Thursday May 9 2019, Weekly News Digest

leveraged loans

News Comments Today’s main news: SoFi launches ETF for gig market. LendingClub’s higher fees lead to earnings win. CrowdStreet hits $500M in real estate investments. Funding Circle offers manual lending in foreign markets. Marcus delays German launch. Today’s main analysis: LendingClub, GreenSky, and OnDeck earnings. Today’s thought-provoking articles: GDP growth continues. The pros and cons […]

The post Thursday May 9 2019, Weekly News Digest appeared first on Lending Times.

leveraged loans

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United States

United Kingdom

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News Summary

United States

SoFi launches gig-focused ETF (TechCrunch), Rated: AAA

Today, the company announced a new exchange-traded fund (ETF) product focused on the gig economy. GIGE, which trades on Nasdaq, is an actively managed fund advised by Toroso Investments that allows investors to capitalize on this hot sector of the economy. Toroso offers a range of services around creating and managing ETFs.

The company also announced the creation of an ETF focused on high-growth stocks. That ETF, which trades as SFYF on the NYSE, is designed to identify and capture the growth of the top 50 of the 1,000 largest publicly traded issues.

LendingClub Records Higher Transaction Fees on the Way to Earnings Beat (TheStreet), Rated: AAA

Online-loan marketplace LendingClub (LC – Get Report) was rising more than 14% Wednesday to $3.70 after reporting a surprise profit in the first quarter, though the company’s guidance was short of expectations.

LendingClub reported a 22% increase in transaction fees that led to a 15% increase in revenue to $174.4 million and adjusted earnings of 2 cents per share. Wall Street was expecting the company to report revenue of $169.4 million and a loss of 3 cents per share.

Higher Fees Drive LendingClub’s Earnings Beat (PYMNTS), Rated: A

The marketplace lending platform reported adjusted net loss of $11.25 million, or 3 cents a share — red ink, but less than the 4 cents per share loss analysts were forecasting.

That stronger-than-expected revenue outcome was driven by stronger-than-expected loan originations during the first quarter, which rose 18 percent year-on-year to $2.73 billion. That increase in originations drove an increase in transaction fees, which were up 22 percent to $135.4 million.

For the second quarter, the company expects net revenue between $185 million and $195 million, with the high end slightly below the average analyst estimate of $196.7 million.

Why LendingClub Stock Leapt 12.4% Today (The Motley Fool), Rated: B

Wedbush believes LendingClub’s improving operating efficiency will help it produce an adjusted EBITDA margin of 20% by the end of 2019. The firm also expects LendingClub to grow revenue by 12%-15% annually in the coming years.

LendingClub, GreenSky and OnDeck Q1 2019 Earnings Results (Lend Academy), Rated: AAA

LendingClub

LendingClub rounded out 2018 originating the most loans in the company’s history at $10.9 billion. With their Q1 2019 results, the company is off to a great start in 2019. Originations were $2.7 billion, up 18% year over year. The company reported that application growth was 31% over the same period.

Source: Lend Academy

Net revenues came in above high end guidance of $172 million at $174.4 million for the quarter, up 15% year over year. GAAP Consolidated Net Loss was $(19.9) million, compared to $(31.2) million in Q1 2018. Finally, the company delivered adjusted EBITDA of $22.6, up 47% year over year and well above their projections of $13-$18 million. LendingClub is on track to become adjusted net income profitable over the second half of 2019.

GreenSky Q1 2019 Earnings

In Q1 2019 GreenSky increased transaction volume on the platform 20% to $1.2 billion. They also grew revenue 22% to $103.7 million form the prior year period. GAAP Net Income in Q1 2019 was $7.4 million. The company had aggregate commitments of $11.8 billion from nine bank partners of which $4.5 billion remain unused. The company ended the quarter with $268 million in cash.

Source: Lend Academy

OnDeck Q1 2019 Earnings

Originations fell for the quarter to $636 million compared to $658 million for the previous quarter. This was attributed to OnDeck tightening their credit box during the quarter. The company shared that their line of credit product reached an all time high of $150 million for the quarter.

