Archive for 2017
See You At LendIt
March 3, 2017Monday kicks off the LendIt conference at the Javits Center in NYC. Given that it’s the biggest event of the year for the industry, I certainly hope to meet as much of you there as possible.
If you still haven’t registered, make sure you at least take advantage of a 15% discount by using promo code: Debanked17USA. My schedule is pretty booked up, fueled in part by the excellent session topics this year which I want to catch a bunch of. That being the case, I am potentially available to get together even on Sunday or Wednesday (since I live in Manhattan) or any other day outside of the conference.
I hope you enjoy LendIt. You should check out their story of how they came to be HERE.
Letter From The Editor – Mar/Apr 2017
March 1, 2017Out of the many lenders and marketplaces that reported their 2016 earnings in the last month, several didn’t look so good. If algorithms and branchless-finance was supposed to make lending so much more efficient, why is it that so many online lenders are struggling to make a pro t?
As it would turn out, banks were not as doomed or as outdated as the technologists characterized them to be. Their cost of capital and brand name recognition (for most of them anyway) is proving very tough to compete with. In this issue we explore the latest trend, the drift back towards banking. That doesn’t mean that we are returning to a purely bank-dominated lending universe, however. On the contrary, it’s mainly the prime borrower market that banks are working to service better. There’s an entire segment out there for which bank financing is not the answer, at least not yet, and there’s plenty of exciting events taking place.
For small business owners, some still want a relationship with the person helping them obtain capital, they just want it in a different way. In the last few months, we spoke with several professionals who attest to having a text-based relationship with their clients, as in they communicate back and forth through their phones over text.
When I first heard about this, I assumed it had to be a one-off. “Wait, your applicants text you for updates with the underwriting process?” I asked a sales representative who seemed stunned that I would think that was odd. After a quick poll of other salespeople at a conference, the truth became clear to me. If you don’t attempt to have a text relationship with your clients, you might be at a disadvantage. In this issue, we explore why that might be.
And on that note, RU ready 4 this issue? Cuz I g2g so ttyl. Thx. 
–Sean Murray
CIM Commits Additional $100M to Funding Circle to Help Fuel Small Businesses
March 1, 2017SAN FRANCISCO, March 1, 2017 /PRNewswire/ — Funding Circle, the world’s leading lending platform focused exclusively on small business, today confirmed Community Investment Management (“CIM”), an impact investment firm focused on marketplace lending, will finance an additional $100 million in loans to businesses originated through Funding Circle in the U.S.
The multi-year agreement, which extends the existing relationship between Funding Circle and CIM, will allow Funding Circle to provide a much-needed, further injection of capital into America’s small business sector.
“We are thrilled to extend our partnership with CIM, who shares our values and mission to help small businesses grow and thrive,” said Sam Hodges, co-founder and US managing director at Funding Circle. “Together, through this additional investment, we can help even more businesses access the transparent and responsible financing they need to stimulate job creation and economic growth in their local communities.”
Since launching in 2010, investors at Funding Circle – including 60,000 individuals, financial institutions, government, and the listed Funding Circle SME Income Fund – have helped more than 25,000 businesses globally access $3 billion in transparent and affordable financing. CIM was one of Funding Circle’s earliest institutional partners in the U.S.
“Funding Circle is a leader in innovative lending to small businesses who are underserved by traditional lenders,” said Jacob Haar, Managing Partner at CIM. “We are pleased to expand our relationship to further empower small businesses across the United States with responsible financing.”
About CIM
Community Investment Management (“CIM”) is an impact investment firm focused on marketplace lending. CIM provides responsible and transparent financing to small businesses in the United States in partnership with a select group of technology-driven lenders. CIM combines experience, innovation, and values to align the interests of small business borrowers and investors. More information is available at http://www.cim-llc.com.
About Funding Circle
Funding Circle (www.fundingcircle.com) is the world’s leading lending platform for business loans, matching small businesses who want to borrow with investors who want to lend in the UK, US and Europe. Since launching in 2010, investors at Funding Circle – including 60,000 individuals, financial institutions, the listed Funding Circle SME Income Fund and Government – have lent more than $3 billion to 25,000 businesses globally. Funding Circle has raised $373m in equity capital from the same investors that backed Facebook, Twitter and Airbnb.
Lendio Announces First-of-Its-Kind Marketplace Lending Franchise Program
March 1, 2017Lendio, the nation’s leading marketplace for small business loans, today announced it is expanding the reach and availability of its small business lending options with the launch of a new franchise program.
The Lendio franchise program complements the company’s core value of helping small business owners fuel the American Dream. Through this program, franchise owners across the country can ease the financial hurdles for small businesses in their local community. Lendio franchisees get access to Lendio’s marketplace and technology, comprehensive training, branded marketing tools and national advertising, partnerships, and access to Lendio’s franchise support team to help coach small business owners through the lending process.
