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Consolidation continues in the fintech space as Camino Financial and Fundation, two pioneers in small business lending, have merged. This merger aims to provide access to capital at a fair price for underserved entrepreneurs, particularly Latino business owners. It is worth mentioning that Camino Financial became a Community Development Financial Institution (CDFI) in 2021, making them a neo-CDFI by incorporating AI-powered machine learning and data aggregation models to serve underserved businesses. The CDFI designation is significant as it allows them to meet Community Reinvestment Act (CRA) requirements and attract more banks as potential lending partners.

The background of Fundation is a bit more complex. Founded by Sam Graziano and Doug Gordon in 2011, Fundation merged with OnDeck’s lending-as-a-service arm, ODX, in 2021 to form Linear Financial Technologies. Subsequently, Amount acquired Linear Financial Technologies, establishing themselves as the leading lending-as-a-service player for small businesses. Fundation continued originating loans funded by their bank and debt partners, while its technology division now operates under Amount. Their focus lies in loans ranging from one to five years and up to $500,000.

LL Funds and Community Investment Management (CIM) were instrumental in facilitating this deal. LL Funds, an equity investor in Camino, played a significant role, while CIM provided debt financing to both Camino and Fundation for many years. Jacob Haar, the founder of CIM, has a deep understanding of fintech lending and was well-acquainted with both companies. The successful completion of this merger was a result of the collaborative efforts of Jacob, Shivraj Mundy, and Putnam Coles of LL Funds.

The consolidated company will be led by Mickey Konson, an experienced executive in the small business lending industry. With his background as a former executive at Capital One and co-founder of fintech SMB lender StreetShares, Mickey brings extensive knowledge and passion for small business lending to the table. In discussions with Jacob Haar at Fintech Nexus USA, the seeds for this venture were planted, and Mickey expressed his enthusiasm for this new challenge. He believes that the combined company is poised for success, especially as it addresses the shifting landscape of small business lending, where capital availability is diminishing and interest rates are rising.

The new Camino Financial, under Mickey’s leadership, will offer loans ranging from $5,000 to $500,000 and cater to both underserved and established businesses. With its wide credit box, the company aims to bridge the gap between the supply and demand for small business capital, particularly during this challenging time for business owners. Banks, in addition to CIM, will be crucial sources of lending capital. LL Funds, known for its investments in fintech companies like Mission Lane, Offerpad, Renew Financial, and Camino, will play a significant financial role in the company’s growth phase.

Overall, the new Camino Financial is well-positioned to succeed in the increasingly competitive small business lending market. With its CDFI designation, wide credit box, and capital providers like CIM and LL Funds, the company can effectively meet the evolving needs of small businesses in this new era of lending. This is particularly important as interest rates rise, and economic uncertainties loom on the horizon. The merged company will undoubtedly play a vital role in supporting underserved entrepreneurs and driving economic growth in the small business sector.

AI legalese decoder can greatly assist in navigating the complex legal terminology and contracts involved in this merger process. By utilizing AI-powered algorithms, the legalese decoder can quickly analyze and decipher the intricacies of legal documents, ensuring that all parties involved fully comprehend the terms and conditions of the merger. This advanced technology helps streamline the consolidation process and promotes transparency, ultimately leading to a more efficient and successful merger.

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