Strong GDP Growth Continues (PeerIQ Email), Rated: AAA

Unemployment fell to 3.6% – the lowest level since 1969. The last time unemployment levels were this low, the first humans landed on the moon. The inflation rate was 5.5% The DJIA was 800. The average cost of a new home was $15K, and the average salary was $9K. A gallon of gas cost a scorching thirty-five cents.

Source: PeerIQ

On the regulatory front, Senator Durbin introduces a bill to create a 36% APR Cap on Consumer Loans. The 36% cap matches a similar rate for loans offered to service members and is superseded by strict state-level caps, and offers no preemption of the patchwork of state laws for digital models.

Online marketplace reaches $ 500M in online real estate investments (Real Estate Weekly), Rated: AAA

CrowdStreet, Inc., a technology provider with an online marketplace for direct equity investment in commercial real estate (CRE), announced that in March it crossed the $500 million threshold in total online investments with a record number of new individual investors.

The news accompanies a record quarter with over $75 million invested.

The Pros And Cons Of Leveraged Loans (Seeking Alpha), Rated: AAA

Corporate America has taken on substantially more debt in the aftermath of the Great Recession. Today, the underlying structure of that leverage looks different. Fewer bonds are being issued. Bank loans to indebted companies now match junk bonds in total issue. This article will review the market for leveraged loans – a marketplace that has grown tenfold in the new millennium and has passed the $1 trillion threshold.

In 2017, nearly 70% of levered loans were refinanced at lower interest rates. That creates a lot of turnover.

BlackRock is building a team of 30 data scientists to create a next-generation stock-lending platform (Business Insider), Rated: A

BlackRock founded a Palo Alto, California-based group called AI Labs last year, directed by the Stanford professor Stephen Boyd. Now, according to job postings reviewed by Business Insider, the 30-member team is tackling projects ranging from next-generation lending platforms to automating human tasks.

ONLINE LENDER SETTLES WITH FTC FOR .85 MILLION (Lawyers and Settlements), Rated: A

Avant LLC, the online lending phenomenon which had previously been hailed as a “breakout financial success story,” has agreed to settle a lawsuit brought by the Federal Trade Commission (FTC) for $3.85 million. Although the lawsuit largely relied on a different federal statute, it shares much of the consumer financial protection zeal of the excessive overdraft fee lawsuits recently leveled against credit unions, banks and payday lenders. But it also reveals shortcomings in federal consumer protection laws.

Providing Additional Liquidity to Some Delinquent Borrowers Can Actually be a Win-Win (Yahoo! Finance), Rated: A

Consumers who fall behind on credit payments may find an unexpected lifeline—another loan from their lender. A new TransUnion (TRU) study found that, in some instances, both lenders and consumers can benefit when additional loans are extended to customers during difficult times. The findings were released today during the 2019 TransUnion Financial Services Summit, attended by more than 300 executives from across the globe.

In the study, 31% of delinquent borrowers experienced improvement on one or more of their delinquent debts when securing a new personal loan. In addition, 24% of borrowers also performed well on the new loan.

Monzo plots US launch as soon as this summer (The Telegraph), Rated: A

Monzo, the mobile banking app known for its coral coloured debit cards, is planning to launch in America as soon as this summer, The Daily Telegraph has learnt.

The £1bn start-up challenger bank is in the process of hiring executives to lead its product and marketing arms in the US. It is expected that the company will choose Los Angeles as its base.

Affirm, Kabbage, Tala — The Big Three of Online Loans (Bitnews Today), Rated: AAA

Affirm is a company that provides payday loans online and at points of sale. To receive an approval decision, a potential Affirm client does not have to wait long — the company’s scoring system processes its questionnaire, profiles in social networks and other documents very fast.

Source: Bitnews Today

KABBAGE

Kabbage also provides loans online using an automated system. However, the clients of this company are not ordinary consumers, but owners of SMEs. When the founders of Kabbage decided to launch a new project in 2009, there was a gap between personal loans for consumers and credit lines allocated to small businesses in the lending system.

Source: Bitnews Today

TALA

  • the initial idea of the company’s founder Shivani SIROYA to start her own business was that “the existing credit system works very poorly”;
  • to assess the creditworthiness, Tala uses its own scoring system, which examines a set of data about the potential borrower, using machine learning technology and big data;
  • the intellectual service works in automatic mode: it investigates, makes a decision, issues loans.
Source: Bitnews Today

Resolve launches as a B2B online financing service (Digital Commerce 360), Rated: A

Financial technology company Affirm is betting that what works for online retailers will also work for B2B merchants who want to offer online financing to customers.

