Bitcoins are transferred digitally with a trailing authentication code The value is theoretically derived in a pure marketplace through the exchange among investors, outside of anyone’s monetary policy or manipulation What’s the Next Big Idea? For any readers who have been in the trenches for more than the past 20 years, these many different innovations are truly transformational And What Innovation Means for Bank Lending 189 if business lending experiences continued technological innovation like most other sectors have, the pace of change will only increase in the years ahead Clearly the shadow banking system, which is an unregulated counterpart to the regulated banking sector, is alive and growing Access to capital is getting easier, faster, and more narrowly focused on smaller niches of the broad small business market These changes are channeling new sources of funding to business owners who will enjoy a growing smorgasbord of capital sources But along with that greater access comes more accurate assessment models that might welcome—or dismiss—funding applications in record time Risk-based pricing for capital, delivered by investors rather than banks, will likely mean borrowers will be paying much more for capital, at least until there is broader competition in the market So what will be the next big idea? eBay for CRE lending? Pre-approved, self-generated SBA guarantees? Google sending you a loan check based on assessing your bill pay and e-mail? We can only speculate But what is certain is that advancements are being made daily that will rapidly change the nature of small business funding, with implications for both borrowers and funders in the years ahead Notes Anil Stoker, “The Future of Banking—and Why it Won’t Be Determined by Banks,” SmallBusiness.co.UK, www.smallbusiness.co.uk/financing-a-business/ business-banking/2347068/the-future-of-banking-and-why-it-wonand39t-bedetermined-by-banks.thtml (accessed January 2, 2014) “Fast Facts—Payday Lending,” ResponsibleLending.org, www.responsiblelending org/payday-lending/tools-resources/fast-facts.html (accessed January 6, 2014) Randal Smith, “Not Banks, but Still Lending Money and Drawing Investors,” DealB%k, August 7, 2013, http://dealbook.nytimes.com/2013/08/07/not-banksbut-still-lending-and-drawing-investors/ Lois Beckett, “Everything We Know About What Data Brokers Know About You,” ProPublica, September 13, 2013, https://www.propublica.org/article/ everything-we-know-about-what-data-brokers-know-about-you Sarah Wheaton, “Credit Score, by Multiple Choice,” New York Times, December 30, 2103, www.nytimes.com/2013/12/31/business/credit-scores-from-a-test-nota-history.html?_r=0 Ibid About the Companion Website T o support the book and offer additional resources and value, an online database of innovative lenders and service providers is available at www wiley.com/go/bankersguide (password: green14) Sources are identified by major categories, such as business lenders, crowdfunding, peer-to-peer lenders, merchant cash advance companies, and so on, consistent with the book contents The listing provides contact information and a brief description of the services provided This database has been compiled from industry sources and news accounts of companies and individuals that are available to provide a variety of funding and other financial services Download the listing in xlsx or pdf format, and be sure to check back for updates 191 Index Accounts receivable (A/R): eBay for, 154 and factoring, 152–154 future receivables purchase and sale agreement, 98, 101–103 in working capital management systems, 156–157 AdvanceMe, Inc (AMI), 103–105 Advertising, 49–51 AIG, 25, 27 Algorithmic trading, 61 Alternative financing, rise of, 12–14 See also Innovative funders Amazon, 46–49, 113, 177 American Enterprise Institute (AEI), 37 American Express, 29 American International Group (AIG), 25, 27 American Recovery and Reinvestment Act of 2009 (ARRA), 31–33 Anderson, Chris, 47 Angel investing, 62–64 Angie’sList.com, 115 Arts funding, 127 Asset financing vs working capital lending, 98 Asset-based loans (ABLs), xvi, 12–13, 152, 155, 174 Bair, Sheila, 39 Bank funding, 15–21 common requirements and criteria, 8–10 credit cards, 108 erosion of, 178–179 five Cs of credit, 8, 73, 