In a series of interviews with Smarter Loans, Bluerock Options CEO David Paulson discusses all things alternative lending and FinTech. In this short clip, Jordan shares what's next for Bluerock Options and hints at new features borrowers and brokers can expect to see in the next four to six months.

Watch the video, or keep reading below for a full transcript.

SL: In terms of what’s up next for you and Bluerock Options, is there anything you want to speak to? Any upcoming launches, innovation, news?

JORDAN: Yes! So we have several feature releases in our box. We talk a lot about "the box". We created a software platform in 2016 and launched it in 2017, which basically facilitates the funding process. Really the focus is seamless, right? Seamless, seamless, seamless. Speed in communication. But the communication lies within our staff to communicate effectively. In terms of the technology, that technology is there to create seamlessness and speed to the transaction.

What [the box] does, it basically protects brokers by limiting human interaction in terms of the data that gets provided to us-that’s a benefit for the brokers. Also a benefit for the borrower. Speed allows us to process information quickly-to grab the data, process it, and provide a credit decision. And then what we have coming up is...I can’t get too much into detail with it, but there’s a few key features that are going to be available to the customer, to the borrower, that are going to allow them to get capital on demand without really having to do anything. Really, seamlessness is a key driver.

it, but it’s going to give them the access and tools to be able to customize offers at a whole new level. We already have a great customization tool for them to customize the offer for the customer, which gives them quick on-demand ability. They’re now going to have even more tools and transparency so that there’s less feedback loop, less time to get that feedback from Bluerock Options to the broker, because of that extra party in the transaction. We want to set them up as well, because at the end of the day, if we don’t focus on our brokers, then we’re also hurting our merchants because they’re dealing with the customers. They’re dealing with the business owners. We have to make sure there’s a lot of good features for our brokers as well.

the Canadian market as well?

JORDAN: Absolutely. When we roll out, we roll out to all markets.

Smarter Loans’ mission is to help Canadians make smarter financial decisions through educational resources about Canada’s most innovative financial products and connecting Canadian consumers and businesses with top financial companies in a fast, safe, and convenient way. With a focus on both personal and small business lending, Smarter Loans compiles company profiles for top financial companies in Canada, offers loan finder tools to make it easy to find the right loan, and shares educational content that promotes responsible lending in Canada. Visit Smarter Loans to learn more.

In a series of interviews with Smarter Loans, Bluerock Options CEO David Paulson discusses all things alternative lending and FinTech. In this short clip, Jordan shares his thoughts on how transparency and regulation can help protect borrowers and improve the borrowing experience.

Watch the video, or keep reading below for a full transcript.

SL: Innovation is happening on a daily, weekly, monthly basis, oftentimes at warp speed. In terms of how much room there is left to really enhance and improve the borrowing experience, what can you say about that?

calls, and that is daunting. I feel bad for them. They go out and fill out a form and their phone is ringing off the hook. And I don’t think if they knew that they would have signed up for that.

But essentially, they have to go fill out an application, right. A credit application, and they go get their bank statements, and they have to submit it. And the thing is that the brokers are generally unlicensed. It’s just unregulated. And what usually happens-not always, but often-brokers are submitting to brokers who are submitting to brokers, and you never know how many brokers it takes to get to a funder. Sometimes it’s direct. A lot of times it’s direct, actually. But their data is being passed through email in an unsecured fashion and their information is all over. It’s not tracked. It’s inefficient, it’s unsafe, and it’s how fraud happens. So I think that the industry could really grow up in that area.

I also think that the industry should just be more digitized. I think that would be something that could really help. And that’s kind of what I was talking about with the banks and APIs, things like that. I think it will happen. I think it’s going to come, and it’s going to help the borrower make more sense of what’s going on. They don’t know! They come to the transaction and they just don’t know. And I think that it would be nice to give them that transparency. Funders do, right. They do. A lot of times they’re explaining, "we do that". We explain everything that’s happening, but I’m talking about the beginning of the process, understanding what’s actually happening with their data and what’s going on. I think that’d be really nice.