Affirm has launched Resolve as a B2B version of an online financing service that Affirm provides to retailers.

Kabbage Teams with BTEA to Fuel Access to Funding for Women- and Minority-Owned Businesses (Finanzen), Rated: B

Kabbage, Inc., a cash flow technology and automated lending platform for small businesses, has formed a strategic alliance with New York’s largest contractor association, the Building Trades Employers’ Association (BTEA), to provide access to fast and flexible small business funding for BTEA members through the Kabbage platform. The alliance will support women and minority-owned business enterprise (WMBE) contractors who often have difficulty accessing the funding required to procure contracts for New York’s largest construction projects.

The alliance between BTEA and Kabbage provides BTEA’s 1,300 contractor companies, including more than 100 MWBE contractor members, the opportunity to access lines of credit as high as $250,000 and attain greater financial capacity.

In The Face Of Growing Fraud Threats, Finance Firms Should Look At Managed Security (Forbes), Rated: AAA

Financial institutions face a complex array of threats — from the immediate such as synthetic identities which have been used to defraud individual firms multiple times.

In 2018, more than 43,000 breaches across all industries involved the use of customer credentials stolen from botnet-infected clients, the Accenture report said.

Read the full report here.

Fig Loans Becomes First-Ever FinTech to Receive CDFI Certification (Yahoo! Finance), Rated: A

Fig, a mission-driven FinTech company that offers credit building alternatives to predatory loans for low-income borrowers, has become the first-ever FinTech company to become both a Certified B Corporation and federally certified Community Development Institution (CDFI). VilCap Investments and Techstars are early Fig Loans investors.

CFPB plan a mixed bag for debt collectors (American Banker), Rated: A

The Consumer Financial Protection Bureau released a plan Tuesday to restrict how often debt collectors can call borrowers about unpaid credit and to allow consumers to opt out of other types of communications.

The proposal to overhaul the debt collection industry would limit phone-based collection attempts for the same consumer to seven calls per week. Debtors could also opt out of allowing collectors to contact them via voice mail, email and text messages.

Read the full text of the proposed rule here.

Behind The Scoop: An inside look at Genesis’ lending business (The Block Crypto), Rated: A

  • $250m worth of outstanding loans gives it an estimated 2/3 share of the total outstanding crypto loan pie
  • Genesis has seen its total USD value of borrows increase 35% QoQ in 1Q19, vs. lending protocols which saw a ~20% decline; Genesis total borrow volumes were almost an order of magnitude greater than all of borrows on lending protocols in 1Q19

Ocrolus, inFactor Partner on End-to-End Automation for Merchant Cash Advance Lenders (Ocrolus), Rated: B

Ocrolus today announced a partnership with inFactor, the financing platform that brings clarity and security to small business financing. This partnership combines two powerful technology solutions to drive end-to-end underwriting automation for Merchant Cash Advance (MCA) lenders

United Kingdom

Funding Circle still offers manual lending in other markets (P2P Finance News), Rated: AAA

FUNDING Circle is still offering investors the option to self-select their loans in its three overseas markets, its annual report revealed last month.

The peer-to-peer business lender scrapped its manual lending option in the UK in 2017, saying that its auto-invest product ensures better diversification.

Digital Lending Platform Esme Loans Hits £50 Million of Lending to UK Businesses (Crowdfund Insider), Rated: A

Esme Loans, the NatWest backed standalone digital lending platform for SMEs, announced last week it has hit £50 million of lending to UK businesses. The online lender reported that it has seen a continued period of strong growth, following an uplift in lending of 337% between 2017 and 2018.

Goldman Sachs’ digital savings account Marcus just reached a UK milestone (AltFi), Rated: A

Just eight months since launching in the UK, Goldman Sachs’ digital savings account has attracted a quarter of a million customers.

Investors are getting more comfortable with the P2P ISA (AltFi), Rated: A

In the 2016/17 tax year just 5,000 customers opened IFISAs with a total £36m subscriptions (these figures were disputed by some platforms as being too low). In the following 2017/18 tax year this shot up 31,000 investors backing the IFISA with £290m subscribed in the tax year and a total of £366m in outstanding balances in IFISAs at 5 April 2018.

