Breakout Capital, headquartered in McLean, VA., is a technology-enabled direct lender that has provided millions of dollars through a wide range of working capital solutions to hundreds of small businesses across the country.
Sure, you’ve seen something like that on our competitors’ websites, but that’s where the similarities end; we’re more than just a lender. In 2013, our Founder and CEO, Carl Fairbank, began pitching an idea to investors, potential partners, and small business groups that many viewed as addressing the impossible: building a company that would transform the rapidly growing “online” lending industry. For a decade, Carl was an investment banker to the alternative finance space and, despite fantastic innovation in technology and the speed of access to funds, the market remained “broken” and product development had not kept pace. For years, despite many products changing names, the actual product delivery, underwriting, and repayment structure remained basically the same. And even worse, the majority of the products were filled with predatory features, disclosure around cost and terms were limited and/or highly confusing, and cost comparison was impossible.
We’d start each meeting with investors stating: “You are about to invest in a company that is electing to pass up 30% in profit margins.” While this provided great shock value, it also immediately addressed the elephant in the room. “If everyone is doing it,” investors asked, “why would you change the products and pass up increased profit margin that results from these practices?” Well, this was the first, and easiest, question we have ever had to answer: “Because it’s the right thing to do. And if we don’t do it, regulators eventually will.” We set out to combine the great elements of online finance – speed and ease of access – with product innovation, education, and transparency. As we walked investors, small business groups, and potential partners through the market opportunity we knew existed, more and more folks realized we were on to something special. The questions changed from “why” to “how can we get involved?”
We formally launched in early 2015, entering the rapidly growing small business finance market with the fundamental belief that, through product innovation, suitability tests, sophisticated analytics, and an unwavering dedication to ‘doing the right thing’, we could offer small businesses a better, more transparent, and more affordable working capital solution. We created several new merchant-friendly products and product features that didn’t exist in the market. We identified every problem we saw in other products and set out to eliminate them. We became the first small business lender to offer an “online” shorter-term loan product that didn’t Double Dip and aggressively educated small businesses, regulators, and other industry stakeholders about this predatory practice. We also educated small businesses on the dangers and drivers of debt traps, stacking, brokers, and many of the hidden fees and confusing marketing in our competitors’ products. We eliminated “junk fees” and aimed to break the cycle of renewal.
But we didn’t stop there; we set out to change the industry landscape. Carl is an active thought leader on Capitol Hill, advocating for improved transparency and the adoption of “best practices” by alternative capital providers throughout the market. We are a Steering Committee Member of the Coalition for Responsible Business Finance, and you can read our Code of Ethics that we hope is adopted by the entire market. We are improving cost disclosure and full process transparency, and are working closely with some of the largest companies in the space to produce the SMART Box. The SMART Box initiative intends to further drive cost transparency and to improve the ability to compare the cost of alternatives industry-wide. We are also on the task force for The Partnership for Lending in Underserved Markets (PLUM) led by the SBA and Milken Institute, in an effort to increase access to affordable capital for minority-owned businesses.
And we set out to create what we believe is the premier team in the industry, with every employee possessing two key qualifications: 1) strong ethics with a steadfast commitment to our core philosophy; and 2) a “superstar” in their field. Our Chief Credit Officer, Rob Kottmeier, served in the same role at GreenSky Credit, which was recently valued at $3.4 billion. Our Chief Financial Officer, Darwin Olympia, was a Certified Public Accountant at one of the top-tier global accounting firms and a leading investment banker and consultant for more than a decade. Our Head of Credit Strategy, Kris Huennekens, was a lead data scientist at Capital One for more than a decade. And it goes on and on. We have a forensic accountant, a Collections Manager that helped build OnDeck’s collections platform, a Head of Marketing with extensive experience across a wide variety of mediums and industries, just to name a few. And, perhaps most importantly, every single member of our Sales staff is required to possess a deep background in financial services and, in many ways, are “selling knowledge”, not just a working capital product.
Less than two years later after our formal launch, we are one of the fastest growing companies in the market and quickly becoming a brand name. We have institutional investors that believe in our model and continue to provide the capital we need to build a long-standing company that can not only offer great products, but also affect change in the broader market. We are proud of what we have built and will continue to reinforce our fundamental pillars of transparency, innovative lending, borrower education, and advocacy. But we are even more excited to continue to execute on our plan to transform the alternative lending market, and enable more small businesses to access affordable, transparent, and suitable capital to grow their businesses. Our work is just getting started and we’d love to partner with you.