Oh, actually, there’s a few things that make me equally as happy, but I think that, again, with the borrower, it’s not fair. It paints a bad picture on our industry. I would love to clean that up. Where it’s an even playing field, so brokers have to have either great relationships, a good process, or build a good rapport, as opposed to saying things that maybe bend the truth, break the truth, whatever.

an offer, and you review them and are like, "okay, the reviews are good, I’ll go through with that". And then you get a contract and the contract says Bluerock Options, for example. Google Bluerock Options reviews. See what they’re saying. And then talk to them and ask them questions, saying, "here’s what my broker told me. Here’s what’s going on. Is this what’s happening? Is this what’s happening?". Be in communication. That sets you up for success.

We’re also doing our part too, to make sure that we say, "here are the terms and conditions. You agree to this? You agree to this? You agree to this?", because we want to make sure that it’s done in fair dealings. That would be with some of the best advice that I can give to give transparency right now in the industry with how it exists.

Smarter Loans’ mission is to help Canadians make smarter financial decisions through educational resources about Canada’s most innovative financial products and connecting Canadian consumers and businesses with top financial companies in a fast, safe, and convenient way. With a focus on both personal and small business lending, Smarter Loans compiles company profiles for top financial companies in Canada, offers loan finder tools to make it easy to find the right loan, and shares educational content that promotes responsible lending in Canada. Visit Smarter Loans to learn more.

Bluerock Options CEO David Paulson joined Smarter Loans to talk all things alternative business funding. In this short clip, Jordan explains why opportunity abounds during times of disruption and downturn, and shares his advice for small business owners who are looking to pivot or start a new business.

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SL: You’ve been dealing with SMBs for over a decade now. Bluerock Options has funded so many businesses. If you had tips or advice for businesses who are looking to perhaps pivot, or people entering the field who want to become entrepreneurs or take advantage of the disruption in the market, what are some things you would impart?

JORDAN: When you have a downturn, it is the best time to enter. It’s unbelievable because what happens is the strongest are going to survive. But that means that a whole lot of businesses, unfortunately, are not going to make it. And that sucks, but it also creates opportunity for other people.

In any kind of event like this there’s winners and losers. And basically what I’m getting at is how can an entrepreneur get in there and take advantage of an opportunity? There’s no question that this is the opportunity to start a business. There is no question. If you want to pivot, you have to look. I’m sure most entrepreneurs have that natural spirit of what they feel is missing in the market. If they’re a restauranteur, like, "oh, there’s just not enough vegan places, the uptick of veganism is happening or plant-based. I had this great idea and these dishes are great."

To start a business, you can start anything. You could start small. You can have an Instagram account and your Instagram account could get out and you can have essentially delivery happening. And I mean, think about this. You can do it in your own home, set up a Square account or whatever you’re going to set up. We’re talking credit card payments, maybe even Venmo, something so simple. And you’re now delivering and you’re now building a business. You’re building branding.

And keep your expenses down. I think that’s one of the things that people learn the most. People probably learned that, "hey, I don’t know if we needed all these expenses. Look how much I learned. We’re doing the same business or a little bit less with way less expenses." I think that’s something that’s really been a very valuable lesson for business owners as well.

Smarter Loans’ mission is to help Canadians make smarter financial decisions through educational resources about Canada’s most innovative financial products and connecting Canadian consumers and businesses with top financial companies in a fast, safe, and convenient way. With a focus on both personal and small business lending, Smarter Loans compiles company profiles for top financial companies in Canada, offers loan finder tools to make it easy to find the right loan, and shares educational content that promotes responsible lending in Canada. Visit Smarter Loans to learn more.

Bluerock Options CEO David Paulson joined Smarter Loans to talk all things alternative business funding. In this short clip, Jordan explains the importance of transparency and communication and shares his #1 piece of advice for small business owners who are looking for funding.

Watch the video, or keep reading below for a full transcript.

SL: What are some things on your end that you’ve seen, perhaps mistakes that borrowers make specifically tied to maximizing the potential of different types of financing? Because oftentimes people obtain financing, but they don’t utilize it to the maximum potential.

