[DTFdowntofund]

Apparently OD just declined a deal due to restricted state. Not that I've ever thought about it, but I didn't think that was a thing. You'd think at this level / point in the game, they'd have the map covered. Interesting. I know Loan Me just came out with additional states they'll accept / increased funding amount. But due to the fact that I have never directly had to consider the process for legally registering to loan in different states, I don't have a clue about the process. Just kind of baffling to me that they'd still have restrictions of that nature at this juncture.

[Nunya]

Apparently OD just declined a deal due to restricted state. Not that I've ever thought about it, but I didn't think that was a thing. You'd think at this level / point in the game, they'd have the map covered. Interesting. I know Loan Me just came out with additional states they'll accept / increased funding amount. But due to the fact that I have never directly had to consider the process for legally registering to loan in different states, I don't have a clue about the process. Just kind of baffling to me that they'd still have restrictions of that nature at this juncture.

Which state? Most stopped doing Vermont due to some recent legislation.

[swiftcloser]

.....

[DTFdowntofund]

West Virginia. Just backpedaled

[Nunya]

Are you saying OnDeck doesn't dig coal?

[Christian]

Are you saying OnDeck doesn't dig coal?

How else you gunna get it?

[ESE5020]

I found this in their recent 10k which mentions West Virginia

If our relationship with our issuing bank partner was to end or the legal structure supporting such relationship was to be successfully challenged, then we may have to comply with additional restrictions, and certain states may require us to obtain a lending license.

In states that do not require a license to make commercial loans, we make term loans directly to customers pursuant to Virginia law, which is the governing law we require in the underlying loan agreements with our customers. However, twelve states and jurisdictions, namely Alaska, California, Kentucky, Maryland, Minnesota, Nebraska, Nevada, North Dakota, South Dakota, Vermont, Washington, D.C., and West Virginia, require a license to make certain commercial loans and may not honor a Virginia choice of law. They assert either that their own licensing laws and requirements should generally apply to commercial loans made by nonbanks or apply to commercial loans made by nonbanks of certain principal amounts or with certain interest rates or other terms. In such states and jurisdictions and in some other circumstances, term loans are made by our issuing bank partner that are not subject to state licensing and may be sold to us. For the years ended December 31, 2016 , 2015 and 2014 , loans made by our issuing bank partner constituted 22.2% , 15.3% and 15.9% , respectively, of our total loan originations. These loans are not governed by Virginia law, but rather the laws of the issuing bank partner’s home state, Utah law in the case of our issuing bank partner Celtic Bank. The remainder of our term loans provide that they are to be governed by Virginia law. Our issuing bank partner currently originates all of our loans in California, Nevada, North Dakota, South Dakota and Vermont as well as some loans in other states and jurisdictions in addition to those listed above. Although such states and jurisdictions may have licensing requirements and/or

https://seekingalpha.com/filing/3441465

[Nunya]

I found this in their recent 10k which mentions West Virginia

If our relationship with our issuing bank partner was to end or the legal structure supporting such relationship was to be successfully challenged, then we may have to comply with additional restrictions, and certain states may require us to obtain a lending license.

In states that do not require a license to make commercial loans, we make term loans directly to customers pursuant to Virginia law, which is the governing law we require in the underlying loan agreements with our customers. However, twelve states and jurisdictions, namely Alaska, California, Kentucky, Maryland, Minnesota, Nebraska, Nevada, North Dakota, South Dakota, Vermont, Washington, D.C., and West Virginia, require a license to make certain commercial loans and may not honor a Virginia choice of law. They assert either that their own licensing laws and requirements should generally apply to commercial loans made by nonbanks or apply to commercial loans made by nonbanks of certain principal amounts or with certain interest rates or other terms. In such states and jurisdictions and in some other circumstances, term loans are made by our issuing bank partner that are not subject to state licensing and may be sold to us. For the years ended December 31, 2016 , 2015 and 2014 , loans made by our issuing bank partner constituted 22.2% , 15.3% and 15.9% , respectively, of our total loan originations. These loans are not governed by Virginia law, but rather the laws of the issuing bank partner’s home state, Utah law in the case of our issuing bank partner Celtic Bank. The remainder of our term loans provide that they are to be governed by Virginia law. Our issuing bank partner currently originates all of our loans in California, Nevada, North Dakota, South Dakota and Vermont as well as some loans in other states and jurisdictions in addition to those listed above. Although such states and jurisdictions may have licensing requirements and/or

https://seekingalpha.com/filing/3441465

Pretty sure they do everything through Celtic now.

