It’s Live, You Can Now Invest in a Credibly Warehouse Line Through Figure

IT’S LIVE. Less than two months after Credibly announced a strategic partnership with Figure to “modernize SMB capital markets via blockchain rails,” investors big and small are now able to share in the earnings of a Credibly business loan warehouse line.

Specifically, Credibly boarded a business loan portfolio on July 21 and can already borrow against it using Figure’s Democratized Prime. Investors can now effectively participate in the earnings of that line by lending their own money into the pool. The amount of capital contributed to the pool and the utilization rate of it play a big role in the yield generated from that. Investors can pull out of the pool at any time assuming there is liquidity available to do so.

Unlike most investing platforms, investors can only participate in this one using blockchain rails (as was explained in deBanked’s May 23 story). Investors fund their accounts using dollars, crypto, or stablecoins, convert them into Figure YLDS tokens, and then lend those tokens into any number of available pools. As of the time of this writing investors can participate in HELOCs, auto loans, crypto loans, and now “small and medium business loans” which at present is sourced from Credibly. This all takes place on the Provenance blockchain and can all be easily conducted through the Figure Markets mobile app. deBanked was able to execute this process with no issues while using the investor side of the platform.

The investing opportunities on Figure’s Democratized Prime are warehouse lines for institutional-grade portfolios so investors are likely to see returns that resemble warehouse line rates (versus what one might expect if they do direct syndication with mom & pop lenders/funders). Credibly stands to benefit in the long run by the likelihood of lower borrowing rates and costs versus other capital market options and then being able to pass those savings onto their customers.

Investors will see some stats for the inaugural small and medium business loan pool which looked like this at the time of this writing:

The page also offers this information:

The Small and Medium Business (SMB) pool gives you exposure to credit backed by thousands of real, vetted American small businesses. The receivables represent payments owed by operating U.S. businesses. By lending into the pool, you earn from the cash flows those businesses generate as they repay their financing obligations. Backed by institutional-grade small-business credit, the SMB pool provides yield generated by a tangible, collateralized asset class, and a new way to diversify your portfolio.

Risk parameters
Democratized Prime manages risk through a structured financing facility backed by a diversified pool of prime small business financing receivables. The facility benefits from multiple layers of credit enhancement ensuring the pool can absorb a variety of adverse conditions before depositor yield is affected. This is enabled by a variety of mechanisms, including a 95% advance rate cap, reserve account funding, overcollateralization, originator repurchase obligations, and full recourse provisions. All receivables included in Democratized Prime must satisfy established eligibility requirements and be performing at the time of inclusion.

Collateral description
The collateral consists of eligible small business financing receivables originated and extended to operating U.S. businesses and are underwritten using proprietary cash-flow-based models, business verification processes, and personal guarantees from business owners. The portfolio has an average business owner FICO score of approximately 700, an average of 10 years in business, and spans more than 330 industries.

Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.