Atlanta-based fintech startup LendingPoint has picked up one of the biggest loans of 2017 — a $500 million credit facility — to fund more consumer loans as it expands nationally with a broader set of products. The balance sheet lending company uses a technology-based data approach to look deeper into a potential customer’s credit profile, to provide loan options in under seven seconds.
“This a senior [credit] facility that allows us to continue funding the consumer loans we offer from our own balance sheet,” says Tom Burnside, LendingPoint’s co-founder and CEO, about the facility arranged by Guggenheim Securities. “When we provide a loan to a consumer, it’s our money. We take the credit risk on the asset throughout the life of the loan, so we have a vested interest in making sure that the loan can be paid back in a predictable way. “
Burnside explains that this approach is different from other, traditional marketplace lenders, who often make a loan and quickly sell it off to interested investors.
“The more access we have to capital in the form of lines of credit, we can continue to expand our national footprint and offer new products to even more consumers,” says Burnside.
Because life happens, LendingPoint uses machine learning and cloud-based technology to take more than 10,000 data points, including credit and payment history, debt, verified income and more, into consideration when customers submit a loan application. In a few blinks, the platform provides a variety of loan options of up to $20,000.
This approach also allows the startup, which has been growing its customer base and product since 2015, to serve customers who might be turned down by a traditional lender.
“LendingPoint uses data and technology to provide more access to credit to people who are being underserved by traditional banking models,” says Burnside. “After the Great Recession, the lending industry started dividing people into “Prime” and “Subprime” categories. Credit is easy for people in the Prime category — they get low interest rates, rewards and loyalty programs.
“For everybody else, they were stuck with either bank declines or predatory products with sky-high interest rates. There are about 50 million NearPrime consumers in America who have credit scores between 600-700. These are good customers who deserve better access to responsible loans. By using data and technology, we’re able to more fully understand their credit story, not just their scores.”
Earlier this year, LendingPoint partnered with FinWise Bank to further their reach to NearPrime customers and is now operational in 30 states. The startup expects to have originated more than $400 million in consumer loans from inception in 2015 until end of this year.
Burnside says he has watched Atlanta grow as a global fintech hub for the past 15 years. One of the factors that he attributes to the city’s growth as a payments capital is the nurturing of local talent by the enterprises headquartered here.
“If you were to look in a 20-mile radius of LendingPoint’s offices, there are hundreds of fintech companies,” says Burnside. “It all started with companies like Equifax, First Data, Global Payments, and Worldpay — they’ve attracted and developed a lot of great people and made it easy to find data scientists, developers and other technical talent.”
He also points out the local universities with innovative programs that provide choice talent.
“We have Georgia Tech, Georgia State, University of Georgia. One of LendingPoint’s neighbors, Kennesaw State University, now offers a Data Science program, and so we get to participate in some of the recruitment and learning opportunities there. We couldn’t be happier to call Atlanta home.”