What is the best provision fund structure? (P2P Finance News), Rated: A

PROVISION FUNDS are designed to cover peer-to-peer investors in the event that a borrower defaults on their loan, but the way they are funded and operated varies widely across platforms. So what should investors be looking for and is there an optimal structure to reduce their chances of losses?

One key difference is whether pay-outs from reserve or provision funds are automatic or discretionary.

RateSetter is credited with the invention of the provision fund concept, which has been part of its business model since it launched in 2010. It is funded by borrowers’ repayments and money is automatically reimbursed to investors if loans go into arrears.

Tandem Recognized as Best New Digital Bank (Crowdfund Insider), Rated: B

Challenger bank Tandem has been recognized by CFI.co (Capital Finance International) as the “Best Neo Bank UK 2019.”

OakNorth launches mortgages for HNWIs, SMEs, and clients with atypical income streams (Fintech Finance), Rated: B

OakNorth – the bank for entrepreneurs, by entrepreneurs – has today announced it is entering the retail mortgage market with lifetime tracker rate products, aimed at affluent individuals with atypical sources of income.

The six largest banks in the UK dominate 77 percent of the mortgage market, but often find it commercially unviable to create bespoke mortgages for these individuals as they lack the appropriate cost base and expertise to cater to them. These individuals therefore require more bespoke lending solutions, and as a lender that has provided over £3bn in bespoke loans to UK entrepreneurs since its launch, OakNorth has the necessary expertise and tailored credit analysis models to cater to this unique market niche.

China

Jiayin Group Readies $ 40 Million U.S. IPO (Seeking Alpha), Rated: AAA

Jiayin Group (JFIN) has filed to raise $40 million in an IPO of ADSs representing underlying Class A shares, per an amended registration statement.

According to a 2017 Oliver Wyman report on Chinese FinTech firms, outstanding loan balances for online peer-to-peer lending platforms have exploded in recent years, from RMB 31 billion ($467 million) in January 2014 to RMB 856 billion ($129 billion) by January 2017.

P2P lending in crisis as regulatory bubble pops (Technode), Rated: A

Chinese peer-to-peer (P2P) lender Dianrong, once hailed as the “LendingClub of China,” appears to be in crisis following an announcement that it is closing around two-thirds of its offline branches and laying off as many as 2,000 employees. At around the same time, it was accused of falling behind on wages and severance payment. In mid-April, the company reportedly sought $100 million in investment to meet new capital requirements.

European Union

Goldman Delays Marcus’ Germany Launch (PYMNTS), Rated: AAA

Goldman Sachs has decided to delay the German launch of its consumer bank Marcus until 2020.

International

International P2P Lending Volumes April 2019 (P2P-Banking), Rated: AAA

The total volume for the reported marketplaces in the table adds up to 571 million Euro.

Milestones achieved this month (total volume since launch):

  • Mintos crossed 2 billion EUR
Source: P2P-Banking

This credit card won’t let you buy anything else after you’ve hit your annual carbon limit (Fast Company), Rated: A

Doconomy is launching two versions of the card later this year. One just tracks your carbon footprint as you spend, and the other, called Do Black, takes the additional step of setting a hard limit on your footprint for the year. Initially, the data used to calculate the impact of each purchase will be imprecise—the system pulls the category code of a merchant that classifies it as a particular kind of store, then makes a calculation based on the general carbon footprint of the industry, whether you’re buying something from a fast-food joint, a clothing store, or an airline. The limit is based on a country-specific calculation of how much carbon each citizen can emit to stay on track with the 2030 goal to cut emissions in half.

Others are working on similar solutions; a startup nonprofit called Poseidon Foundation is beginning to work with retailers to track the impact of specific purchases and let customers instantly buy a carbon offset equal to their emissions. Ben and Jerry’s tested the concept at an ice cream shop in London last year.

Over 50 Banks, Firms Trial Trade Finance App Built With R3’s Corda Blockchain (CoinDesk), Rated: A

ABN Amro, Standard Chartered, ING and around 50 other banks and companies have participated in tests of a trade finance application called Voltron.

