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LendIt Fintech News: Daily Coverage of Fintech & Online Lending


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Kabbage Offering Extremely Short Duration Loans from Three to Forty-Five Days

The new loan program aims to help Kabbage Payments customers better manage cash flow.

February 5, 2020 By Ryan Lichtenwald 1 Comment

Views: 368

Kabbage is one of the leaders in small business lending and recently announced custom loans for their Kabbage Payments customers. By way of background Kabbage Payments allows for businesses to invoice customers, accept card payments and manage customer and item information

When we think of short term loans in small business lending we often think 6, 12 or 18 month terms, but the new loan program will offer loans as short as 3 days and up to 45 days. It aims to solve for the cash flow challenges many small businesses face.

Borrowers will have the ability pay the loan back when the loan matures or as an alternative to allocate a percentage of Kabbage Payments revenue towards the balance over the term. If opting for the latter the borrower will pay any remaining balance at the end of the term. These custom loans have a one time fee starting as low as 0.1%.

CEO Rob Frohwein provided this statement in the press release:

We’re changing the dynamics of cash flow for small businesses by integrating solutions that help them quickly settle payments and access flexible funding to better manage their businesses.

It is amazing today the number of options that small businesses have for financing. It would have been hard to imagine a decade ago that a small business could get a loan for such a short duration and that it would be financially feasible for a small business lender to provide these loans. With this new product the main alternative for a small business lender is a credit card.

Filed Under: Fintech Tagged With: Kabbage Payments, lending, Loan, short term, small business

Views: 368

Loan Servicing Deserves Dedicated Customer Focus

Personal commitment, groundbreaking technology team up to create fintech customer service that permeates everything

March 11, 2019 By admin Leave a Comment

Views: 356

[Editor’s note: This is a guest post from Shaun O’Neill, President of Concord Servicing Corporation. Founded in 1988, Concord is a world-class financial technology company, delivering innovative, flexible, and scalable portfolio servicing solutions to meet the demands of loan originators and capital providers (and their customers) in multiple asset classes.]

Fintechs evaluating loan servicing and backup servicing will discover that the most critical criterion for success is customer service that permeates and drives every element of performance—from state-of-the-art technology and customer care to compliance and problem-solving. Zappos CEO Tony Hsieh sums it up succinctly: “We believe that customer service shouldn’t be just a department; it should be the entire company.”

Customer service should drive every part of a top-notch Fintech loan servicing and backup organization. Following are 10 top areas to address when reviewing options: [Read more…]

Filed Under: Peer to Peer Lending Tagged With: Concord, Loan, servicing

Views: 356

Travel Lender Uplift Raises $123 Million

The relatively unknown company has made a big splash with their recent funding round.

January 24, 2019 By Ryan Lichtenwald Leave a Comment

Views: 540

 

Investments in fintech are a common occurrence, but it’s not often we learn of a relatively unknown company raising a significant round. Until now, Uplift has been keeping a low profile in order to capitalize in what they feel is a great lending niche.

The company partners with top airlines and travel companies like Kayak and Funjet to provide financing to travelers. The founder and CEO, Brian Barth is no stranger to the travel industry having previously sold a startup to Kayak for $200 million. Now two years into business the company hopes to originate $1 billion in loans in 2019.

With the $123 million Series C round Uplift plans to bring on new partners and expand into new services. The company remains focused on their partnership-based approach instead of launching their own standalone marketplace. According to TechCrunch, the round puts the company at a $195 million pre-money valuation. The round was led by Madrone Capital Partners and also included Draper Nexus, Ridge Ventures, Highgate Ventures, Barton Asset Management and PAR Capital.

What’s interesting is the company is in essence a point of sale lender which I imagine has leaned heavily on previous industry contacts in order to scale a lending business incredibly fast. The company is not alone in serving this segment though as Affirm also has a travel vertical offering financing for airfare and hotel rooms. Affirm has similar relationships like the one with travel giant Expedia.com.

It is impressive that in 2019 an online lending platform operating in a niche, albeit a large one, can raise $123 million in equity capital. Clearly, Uplift is a company to watch going forward.