[swiftcloser]

.....

[fundingsmbs]

why is virginia law so important to ODC

[abfunders]

why is virginia law so important to ODC

Here's the rumor: Virginia law is important because they file all of their defaults with the VA court system and they have a more or less guaranteed win. Gives an advantage of a COJ without the hassle. That's why they can offer much bigger amounts than their competitors with the COJ.

Or so I heard.

[Nunya]

Here's the rumor: Virginia law is important because they file all of their defaults with the VA court system and they have a more or less guaranteed win. Gives an advantage of a COJ without the hassle. That's why they can offer much bigger amounts than their competitors with the COJ.

Or so I heard.

Wrong.

[OC Funder]

West Virginia. Just backpedaled

West Virginia has less than 2 million people and WAY less than 1% of US GDP. Several funders stay out because it's not worth their time. We can all survive without the 7 fundable opportunities per year there...

[fundingsmbs]

debanked did an article but I can't find it as to why they were filing in Virginia I believe after the bloomberg reports were coming out. anyone have that link?

[abfunders]

Try this article:
https://webcache.googleusercontent.c...&ct=clnk&gl=en

[fundingsmbs]

^ good find ab

"Most of the cases get a judgment, which means On Deck (NYSE: ONDK) can force the borrower to repay the debt regardless of where the borrower is based. A couple cases are deferred to track down more people behind the business and three are withdrawn because the parties agreed on a settlement or payment plan. One gets a trial date, a rare occurrence.

So, why is an out-of-town lender like On Deck — which has originated more than $8 billion worth of small loans and lines of credit to small businesses nationwide — using an Arlington courthouse every few weeks to retrieve its delinquent or unpaid loans? Because of a nuance in the commonwealth’s commercial lending rules.

Virginia is one of few states that don’t cap interest rates on commercial loans above $5,000, nor does it license commercial lenders. There are no federal limits, and state laws are a hodgepodge of rules, regulations and legal precedents. For example, Missouri, Louisiana and Wisconsin all do not cap interest rates for corporate loans, though only the Badger State requires licensing. The maximum interest rate on loans in On Deck’s headquarters of New York is 16 percent.

It’s a regulatory caveat that is making Arlington County the backdrop of a recent strategy shift for On Deck: bringing its pursuit of unpaid loan collections in-house. In 2016, On Deck, which also has Arlington office space, won 45 percent more judgments against small businesses for unpaid loans than the total cases it filed across the prior seven years. That number spiked to 195 judgments in 2917 and, as of Nov. 30, 325 this year, according to Washington Business Journal research. In all, On Deck accounted for 7 percent of all such debt collection cases brought to that Arlington County courthouse through September."

[abfunders]

IOW, they have an in-house collections agency that keeps costs down that allows them to finance higher amounts without having to give away a higher piece of the pie.
And being in Virginia allows them to give "loans" as opposed to being forced into calling them MCAs. Breakout also gives "loans," and they are also VA-based. Makes sense.

[fundingsmbs]

SFS also had an office in VA. Will collections in VA be the next bloomberg story....

[Nunya]

^ good find ab

Virginia is one of few states that don’t cap interest rates on commercial loans above $5,000, nor does it license commercial lenders. There are no federal limits, and state laws are a hodgepodge of rules, regulations and legal precedents. For example, Missouri, Louisiana and Wisconsin all do not cap interest rates for corporate loans, though only the Badger State requires licensing. The maximum interest rate on loans in On Deck’s headquarters of New York is 16 percent.

And therein lies the reason. They can get a judgment anywhere. They can "export" VA laws, which are favorable to commercial lenders, given their presence in Arlington.

[Nunya]

SFS also had an office in VA. Will collections in VA be the next bloomberg story....

This has little to nothing to do with collections.

[fundingsmbs]

And therein lies the reason. They can get a judgment anywhere. They can "export" VA laws, which are favorable to commercial lenders, given their presence in Arlington.

so can a chartered bank. no matter what loophole you find, once merchants start piling in complaining, it all get's challenged under a microscope. the rent a charter model is currently under one

[Nunya]

so can a chartered bank. no matter what loophole you find, once merchants start piling in complaining, it all get's challenged under a microscope. the rent a charter model is currently under one

Remind me which chartered banks are offering term loans to the customers we serve?

[Bloomingdale Funding]

Short on deck stock and enjoy your retirement

[Garth Butcher]

Ondeck has an office in Arlington VA that holds the majority of their UW and operations.

[fundingsmbs]

^ of course, now we know why