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2022: A Year in review (Webinar Transcript)

January 24, 2023

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To say 2022 was a difficult year would be an understatement and a half. Amid a post-pandemic environment, markets have dealt with continued supply chain issues and an embattled Federal Reserve fighting with inflation. The war in Ukraine was the final thorn on the side of the global economy. All three major indices – Dow Jones, S&P 500, and Nasdaq – all closed in the red solidifying to most investors that a standard stocks/bonds portfolio would not cut it in 2023.

Jennifer Cross – Director of Business Development & Client Service and John Donahue – Chief Investment Officer review 2022 and what investors can expect in the first half of 2023. Jenn and JD discuss how the major investing events of 2022 affected the overarching alternatives market and dive into the ramifications for the Merchant Cash Advance space.


Jennifer Cross  00:11

All right. Hi, everyone, and Happy New Year. Welcome to the first Supervest webinar of 2023. We’re very excited to have you all here. And today joining us for this webinar is our very own John Donahue, chief investment officer of Supervest. Welcome, JD.


John Donahue  00:31

Jenn. Hi, everybody. Good to be here.


Jennifer Cross  00:35

All right. So for everyone here joining the call. And for those of you that are just hopping on here, today’s discussion, and flow will be very conversational. We’re looking to basically discuss with you all, where we’ve been, and where we plan to go in the new year, the first 20 minutes will be us just going through some of the major highlights we want to share with you all. And then at the end, the last final 10 minutes, we’ll open it up to a q&a. Everyone should have a q&a box. So just enter your questions there. We may get to some of them during the conversation, but most will reserve until the end. So don’t be shy, ask away. And anything that we don’t get to on the call here today, we’ll make sure to get to afterward, too. So don’t be dismayed if we don’t answer everyone. But let’s get started. Let’s jump right into a JD. Are you ready?


John Donahue  01:30

I’m ready, I think. Right.


Jennifer Cross  01:33

So Judy, can you just go over it with us? What were the most significant investing slash marketing events of 2022 that impacted Supervest in the alternative investment community overall?


John Donahue  01:47

Well, I think the biggest thing, Jen probably is looking back at 2022. Really the entire investment landscape, I think, I think, you know, everybody on the call today, parts of my own portfolio, there was really nowhere to run nowhere to hide, you know, particularly if you were in traditional kind of a 6040 portfolio that many investors on this call and like myself, are invested in, you know, equity markets were down big bond markets were down big. And, you know, there’s been a big push into the alternative asset classes, hoping that those were not correlated to those public markets. But I think many investors found out this year, there was a correlation in those asset classes, particularly crypto where we thought, I think many investors thought they could hide, but that didn’t turn out so well. So I think the big lesson, looking back on 2022, strictly from an investment perspective, is you’ve got to be aware of, of correlations in alternative assets relative to traditional markets, traditional 6040 portfolios, and truly be aware that when you’re looking at alternative investments, look for investments that are low and correlation, things will always at times be correlated, but you really need to source you know, investments that have truly low correlation at times of market distress.


Jennifer Cross  03:15

That’s excellent. And to your point, JD, it seems that now during this period, a lot of investors are turning to alternative investments to sort of move away from some of those aforementioned asset classes. How do you think that this has affected the alternative? Investments industry?


John Donahue  03:34

Yeah, I think it’s, you know, I think this past year particular, that’s the question Jen is it’s helped it the Alternative Investment Industry, but it’s hurt at the same time. Right. Back to my point, I think some investors thought, you know, certain alternate quote unquote, alternative investments would be a buffer or ballast to their portfolio in times of distress in traditional public markets that we saw in the equity and bond markets, again, mentioned crypto. I noticed, you know, in the papers recently, in the fall, even real estate plays as I think, you know, not to name names, but one of the large largest real estate funds out there gated investors because of questionable mark to market issues they may have in their portfolios. So I think, I think, to a certain degree, it it aroused investors’ skepticism in terms of what alternative investors could truly do for their portfolio because of those correlation issues. But at the same time, you know, there are certain alternative investments, particularly private credit, kind of that’s where the MTA industry does fall kind of on the on on the lower end and smaller value chain in the private credit area. But those certain alternative investments benefited through 2022 Because they did show their ability to show low correlation and still gain returns in during a market cycle where almost everything else didn’t work. So I think it’s there were pluses, they were minuses. And I think it just made investors become that much more attuned, that much more aware of really what they’re investing in when they get into the alternative space, they really got to keep on an eye on that correlation. They gotta keep an eye on their due diligence when they’re investing in these alternative markets, or in the particular asset classes or the platforms or the firms that they’re, they’re making those investments through.


