Stephen brings a broad range of finance experience to small businesses all across the U.S. He holds a degree in political science from George Washington University and is also a graduate of its law school. Before founding Bizfi, he helped structure the purchase of large ships and ran his own law firm. In 2005, he founded Bizfi, an alternative finance company that has provided more than $1.7 billion in financing to more than 30,000 small businesses.
How did you get into the industry?
When I was practicing law, I found myself representing celebrity chefs and credit-card processors. The chefs were smart entrepreneurs and brilliant in the kitchen but not always great at managing the financial side of their business. Their cash flow was often a problem. I believed there was a way to extend financing to them based on their credit card transactions and to be repaid, automatically, from those transactions. I knew that credit card processors had a keen sense of restaurant revenue patterns. So I came to believe that there was a way to extend financing to restaurants based on their credit card transactions and to be repaid, automatically, from those transactions. I found a group of investors who believed I was on to something, and a few months later Bizfi was born.
Any emerging industry trends?
There are discussions going on now in many corners of Washington, and in many state capitals, about regulating alternative finance the way other segments of the financial services industry are regulated. I have said for many years that I believe that there is a role for regulators to play in alternative finance. I also believe that regulation should be managed on a national, rather than state, level. It’s the only way to avoid a patchwork of rules that could get in the way of small businesses getting the funding they need. The last thing we want to do is make it more difficult for small business owners.
Any industry opportunities or challenges?
Partnerships between alternative finance companies and banks will be both an opportunity and a challenge—for both sides. Banks have great distribution channels, but there are gaps in their technology that make it difficult for them to deliver funding for small businesses in a fast, efficient way. Bizfi has the technology and we are making it available to banks in a white-label format that marries well with their existing technology. Earlier this year, Western Independent Bankers (WIB), a trade association that includes more than 600 community and regional banks, named Bizfi its exclusive Premier Solution Provider for alternative finance. We also have a relationship with ProfitStars® a Jack Henry® & Associates, Inc. company (NASDAQ: JKHY). The financial institutions that utilize ProfitStars’ LendingNetwork® platform can now provide businessfinancing solutions to finance their small business clients that may not have met underwriting criteria in the past. Our goal with these partnerships—and the ones to come—will be to always make sure that 1 + 1 = 3 for all parties.
Inspiration for Bizfi, and your vision for it?
The challenges faced by restaurant owners inspired the creation of Bizfi. They traditionally have had a terrible time securing financing from traditional lenders like banks and credit unions. Bizfi has helped many restaurants get financing since 2005, but also many businesses in a wide variety of other industries, from construction to healthcare. Bizfi began by offering only short-term funding, but now we can present business owners with equipment and invoice financing, franchise financing, medical financing, lines of credit, medium-term loans and even long-term loans backed by guarantees from the U.S. Small Business Administration. Our proprietary technology means we can pre-approve an application in minutes and deliver funds to the business’ bank account within a matter of days. Small business owners have very little time in their day that isn’t taken up with running their business, and they have no time to wait for an application to be denied.
What's next for the Business in the near future?
While we can make a credit decision far faster than a traditional bank, I see Bizfi as being a key partner of traditional banks and not a mortal enemy. We expect to partner with more banks and traditional financial institutions in the future, large and small, in the U.S. and in other parts of the world. We just finished a pilot program with Japan's largest credit card issuer, Credit Saison and are working on a more permanent partnership
Your key initiatives for the success of Bizfi?
Technology and brand development. From the beginning, we have invested heavily in technology, both technology that we developed in house and in best-of-breed programs developed by others. This technology has greatly improved the user experience, and reinforced the intelligence we bring to underwriting and fraud detection. (We don’t trust our credit decisions only to big data, however: Unlike many of our competitors, Bizfi maintains a large staff of trained underwriters who speak with every merchant we fund.) At the same time, we expanded our brand. Bizfi started out as Merchant Cash and Capital, providing only short-term financing. We still do short-term financing, but it is one of a growing suite of financial alternatives. That product expansion, and our technology, prompted us to rebrand the company as Bizfi in the fall of 2015. It has been a very successful initiative.
Your most difficult moment at Bizfi? (and what did you learn?)
The rebranding was definitely stressful. We had to transition many internal systems and reposition our marketing. I wondered, for a time, whether our clients would accept the new name and new product suite, or whether they would find it too complicated. I worried that we would lose the brand equity that we had built up over the decade. It turns out that I shouldn’t have worried. Our longstanding clients have welcomed the change, and we have added many new clients and industries to our relationships. I learned that if a big initiative is properly planned and managed by a team that believes in it, it will be transformative.
Ideal experience for a customer/client?
Some businesses come to us because they face a financial emergency: A key piece of equipment has broken and they will lose a great deal of revenue if they don’t get it repaired or replaced quickly. Bizfi has to treat their emergency as our emergency, and get them the financing they need fast. We have many other businesses that have incorporated alternative financing into the range of financial products they need. With them, Bizfi needs to build a relationship as a trusted advisor that can help them pick the right solution at the right time.
How do you motivate others?
In a decade, Bizfi has grown from 1 employee to more than 200. In that time, I’ve made it a point to get to know everyone on my staff and to find time, every day that I am in the office, to walk our floors and have as many conversations with my employees as I can. It helps me stay in touch with their lives, and to see which employees are ready for greater career responsibilities. It’s important that we promote from within; our Vice President of Strategy and Business Development started with us right out of college.
Career advice to those in your industry?
Constantly be mindful of your competitors’ strengths and your own business’ weaknesses. Make every day an occasion to be better than you were the day before.