- Today’s main news: April US consumer credit rises $8.2B. China Rapid Finance targets 3 million new users by end of year. TSB Bank lent $50M unsecured consumer loans through Harmoney.
- Today’s main analysis: UK house prices fall for three months in a row.
- Today’s thought-provoking articles: Amazon lent $1B to merchants in last 12 months. SBA enabled on sprouting more loans. Why Alibaba has its eye on India’s payments market.
- LendingClub SEC filing. GP:”The usual SEC filings Lending Club has to do. Always a good source of data.”
- April US consumer credit rises $8.2B. GP:”The origination volume in aggregate is slowing down from a 6.2% annual growth to 2.6%. “AT: “A slow-down in the increase of consumer credit does not necessarily spell trouble for the economy. If Americans increased their debt substantially in previous months, then it could simply be a sign of things evening out in the long run.”
- Amazon lent $1B to businesses in the last 12 months. GP:”$1bil in origination is impressive especially giventhe time lines.”AT: “It might come as a surprise to many readers that Amazon is now acting like a bank. It shouldn’t. When you have money lying around, it makes sense to put it to work. And Amazon has plenty of money lying around. Why not lend it?”
- Amazon has secretly become a giant bank. GP:”With banking come handcafts as well, I don’t believe becoming a bank is the right way for Amazon or any non financial institution.”AT: “It wouldn’t surprise me to see Google and Facebook follow. They may already be pursuing their own banking interests. I mean, beyond payments.”
- SBA enabler on sprouting more loans. GP:”SmartBiz started as a consumer lender and migrated to SMB lending, a very interesting trasition process worth thinking about.”AT: “This is the most interesting read of the day.”
- Banks cede market share in auto lending. GP:”This is not necessary good news for fintech as it may be the beginning of an auto crisis that will leave the fintechs holding the hot patato.”
- New regulations coming for New Mexico lenders. AT: “It looks like this legislation could substantially change the payday loan market in New Mexico.”
- AvidXchange raises $300M. AT: “This is a huge raise with some powerful people behind it.”
- VA loan captain announces partnership with EXIT Realty.
- Reg A+ conference savings.
- Money360 closes $17M bridge loan in New Jersey.
- UK house prices fall for three straight months. GP:”3-months may not be enough to make it a trend but it could be.”
- P2P lenders have their say before the election. AT: “No surprises, really.”
- OakNorth lent $300M GBP last year. GP:”A nice origination volume already, congratulations! Lending Times covered OakNorth 1 year ago approximatively.”
- Lendy to sponsor sailing regatta.
- China Rapid Finance targets 3M new users by end of year.
- Why Alibaba is eyeing India’s payments market. AT: “Alibaba isn’t the only non-Indian company looking at India’s payments market. I suspect we’ll see other top global companies looking to get in soon.”
- Most P2P lenders have finished bank depository before deadline.
- Ezuabao bilked investors for more than $7.6B. GP:”This is perhaps 2 year old news at this point.”
- How late payments help create a billion-dollar market.
- TSB Bank lent $50M in unsecured consumer loans through Harmoney. GP:”An impressive volume!”
- What does rapid growth of P2P lending mean for New Zealand?