I think some of the things that I see that are the biggest problem is the lack of communication. Be open and be in communication. That is what I would say is the best thing to maximize because if you do, you might be able to get a better offer than what you would’ve got if you didn't.

It happens all the time. We say, "okay, let’s give a nine or 10 month term or a 12 month term". And they say, "Hey, blah, blah, blah, blah, blah". And now that we've understood that, we’re able to address the risks and we’re able to maybe make an exception that we wouldn’t have been able to make otherwise. "Oh, the max approval is $100,000 but they only need $50,000? Okay, we’ll give another extra month we were never planning to give". Why? Because if they’re being financially responsible, taking less [money], maybe we’ll take some extra risks. So that’s an example of being open and transparent and sharing what their objectives are to be able to get what they want. I think that's very important.

Smarter Loans’ mission is to help Canadians make smarter financial decisions through educational resources about Canada’s most innovative financial products and connecting Canadian consumers and businesses with top financial companies in a fast, safe, and convenient way. With a focus on both personal and small business lending, Smarter Loans compiles company profiles for top financial companies in Canada, offers loan finder tools to make it easy to find the right loan, and shares educational content that promotes responsible lending in Canada. Visit Smarter Loans to learn more.

Bluerock Options CEO David Paulson joined Smarter Loans to talk all things alternative business funding. In this video, Jordan outlines three things all small business owners should do before applying for or taking a loan. Keep watching to get Jordan's expert advice for setting expectations, preparing your business, and doing your research so you can understand your alternative business funding options before you apply.

Key Takeaways

• Set realistic expectations: Understand the unique costs and risks of alternative business funding.
• Prepare your business: Maintain clean bank statements and consistent revenue to improve loan terms.
• Conduct thorough research: Compare offers, check reviews, and gather information before applying.
• Assess market rates: Be open-minded to varying market rates based on risk and business type.
• Apply strategically: Apply to trusted lenders and ask questions to ensure you get the best terms.

Watch the video, or keep reading below for a full transcript.

SL: If you were making a list for a customer or a borrower or what he or she has to sort through or go through when they’re looking for capital, what should they keep in mind?

If it is to increase your revenue and grow your business, yes, the cost matters, but the market sets the cost, right? The market creates it and sets the cost. If somebody out there says, “I’ll give it to you for 1%”, the market says 1%. If five funders come out and say, I’ll give it to you at 20%, the market is 20%. Be open-minded to what the market is and collect many offers.

I’ve seen so many times where borrowers will literally say, "it’s not 8% or 6% or 7%". Maybe they’re a one-year business, which is high risk, and they don’t realize that. And they’re like, "I’m out!". Well look, making a decision based on that and not listening to what the market says is shortsighted if you’re not considering what using the money for and how it’s going help your business. That is huge to understand. That’s the advice for people who feel what we call "rate shock", because they don’t really understand that they’re not the same thing as giving their home at 2%, 3%. People just don’t know, it’s new to them. They associate banks and loans with 3%, 4%, or 5% interest because that’s what they got with their home or that’s what they heard or that’s what they think it is. But this is a newer space. This is against smaller business, which is unpredictable revenue. So that’s number one.

personal credit, and they don’t and that’s okay. There’s products for that as well.

So you just want to apply to a couple that you feel really, really confident about, get some quotes, get some information, ask a lot of questions. I think that is some of the best thing you can do-be open-minded and just collect information. If you go into the transaction with your set expectations of how it’s going to be, you may or may not be happy depending on what it is because it’s new to you and it’s a new situation.

Smarter Loans’ mission is to help Canadians make smarter financial decisions through educational resources about Canada’s most innovative financial products and connecting Canadian consumers and businesses with top financial companies in a fast, safe, and convenient way. With a focus on both personal and small business lending, Smarter Loans compiles company profiles for top financial companies in Canada, offers loan finder tools to make it easy to find the right loan, and shares educational content that promotes responsible lending in Canada. Visit Smarter Loans to learn more.