186 innovation options in, 182–184 lending practices, 180–182 online lenders compared to, 108 opportunities for in innovative funding, 184–185 payday loans, 14, 181 screening procedures, 8–10, 72–78 Bank of America, 25, 27, 34, 35 Banking regulation/deregulation, 17, 37–41, 66, 178 Bankruptcy, 78–79 Bankruptcy Navigator Index (BNI), 113 BBVA Research, 89 Bear Stearns, 25 Behavioral analytics, 105, 187–188 BeneTrends, 159 Benna, Ted, 158 Best, Jason, 134 Better Business Bureau (BBB), 113 Bezos, Jeff, 46, 49 BitCoin, 188 Biz2Credit.com, 171 Boefly.com, 173–174 Branded credit cards, 75 Burger King, 46 Business plans, 184 193 194 Capital, sources of, 10–11 Capital distribution See Funding Capital markets, 66 Cash substitutes, 188 CDOs, 24–25, 38 Center for Responsible Lending, 181 Chapter 11 filings, 79 Character, 73, 186-188 CIFRA, 145 Citicorp, 27, 28, 34 Client targeting, 55–58 Closing process, online loans, 120–121 Cloud-based underwriting, 112–117 Coleman, Bob, 33 Collateral risk, 106 Collateralized debt obligations (CDOs), 24–25, 38 Collection agencies, 74 Commodity Futures Modernization Act (CFM), 37–38 Communication strategy for crowdfunding, 129 Community Reinvestment Act (CRA), 37 CommunityLeader.com, 144 Compliance, and equity crowdfunding, 144 Consumer choice, 46 Countrywide Financial, 25–26 Credit, bank procedures, 8–10, 72–78 See also Bank funding Credit bureaus, 78, 113 Credit cards, 75, 108, 152 Credit default swap (CDS), 24–25 Credit risk, compensating for, 119–120 Credit score misinterpretation, 73–76 Credit scores, 82–83, 113 INDEX Credit screening: for bank funding, 8–10, 72–78 behavioral analytics for, 187–188 for character, 186–188 credit bureaus, 78 digital innovation in, 82–84 FICO model, 73–76 five Cs of credit, 8, 73, 186 Small Business Financial Exchange® (SBFE), 76–78 for virtual merchants, 161–164 Credit utilization, 73–74 Crowdfund Capital Advisors, 134 Crowdfund Intermediary Regulatory Advocates (CIFRA), 145 Crowdfund Investing rules, 140 Crowdfunding, 81–82, 125–148 campaign execution, 130–132 campaign planning, 128–130 challenges to, 146–147 compliance, 144 digital intermediaries, 88–89 donors, 125–133, 148 effects on banks, 89–90 equity investing and, 140–148 growth of, 125 history of, 86–88 influencer participation for, 130 obstacles, 147–148 payment systems for, 129 peer-to-peer lending, 66–67, 135–140, 148 platforms, 129 project pages for, 129 publicity for, 130 state regulation, 143–144, 145–146 support community for, 130 texting/tweeting for, 132–133 transparency in, 142–143 Index uses and types of campaigns, 126–128, 132–133 videos for, 129 Daily payment tranfers, 97, 99 Data mining, 82–84 Data sorting, 53 Data types for credit decision scoring: government data, 116–117 metadata collection and use, 82–84 private data, 112–114 social media data, 114–116 Day trading, 61 Defaults, budgeting for, 84–86 Deregulation/regulation, 17, 37–41, 66, 178 Digital innovation See also Technological advancements and applicant screening, 82–84 funding options, 81–82 (see also Crowdfunding) by merchant cash advance companies (MCAs), 104–106 (see also Merchant cash advance companies (MCAs)) and risk management, 84–86 underwriting, 112–117 Digital intermediaries, 88–89 Digitally assisted underwriting, 112–117 Dodd-Frank Act, 20, 41, 66 Donors, in crowdfunding, 125–133, 148 Dunham, Lena, 126 eBay, 49, 113, 160 ECast, 47 E-commerce: Amazon, 46–49, 113, 177 eBay, 49, 113, 160 PayPal, 49, 162, 163–164, 188 195 Elevation Dock, 125 Emergency Economic Stabilization Act, 27 Entrepreneurial Finance Lab, 187 Entrepreneurship growth, 65 Equifax, 53, 77, 113 Equity crowdfunding, 140–148 Ethority.com, 117 Etsy, 162 Experian, 53, 113 Facebook, 51–53, 114, 115, 163 Facial recognition software, 53 Factoring, xvi, 13, 97, 151–155 Fannie Mae, 26, 39 FDIC, 80 FICO credit screening model, 73–76, 82–84 and character measurement, 186 Small Business Scoring Service (SBSS Score), 78 FICO Liquid Credit, 83 Finance, defining, 84 Financial crisis of 2008, 26–37 causes of, 37–39 timeline, 26–28 Financial literacy, Fluke, Sandra, 126 401(k) plans, 158–160 Fraud detection, 118–119 Freddie Mac, 26 FTrans.com, 174 Funding, 15–21 alternative financing, 12–14 angel investing, 62–64 applications vs approvals, 12 archaic