Online loan provider LendingPoint announced that on August 22, 2017, it closed an up to $500 million credit facility arranged by Guggenheim Securities. The company took down $138.5 million of the facility at the closing and on September 15, 2017, it took down an additional $32.7 million. LendingPoint intends to use the funds to fuel the growth of its consumer installment loan portfolio which has roughly doubled (98% growth) between August 2016 and August 2017. Guggenheim Securities, the investment banking and capital markets division of Guggenheim Partners, arranged the transaction and served as bookrunner. CBIZ MHM is the Administrative Agent, and U.S. Bank is the Note Agent and Paying Agent.
The announcement marks one of the largest credit facilities raised in 2017 in the online consumer lending industry for a balance sheet lender, providing LendingPoint with additional capital to expand its products and services nationwide, at a significantly lower cost of funds.
Earlier this year, the company announced a participation agreement with FinWise Bank, allowing LendingPoint to offer NearPrime consumers across the U.S. access to installment loans with standardized rates, loan agreements, product portfolios, marketing and services. As a result of the FinWise relationship, LendingPoint recently began marketing in Alabama, Alaska, Arizona, Florida, Kansas, Minnesota, Mississippi, Nebraska, North Carolina, Virginia and Washington, D.C. and is now operational in 30 states plus the District of Columbia. The company, which issued its first loan in 2015, expects to have originated, either directly or by FinWise Bank, more than $400 million in consumer loans from inception until end of this year.
“Investors are looking for opportunities that combine leading technology, sound data and risk modeling, and predictable return. LendingPoint’s credit-first, balance sheet approach has proven that it’s possible to unlock access to credit for more consumers who have been underserved by traditional lending, while still offering stable, predictable performance for investors,” said Tom Burnside, co-founder and CEO of LendingPoint. “The success of this facility highlights belief in LendingPoint’s vision to provide NearPrime consumers with more responsible borrowing choices and allows us to provide better access to credit to even more people across the U.S.”
LendingPoint combines data and technology to create a proprietary model that adds other dimensions to credit analytics. This model allows the company to get a more complete financial story of the customer and approve more people, who otherwise may have been overlooked by traditional FICO results. Loans range from $1,000 to $26,500, with terms from 24 to 48 months. So whether they’re planning a dream vacation or a dream wedding; a home renovation or a cross-country move; or need access to money for debt consolidation or medical expenses -- LendingPoint responds to customers in a matter of seconds with loan offers that meet their needs and transparent terms that take the guesswork out of repayment.
“LendingPoint is in the business of democratizing access to credit for millions of people who are overlooked by risk models that rely too heavily on traditional credit scores,” said Juan E. Tavares, co-founder and Chief Strategy Officer of LendingPoint. “We do this by using data and technology to tell unique credit stories -- looking at people’s potential, not just their past. Today’s announcement marks an important step in our ability to make credit fair again for a huge segment of the population who are deserving, yet underserved.”