Bluerock Options CEO David Paulson recently joined Smarter Loans to talk tech growth in alternative business funding. In this video, Jordan discusses the impact of tech giants like PayPal and Square entering the small business financing space, and offers his advice for what alternative alternative business funders need to compete against these major players.

Key Takeaways

• Tech Disruption: Companies like PayPal and Square are reshaping the small business funding market by leveraging extensive customer data and tech-driven processes.
• Importance of Speed: Rapid decision-making and fast funding are crucial in winning deals in the alternative lending space.
• Tech Integration: Implementing advanced technology is essential for scaling and remaining competitive.
• Customer Acquisition: Larger tech companies have lower customer acquisition costs due to existing databases, allowing them to offer competitive rates.
• Strategic Focus: Bluerock Options emphasizes strategic planning, data utilization, and technological adaptation to stay competitive.
• Ecosystem Impact: Large companies aim to create a complete ecosystem, integrating financial products to retain customers.

Watch the video, or keep reading below for a full transcript.

SL: There's the Canadian reliance, perhaps some would say over-reliance on big financial institutions, like big banks, and then you also mentioned earlier PayPal and Square entering the alternative financing market. Where does that situate the current players in the business financing industry, specifically in the alternative lending space? Because now you’re having these big players like PayPal and Square entering that have captive customers that have access to large throws of customer data. Is that cause for concern, is it an area of renovation? What are your thoughts?

JORDAN: As this industry matures, it’s going to be even more difficult to enter. Just like any emerging industry, as the industry develops, the inefficiencies are taken out. The players achieve scale and it’s difficult because what’s happening right now is you’re seeing a major shift in technology. Three, four years ago, to get a decision on a submission was maybe three, four or five hours, depending on what kind of shop it was. Now, it’s down to under an hour.

What do you think it’s going to be in two or three years? I think that it’s super important to recognize that if you don’t have technology in your business, to achieve scale will be just about impossible. And I think at this point it is impossible. It already is impossible, right? But if you’re doing things without using technology to make decisions…you can make a couple of shekels at a small level, but I think that you’ll be outplayed by the competition because of speed.

Speed drives our industry, we all know that. Everybody is competing-"I can get you this offer, I can get you this offer"-and a lot of times speed wins the deal. This offer may come in, it’s better and it’s just 20 or 30 minutes behind, but the other one already has contracts out. And that’s because the customer got the offer that they needed, like "I want the 50", and they’re ready to go. This was 50 at a slightly cheaper cost, but you know what, you were slow and you lost it. Going back to what you were saying, companies like Square and PayPal, the larger companies with technology, are going to have an edge up simply because of that.

The other area where Square and PayPal have a great edge is in customer acquisition. If they have these large databases of customers that they’re constantly marketing, their cost to acquire is lower and they’re able to give a much lower cost. And they already have information on these people because they’re doing business with them. So now maybe their bad debt expense is lower on these customers. These are the drivers of the business. You know, you’ve got your bad debt expense, your customer acquisition, your operating expense and your cost of capital-that’s it, and those are the main drivers, and if you're able to reduce that then you could be extremely competitive. It’s a branding thing that they get as well.

I think it is all of concern, but I’m not concerned for Bluerock Options. I'm not going to say I have zero concern-there’s definitely a level of concern-but we’re doing our thing. We have a strategy. We’ve been in the space for awhile. But if I was telling that to newer players, I think they need to figure out how to get technology. If they want to come into the industry right now, they have to figure out right out the gate how to get some kind of technology. Without the data and the ability to make those decisions, they’re just going to have to do trial and error and learn about either what they know or what their intuition tells them. But data is king. The more data you have, the better positioning you’ll have on the pricing and credit side.

I think that there is a concern in general, that everyone has to be somewhat concerned about these large behemoths of businesses. But remember, these companies, they don’t need their capital arm. They’ve made billions of dollars. The capital arm is probably a breakeven for them. When Square is putting out 9, 10, 11% interest and PayPal is doing the same, they’re barely making money. They’re doing this to create their ecosystem around their clients and say, look, we can offer you capital. We can do this. We can do that. You don’t need to ever go over to Square-you got PayPal. They're playing a different game.