rules, 95 banks (see Bank funding) digital paths to, 81–82 effects of technological advancements on, 54–58 marketplace innovations in, 95–97 196 Funding (continued ) MCAs, 67–69 online funders, 97–106 online lenders, 106–132 peer-to-peer lending (see Peer-to-peer lending) screening procedures (see Credit screening) and securities regulations, 80–81 sources of, 10–11 virtual, 65, 97–106 (see also Online lenders) Future receivables purchase and sale agreement, 98, 101–103 Glass-Steagall Act, 38 GoFundMe.com, 127 Gold West Financial, 27 Goldman Sachs, 29 Google, 49–51, 57, 177 Google Maps search, 113–114 Gorlin, Marc, 162 Government data resources, 116–117 Government Sponsored Enterprises (GSEs), 38–39 Gramm Leach Bliley Act (GLB), 37–38 Great Recession, 35–37, 60 Greenspan, Alan, 23, 40 Guidant Financial, 159 Home equity lines of credit (HELOCs), 36 Homefunded.com, 127 Housing and Urban Development (HUD), 37 Housing bubble, 23–29 Hyland, Joe, 156 Independent sales originators (ISOs), 107, 109–110 IndieGoGo, 88 INDEX IndyMac, 26 Influencer participation for crowdfunding, 130 Innovative funders, 66–69 common features of, 96–97 merchant cash advance (MCA) companies, 97–106 (see also Merchant cash advance companies (MCAs)) online lenders, 109–132 (see also Online lenders) Innovative lending, defining, 178 Institutional structure, 17–18 Interest rates, 119 Internet privacy, 49–51 Invest Kansas Exemption, 142–143 IRAs (individual retirement accounts), 158 JOBS (Jumpstart Our Business Startups) Act, 81, 88, 140–142, 146 Johnson, Simon, 38 JP Morgan Chase, 25 Kabbage.com, 162–164 Karp, Nathaniel, 89–90 Kickstarter.com, 131–132, 133–134 Kiva.com, 135 Klein, Candace, 145 Klout.com, 115 Koplewicz, Josh, 185 Lehman Brothers, 27 Lending data See Data types for credit decision scoring Lending innovation, defining, 178 Lending technology, 54–58 LendingClub.com, 67, 135–140, 185 LendingTree.com, 167 Lendio.com, 172–173 Liar loans, 24 Index Licensing board information, 114 Link farms, 170 LinkedIn, 62, 115 LiveOak Bank, 54 Loan applications: approval process, 17–18 common requirements, 8–10 screening procedures (see Credit screening) Loan brokers, 168–174 link farms, 170 value-added resources, 170–174 Loan defaults, budgeting for, 84–86 Loan servicing, 121–122 Loan size vs quality of financial information, Loan status migration, 138–139 Loan terms, 15 Loan to bank-size relationship, 20–21 The Long Tail (Anderson), 47 Mark to market, 30 Marketing for clients, 109–110 Marom, Dan, 126 Massolution.com, 88 MCAs See Merchant cash advance companies (MCAs) McDonalds, 46 Member Payment Dependent Notes, 138 Merchant cash advance companies (MCAs), 67–69, 97–106 AdvanceMe, Inc (AMI), 103–104 challenges to, 106 controversial terminology, 101–104 daily payment transfers, 99 risks of, 98–99, 101 vs traditional banks, 104–106 transaction costs, 99 typical terms scenario, 100–101 197 Merchant payment processors, 113 Merrill Lynch, 27–28, 61 Metadata, 82–84 mGive.com, 133 Migicovsky, Eric, 133–134 MobileCause.com, 133 Monitored lines of credit See Asset-based loans (ABLs) Morgan Stanley, 29, 34 Mortgage crisis, 23–29, 37–38 Mortgages, residential, 167 Multitiered pricing, 96–97 NAICS codes, 4–6 nCINO, 54–55 North American Merchant Advance Association (NAMAA), 106 NOWAccount.com (NOW), 153 Obama, Barack, 53 administration, 31 presidential campaign, 126–127 Omidyar, Pierre, 154, 155 OnDeck Capital, 109, 110 Online funders: merchant cash advance (MCA) companies, 97–106 (see also Merchant cash advance companies (MCAs)) opportunities for banks as, 184–185 Online lenders, 106–132 application and screening, 110–111 closing process, 120–121 compared to MCAs, 106–107 compared to traditional bank lenders, 107–108 digitally assisted underwriting, 112–117 fraud detection, 118–119 funding sources of, 122–124 198 Online lenders (continued ) Kabbage.com, 162–164 LendingTree.com, 167 Lighter Capital, 164–165 link farms, 170 loan brokers, 168–174 loan pricing, 119–120 loan servicing, 121–122 marketing for clients, 109–110 mortgages, 167 PayPal, 163–164 revenue-based financing (RBF), 164–165 skipped/missed payments and defaults, 121–122 types of data used, 112–117 underwriting calculations, 118 for virtual merchants, 160–164 website design shifts, 186 Online