Camilo Concha’s experiences in building specialized online platforms taught him that there was a need to place potential clients and patients with the right professional for their situation, but there was also the need to help them finance their legal and medical bills. That’s when he started the two specialty companies mylegalloan.com and medicalfinancing.com.
His ability to diagnose market needs and find viable, simple solutions brought about his latest, largest, and boldest venture yet, LendingUSA.
Prior to the 2015 founding LendingUSA, Concha attended a LendIt conference where he learned how to build a better platform. He connected with Cross River Bank, which now does all of the company’s loan licensing, and First Associates, who services the loans. He also connected with Howard Freedland. Freedland, in turn, brought Brandon Ross, CEO and founder of Direct Lending Investments, and the two partnered with online lenders to add $55M USD in debt capital to the $5M Concha had raised in equity funding. That $60M is the only funding the company has seen to date, and Concha says that it was possible to raise that amount due to the company’s $1B in loan application flows.
LendingUSA Continues Concha’s Successful Run
Simplicity is evident when we look at how LendingUSA got off the ground. “We basically built an underwriting model and started lending,” Concha said. Working with doctors and merchants at the point of sale (POS), the company has developed a strong vantage point, being able to offer their product to consumers who can’t or don’t want to do longer term financing.
Much of the client base is comprised of people who want to get elective medical procedures, such as liposuction, which are not covered by insurance. LendingUSA makes a loan to the customer but pays the amount straight to the doctor.
Loan pricing is set into the business model, and it is based on a credit profile, which includes credit score, debt-to-income ratio, and credit sought in the last six months. FICO scores are also a factor, but just one of the important things, with the company also assessing whether customers are maxed out on their credit and if they’re paying their bills. Risk assessment is measured by an algorithm, a process that allows the customer to be approved or declined on the spot.
Being a POS lender provides many benefits to the LendingUSA business model. Beginning the process with the provider, rather than the borrower, referrals come from the providers themselves, whether through an advisory role or by way of brochures available in providers’ offices. Providing loans at this point allows LendingUSA to offer financing in installment loans where other companies tend to deal in lines of credit. This allows the company to go higher on the credit scale than would be possible with lines of credit and to also go a little lower on the credit spectrum, as far as 620. Installment loans also prove more beneficial to the borrower as risk goes down every month.
The company charges a fee at the POS depending on their risk evaluation, and the merchant fee for these services usually runs about five to six percent.
During LendingUSA’s growth, the company has also acquired 30 branded websites including bridalloans.com, surgeryloans.com, petloans.com, and dentalloans.com. In all, the company currently does business with 3,700 different medical providers.
Working with customers who have an average credit rating of 682, the company currently has a loan volume in the neighborhood $225M. The average loan is $6K with an average interest rate of 22% and an annualized charge off rate of about 8-10%.
Choosing to focus on “life’s important moments,” LendingUSA focuses on “niche markets we think we can win in,” counting elective medical, dental, cosmetic surgery, chiropractic, pet loans, and funeral loans among the diverse group of industries it works in.
Competition and Customers
Concerning the competition, Concha shows another reason why he has proven successful in that he doesn’t worry himself with concerns about what other companies are doing, choosing to focus on what his is doing. “I don’t like to call it competition,” he said. “There are great companies like Care Credit, Affirm, and Green Sky that do similar things, but they work in other niche markets or do it differently by providing revolving lines of credit. We have our little niche and are a better fit for some people, [especially in that] installment loans are better for large amounts of revenue, and lines of credit better for smaller amounts.”
The typical LendingUSA customer is someone in their 40s and 50s who makes $60K to $80K a year. “We believe that a lot of people want to improve their lives,” Concha said. “Our customers are gainfully employed, but they don’t have the means to get the product they want. We make it available to them.” In doing so, the company provides a great service for their merchant partners by helping them to capture more clients and generate more revenue.
LendingUSA’s Goals and the Direction of the Industry
“Our initial goal was to reach $1B in sales in the next three to four years,” Concha said. “We’re looking to price loans better, securitize loans, and find new capital partners.”
Concha is positive about these goals as the cosmetic surgery and elective medical fields are growing every year. The growth is underscored by the fact that men are now gravitating toward cosmetic surgery, when the thought was taboo in the past. These procedures are now more generally accepted for men. He also says that fears of economic downturns, which might stunt growth in other industries, are less of a concern. “People still want to feel good about themselves; they might not buy a new house or car, but they want to look good,” Concha said.
LendingUSA’s Team and The Future
Concha considers himself fortunate enough to have built a strong team. This includes Mike Testa, the company president and the former president of Care Credit, who built a POS business in the medical industry from $80M to $6B; Sharad Shankar, the former chief risk officer of Lending Point, who now holds that title with LendingUSA; and
Jenann Shemisa, LendingUSA’s chief compliance officer, who served as a senior attorney for the enforcement division of the FDIC.
Understandably pleased with what he has built in less than three years since founding LendingUSA, Concha says the company is now focused on loan performance. “Because we’re at the POS, we’re able to compete more on service than on price. This means we can charge a little more, which allows our portfolio to perform at 500 basis points better on yield than most marketplace lenders. Everybody that advertises on LendingTree and online comparison sites is competing on price, which doesn’t help portfolio performance. By working at the POS, we get better yields because we’re not competing on price.” With this focus, the company has a goal of being number one in the markets it services.
Concha’s Past Comes Back to Reward Him
Concha came to the U.S. from Colombia with his family when he was 14. It only took him seven years to go from being a school boy who spoke little English to starting his first business, which he ran while he studied at California State University, Northridge and worked as a Spanish interpreter at the San Fernando Bar Association.
Seeing the desperate need for an attorney referral service, he founded the Attorney Search Network (ASN), which he ran out of his apartment until he could afford to pay for his first office space, a converted janitor’s closet that was so small he had to speak with clients in the hallway.
Concha then saw that he could create other companies to fulfill similar voids in different fields. This brought about the founding of 1800mysurgeon.com, created to help assist individuals who are looking for a board-certified and reputable cosmetic surgeon.
Concha now works out of one of the tallest buildings in the San Fernando Valley, employs dozens, and the two companies together have extensive databases with hundreds of doctors and lawyers from every legal and medical field. Add to that the lending businesses he has founded and he has quite the legacy. All of them are still growing strong. There’s nothing her to suggest that LendingUSA won’t maintain a similar trajectory.
Written by Paul Keenan.