Jennifer Cross  05:29

Excellent, excellent. And speaking of due diligence, and correlations, specifically with the merchant cash advance industry, we know a lot of our investors want to know, they’ve been curious about what are the trends that we’re seeing in MCA. From Supervest’s perspective? What are some of the correlations we’re seeing in the Merchant Cash Advance industry? Now, some of the highlights that we’re seeing that we maybe want to point out to our investor base as to what we’re seeing overall in the MCA space industry.


John Donahue  06:06

Yeah, I’ll give you kind of if we look back at 2022, you know, we kind of roll the movie back, then I think, you know, the first two quarters, we actually had to negative Princeton GDP. So I think, you know, I think most investors, were starting to think that we were in a recession, we’re moving towards recession, or we’re going to be in a recession, you know, 2023, at some point, we began to see kind of economic conditions for merchants begin to soften a bit, where we saw those soft earnings was really in kind of the lower FICO bands of the merchants, smaller merchants, smaller kind of monthly receivables from those merchants, we also began to see kind of a softness in specific industries, I would say and I think we telegraph this to a lot of our investors through kind of individual calls and some of the print we put out there. But we did be able to see some softness in trucking, the trucking industry specifically. And when I say trucking, I really talking about the smaller operators. And I think that was probably a function of weeks, or one of the economic conditions but two, you kind of had the end of the pandemic, in the last mile, to the home kind of transportation where everyone was ordering from their couches, in their, their sofas, from Amazon, and, in Target, etc. So the trucking industry really had a boom during that period. But as things normalized, and we all came out of our houses, over the last year or so, the last mile to the trucking begins slowing down. And we began to see that kind of in the remittance flow and the receivables from the performance of the underlying trucking industry. So, you know, one of the things we, when we speak to people and have some calls with folks was really we tried to steer them, potentially weight from that trucking industry. And then also kind of move them up the quality bracket moving away from the kind of lower fight goes lower, lower size merchants, the smaller merchants, the world kind of up the credit quality. That’s kind of what we saw kind of as a history going back looking at 2022.


Jennifer Cross  08:20

Fantastic. Now, given the economic climate that we’re in JD Brent heading into a recessionary period. A lot of our investors are also wondering, what do we think about the state of MCA given the times that we’re in that were in what will small businesses encounter? How will that affect MC rate returns? Etc?


