On October 7, 2021, the financial technology company Now Corp. (previously NOWaccount) co-founded by Stacey Abrams in 2010, secured $29 million in financing and an equity investment from Brigade Capital Management LP and Virgo Investment Group.
This was a significant milestone given the fact in 2013 NOWaccount had approximately $100,000 in annual revenue.
Less than two months after this announcement, on December 1, 2021, Abrams announced she would run for Georgia governor, setting up a possible rematch with Georgia GOP Gov. Brian Kemp.
And in March 2022, Abrams filed a financial disclosure form which indicated her net worth was $3.17 million, a substantial increase from the net worth of $109,000 when she first ran for governor four years ago.
While most media reports attribute Abrams significant increases in net-worth to speeches and advances for book projects, her investment in Now Corp. has received little attention. Abrams herself has previously claimed that she “walled myself off” from company operations. However, documents indicate she was an integral part of the plan to use the federal program to benefit NOW.
Curiously, the website for the Now Corp. currently has no mention of Abrams under the “About Us” tab which describes the beginnings of the company. She is also not listed as member of the management team.
It appears that Abrams – as she embarks on another high-profile political campaign – wants to separate her 9-year financial relationship with Now Corp. from her political ambitions.
A paper trail beginning in 2013 may explain why.
An investigation by the Government Accountability Institute (GAI), supported by documents retrieved through FOIA requests, has discovered facts not yet reported about Abrams role in a unique scheme to use taxpayer backed federal program to benefit her private business and increase her financial fortunes.
Listed below are the sources used in the GAI research.
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Abrams Business Receives Unique Status, Approved as Private Lender
Abrams’ business, NOWaccount, received special treatment from the Georgia Department of Community Affairs related to a federal loan program which used taxpayer funds to guarantee small business loans.
NOWaccount applied for, and was approved as a private lender with the ability to use government backed loans to purchase small business trade receivables. At the time of the approval Abrams was a member of the Georgia House of Representatives. Provided below is the first page of the application for one of the entities approved as a private lender. Review full application for 2013 here and 2014 here.
Based on discussions with Georgia DCA officials, no other applicant received the private lender status. In fact, NOWaccount stated they could not get other states to adopt a “Georgia-like program.”
“Even through our applications from outside Georgia have picked up because of more national exposure, the reality is that our approval rate in Georgia is 6 times that in other states,” Hayes wrote. “We were never successful in getting other states to adopt a Georgia-like program.” Source: Atlanta Journal Constitution
Abrams Business Reported Approximately $100,000 in Annual Revenues in 2013.
Around the time Nowaccount was seeking a relationship with Georgia Department of Community Affairs, it was reported that NOWaccount’s annual revenue was approximately $100,000. Provded below is an excerpt from a Harvard Business School case study.
Abrams Partner: Taxpayer Guarantees Helped Us Grow Faster
Abrams’ business partner stated in a Harvard Business School case study that NOWaccount’s use of the federal loan program “allows us to scale faster because the government is in the first-loss position, not our lenders.”
In other words, NOWaccount could submit loans applications to the DCA for approval and then provide their selected business partners with cash for the promised collection of monies for services already provided to customer. If the NOWaccount partner defaulted on the monies provided, NOWaccount could be reimbursed by the government program with taxpayer funds.
Provided below is an excerpt from the case study.
Abrams told the Atlanta Journal Constitution that she played no role in securing the special status. However, the application to DCA labeled her a “key manager.”
“Abrams, who served as House minority leader from 2010 until she resigned last year, told The Atlanta Journal-Constitution that she played no role in securing the state contracts, and that she scrupulously avoided conflicts of interest.” Source: Atlanta Journal Constitution
However, in the application submitted by NOWaccount in 2014 seeking approval for the entity – Small Business Credit Cooperative (SBCC) to act as a private lender – Abrams was listed as a “key manager.”
Listed below is page 19 of the application which refers to the resumes of key managers.
Listed below is the resume of Abrams included in the application to the Georgia Department of Community Affairs.
In addition, Abrams was as listed as an officer when SBCC was created with the Georgia Department of Corporations. Provided below are images of the filing with the Georgia Department of State. See complete filing here.
The SBCC entity was funded by a private equity firm.
The SBCC application seeking approval as a private lender noted that a “major private equity firm” was involved with SBCC.
“Small Business Credit Cooperative, Inc. (“SBCC”) was created by NOWaccount Network Corporation (“NOW”) and a major private equity firm that has committed $20.7 million of subordinated debt to SBCC to attract approximately $100 million of senior debt.” Source P.19 SBCC application.
This means that taxpayers would be responsible for losses related to an entity with financial ties to private equity investment.
The NOWaccount entity tied to private equity, received more taxpayer guaranteed funds than entity tied to credit unions.
NOWaccount created two legally-independent Georgia non-profit corporations that contracted with NOW for servicing.
The first entity created by NOW was the Trade Credit Guaranty Corporation (“TCGC”), organized as cooperative under the Georgia non-profit corporation code. TCGC was organized and has been funded exclusively by the credit union industry.
The second entity created by NOW was the Small Business Credit Cooperative, Inc., (“SBCC”) also a cooperative under the Georgia non-profit corporation code. SBCC has been organized to be funded by commercial banks and private equity. Source P.5 SBCC application.
Information provided the Georgia Department of Community Affairs indicated the private equity funded entity had three times the loss in loan defaults as the entity funded by credit unions. Under the parameters of the federal program, taxpayers reimbursed the two entities.