“We are thrilled to extend the availability of our online loan marketplace through our franchisees to an even broader group of small businesses who may not have been aware of the range of loan options available to them,” said Brock Blake, CEO and founder of Lendio. “With 80 percent of small business loan applications being rejected by traditional banks, now more than ever, small business owners need access to various sources of funding. Having a local presence will help bridge the awareness and trust gap for small business owners, helping borrowers position themselves and their companies for a great future.”
Ben Davis, Chief Franchising Officer at Lendio, will lead the franchise program. Together, Lendio and Davis will expand the company’s local presence and offer services to a new segment of small business owners through local franchisees, bringing options, speed and trust to Main Street, the backbone of America’s economy, in a way that has never been done before.
“Lendio’s investment in franchising meets the classic definition of an organization putting its money where its mouth is,” Davis said. “To Lendio’s already powerful online marketplace, Lendio franchisees bring a wealth of knowledge about local businesses and their capital requirements. They are connected to their communities and uniquely driven to build great neighborhoods and strong local economies.”
Lendio helps small business owners find working capital through its online platform. With a network of over 75 lenders offering multiple loan products, Lendio’s marketplace matches small business owners with various loan options. Today’s announcement comes on the heels of Lendio announcing an 87 percent annual increase of loans originated through its platform, which has facilitated more than $240 million in loans to date.
Lendio currently has franchisees in five territories, with significant interest in many others. Partners Kyle Bohrer and Bryan Gealy, in Erie, Pennsylvania, joined Lendio as the first franchise owners. Bohrer has been in the small/mid-sized business marketplace for over 10 years. Located in the Great Lakes region, Bohrer has been working on saving Erie small business owners money on their shipping. By becoming a Lendio franchisee, they are able to support businesses with their financing needs and help their community turn the corner economically.
“We will consult with potential customers looking to create new businesses and ones looking to expand, grow or just stay afloat,” Bohrer said. “Erie is my hometown, so becoming a Lendio franchisee allows local small business owners to work with someone in their community who knows their needs, challenges and potential opportunities.”
For more information about Lendio’s franchise program, visit: https://www.lendio.com/franchise.
About Lendio
Lendio is a free online service that helps business owners find the right small business loans within minutes. The center of small business lending, our passion is fueling the American Dream by uniting the small business loan industry and bringing all options together in one place, from short-term specialty financing to long-term low-interest traditional loans. Our technology makes small business lending simple, decreasing the amount of time and effort it takes to secure funding. More information about Lendio is available at http://www.lendio.com.
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In The UK, Regulators Advise Where The Line Between Banks and Non-banks Lies
March 1, 2017Online lenders shouldn’t be borrowing money from other online lenders and using that money to lend, the Financial Conduct Authority in the UK warned on Tuesday. Doing so without regulatory permission, they explained, would constitute accepting deposits and be a criminal offense.
A copy of the official letter signed by Jonathan Davidson, Director of Supervision – Retail and Authorisations, is publicly available.
According to the Financial Times, the warning was prompted after RateSetter asked the government in October 2016 if such activity was acceptable. They had been engaged in such wholesale lending, as it’s called, since 2016 but have since stopped.
Prosper, A Marketplace for the World’s Richest Banks and Billionaires?
February 28, 2017
Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, and funds tied to some of the world’s richest billionaires (including George Soros) all make up the “consortium of institutional investors” and “syndicate of lenders” involved in Prosper’s recently announced landmark deal. The terms allow for the investors to purchase up to $5 billion of loans on the platform while the lenders will provide warehouse financing up to $1 billion. It’s safe to say that this is not your father’s peer-to-peer lender.
The WSJ reported too that investors will receive warrants to buy equity in Prosper that’s tied to the amount of loans they buy, all the way up to 35% of the company if they buy the full $5 billion.
Prosper used to call itself a “peer-to-peer lending marketplace” but these days it’s adopted a slightly different label, “consumer lending marketplace.”
Back in July, I half-jokingly scoffed at the phrase marketplace lending as the industry had begun to call itself, seeing that it was morphing into just Wall Street lending after Goldman Sachs announced it would actually be launching an online consumer lending arm to compete against Lending Club and Prosper.
The deal is obviously great for Prosper, whose future seemed kind of up in the air, but it’s hard to get excited about the world’s biggest banks and richest funds now being the consortium behind an online lender who pioneered peer-to-peer lending, if things like peer-to-peer lending excited you.
To be fair, peers/retail investors can still invest on the platform too so I guess there’s that.
Prosper Marketplace Closes Loan Purchase Agreement for up to $5 Billion of Loans with Consortium of Institutional Investors
February 27, 2017SAN FRANCISCO–(BUSINESS WIRE)–Prosper Marketplace, a leading online consumer lending marketplace, today announced that it has closed a deal with a consortium of institutional investors to purchase up to $5 billion worth of loans through the Prosper platform over the next 24 months. The investors in the consortium are affiliates of each of New Residential Investment Corp., Jefferies Group LLC and Third Point LLC, and an entity of which Soros Fund Management LLC serves as principal investment manager. The consortium will also earn an equity stake in the company based on the amount of loans purchased, further aligning the group with Prosper’s future growth and success. Warehouse financing of up to $1 billion will be provided by a syndicate of lenders including Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley.