John Donahue  08:44

Yeah, it’s a good question. I mean, I think, you know, again, the question is, and I don’t have a crystal ball. I don’t know if anybody does, but we’re either, you know, in a recession, probably, or we’re heading towards one. I think that’s what most pundits claim. I think there’s certainly softness, we’ve got a Fed tightening right now. There’s certainly a credit contraction going on out there. And it’s beginning to be felt, certainly, in industries that are rate sensitive, there’s no question about that. There’s demand destruction going on out there. So what we have seen historically, you know, we do have experience going back to the 2008-2009, great recession, if you will, in the MCA space. Historically, what we kind of recommendations to our investors and what we see is this kind of playbook we tend to see as I just mentioned, kind of softening in in in or heightening of delinquency rates in the smaller merchants, the lower fight goes kind of lower credit quality type of merchant deals. What we’d like to kind of drive or kind of ask investors to consider is moving up in the quality as I mentioned before moving up in the FICO brackets, trying to participate in kind of larger deal sizes with higher quality merchants, when we’re kind of heading into recession in the midst of a recession, that’s a great way to kind of position your portfolio in the Merchant Cash Advance industry, you really tried to protect capital earn a nice return at the same time. But the risk probably isn’t worth it if you’re down in those sub 600, or even, you know, arguably some 650 FICO buckets. Now, that said, what we’d like to do also, you know, as we depending on one’s view of where we are in that recession, as we begin to kind of move out of recession, let’s say, if we do see the light at the end of the tunnel, we do get a more kind of accommodative fed at some point in 2023. And we begin to see the economy, perhaps accelerating may not happen in 2024. That’s when I think it makes a lot of sense for an investor to think about taking a bit more risk. And then maybe dropping those FICO buckets down in their self-directed model back down into the sub 650, sub six hundred, and taking advantage of the very high factor rates and pricing that’s down in that level, which makes a lot of sense. The other thing that I would highlight, is, that it may be counterintuitive, but really makes a lot of sense. I mentioned the kind of tightening cycle that’s going on in the credit markets right now. And that feeds itself right through the economy right to these businesses, like I said, first it hits the very insert interest, rate-sensitive type of industries, but it feeds itself down into manufacturing, shipping, trucking, etc, all the way down through the food chain. Traditionally, what we’ve we’ve seen also there is I think many investors on this call can imagine is, as credit conditions tighten, that means the banks are pulling back, that means other alternative lenders, who traditionally get their funding capabilities from those banks were tightening, they all pull back and restrict credit to their to the businesses they were formerly providing credit for. So what we tend to see kind of in the belly of a recession, and we’re seeing that right now, anecdotally, actually, we’re seeing in the data, to be honest, we’re beginning to see higher quality merchants begin to fall into the MCA space who had never previously been applicants for a merchant cash advance, they typically get their working capital needs satisfied from a bank from, as I mentioned, alternative lender and at a relatively attractive rate. But because credit is contracting from those banks, from those lenders, we’re seeing much higher credit quality, much larger businesses falling into the MCA space. And importantly, the pricing in the MCA space stays relatively strong and stays relatively kind of stagnant, we don’t see a lot of pricing pressure. So you’re getting a much higher quality of merchant at a price point that was similar to what we saw in much easier credit conditions back in 2020, in early 2021, if that makes sense.


Jennifer Cross  12:58

Yeah, that makes perfect sense. So heading into the new year, we can anticipate those better-quality merchants flowing into the MCA space. But in the interim, certainly, investors should err on the side of safety or I guess, more conservative for the time being, and basically participate in those better-quality deals. And the good news is that we have plenty of deal flow where investors can rest assured that they can go in and even though they’re blocking out some of those poor-quality deals, it does not mean that there will not be enough deal flow there. There’s more than enough.


John Donahue  13:34

Yeah, that’s a good point. And it really depends on each investor, right? But in the way, they’ve structured their portfolio. I mean, the key I think we always tell investors is diversification is key, you never want to be too exposed to any one deal. You know, my rule of thumb is just a rule of thumb. But you know, I always like to think of never more than 1% of a position in any of your total portfolios in any one singular deal to make sure you’re well diversified across the board. But as you do one, one nuance to that is, as you do move up that quality spectrum, investors may want to think about they can take kind of a larger may think about taking a larger participation in those higher credit quality deals relative to their portfolio than they would in kind of the higher risk sub 650 called FICO scores. If you’re moving up, you know, north of 700, and your FICO scores participations, you know, that may do well to take a little larger exposure on a per deal basis. Don’t go crazy, but you may want to increase that exposure as you move up because the quality is better. The term is going to be a little longer, so the velocity would be a little slower. But I think it’s prudent in this environment.


Jennifer Cross  14:43

Fantastic. And I just want to point out here briefly that there was a poll that just went up on everyone’s screen there, make sure to answer that poll, so we can see what the number one requested, offering or product would be for the new year. We’re very curious to hear from Welcome, everyone. So JB, a lot of points, I think a lot of our investors would also love to hear a little bit more about what Supervest has in store in 2023. Products, initiatives, offerings, anything you can share with us on that front.