Filed Under: Peer to Peer Lending Tagged With: Loan, travel, Uplift

Views: 540

Applying for a Debt Consolidation Loan in 2019

We detail one borrower's experience in applying for and being approved for a personal loan online.

January 17, 2019 By Ryan Lichtenwald 2 Comments

Views: 799

The LendIt Fintech News team has long featured reviews detailing the process for borrowers applying for loans through companies like LendingClub and Prosper. The reality is that the landscape for online loans today is much larger than these two fintech firms which dominated the industry a decade ago.

There are dozens of companies competing in the personal loan space, from the big banks who have either launched a new unsecured online loan or intend to do so, to the many successful fintechs we see in the ecosystem today. While receiving a loan online isn’t novel in 2019, every consumer lender today offers a slightly different user experience and most importantly, varying interest rates. Since we like to keep up to date with the current landscape we’re always excited when borrowers are willing to share the details of applying for a loan online. In this post we review the process of someone looking to consolidate approximately $10,000 of credit card debt.

One thing many borrowers don’t realize is that you don’t necessarily have to go to every single loan provider’s website to get an offer of credit. Sites like Credit Karma and LendingTree work with many lenders which can save time in finding the cheapest cost of credit. Below is a screenshot from this particular borrower’s Credit Karma account showing that they are pre-qualified for a loan through Prosper. This was just one of many of the options displayed to this borrower.

You can see in the table below that this borrower was able to receive a variety of offers with interest rates ranging from 9.47% to 13.99% and terms between 2 and 3 years. The most important field here in this person’s situation is the all-in cost of the loan, which includes interest and fees. While Prosper offered the lowest interest rate for this borrower, Lightstream was actually the cheaper loan due to the fact that they do not charge origination fees. Note that Prosper’s offer was a three year loan while Lightstream offered a two year loan term. Since this borrower planned to payoff this loan aggressively within the next 4-6 months the Lightstream loan was the best option. Other borrowers may value the flexibility of having a longer term loan which Prosper and others offered. Note that the FICO score of this borrower was around 720.

Lender Loan Amt Pre-qualified APR Length (Months) Payment Interest & Fees Phone Calls?
SoFi $10,000.00 10.60% 24 $464.22 $1,141.28 No
Lightstream $10,000.00 10.09% 24 $461.86 $1,084.64 Yes
Prosper $10,000.00 9.47% 36 $309.00 $1,472.00 No
LendingClub $10,000.00 10.35% 36 $311.00 $1,608.00 Yes
LendingClub $11,000.00 12.35% 36 $348.83 $1,557.88
Upstart $10,000.00 12.59% 36 $318.00 $1,954.00 No
Best Egg $10,000.00 13.49% 36 $326.00 $1,732.00 No
Marcus $10,000.00 13.99% 36 $342.00 $2,302.00 No

We also wanted to get an unbiased perspective on the actual user experience. Here is what this borrower had to say about each company’s process:

  • SoFi: User experience was friendly. Issues with uploading ID’s though. Had to try several times.
  • Lightstream: This is the loan I chose. The application was quick and the rates came within a day. The phone call I received was only to see if I required anything further or wanted more information.
  • Prosper: These rates were supplied by Credit Karma. Prosper wanted me to go through the full application and submission of my ID’s before locking in a rate.
  • LendingClub: I received several phone calls to verify my identity and needs which I thought was annoying and redundant. Plus they called me and wanted me to verify all of my SSN/etc. which felt more like a phishing call and less of a customer service call.
  • Upstart: Wasn’t a fan of the 3 year term, so I didn’t pursue.
  • BestEgg/Marcus: Didn’t consider due to the rates provided on Credit Karma.

Conclusion

There has been a dramatic power shift in consumers’ favor over the last few years when it comes to personal loans. Never before has the consumer had so much information about the loan options available to them in a matter of minutes. What’s interesting is that the list above of companies in unsecured lending is not comprehensive, there are many big banks and other fintechs who offer similar products. One of the things we’re keeping a close eye on is how fintech lenders and banks go beyond offering just an unsecured loan. When the borrower has transparency into many options, it becomes more important to differentiate with user experience and serving customers throughout their financial lives.

