Startup Looking To Transform Lending Industry Only Works With The Cream Of The Crop

Author:
Updated:
Original:

If Google Ventures and Goldman Sachs represent the prestigious end of OnDeck’s dealings, then merchant cash advance brokers are at the other extreme. The field is rife with unsavory brokerages, staffed by many of the same people who pushed subprime mortgages a decade ago and worked the bottom rung of the stock market in the boiler rooms of the 1990s. One of them is Mario Figueroa, president of Chadwick Cashflow Advances, a brokerage in Saddle Brook, N.J. He got into high-interest small business loans in 2011, shortly after doing time in a Newark halfway house for stock fraud. OnDeck hired his brokerage to market its loans a few years ago, Figueroa says. Near his office in October, over a lunch of pizza, calamari, and tequila shots, his brand-new BMW 6 Series parked outside, he describes how an OnDeck representative offered to pay thousands of dollars for every borrower he brought in. He could hardly believe it was legal to charge such high rates, until he learned that most states’ usury laws don’t apply to business loans. His salesmen, who spend their days cold-calling businesses to offer easy money, are a colorful lot. The list of Figueroa’s past and present employees includes a former hedge fund manager convicted of stock fraud and a recovering heroin addict on probation for a motel stickup gone bad. One new hire stopped coming to work after he robbed a bank. “I saw an opportunity here,” Figueroa says of working with OnDeck. “The banking world is not using the cheap money the government is giving them to fund small businesses. Thank God we exist.” [BusinessWeek]

Related