John Donahue  15:17

Yeah, absolutely. I guess I guess again, I’ll do a quick look back to 2022. First Gen. But the first big thing is, is what we just kind of went through in November, kind of our integration, migration, or introduction of our Supervest 2.0 new UI. That was very big for us. Nervous times as we went through the migration, but I think we made it through unscathed. And I was pretty happy with how the integration works. Certainly, there are a few bugs here and there. And we appreciate all the investors who lived through some of those bugs. Thank you for your patience across the board. And we continue to smooth out any issues that are going on there. So moving forward into 2023. specific to that UI integration, you’re going to continue to see improvements and features functionality across the board. So think about 2.0 becoming 2.1 2.2 2.3 continuing version improvements. As we work our way through 2023. We’ll probably see that on a quarterly basis, the version rollouts. Right now we’re working through multi-week sprints with the kind of fixes and small feature improvements that all of you have suggested, we take all your suggestions to heart. Sometimes you can’t get to all of them. But believe me, we’re investigating often they’re doable, and we’re trying to implement them as quickly as we can. So that’s probably one of the biggest things Jen looking up to in 2023. I think, on the product side, we definitely have in the works a couple of new products. Specifically, we’re going to introduce a couple of new flavors, if you will, of our no product, which saw some great success and traction in 2022. So look for that probably the end of q1 or early q2, probably be a very similar version to our current 12%. No Product that pays a quarterly dividend of 3%. Lock money’s locked up for two years. I think what we’d like to offer right now is maybe a new offering some type of shorter-term note, maybe somewhere around a year, perhaps with monthly payments. That’s TBD. We’re working with our counsel right now to kind of get that paper finalized. But look for that to be introduced, probably, like I said, end of q1, hopefully, the latest by early q2. And then I think what we’re always doing here from a risk and underwriting perspective is introducing new funders onto the platform. And once they’ve gone through our diligence program, and underwriting process, so we onboarded new funders in 2022. I know Roland, who is, you know, head heads our risk and underwriting team, is working on a couple of new funders right now on the diligence side. So look for that, potentially some, some additional funders coming onto the platform, again, more flow hopefully, quality flow coming from those funders.


Jennifer Cross  18:19

Fantastic, fantastic. And for everyone that does have any questions regarding what JP just mentioned, in terms of our new offerings, or any feedback, suggestions, thoughts, or requests, in terms of the new improvements and functionalities were working on with the UI and the new UI release or the version 2.1. As you call the JD, please email us, you can always reach us at And we will log all of those requests and answer any questions you have in a timely manner. Once again, So JT, I think we touched upon most of the major points. I want to turn it over to the investors on the call. We want to hear from you and answer any questions that you have live on the webinar now. So if anyone has questions that need answering, do not be shy. Let’s take a look here and see who we have. All right, JD here’s one. So I am a potential investor very interested. However, I’m concerned about the stability of the company, the risk of the fund, and your ability to manage it. Can you comment on this?


John Donahue  19:44

Sure. I think it’s a great question. I think that that’s the question that I alluded to, you know, what occurred in the crypto markets and some of these crypto platforms over the last year it’s really about doing your due diligence. In terms of our stability, we’ve been around since 2018, we recently incorporated last year. And specifically in terms of stability while we were a young company, you know, currently still, we just closed on my $5 million fundraising round, which certainly gives us plenty of runway over the next few years. We are currently cashflow positive. In our existing business, we’ve always run our business, very close to cashflow positive kind of bumping back and forth depending on new hires and new initiatives that we bring in there. So we’re very prudent managers in terms of running our business here. And again, our recent fundraising round really gives us kind of a backstop, in terms of sticking around for the long term.