Filed Under: Peer to Peer Lending Tagged With: 2019, debt consolidation, Loan

Views: 799

Is LendingClub Making a Permanent Shift to Higher Quality Borrowers?

We hypothesize on what might be in store for the future for LendingClub's mix of loan offerings

November 16, 2017 By Ryan Lichtenwald 2 Comments

Views: 279

A recent post on the Lend Academy Forum spurred a discussion about the potential future of LendingClub, particularly as it relates to the types of borrowers they serve. While we don’t have insight into what LendingClub’s plans are, there are several things that have happened over the last two years that help us hypothesize that LendingClub’s strategy may be shifting.

LendingClub recently sent an email titled “How LendingClub Notes May Help You Generate Long-Term Wealth”. In it, they tout returns in the 4-6% range, a far cry from the returns some investors saw in LendingClub’s early days. The 4-6% range they present is footnoted, clarifying that this includes only grades A-C. LendingClub may be being conservative in presenting returns given recent performance trends, but it also may be a sign that the company is shifting to serving higher quality borrowers. Some investors believe LendingClub is intentionally leaving off the performance of the worst performing loan grades.

One forum member “Rawraw” provides his perspective on this forum thread:

I see it much differently, largely due to my time on this forum. I think they realized attracting investors who are just chasing high returns is not very valuable. Banks long ago learned this lesson, but I think LendingClub is catching on.

Rawraw is right, many of the early investors were attracted by prospect of double digit returns in the early days. The Lend Academy forum user base still has a higher concentration of investors who are chasing yield and as a result, some have moved on to other investments as returns have fallen. It was one of the reasons that I was first attracted to the industry.

No More F and G Loan Grades at LendingClub

After I began writing this article LendingClub coincidentally announced in their recent earnings call that loan grades F and G would no longer be available to investors  These loans have an average interest rate of 24.16% on LendingClub’s platform. Moving forward, the loans will be brought in house as part of a test portfolio for LendingClub. I was personally not surprised by this move. These loans have had a long history of not producing returns that compensate for the additional risk, which is why I hold very few of these loans in my own portfolio. They also make up a small portion of loans originated by the platform.

Going back to the trends of loan grades over time the below graph was taken from LendingClub’s statistics page, where you can further filter by 36 and 60 month loans and also view each loan grade as a percent of the total. You can clearly see the expansion of C grade loans, which has increased to 36.09% of total originations in 2017, the most ever.

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: grade, lendingclub, Loan, statistics

Views: 279

Recap of Recent Performance Trends with Lending Club and Prosper – Part #2

In the second post in this series we look at the performance of loans at Lending Club and Prosper.

January 18, 2017 By Ryan Lichtenwald 11 Comments

Views: 950

In part one of this series we explored the interest rate movements at Lending Club over the past year. In this post we’ll review the actual performance of loans to get an idea on how the recent vintages are trending since the first quarter of 2014.

Delinquency Rates with Lending Club

To begin with we’ll take a broad look at the vintages using delinquency rates which helps paint a picture of what’s going on with all loans originated by Lending Club. Lending Club club shares delinquency rates on their additional statistics page. The below charts are courtesy of NSR Invest and include the most recent data from Lending Club as of Q3 2016.

36 month Delinquency rates from Q3 2013 are shown below. The light blue shaded area represents Q3 2013 36 month loans which are now fully mature. Vintages through Q2 2014 remained pretty stable, but you can start seeing noticeable increases in delinquencies in notes originated in Q3 2014 and Q4 2014. Starting in 2015, delinquencies had a much steeper slope which has continued into the 2016 vintages. Delinquency rates break 2% for many vintages compared to the peak of 1.5% for Q3 2013. What will be interesting to see is how Q3 2016 delinquencies trend once we receive 3 more months of Lending Club data on February 14, 2017 when Lending Club announces their Q4 earnings.

lc_36_month_deliqunecy

Click to enlarge.