For us, the companies in this industry that are just offering capital, we need to make money for our existing products. So yeah, that would be a concern in and of itself. Ecosystem is huge right now. It doesn’t matter where you are or what industry you’re in. Ecosystem is a big deal because it revolves around software and making things easy and seamless.

Smarter Loans’ mission is to help Canadians make smarter financial decisions through educational resources about Canada’s most innovative financial products and connecting Canadian consumers and businesses with top financial companies in a fast, safe, and convenient way. With a focus on both personal and small business lending, Smarter Loans compiles company profiles for top financial companies in Canada, offers loan finder tools to make it easy to find the right loan, and shares educational content that promotes responsible lending in Canada. Visit Smarter Loans to learn more.

In a series of interviews with Smarter Loans, Bluerock Options CEO David Paulson discusses all things alternative business funding and small business lending. In this short clip, Jordan explores FinTech companies in Canada and the differences between the Canadian and US lending markets, from merchants and borrower behavior to brokers, banks, and how new tech is fueling innovation in Canada.

Watch the video, or keep reading below for a full transcript.

SL: In terms of what you’ve encountered…I know in Canada, we love to do comparison narratives, especially with our neighbors down south. You can talk about clients, but also the larger landscape itself, the alternative funding scene here versus the US. Perhaps you can talk a little bit about tech as well and how FinTech fits into that. But where are we in Canada in relation to what is a very heated, alternative lending scene in the US?

JORDAN: There’s less lenders in the Canadian market, and there’s way more lenders and funders in the US market. How does that change things? I don’t know if that changes things too much. I really do think that the behavior lies-like the stacking, all that stuff-ultimately lies with the behavior of the customer or whether the broker can convince them. There’s some brokers that will convince them to take more money, which is absolutely evil because that’s not necessarily good for the business, but then there’s some merchants who will be reckless, right, in the United States. And you don’t see that as much [in Canada]. That is the big, big difference.

In terms of…when you talk about the difference of the markets, brokers in the United States demand these very large commissions and it just wasn’t developed…it doesn’t exist that way in the Canadian market. We do offer larger commissions, but there’s other companies in the Canadian market that do direct. They do direct as a big part of the business, and they do brokers as well. They don’t pay large commissions. They pay much smaller commissions. And I think that this is a very touchy subject because brokers obviously want the largest commissions, but there’s a certain point we have to cut that off and it’s not good for anybody. It’s just too much. The economics of the deal becomes too negative for the business and ends up hurting everyone.

Why does it hurt everyone? The broker makes a big commission to start, but the lifetime value of the customer is now shorter because their propensity to default is higher than the possibility of renewing that customer, and the portfolio of customers goes down. So I do think that the Canadian market is better well built in terms of how it’s structured with respect to commissions, to brokers. That’s a nice advantage that Canadian market has and I hope that never changes because it’s good for everyone. It’s good for the business. It’s good for the broker, whether they believe it or not. And it’s definitely good for the funder. The funder always wants what’s in the best interest of the business. You always want your businesses to survive and do well. If they’re doing well, you’re doing well. We’re not taking an equity stake in the company, but it’s pretty darn close. You know what I mean? Making a debt position at these size companies is very darn close to making an equity position and really betting on the company to do well.

Why does it hurt everyone? The broker makes a big commission to start, but the lifetime value of the customer is now shorter because their propensity to default is higher

FinTech side. It’s a much smaller country compared to the US of course, right? But I’m so surprised by the different innovation and technology that does exist.

The startup that I have is a software product that is going to help the lending industry. It’s going to help facilitate the funding process and take away a lot of inefficiencies, bring a lot of clarity, reduce operating expenses of lenders, and increase efficiency of what the brokers have to deal with when dealing with customers. And the borrower or the merchant is going to have a more seamless experience, not having to fill out all of these forms and get all these bank statements. It’s a product that’s going to bring efficiency and transparency to the industry.

control like 95% of the market. So their ability to increase their technology to be able to better serve business in Canada, consumer and business, through technology is going to be a lot easier because of adaptation with banks and different players like that. Because they hold the data of what the fintechs and the funding companies need, and they’re building out those APIs.