Jennifer Cross  20:46

Excellent. And another pertinent question here, JD, do you have plans to lower the minimum investment amounts so that more investors can participate and test the waters quote, unquote, with Supervest before putting in more funds? So I think this speaks to why we’ve increased that minimum would be a good thing to want to sort of review?


John Donahue  21:10

Yeah, it’s, it’s a great question the reason we kind of made that decision to increase what we’ll call the self-directed model versus the note, we actually lowered the minimum in the note, to make that more accessible to investors. And again, you have to be an accredited investor to invest in any of the offerings, it’s Supervest. But really, what we found is the smaller amounts by investing only, say 25,000. In the self-directed model, excuse me, we found it very difficult for people to really diversify their portfolios in a meaningful manner, across the deal flow that we saw, and then there’s, there’s a bit of a challenge that small of a deal flow kind of size into our funding relationships, too. So we did make the business decision that made sense for Supervest, and it also makes sense for an investor’s portfolio to raise that minimum from 25,000. Right now, it’s 75,000. And I’ll be honest with everyone, it’s probably going to go higher over time, we’re seeing a lot of interest, from folks both on the institutional side, and, and kind of the h and was in the ultra-high net worth folks. That, you know, that makes sense for us. And I think it makes sense for the investor that they really need kind of almost a minimum of 100 grand to make it work in the self-directed model to make that portfolio well diversified.


Jennifer Cross  22:45

Excellent. And JD, what are how many? Excuse me, how many funders do we currently work with? And were any let go in 2022?


John Donahue  22:55

Yep. We’ve had one funder that we did let go in 2022. We also downsize when a funder in terms of screening way, a certain proportion of their deal flow, that we’re not too happy about their performance in that particular subset of deal flow. So we screen that. And like I mentioned before, we did add to funders, in 2022. In talking to Roland, I think we’ve probably got on the docket, maybe two or three, at least in focus right now for 2023. If they didn’t mention, I think if I didn’t mention, I think we’re up to a total of 24 funders on the platform. I would say this is a bit of a ballpark. But I would say probably about 15 of those funders do 80% of the volume to give some context to the participation of those funders.


Jennifer Cross  23:52

Got it? Now, another question, would increasing the minimum monthly revenue for deals be wise at this point?


John Donahue  24:03

Yes. And that speaks to, you know, my mentioned about moving up the credit ladder or the moving up credit quality, larger monthly revenues for the underlying merchant, you know, it’s a linear set. It’s a larger business and to be more stable. So that’s what I like right now. If you have the ability to move up into a higher monthly revenue merchant subset, I think that makes all the sense in the world, given the kind of economic landscape or environment we’re in right now. I think it’s better to be cautious. Now, those type of deal flows for the most part, all things being equal, and on average, they’re probably going to be a little lower factory than we’ve seen over the years. On the platform, you know, they may be 113 O’s, 214 O’s, and they may be longer terms or they may stretch rather than the average Each term that we’ve seen in the platform six months, those made more may be more likely eight to 10-month deals. But I think that’s being more conservative and, and being a little more cognizant of the risk, and they’ll be definitely more stable, less volatility in that return stream from those types of merchant. So I think that makes all the sense in the world.


Jennifer Cross  25:22

Absolutely. Now, JD, can you please comment on what our current default rate on MCA is look like? Have there been increases since the recessionary period began? And how do we compare to the MCA space at large?