The chart below also tracks delinquency rates, but only includes 2015 and 2016 vintages. It is also easier to compare the vintages with the line chart. It’s clear that early delinquency rates have been increasing in recent quarters.

lc_36_month_deliqunecy_line

Click to enlarge.

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: delinquency, Lending Club, Loan, Performance, Prosper, Trends

Views: 950

A Review of Even Financial’s Affiliate Consumer Acquisition Business

We take a look at Even Financial and share some interesting facts about the borrowers who take loans with their technology.

January 5, 2017 By Todd Anderson Leave a Comment

Views: 794

even-financial-logo-transparent

Even Financial is a supply-side platform for online financial services, they have integrated with the top online lenders and affiliate partners to create a loan search, comparison and matching tool with real time analytics. They provide the power behind the affiliate, it’s an out of the box solution for anyone to integrate a comparison tool. Online lending partners include Avant, Discover, Upstart, Lending Club, SoFi and Ascend. The top affiliate partners are Credit Sesame, Bank Rate, Smart Asset, XO Group, CNN Money and MarketWatch.

They recently released their end of year statistics showing their industry leading API generated over 1.8B in loan requests, 100+ affiliate partners integrated, 12+ top online loan providers, and over 360,000 activated users. This article will take a look at Even’s affiliate lead generation business and what they see as the top five trends in lead generation today.

In reviewing Even’s program what you will find is that loan size on average is under $10,000 and the average age of borrowers in the top three loan categories is 44 years old. The top three categories for loans are debt consolidation, weddings, and home improvement.

Average loan size by credit score showed some interesting data points, top tier credit profiles on average received the highest loan amount and consistently requested the highest loan amount. The credit spectrum of borrowers ranges from 720 or higher for the top tier to under 600 on the lowest tier. Average self reported income showed that the fair credit score reported the highest income, with borrowers reporting over $6,000 more per year as compared to the excellent credit tier.

even-financial-results-page

An example of an offer presented to a borrower

An increasingly important aspect when it comes to borrowers is time to fund, you can see below it is one of the top trends and this shows that the quicker a borrower can access capital the better chance they will use that originator. Over a third of borrowers selected their originator based on how quickly they could access funds, even over APR. Additionally, data from Even shows that the lenders with the fastest time to fund also had the fastest take rate. Average time to fund was about 4.5 days, with the fastest being same day and the slowest being 16 days.

As digital marketing continues to take off lenders are comparing the organic and inorganic borrower. Inorganic leads that come from display ads and search channels show a 30% higher rate of default in the first three months as compared to organic leads. The borrowers who come to a lender through credit education or cross promotion have shown to be a lot more reliable to repay the loan.

More and more borrowers are moving away from their desktops and using their phones to organize their financial lives. What the research shows is mobile earnings per click are less than half the cost as compared to the desktop. Having a strong mobile experience and strategy is not only a key for lenders it looks to be able to save them a significant amount of money. Here are the top five trends in lead generation from Brian Brauntuch VP, Partnerships and Operations, Even Financial.

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: Comparison, Even Financial, Loan

Views: 794

Lending Club Now Offering Joint Loan Applications

Lending Club becomes one of the first marketplace lending platforms to offer joint loan applications for consumers.

October 7, 2015 By Ryan Lichtenwald 1 Comment

Views: 400

Lending Club Joint Application Loan

A few weeks ago, Lending Club investors received an email notifying them that Lending Club would be introducing a new feature for borrowers on October 6th. We learned yesterday that the new feature allows borrowers to apply for a joint application Lending Club loan. As part of this feature, there are four new fields that are available in the downloaded notes csv files and the API which we have highlighted below. As for information for borrowers, Lending Club posted a knowledge base article on joint applications.

Lending Club Joint Application – Borrower Information

From the Lending Club Knowledge Base:

To qualify for a joint application loan, a number of factors of either or both applicants are considered, including but not limited to, information provided on the joint application, information provided by credit bureaus, credit score(s), income, debt-to-income (“DTI”) ratio, credit history length and recent credit history.

[Read more…]

Filed Under: Borrowing, Peer to Peer Lending Tagged With: API, Joint Applications, Lending Club, Loan

Views: 400

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ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

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