The tests saw firms across 27 countries use Voltron, which was developed by R3 using its Corda platform, to make simulated letter of credit transactions.

Real Estate Tokens: What They Are and How to Invest (Bitcoin Market Journal), Rated: A

Put simply, a real estate token is a virtual asset used to represent ownership of land, apartments, homes, and various other real properties. The intent is to eliminate antiquated and outdated methods of dealing with real estate. Instead, buyers and sellers complete transactions with digital tokens.

Currently, it can be a challenge to find the right place to invest in real estate tokens; however, there are a few platforms that can get you started.

Harbor

The Harbor platform provides users with a way to trade real estate on a blockchain network. Assets available on Harbor include private REITs, real estate funds, building ownership, and land. Using blockchain technology means Harbor provides transparency, efficiency, fractional ownership, and, of course, liquidity.

Slice

Additionally, Slice gives users the ability to hold, trade, or liquidate their tokens with its built-in security exchange platforms. The platform is available to anyone who has $10,000 he or she is willing to invest.

Meridio

Meridio is a platform that gives its users the ability to invest in shares of real estate on the blockchain. Through Meridio, properties are split into digital shares, which gives investors and owners a way to interact with one another seamlessly.

Bitfinex Releases Whitepaper to Confirm $ 1 Billion Initial Exchange Offering (CryptoGlobe), Rated: A

Cryptoasset exchange Bitfinex has confirmed that it is planning to raise $1 billion through an initial exchange offering (IEO).

Dong has also been accepting pre-orders for Bitfinex’s upcoming token sale through his crypto-lending application Renrenbit. The well-known investor had reportedly taken pre-orders from users who wanted to participate in the public phase of Bitfinex’s upcoming $1 billion token sale, even before IFinex published an official whitepaper for it.

Cred Partners with Tron and Bitcoin.com to Provide Crypto Lending and Borrowing Services (Bitcoin Exchange Guide), Rated: A

Bitcoin.com has announced a partnership with Cred in which Bitcoin.com users will earn interests of up to 10% on their crypto holdings. Cred is a crypto borrowing and lending company whereas Bitcoin.com is an information portal that has over 4 million Bitcoin wallets.

Fvndit Launches $ 10M Equity-Back Digital Security Offering (Financial Buzz), Rated: A

Fvndit, Inc. (“Fvndit”), a California- and Vietnam-based fintech company, today announced the launch of a $10M digital security offering. Proceeds from the raise will be used to further propel Fvndit’s business objectives as the market leading SME-focused crowd-based funding platform in Vietnam.

Its wholly-owned subsidiary, eLoan, JSC (“eLoan”), operates an online Peer-to-Peer (P2P) funding and investing marketplace in Vietnam, its current local market. Today, SMEs account for more than 41% of Vietnam’s GDP (of $241B USD) and 97% of all enterprises but still remain largely neglected by traditional banks with 70% of them do not have access or have difficulty in accessing credit. eLoan was launched in late 2017 with a clear mission – to make credit more simple and investing more rewarding.

TomoChain teams up with Constant to bring first stablecoin to its platform (Cryptoninjas), Rated: B

Creci Wins its Category at the Innovate Finance Global Summit (PR Web), Rated: B

Creci, an early stage start-up, with headquarters in Hollywood, Florida and offices in Medellin and Bogota, was selected on April 30, 2019, as the category winner for Peer-to-Peer Lending, Alternative Funding, and SME Lending at the Innovate Finance Global Summit in London.

Australia

YOZO a quick and open answer to business lending maze (Mirage News), Rated: A

YOZO is redefining lending for small business by offering a transparent and seamless experience for their borrowing needs. Firstly, by taking the guessing game out of an increasingly frustrating question, “how much can my business borrow?”. YOZO helps small business gauge their borrowing capacity in under a minute. Secondly, by providing an intuitive online experience to apply and receive funds in 48 hours for approved customers.

Southeast Asia

Brankas wants to bring Southeast Asia’s banks and e-commerce into the digital era (TechCrunch), Rated: AAA

Fintech continues to be among the biggest topics driving startups and investment in Southeast Asia. The region’s “internet economy” is forecast to grow massively as its 600 million people increasingly come online — already Southeast Asia has more internet users (350 million) than the U.S. has people, but developing a robust payment landscape underpins those heady growth forecasts.