John Donahue  25:37

Yeah, and I always hate to say this, but I always say this to everyone, Jim, when we talk to investors individually, but it depends, right? It depends on what kind of portfolio you know as the investor kind of design. I’ll put it this way, the portfolio that we run internally that that underlines kind of our no products, that that default rate is probably running around 10 or 11%, and that that portfolio is run relatively conservatively. As I said, it’s, it’s the way we run that portfolio is probably, as I mentioned, here, we’ve been moving up the FICO bands, we’ve been going for higher monthly receivables from the underlying merchant, we’re willing to stretch out the term, because we think those are somewhat safer deals, and higher quality. So that’s where we’re at right now. Now, if people are, you know, looking at higher factors, or, you know, like Roland likes to say is our factor hunting, and chasing, you know, one, five O’s or 155 factors, they’re gonna see a much higher default right there that can be in the mid-teens, sometimes in the high teens, depending on what industry subsets they could get exposed to. So and then we see very, very conservative portfolios that are in the high single digits on the platform. Were extremely conservative. So it’s always tough to say, you know, it really depends on the complexion or the composition of, of the criteria, seven digital points up. But that kind of gives you a broad base of what those D cues look like. I think, I think the industry to your point in the industry, it’s similar, you know, what, I’ll call that high-risk paper, I’ll call that C paper, D paper, you know, the default rates have certainly risen through 2022. Those are probably high teens. In some cases, poor underwriting gets you into the mid-20s. I think the A B paper is still in the high single digits for the A paper and you’re probably in the low double digits 1010 to 12, for the best paper that’s out there. I think the industry is seeing that right there. But again, it depends on the funders, their funders, who are excellent underwriters have good processes in place, and work at it. They’re doing well, you know, and they’re, you know, managing that risk accordingly. There are some funders in the time of easy money, who really was just throwing money at the space, they’re seeing defaults rise at a rapid rate. And that’s our job is to understand who those funders are and not let them on the platform, underwrite good funders, and allow them to partner with us and allow us to source deal flow from them to our investors.


Jennifer Cross  28:29

Right. And that sort of leads us to another question here JTS to how we manage that risk, during a potential recession. And a lot of that comes down to the due diligence we conduct with our funding partners, their underwriting their MCA infrastructure, right? And the ongoing due diligence we conduct on an ongoing basis through weekly quarterly monthly portfolio reviews for each individual funder. Is there anything you’d like to add on that front? Other ways in which we manage the risk in terms of deal flow and our funders or funding partners?


John Donahue  29:02

Yeah, that’s, you know, that’s, that’s a big part of the agenda. That’s, you know, the initial due diligence when we first look at a funder to onboard. And then as you mentioned that we have ongoing due diligence quarterly and semi-annually on sites with those funders. But really, the biggest diligence curves every day, we’re looking at these portfolios, and deal flows and deal performance of our funders every single day and seeing how they’re performing. As I mentioned before, I think, you know, we talked about an earlier question of, or have we kicked any funders off? I alluded to one funder that we screened out some of their, their deal flow because we didn’t like a certain subset of it. So one of the things we do here kind of netting over are kind of deal flow as if we do see kind of a funder with a certain subsection, as I mentioned, of deal flow that seems to be underperforming, where it just doesn’t make sense to This will block that type of deal flow, we’ll have a conversation with the funder, explain to them what we’re doing, but why we’re doing it. But we will put that netting over, you know, before that deal flow can even get to our, to our investors. You know what that’s somewhat reactive. You know, we have to see the underperformance first before we can react to it. But we will do that, and we have done it.


Jennifer Cross  30:22

Fantastic. Now, one of the questions I’ve gotten over and over again, is, you know, in regards to the FICO bands, those poor quality merchants that are below 650, or below 600, obviously, there are several funders out there across the US that specialize in different types of paper, right, call it a paper, B paper, see the paper, all the way down to F paper. And by paper, we mean the quality of that merchant a being, you know, better quality, right f being lower quality. So why does Supervest allow deals on the platform that are sub 600, or sub, you know, 500 FICO score, if perhaps ROI isn’t substantially better, and those better quality merchants that are defaulting a lot less,