“We’re very pleased to be working with this consortium of investors, and believe they will be great long-term partners as we continue to build a large-scale business,” said David Kimball, CEO, Prosper Marketplace. “This deal gives us the funding stability and additional capital markets expertise we need to continue to grow our marketplace and achieve profitability in 2017.”
Prosper has maintained positive momentum since the second half of 2016, with monthly loan originations growing steadily since July. In addition, the Prosper loan portfolio is delivering solid returns to its institutional and individual investors, with an estimated net return of 7.86%
Financial Technology Partners (FT Partners) served as strategic advisor to Prosper Marketplace and its Board of Directors on this transaction. DV01 will be the loan data agent to the consortium.
About Prosper Marketplace
Prosper’s mission is to advance financial well-being. The company’s online lending platform connects people who want to borrow money with individuals and institutions that want to invest in consumer credit. Borrowers get access to affordable fixed-rate, fixed-term personal loans, and investors have the opportunity to earn attractive returns via a data-driven underwriting model. To date, over $8 billion in personal loans have been originated through the Prosper platform for debt consolidation and large purchases such as home improvement projects, medical expenses and special occasions.
Prosper launched in 2006 and is headquartered in San Francisco. The lending platform is owned by Prosper Funding LLC, a subsidiary of Prosper Marketplace. Loans originated through the Prosper marketplace are made by WebBank, member FDIC. Visit www.prosper.com and follow @Prosperloans to learn more. Prosper notes offered by Prospectus.
1 Estimated return on January 2017 production is 7.86% according to the Prosper Performance Update: January 2017
Contacts
Prosper Marketplace:
Sarah Cain, 415-593-5474
scain@prosper.com
AutoFi Unveils Online Multi-Lender Sales Solution for Used Car Dealers
February 27, 2017SAN FRANCISCO, CA (February 27th, 2017) – Today AutoFi, a financial technology company that is transforming the way cars are bought and sold, announced the launch of the first fully online sales and multi-lender financing solution for used car dealers. Financing on AutoFi’s platform will be provided by its lender network of banks, speciality lenders, and credit unions. Today, the company announced that its credit union financing will be offered in partnership with iLendingDIRECT.
- “People want buying a car to be fast, straight forward and more transparent. That’s why AutoFi is working with lenders and dealerships to make the process easier through online sales and financing.” said Kevin Singerman, CEO of AutoFi. “That’s why I’m so excited about our partnership with iLendingDIRECT. Bringing iLendingDIRECT’s network of credit unions onto the AutoFi platform means consumers will have even more competitive financing options to choose from when purchasing a car online.
- “This is the perfect e-commerce solution to get customers the auto financing they need and want in a quick and efficient manner, and enhance their car-buying experience,” said Nancy Fitzgerald, President and CEO of iLendingDIRECT.
The AutoFi platform is the first online point-of-sale solution for auto finance. It allows customers to purchase and finance a car completely online, either through a dealer’s website or an in-store digital experience. The company recently announced the world’s first online car sales and financing solution for new car dealers in partnership with Ford Motor Credit. Today’s announcement further expands AutoFi’s ability to serve the multi-billion-dollar used car sales market through its partnership with iLendingDirect.
AutoFi’s platform will now allow used car buyers to research a vehicle on the dealership’s website; select “Buy Now”; receive an automated credit decision; and get loan offers from banks, specialty lenders and iLendingDIRECT’s credit union network who compete for the car buyer’s business in real time. Consumers can then customize their financing deal by selecting down payment and loan terms; choose vehicle protection products; and e-sign all financing documents online. The new platform gives used car dealers and buyers the ability to transact online with competitive financing options in a fully automated process.
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About AutoFi
AutoFi is a technology company transforming the way cars are bought and sold. The company’s platform allows auto dealers to sell cars completely online by connecting buyers with lenders in a fast, easy and transparent process. AutoFi’s team includes industry leaders from enterprise software, finance, automobile and consumer sectors who previously worked at companies including Lending Club, PayPal, and SunGard. AutoFi’s investors include Ford Motor Credit Company, Crosslink Capital, Lerer Hippeau Ventures, Laconia Capital Group, Basset Investment Group, Eniac Ventures, 500 Startups and Silicon Valley Bank. For more information visit www.autofi.com
About iLendingDIRECT
iLendingDIRECT is a national Finance and Insurance marketing firm that focuses on Auto Refinancing. We offer smart financial solutions with the customers’ well‐being in mind – committed to setting our customers up for success by saving them money and educating them about what is best for their particular financial situation. For more information on iLendingDIRECT services, visit www.ilendingdirect.com.