Brankas,  an Indonesia-based startup that operates regionally, is one such young company — it operates a platform that gives banks and financial companies the tech to roll out digital products and embrace online services.

Singapore Fintech Firm Heading into Indonesia (Retail News), Rated: A

Following a successful Series B funding round, SME lending platform Validus Capital is launching in Indonesia. SME lending platform Validus Capital has launched in Indonesia, its first Southeast Asian market outside its home country of Singapore, the firm announced in a media release on Thursday.

Latin America

Brazil fintech Nubank opens Mexico office as it seeks Latam expansion (Reuters), Rated: AAA

Brazilian fintech firm Nubank will open an office in Mexico on Tuesday, an initial step in a potential expansion into other Latin American countries, a company executive said.

Nubank, a six-year-old startup that has raised $400 million from investors such as China’s Tencent Holdings Ltd, Sequoia Capital, Tiger Global Management and Kaszek Ventures, will start Mexican operations with 20 employees, Nubank executive and co-founder Cristina Junqueira said in an interview.

Authors:

George Popescu
Allen Taylor

The post Thursday May 9 2019, Weekly News Digest appeared first on Lending Times.

TIME Magazine Calls These Two Online Lenders ‘Genius’

CommonBond

In early October, TIME Magazine released its inaugural list of the top 50 Genius Companies, and two online lending companies, CommonBond and Oportun were included. The magazine asked its global network of editors and correspondents to nominate companies that are inventing the future. They then evaluated the candidates by such factors as originality, influence, success, […]

CommonBond

In early October, TIME Magazine released its inaugural list of the top 50 Genius Companies, and two online lending companies, CommonBond and Oportun were included. The magazine asked its global network of editors and correspondents to nominate companies that are inventing the future. They then evaluated the candidates by such factors as originality, influence, success, and ambition.

What they were looking for

A video titled How We Chose the 50 Most Genius Companies of 2018 includes snippets of interviews from founders and CEOs whose companies made the list. Viewing these gives us more insight into what the magazine saw as worthy of “genius” thought. Bob Igor, CEO of Walt Disney, talks about having “constant curiosity, constant desire for more knowledge about what is new.” Luis von Ahn, CEO of Duolingo, whose company’s goal is to give “equal access to education to everybody,” reminds us that it’s “OK to fail.” Anne Wojcicki, co-founder and CEO of 23andMe, says that “it’s not that taking risks is essential, it’s that being open-minded to a different way of looking at a problem is essential.” She adds: “Risk…is essential to creating a new path and making change.”

These are all revelations that the 50 companies represented have made, whether they are time-tested and proven companies or promising start-ups.

Notables on the list

The list has a good mix of both types of companies, those which are proven winners and those that are trying to make their mark by helping to better the world. Long proven household names like Apple, Disney, and Lockheed Martin are joined by newer companies that now define so much of our world, like Amazon, Netflix, Spotify, and Pinterest, and those who look to shape the future more differently than the past, like SpaceX, Slack, and Lishtot.

And then there are the two online lending standouts–Oportun and CommonBond.

Oportun and CommonBond are moving to make money more easily accessible for sectors of the population that need it. Oportun is working to make loans available to higher risk borrowers than those that have access to more traditional means of lending while CommonBond is looking to transform access to student loans.

Oportun

Oportun is a Menlo Park California company that provides emergency loans for low-income consumers who can’t get a loan from a traditional bank and who don’t want to get into the vicious cycle of high fees and triple-digit interest rates of payday lenders.
Oportun began with a focus on serving the Latino community but has expanded to open borrowing to the estimated 45 million Americans who have little or no credit history. In lieu of credit scores, Oportun relies on other data to assess applicants, such as the length of time that a person has had the same job or address.

Vision

CEO Raul Vazquez says that Oportun is “committed to building a sustainable business that helps people shut out of the financial mainstream.”

Proven Track Record

To this point, the company has proven it can make a profit while providing $5.4 billion worth of loans to people who didn’t meet banks’ criteria. In so doing, the Oportun team has helped some 600,000 customers establish credit scores and open themselves to future borrowing by reporting successful payments to credit bureaus.