The companies that I’ve seen that are also involved in the FinTech space [in Canada] have been super, super impressive, super impressive. So I think that the Canadian market, while smaller, still proportionally has amazing innovation happening in the FinTech space for the different products. There’s so many different products that are up there. There’s risk management tools up there in the anadian space that we’ve looked at. There’s data aggregation tools that we’ve looked at in the FinTech space, and there’s much more, there’s so much more. I think that the Canadian market is right there.

Smarter Loans’ mission is to help Canadians make smarter financial decisions through educational resources about Canada’s most innovative financial products and connecting Canadian consumers and businesses with top financial companies in a fast, safe, and convenient way. With a focus on both personal and small business lending, Smarter Loans compiles company profiles for top financial companies in Canada, offers loan finder tools to make it easy to find the right loan, and shares educational content that promotes responsible lending in Canada. Visit Smarter Loans to learn more.

Bluerock Options CEO David Paulson joined Smarter Loans to talk all things alternative business funding. In this video, Jordan begins by exploring the history of small business lending in the United States and Canada. Keep watching to learn the story behind Bluerock Options® and why Jordan made the choice to expand into the Canadian market in 2016.

Watch the video, or keep reading below for a full transcript.

SL: Let’s talk about your professional journey, how it led you into business financing, and how you created Bluerock Options.

JORDAN: This journey started in 2007. It was in credit card processing. This whole space that is all over the world came from the credit card processing space, originally from one company called Advanced Via in 1999. It was in the United States and they had a patent on basically providing merchant cash advance through credit card receivables. Small business loans, the way you know it today, they didn’t exist. It was morphed into that, and I’ll get to that in a minute. But essentially there was one company.

We were referring out these clients of ours to get capital for their business. And one day we said, "hey, these commissions are great, but why don’t we do this ourselves?". So we started to do that, and I focused exclusively on that. I wanted to build-literally started the company with a desk and a phone-underwriting standards, data tracking, policies, procedures, risk management tools, controls. Everything that you would think that you need for a finance company. We weren’t a FinTech yet, but we were more of just finance, making loans or making merchant cash advances and deals. Loans weren’t even out there yet. So, we did that for a few years and built up our portfolio, and before we knew it, we said, "hey, look, let’s try to get other deals from other credit card processing companies".

To do that, we said, "wait a second, what credit card processing company is going to give us their business as a credit card processing company?". They’re going to think we’re stealing their deal. So that was right around 2012 when we created Bluerock Options, an independent company, unrelated to the credit card processing company. Bluerock Options was focusing exclusively on merchant cash advance. It was only in the US market at that point. Didn’t offer invoice factoring, collateral loans by real estate like we do today-just merchant cash advance. We started basically getting different credit card processing companies, and at this point, brokers started to come into play. Full on brokers were out there and just doing a better job than the credit card processing companies. They [merchant cash advances] were just not what they were supposed to be doing because they’re focused on credit card processing.

So then credit card processing companies became obsolete. And at this point, somewhere in the same neighborhood of plus or minus a couple of years-well, let’s go back a second to 2008 when the patent for merchant cash advance gets blown by a group of companies. Now there’s several companies offering merchant cash advance, and then in comes the ACH debit. The merchant cash advance, ACH debit, and that developed into small business loans as we know it today, where you have your large PayPal acquiring Swift, and you have your Square doing loans even though it’s out of credit card receivables all over again.

But that’s how the industry really developed. They said, "hey, look, we’re running out of companies to fund with credit cards. Let’s fund companies that don’t have credit cards too". So there you go. And then it really became a lot easier to fund businesses through ACH than take out of the credit cards. You’d be talking about delays in getting your revenue if you’re on a lockbox, or if you need it to be integrated, it just took too much time. It’s just so much more seamless.