John Donahue  31:09

because because the times they are, and I don’t mean to be cute with that, but is that, you know, there are times when those see, and even D paper can be extremely attractive. As I said, I think I said, as we if we do see the light at the end of the tunnel and the economy begins to accelerate again, C and D paper can be extremely attractive at those times. And over time, the C and D paper does pay. But there’s an inherent amount of volatility in that paper, particularly as you move into recession, it’s probably going to be bad volatility down volatility. But if you get into a situation where you know where the economy is coming back strong, that that CD paper can be extremely attractive, because, you know, those things are getting priced at 150 is even as high as one six is and even higher. If those default rates, you know, can fall as low as you know, high debt, low double digits 12 15%. That’s an extremely attractive return potential for an end investor participating in that deal flow. But there’s a lot of volatility in that deal flow. So, so we do offer that it will continue to offer that. But I think we’d like to manage it and kind of recommendation for investors, you know, part of this call is to in this environment, probably the right thing to do is to maybe move up that credit quality as we existed. But there are certainly opportune times to look down into that seed paper where the factors are quite high, the terms are very short three to five-month deals. So the velocity of that capital term can be quite high, and you can support, you know, it’s a favorable environment for that type of deal flow. It’s a 15%, DQ or delinquencies in that type of deal. Flow is extremely attractive from a final and return-type perspective.


Jennifer Cross  33:11

Fantastic. So the timing of it is really important. Wonderful. Speaking of just performance, the recession, Another commonly asked question is outside of trucking, of course, are there other industries that investors should have their eye on, that are more volatile or just showing? Variable performance? If you will?


John Donahue  33:35

Yeah. I think, you know, one of the things that I always say to investors and I think all our investors will obviously they’re all accredited and I think they’re an incredibly sophisticated group of people who are very bright on at least all the ones I’ve talked to, it’s kind of you got to think about it, you know, look at the world look at the economy, look at the industries, just the way, you know, you would think about what’s attractive or what’s not attractive out there. So, you know, for example, like right now, you know, we all know rates are backing up, we all know well, that that means interest rates, sensitive industries are taking the hit. The first thing that’s kind of taken a hit kind of recently, is we’ve seen housing slowed down after having an incredible run over the last three to five years. Because of the low-interest rate environment, housing starts are down, new housing starts are down mortgage applications are down, and revised down. So that immediately I think, you know, tells us to me that okay, maybe, maybe I should lighten my exposure in the general contracting space because they’re the guys who build houses. So maybe I want to move up the FICO bands in the construction space, general construction space, and get away from kind of the riskier contractors that are out there building houses, you know, common sense kind of approaches to As your industry selection makes sense there, and conversely, you know, specialty construction industry, I still think that makes a lot of sense. Because that’s your electricians, that’s your plumbers, those are the folks that no matter if you’re in a recession, or in the boom times if your pipes break, you gotta get the plumber over, you’re gonna need that plumber. Same with your electricity goes out, you’re gonna get the blow your fuse, but you need your electrician, those tend to be, you know, somewhat recession, recession, resistant resistant type of industries. So I’d like to still play in those kinds of those, those bands. So, you know, industries that just make sense, like, Hey, we’re going to the recession, what could get hurt, housings hurt, maybe I suggest moving up the FICO bucket in those kinds of industries. You know, contractors, as I said, the trucking, all of a sudden, we start to see a Walmart or amazon stuck to miss their earnings. Well, that means there’s less product being shipped. So maybe you want to dial up your FICO exposure to truckers, you know, it all makes sense. So I always think, you know, most people have a very good idea of what the world is going on. The merchants that were funded for the most part are main street merchants. So it’s really looking around, you know, what do you see being impacted. And that’s the best way to dial your exposure.


Jennifer Cross  36:22

Fantastic. So I’m hearing look at the news, you know, keep your eyes open and keep track of what’s happening in real-time. And then of course, look at the performance of your own portfolio as well trends, you know, what’s happening across industries’ FICO score, term, etc. And then of course, correct as you go. Absolutely. Wonderful. Well, JD, we’re just a little over our time here. But super insightful. Thank you so much for all of that information. And thank you to everyone that joined us on the call today. As always, we greatly appreciate your support. And we look forward to continuing to serve you in 2023. If you have any questions at all, beyond today, please feel free to contact us again. That email will be And thank you again. We’ll see you next time.


John Donahue  37:19

Thanks, Jenn. That was great being with you. Thanks, everybody. Bye

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