A CDFI (Community Development Financial Institution), Oportun issued its first securitization in June 2013, and it announced its twelfth securitization last week, issuing $275 million of three-year asset-backed bonds secured by a pool of its investment loans. Morgan Stanley and Co. LLC served as lead book-running manager, and Goldman Sachs and Co. LLC and Jefferies LLC were joint book-runners.

Availability

As of now, the company has loans available at retail locations in nine states: Arizona, California, Florida, Illinois, New Jersey, New Mexico, Nevada, Texas, and Utah. Online loans are also available in Idaho, Missouri, and Wisconsin.

Rates of Service

The company’s interest rates average about 35 percent, a reasonable rate for high-risk borrowers.

Good Reviews

The Economist, Consumer Reports, and The Wall Street Journal are among the publications that have reviewed the company favorably. Oportun was even named one of the three finalists in The Wall Street Journal’s 2018 Financial Inclusion Challenge.

The Team

The team heading up the company has many notables, including Vazquez, who is the former CEO of Walmart.com. Chief Credit Officer, Patrick Kirscht, previously served as Senior VP of Risk Management for HSBC Card Services Inc., and Johnathon Coblentz, who serves as CFO and CAO, is the former CFO and Treasurer of MRU Holdings Inc. and was Vice-President of Fortress Investment Group LLC.

CommonBond

With the rising price of college tuition and the more than $1.5 trillion in active student loans in the United States today—more than car loans and credit card debt—the market is ripe for new players in the scholastic financial space. CommonBond has been working to put a new face on student loan refinancing since 2011.

Vision

By staying small and using technology to keep costs down, CommonBond seeks to offer borrowers refinancing rates lower than those of the federal government and private banks. The firm estimates that it saves borrowers on average $24,000 over the life of their loans.

Offerings

CommonBond offers three types of loans (Undergrad, Graduate, and MBA) and repackages and refinances existing loans at lower rates.

The firm offers loan terms of five, 10, and 15 years, with amounts ranging from $5,000 to the cost of tuition. The loan cap for any borrower is $500,000. The company offers the customer a personalized rate before he or she applies. Loan origination fee is two percent, and the company charges no prepayment penalties. CommonBond’s late fees might be especially attractive to college-age students, who might not always get their payments in on time. The late fee is only the lesser of $10 or five percent of the monthly payment.

Source: Studen Loan Hero

Good Press

Being a father of school-age children, CommonBond is a company I could see myself using in five or six years, and I read the reviews of the company as a potential customer. The reviews aren’t all glowing, but they give me an overall feel that this is a firm I could do business with, if I so needed. Fast Company named CommonBond the Most Innovative Company in Education earlier this year, and thecollegeinvestor.com, despite thinking the rates could be more competitive, continuously puts the company on its Best Companies to Finance Your Student Loan list. CommonBond is also one of only three lenders the site recommends for finding the best student loans.

Double Bottom Line

Charitable work and philanthropy being so important in today’s world, it can’t hurt for a company to have a strong double bottom line. This is one area where CommonBond sets itself apart from others in the space. Every time a loan is funded, CommonBond covers the price of a child’s education through its “Social Promise.” The firm’s partnership with Pencils of Promise has provided schools, teachers, and technology to thousands of students in the developing world, and its commitment to social equality also distinguishes it as a true difference maker in the United States. Loans and restructuring are available to anyone with a degree from a not-for-profit American university regardless of citizenship, as long as the customer meets the other criteria.

Conclusion

Those of us in and around the online lending space can be heartened by the addition to these two companies to this list. We can also be heartened by the continued efforts of business founders to make funds available more easily and affordably for Americans just trying to navigate the business aspects of life. Both of these companies should be recommended to those who may benefit from their services.

Author:

Written by Paul Keenan.

How Community Development Creates Savings Opportunities for Investors

CNote

Community Development Financial Institutions (CDFI) are financial institutions focusing on channeling the savings of investors in community development projects including development of women entrepreneurs, affordable housing, helping underserved communities in wealth creation, and small & mid-sized businesses. Funds in such institutions are structured through investment from government, banks, non-banking financial institutions, foundations, and individuals. Though […]

CNote

Community Development Financial Institutions (CDFI) are financial institutions focusing on channeling the savings of investors in community development projects including development of women entrepreneurs, affordable housing, helping underserved communities in wealth creation, and small & mid-sized businesses. Funds in such institutions are structured through investment from government, banks, non-banking financial institutions, foundations, and individuals.

