Often in these pages we focus on the more established online lenders, many that have been around for 10 years or more now. But there are a small number of online lenders that launched more recently who are making a name for themselves.
One company that we believe has a bright future is LendingPoint. Founded in 2015, the Atlanta based company is a little bit different from many others in this space. LendingPoint is a near prime lender, a segment that has been largely underserved by both banks and fintechs alike. They are taking a different approach and recently announced their foray into point-of-sale finance with the acquisition of LoanHero
Today, the company announced that they have secured a $600 million credit facility from Guggenheim Securities. This is a significant milestone for the company as they have now secured a total of $1.1 billion in funding. Their last facility of $500 million was announced in September 2017 and was also arranged by Guggenheim Securities.
Tom Burnside, co-founder and CEO commented on the details of the facility which was included in the press release:
“The sizes, advance rates and interest rates of our credit facilities are a testament to our portfolio’s outstanding performance to date. This blended interest rate on this most recent facility is exceptionally low — LIBOR plus 467 basis points – and the advance rate is 90%, underscoring that our lenders’ believe that our credit-first, balance-sheet business model works. When we started LendingPoint, we knew that by successfully solving lending for people with credit scores between 580 to 700 – those we call ‘NearPrime’ – we would maintain strong capital markets support. This new Guggenheim facility and its pricing confirms that we’re succeeding.”
LendingPoint shared that they had processed 850,000 applications in the first quarter, totaling $9.2 billion in loans. The amount of interest they have from prospective borrowers is staggering. While many of the borrowers are declined, we did get a sense of their scale today. To date, LendingPoint has originated 50,000 loans totaling over $500 million. That already makes them a significant player in the near prime space.
LendingPoint continues to build their business, but the latest credit facility is a testament to the success of the company to date. They are certainly one of the lenders we are keeping a close eye on and believe have the potential to grow much further with the market they are serving.