[Editor’s note: This review contains several links to Promise Financial that are affiliate links. If you open an account through one of these links the blog will receive a small commission from Promise Financial.]
We often like to feature companies that are doing something different in the marketplace lending industry and Promise Financial is certainly one of these companies. They have taken the same approach as other marketplace lenders, but have decided to focus on the niche of wedding financing. I spoke to Josh Jersey, Co-Founder and CEO and Jean-Paul Ndong, their Chief Credit Officer to learn more about the company and team behind it.
Founded in 2014, Promise Financial set out to build their technology and underwriting. With that being complete, they officially launched in June 2015 and are already originating loans. While it is still extremely early, Josh confirmed that they have received loan requests totaling a few million dollars. Between equity and capital allocated to fund loans on the platform, Promise Financial raised $4 million. Investing is open to accredited investors and they have a small number of investors participating at this time.
The most important piece to dig into is why the focus on wedding loans. Josh had been well aware the marketplace lending model and tech-enabled lending, but found that it was broadly applied to credit card refinance. Josh and his team saw an opportunity to both bring the loan product to the point of purchase and to find an underserved market. According to Promise Financial, the average wedding now costs about $30,000. With weddings being commonly paid for by credit cards and payments for weddings being due upfront, it was a perfect fit. In addition, by selecting a dedicated product, borrowers will likely find that the interest rates on a Promise Financial loan are likely lower than that of a credit card.
Promise Financial Differentiation
I asked Josh what set his company apart from other unsecured lenders like Prosper and Lending Club. The two main aspects to their differentiation are innovation on the product and the distribution. He believes that the emphasis on wedding loans will allow them to better appeal to young engaged borrowers. Currently they offer several wedding planning tools including a blog dedicated to wedding finance, a wedding checklist and a budgeting tool. They plan to expand this over time as a valuable resource for their customers.
The second piece that sets them apart is the distribution channels. Although the company just started to originate loans, Josh mentioned that partnerships are going to be important when it comes to borrower acquisition. It seems like this is a great approach as it should be relatively easy to target and partner with other companies in the wedding industry. They are currently attracting borrowers through direct digital marketing.
Loan Size and Borrower Demographics
Promise Financial offers loans from $3,000 to $35,000 to borrowers with a 660 or higher FICO. These are 3 year loans with fixed APRs ranging from 5.89% – 29.48%. Promise Financial charges an upfront origination charge between 1-5% of loan amount. While it is still very early on, I asked about the demographics of current borrowers. The average loan amount is between $10,000 and $15,000 to someone who is getting married in the next 3 to 6 months. They have an average FICO in the high 600’s.
It’s always interesting to hear about companies who are applying the marketplace lending model to various niches. They have brought on a strong team with an immense amount of background in financial services, private equity and underwriting. It’s clear they were thoughtful in targeting wedding loans and they will be certainly one to keep an eye on as they begin to ramp up their originations.