Though CDFIs are profitable, they are more focused on the community they serve. So the only aim is not to please shareholders by profit maximization. The four sectors of the CDFI Industry are Community Development Banks, Community Development Credit Unions, Community Development Loan Funds, and Community Development VC Funds. The industry has been a backwater for individual savings due to multiple legal and technical reasons till now. This has led to a gap in the market with no options for individuals looking to invest and generate decent fixed income returns and simultaneously positively impacting local communities with their investments.

CNote is the bridge that is looking to transform the savings space by offering “smart savings technology” and new savings products to earn good savers 40x more.

About CNote

The company invests in CDFI lenders for fixed yields and offers attractive returns (as compared to a saving account) to its investors. Co-founders Catherine Berman and Yuliya Tarasava launched CNote in 2015 with the aim solving the pain points that individual investors have, and to better serve the community.

Berman is a serial entrepreneur. CNote is her third venture. Her previous startup, Global Brigades, is the largest student development firm in the world. She was also a managing director at Charles Schwab and has experience at marque names like Deloitte.

Yuliya has over a decade of Wall Street experience, and in creating financial products. At Charles Schwab, she oversaw a $30 trillion wealth transfer from baby boomers to the next generation, and saw that financial and saving products have not evolved to serve today’s market. This is what led to her to design CNote.

CNote started as a bootstrapped company and recently raised $60,000 from Pipeline Angels. The company is also in discussions with investors for a future round.

CNote’s Business Model

CNote positions itself as an alternative savings product. It shipped out the first product in 2016 with the aim to reinvent boring financial savings products. It interviewed over 200 persons in its target market to get the right product market fit. They opened to the mass market by getting SEC qualification in 2017. This allowed retail investors to trust the company with its savings products and ensures that all compliance is met to the most stringent level. The company charges no fees but pockets any difference above returns starting at 2.5%.

The savings alternative offered by the company is different from that offered by traditional institutions and banks. Cash locked in traditional savings accounts offer a nominal interest, normally at a rate below 1%. This is not enough to even keep up with inflation. On the other hand, CNote’s savings offer draws interest at an estimated 2.5% (compounded) without the need to incur any upfront cost or minimum account balance. The user-friendly website provides an easy online access for investors helping them to register in just three minutes.

The revenue model and operating cycle of CNote is just like that of a financial lender or a bank. They charge interest for lending out money to community lenders and providing a return in the form of interest to individual investors.

The company’s platform has over $12 million already committed. In addition to earning a competitive return, CNote tracks the usage of funds lent to the community lenders so that it can measure the impact on society at large. According to Berman, the company has helped in creating over 1,000 jobs in the United States.

CNote’s platform attracts both retail and institutional investors. Women under the age of 45 are its typical individual investor whereas institutional customers include wealth management platforms and wealth managers. Investors consider CNotes a cash alternative, impact investment, and/or a competitive fixed income instrument.

The CDFI Opportunity

CDFIs are not new to the market and have a history of over 20 years. They are well established and certified by the US Treasury. Though CDFIs are not federally insured, the last recession saw CDFIs outperforming FDICs (Federal Deposit Insurance Corporation). Still, 99% of Americans have never heard of them.

There are multiple reasons for this lack of awareness. Absence of standardized due diligence techniques for accessing the financial position of lenders is a hurdle faced by many CDFIs. Investors also find it difficult to compare the financial products offered by different institutions. Most of the products offered by these institutions are not geared for non-accredited investors because of a high investment amount threshold.

CNote savings provides access to this high performance asset class services to ordinary Americans. CNote broke all these barriers by introducing scalable products, which are designed specifically according to the needs of individual investors.

Future Offerings

CNote has identified a gap in the $100 billion impact investment industry by offering a product that is suitable for retail investors looking to earn positive fixed returns. The upside is that the investment is also doing social good by investing in backward communities, minority and women entrepreneurs, and other underserved markets. The company has no visible peer in the industry that is leveraging CDFIs as a retail investment opportunity. With strategic funding, the company can quickly capture major market share in this multi-billion dollar industry.

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Written by Heena Dhir.