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ProfileCompany or group

Ready Capital

Lender or loan platform

PPP · PPPLF
Type
Company or group
Role
Lender or loan platform
Programs
PPP, PPPLF
Updated
  • Type: Public multi-strategy real estate finance company (mortgage REIT) with a nonbank SBA-lending arm.
  • Legal entities: Ready Capital Corporation (NYSE: RC). PPP lender of record was ReadyCap Lending, LLC. The technology and lending-services division is iBusiness Funding, LLC.
  • Founded: Co-founded by Thomas Capasse and Jack Ross.
  • HQ: New York.
  • CEO: Thomas Capasse (co-founder, CEO, and Chairman; still CEO in current company materials).
  • Role in PPP: Direct nonbank SBA lender — about 106,252 loans (SBA PPP FOIA loan-level data) — financed in part through the Federal Reserve's PPPLF, with economics shared with referral agents and partners (deBanked, May 12, 2020). In round one it sourced and underwrote about $2.5 billion of loans that were sold to another lender under a Lender Service Provider agreement, for half that lender's SBA fees less agent fees: $43.3 million (2020 Form 10-K).

In the archive

Pandemic-role map

  • Reader shorthand: public mortgage REIT whose ReadyCap Lending was a PPP lender of record.
  • What Ready Capital did for borrowers: originated PPP loans directly through ReadyCap Lending, including a large count of small loans.
  • Where responsibility sat: SBA's loan data list ReadyCap Lending as the originating lender on all 106,252 loans. In round one Customers Bank is the servicing lender on 32,926 of the 34,223 loans, and Ready's fee under its Lender Service Provider agreement was half the SBA fees, less agent fees; in round two ReadyCap Lending kept the loans and financed them through the Federal Reserve's PPPLF.

Before the pandemic (pre-2020)

Ready Capital's core business was lower-to-middle-market commercial real estate lending, with SBA 7(a) lending inside the platform through ReadyCap Lending, an existing nonbank SBA lender. Its 2020 Form 10-K says that beginning in April 2020 the company, "as one of fourteen non-bank SBA lenders," facilitated PPP loans throughout the United States.

During the pandemic (March 2020 – mid 2021)

Cash first

Ready Capital started the pandemic by conserving cash. On March 20, 2020 it said the first-quarter dividend of $0.40 would be paid "in a combination of cash, not to exceed 20% in the aggregate, and common stock."1 The stock portion came to about 2.7 million new shares.2 Ten days later Thomas Capasse's letter to shareholders listed "a plan to reduce staffing expenditures by 25%."3 The 2020 annual report shows ReadyCap Lending's headcount going from 91 to 82, while employee compensation in the SBA segment rose from $16.3 million to $19.5 million.4 Company-wide, employee compensation went from $51.2 million to $91.9 million; $22.5 million of the increase was in residential mortgage banking, whose lender, GMFS, grew from 244 people to 304.4 The second-quarter dividend was $0.25, in cash.5

What borrowers got

Ready's relief for its own borrowers was forbearance. By May 11 it had "offered forbearance" on 10% of its commercial real estate loans and 7% of its residential loans.6 At year-end, 2.0% of the commercial real estate book was in forbearance plans.7 We found no fee waiver or rate cut for borrowers in the company's 2020 and 2021 filings and releases.

Round one: underwriting for someone else

The SBA paid lenders 5% on PPP loans of $350,000 or less.8 Ready's March letter said its fintech front end, Knight Capital, left it "uniquely positioned to capture market share in this area as compared to banks."9 Its application portal asked whether the applicant was a Knight Capital client and asked for three months of bank statements, uploaded to iBusiness Funding.10 On May 6 Ready said it had taken more than 40,000 applications, with an average loan size of $73,000.11

Most of those loans were not Ready's to keep. It funded $114.7 million directly in April, for $5.2 million in processing fees.12 On April 28 it signed a Lender Service Provider agreement with an unnamed third party, and it "sourced and underwrote approximately $2.5 billion" of loans that were sold to that party.13 Its fee was "one-half of the total fees received by the third-party from the SBA, less any agent fees paid directly by the third-party," which came to $43.3 million.13 The 10-K does not name the buyer. In SBA's loan data, Customers Bank is the servicing lender on 32,926 of the 34,223 loans ReadyCap Lending made in 2020.14

Applying the SBA fee schedule to those 34,223 loans gives about $102.5 million.15 Ready's fees on them came to $48.5 million ($43.3 million plus $5.2 million), or 47%. In May 2020 the company estimated its net at 35% to 50% of gross, deBanked reported, because the fees were "in many cases split with referral agents and other partners."16 Pre-tax PPP income for 2020 was $23.4 million.17

Round two: keeping the loans, with the Fed's money

In 2021 ReadyCap Lending kept the loans. It made 72,029 of them, worth $2.26 billion, including 33,350 second draws; the average fell to $31,410.14 It financed them through the Fed's PPP Liquidity Facility at 0.35%; borrowings peaked at $2.29 billion, the balance on June 30, 2021.18 The 2021 10-K puts "total net fees" at $123.7 million and does not say what was netted out.19 The SBA fee schedule applied to the 2021 loans gives $204.9 million.15 The same 10-K says PPP loans were forgiven before the matching Fed borrowings were repaid, and that the forgiveness proceeds sat in unrestricted cash.20 Pre-tax PPP income was $56.1 million in 2021 and $65.5 million in 2022.21 In May 2021 Capasse said the company's PPP work was something "we will continue to parlay into expansion of our core SBA 7(a) lending program."22