merchants: Amazon, 46–49, 113, 177 eBay, 49, 113, 160 Etsy, 162 PayPal, 49, 162, 163–164, 188 Shopify, 162 Yahoo, 162 Online privacy, 49–51 Origination fees, 119 Paul, DJ, 145–146 Paulson, Henry, 27, 31, 41 Payday lenders, 14, 181 Payment options, 188 Payment systems for crowdfunding, 129 PayPal, 49, 162, 163–164, 188 Pebble Technology, 125 Pebble Watch, 133 Peer-to-peer lending, 66–67, 135–140, 148 Penn, Kal, 126 Pensions, 157–158 INDEX Pepperdine Private Capital Access Index (PCA), 11, 34–35, 184 PNC Bank, 33 Privacy, online, 49–51 Private data sources, 112–114 Project page for crowdfunding, 129 ProPublica, 187 Prosper.com, 135 Publicity for crowdfunding, 130 Pulitzer, Joseph, 87 QuickBooks data, 163 Raymond James, 29 Real estate equity, 36 The Receivable Exchange (TRE), 155 Regulation/deregulation, 17, 37–41, 66, 178 See also Securities regulations Residential mortgage backed securities (RMBSs), 38 Resources for borrowers and lenders, 168–175 for application advice, 173–174 for borrower-lender matchmaking, 172–173 for enhanced self-direction, 171–172 link farms, 170 Retirement benefits, 157–160 401(k) plans, 158–160 IRAs, 158 pension plans, 157–158 ROBS transactions, 159–160 Social Security, 157 Revenue-based financing (RBF), 164–165 Revolving line of credit (RLOC), 75–76, 108 Risk: in bank funding, 16 collateral risk, 106 managing, 84–86 199 Index Risk premiums, 119–120 Rogue lenders, 106 Rollover as Business Start-Up (ROBS), 159–160 Rubin, Robert, 41 SalesForce.com, 54, 109 Sarbanes-Oxley Act, 141 Savings & loan associations (S&Ls), 37 Scalability, in bank funding, 19–20 Schumer, Charles, 26 Search engines, 49–51 Securities regulations, 80–82, 140–142 Shopify, 162 Small business: defining, 3–8 size standards, 5–6 Small Business Administration (SBA), 3–4 lending and investing programs, 31–32, 174 Size Standards Methodology, subsidies, 33–34 Small Business Financial Exchange® (SBFE), 76–78 Small Business Jobs Act, 31, 33 Small Business Scoring Service (SBSS Score), 78 Social media data, 114–116, 163, 165 Social Security, 157 SoMoLend.com, 145–146 Sources of capital, 10–11 Starbucks, 177 Start-ups, growth of, 65 Subprime mortgage crisis, 23–29, 37–38 Supply and demand for capital, 34–37 Support community for crowdfunding, 130 TALF, 28 TARP, 27, 28, 30, 31 Taulia, 156–157 Technological advancements, 45–58 See also Digital innovation Amazon, 46–49 ATMs, 45–46 eBay, 49 ECast, 47 effects on small business lending, 54–58 Facebook, 51–53 Google, 49–51 PayPal, 49 in trading, 61–62 Term Asset-Backed Securities Loan Facility (TALF), 28 Texting/tweeting for crowdfunding, 132–133 Tools for loan pricing, 119–120 Trade association memberships, 114 Trading, technological changes in, 61–62 Transparency, in crowdfunding investing, 142–143 TransUnion, 113 Troubled Asset Relief Program (TARP), 27, 28, 30, 31 Troubled debt restructure (TDR), 33 TwitPay.com, 133 Twitter, 133, 163 Underwriting, cloud-based, 112–117 United Parcel Service (UPS) merchant accounts, 114 U.S Department of Agriculture (USDA) loans, 174 Vann-Adibé, Robbie, 47 Vantage score, 113 Venture investing, 62–64 Videos for crowdfunding, 129 200 Virtual lending See Online funders; Online lenders Virtual merchants See Online merchants Wachovia Bank, 27 Wall Street, equity market changes to, 60–62 Walmart, 48, 49 Washington Mutual, 27 WebBank.com, 136–138 Website design shift, 186 INDEX Wells Fargo, 27, 35–36 Wendy’s, 46 Working capital lending vs asset financing, 98 Working capital management systems, 156–157 Yahoo, 162 Yelp.com, 114 Yodlee.com, 122 Zillow.com, 115 Zopa.com, 135 WILEY END USER LICENSE AGREEMENT Go to www.wiley.com/go/eula to access Wiley’s ebook EULA ... knowledge and understanding Banker’s Guide to New Small Business Finance Venture Deals, Crowdfunding, Private Equity, and Technology CHARLES H GREEN Cover image: © iStock.com/hidesy Cover design: Wiley... employees, to determine whether they are officially deemed a small business Survey of Funding Small Business As defined by the SBA’s Table of Small Business Size Standards, small to some companies... greater business community is how the banking sector views commercial lending and the associated risk of funding a small enterprise And to be fair to small business owners, where did they learn to