LendingPoint, the company working to revolutionize and democratize commerce, announced that it closed a committed, $250 million credit facility arranged by Guggenheim Securities. The credit facility has an accordion feature, which allows the Company to increase the size of the credit facility to up to $500 million. On the closing date, the Company drew down $215 million of notes from the credit facility.
LendingPoint intends to use the credit facility to fund the continued growth of its consumer installment loan origination platform, which grew by 64% through July 2019 compared to the same period in 2018. Guggenheim Securities, the investment banking and capital markets division of Guggenheim Partners, arranged the transaction and served as sole structuring agent and sole bookrunner. CBIZ MHM is the Administrative Agent, and U.S. Bank is the Note Agent and Paying Agent. The transaction was structured as an amendment, an extension, and an upsize of LendingPoint’s Series 2017-1 credit facility, which was also arranged by Guggenheim Securities.
The amended credit facility priced at a blended margin that is approximately 200 basis points below that of the original, Series 2017-1 credit facility, and is structured as a variable funding note program, which allows LendingPoint to periodically transfer receivables from the credit facility to collateralize a takeout transaction, such as a securitization or a whole loan sale.
Earlier this year, the Company upsized its 2018 credit facility arranged by Guggenheim Securities to $350 million. That facility can be upsized to a total of $600 million.
LendingPoint originates unsecured consumer installment loans directly using its own lender licenses and also originates for FinWise Bank, a Utah chartered bank, member FDIC and for First Electronic Bank, a Utah chartered bank, member FDIC. The originations are done direct-to-consumer online, and through thousands of merchant and service providers nationwide which offer financing at the point of sale.
“Investors are looking for compelling receivables-backed investment opportunities that combine leading technology with sound and time-tested credit underwriting practices,” said Victor Jose Pacheco, Co-Founder and Head of Capital Markets at LendingPoint. “The success of this credit facility highlights investors’ belief in LendingPoint’s ability and vision to provide NearPrime consumers with more responsible borrowing choices, as well as confidence in the leadership team at LendingPoint and our unique and differentiated approach to lending.”
“From the beginning, our team has understood that building the commerce platform we envision requires offering stable, predictable performance for investors,” said Tom Burnside, co-founder and CEO of LendingPoint. “Today’s announcement demonstrates investor confidence in our ability to predict risk both online direct to consumer and at the point of sale. As we continue to build out the platform, we will not lose sight of the need to maintain healthy margins in all of the products and services we offer.”
LendingPoint combines data and technology to create a proprietary model that brings additional dimensions to traditional credit analytics. This model allows the company to obtain a more complete financial story of the customer and to approve customers who otherwise may have been overlooked by lenders with less robust and more traditional, FICO-score dependent, credit scoring models. Offered loan sizes range from $500 to $26,500, with terms from 24 to 51 months. So whether a customer is planning a dream vacation or a dream wedding; a home renovation or a cross-country move; or wants access to funds for debt consolidation or medical expenses -- LendingPoint responds to its customers in a matter of seconds with loan offers that meet their needs and provide transparent terms, which takes the guesswork out of repayment.
“We are in the business of revolutionizing and democratizing commerce,” said Burnside. “We started by using data and technology to tell unique credit stories -- looking at people’s potential, not just their past. We then moved to point of sale financing to help most consumers with alternatives to credit card revolving debt and compound interest. Even as we provide more data, tools and services to transform commerce, we will always take care to make credit fair again for a huge segment of the population who are deserving -- yet underserved.”