How it ended

SBA's data record forgiveness of $4.50 billion on 98,249 ReadyCap loans and 6,173 loans charged off. Of the charge-offs, 5,568 are from 2021, or 7.7% of that year's ReadyCap loans.14 Of all PPP loans approved in 2021, 8.1% are charged off.23 Ready's PPPLF borrowings were fully repaid by June 30, 2026.24

Ready's 2025 proxy statement lists, next to an annual volunteer day and donations to a rent-relief charity: "Provided over $5.0 billion of Paycheck Protection Program loans, the majority of which were under $25,000, to small businesses disproportionately comprised of minority/women-owned small businesses."25 SBA's data show $4.78 billion ($4.91 billion at initial approval), with 69.4% of loans under $25,000. The race field reads "Unanswered" on 98,971 of the 106,252 loans.14

Notes

  1. Ready Capital, "Ready Capital Corporation to Pay Previously Announced Quarterly Dividend on Common Stock of $0.40 Per Share 20% in Cash and 80% in Stock," press release, Mar. 20, 2020. ↩
  2. Ready Capital Corporation, Form 10-Q for the quarter ended March 31, 2020 (filed May 11, 2020). ↩
  3. "Ready Capital Corporation Provides Company Update," press release and letter to shareholders, Mar. 30, 2020. ↩
  4. Ready Capital Corporation, Form 10-K for 2020 (filed Mar. 15, 2021), Item 1 segment table, consolidated statements of income and segment tables; Form 10-K for 2019 (filed Mar. 12, 2020), Item 1 segment table. ↩
  5. "Ready Capital Corporation Declares Second Quarter 2020 Dividend," press release, June 15, 2020. ↩
  6. Ready Capital, "Supplemental Financial Data, First Quarter 2020," Form 8-K Exhibit 99.2, May 11, 2020. ↩
  7. Ready Capital Corporation, Form 10-K for 2020, Item 7A. ↩
  8. Ready Capital Corporation, Form 10-K for 2020, Note 20. ↩
  9. "Ready Capital Corporation Provides Company Update," Mar. 30, 2020. ↩
  10. Ready Capital PPP application portal (ppp.readycapital.com), Wayback Machine copy of Apr. 8, 2020. ↩
  11. "Ready Capital Corporation Funds Initial $1.2 Billion of SBA Loans Through the Paycheck Protection Program," press release, May 6, 2020. ↩
  12. Ready Capital Corporation, Form 10-K for 2020, Note 20. ↩
  13. Ready Capital Corporation, Form 10-K for 2020, Note 20; Form 10-Q for the quarter ended June 30, 2020 (filed Aug. 7, 2020). ↩
  14. SBA, PPP FOIA loan-level data (Sept. 30, 2024 release), loans with originating lender Readycap Lending, LLC. ↩
  15. SBA, PPP FOIA loan-level data (Sept. 30, 2024 release), with SBA's lender-fee schedule applied to each loan (lender-fee table). ↩
  16. deBanked, "$100 Million in PPP Fees," May 12, 2020. ↩
  17. Ready Capital Corporation, Form 10-K for 2021 (filed Feb. 28, 2022), Note 20. ↩
  18. Ready Capital Corporation, Form 10-K for 2021, Liquidity; "Ready Capital Corporation Announces Second Quarter 2021 Results," Form 8-K Exhibit 99.1, Aug. 5, 2021; Federal Reserve, PPPLF lender disclosures. ↩
  19. Ready Capital Corporation, Form 10-K for 2021, Note 20. ↩
  20. Ready Capital Corporation, Form 10-K for 2021, Note 20. ↩
  21. Ready Capital Corporation, Form 10-K for 2022 (filed Feb. 28, 2023), PPP note. ↩
  22. "Ready Capital Corporation Announces First Quarter 2021 Results," Form 8-K Exhibit 99.1, May 6, 2021. ↩
  23. SBA, PPP FOIA loan-level data (Sept. 30, 2024 release), all loans by approval year. ↩
  24. Ready Capital Corporation, Form 10-Q for the quarter ended June 30, 2026 (filed Aug. 7, 2026), Liquidity. ↩
  25. Ready Capital Corporation, proxy statement (Schedule 14A), filed Apr. 29, 2025. ↩

After the pandemic (mid 2021 – present)

No enforcement track

No PPP enforcement action or congressional case study involving ReadyCap has been located.

The Funding Circle USA acquisition

In June 2024, iBusiness Funding, Ready's technology and lending-services division, agreed to acquire Funding Circle USA for £33 million (Ready Capital release); Funding Circle surrendered its newly acquired SBLC license as part of the transaction (see the Funding Circle profile).

The next credit cycle

By 2026 the company was managing legacy commercial real estate exposure (April 1, 2026 business update).

Sources

In this archive

External references

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