- United States
- LendingClub Operated Aggregator Note (LOAN) NP I, LLC (SEC), Rated: AAA
- April US Consumer Credit Rises $ 8.2bn, Weakest Reading For Over 5 Years (Economic Calendar), Rated: AAA
- Amazon has lent $ 1 billion to merchants in an effort to help boost sales (Business Insider), Rated: AAA
- Amazon Has Secretly Become a Giant Bank (The Street), Rated: AAA
- SBA enabler on sprouting more loans (Banking Exchange), Rated: AAA
- Banks cede market share in auto lending (American Banker), Rated: A
- Attention New Mexico Lenders: New Regulations Coming Soon (Clarity Services Email), Rated: A
- Fintech Company Raises $ 300 Million to Help Businesses Stop Using Checks (WSJ), Rated: A
- VA Loan Captain Announces Partnership with EXIT Realty (PR Newswire), Rated: A
- Reg A+ Crowdfunding Conference Exclusive Savings Inside (Financial Research Associates Email), Rated: B
- Money360 Closes $ 17 Million Bridge Loan for an Office Property in Morris County, New Jersey (Money360 Email), Rated: B
- United Kingdom
- UK house prices fall for third month in a row for first time since financial crisis (The Guardian), Rated: AAA
- Peer-to-peer lenders have their say ahead of election (AltFi), Rated: A
- OakNorth, the ‘bank for entrepreneurs,’ lent £300 million last year (Business Insider), Rated: A
- Lendy to sponsor world-famous sporting event (Bridging&Commercial), Rated: B
- China Rapid Finance targets 3 million new users by year’s end (SCMP), Rated: AAA
- Why Alibaba is eyeing India’s payments market (The Asset), Rated: AAA
- Most P2P Lending platforms have finished bank depository before the deadline (Xing Ping She Email), Rated: A
- EZUBAO THE ONLINE LENDER BILKED INVESTORS OF OVER $ 7.6 BILLION (Petro Global News), Rated: A
- How late payments help create a billion-dollar market (The Asset), Rated: A
- European Union
- The Future of Finance (The Portugal News), Rated: A
- Peer to Peer Lending Market Expected to Reach $ 460,312 Million, Globally, by 2022 (Digital Journal), Rated: A
- Australia/New Zealand
- TSB Bank says it has lent $ 50 mln in unsecured consumer lending through P2P lender Harmoney (Interest.co.nz), Rated: AAA
- Report on rapid growth in P2P lending – what does it mean for New Zealand? (Lexology), Rated; A
- Path clear for robo advisers in financial services (Nation Multimedia), Rated: A
LendingClub Operated Aggregator Note (LOAN) NP I, LLC (SEC), Rated: AAA
1. Loan number (for informational purpose only)
2. Origination date
3. Original principal balance
4. Maturity date
5. Loan term (months)
6. Borrower interest rate
7. Contractual monthly payment
8. State of residence
9. Current principal balance
10. FICO score low (at issuance)
11. FICO score high (at issuance)
12. Loan age (months)
April US Consumer Credit Rises $ 8.2bn, Weakest Reading For Over 5 Years (Economic Calendar), Rated: AAA
US consumer credit increased $8.2bn in April following a revised increases of $19.5bn which was originally reported as $16.4.bn.
The April increase was lower than consensus forecasts of around $16.0bn and the weakest reading since August 2011.
The annual increase slowed to 2.6% from 6.2% the previous month. Revolving credit slowed to an annual rate of 1.8% from 6.5% previously while there was a slowdown in non-revolving credit to 2.9% from 6.1%.
Amazon has lent $ 1 billion to merchants in an effort to help boost sales (Business Insider), Rated: AAA
Amazon.com Inc has stepped up lending to third-party sellers on its site who are looking to grow their business, a company executive said in an interview on Wednesday.
The e-commerce giant has doled out more than $1 billion in small loans to sellers in the past 12 months, compared with more than $1.5 billion it lent from 2011 through 2015, said Peeyush Nahar, vice president for Amazon Marketplace. Sellers have used the money to expand their inventory or discount items on Amazon, he said.
More than 20,000 small businesses have received a loan from Amazon and more than half of those have taken a second loan from the company, it said.
Loans range from $1,000 to $750,000. Sellers have said interest rates are between 6 percent and 14 percent.
Amazon Has Secretly Become a Giant Bank (The Street), Rated: AAA
Amazon.com (AMZN) said Thursday that its Amazon Lending service has surpassed $3 billion in loans to small businesses since it was launched in 2011.
“We created Amazon Lending to make it simple for up-and-coming small businesses to efficiently get a business loan, because we know that an infusion of capital at the right moment can put a small business on the path to even greater success,” Amazon Marketplace VP Peeyush Nahar said.
SBA enabler on sprouting more loans (Banking Exchange), Rated: AAA
When your largest client asks for a favor, you tend to do everything you can to help. For fintech company SmartBiz, that led to completely changing its business model.
The San Francisco-based company began life as an online consumer lender in 2010. However, three years in, the company switched gears to focus on small business lending.
Thus began a transition that culminated in SmartBiz selling off its consumer lending business. In place of that, SmartBiz built a bank-centric marketplace—an “ecosystem” in Singer’s words—in which SmartBiz refers qualified SBA loan applications to a network of banks. Currently the company works with five banks in the U.S.
Banking Exchange: Can you explain further why you made the switch from the consumer loan business to the small business loan market?
Singer: The stores typically needed $50,000 to $200,000, but were having a hard time obtaining financing at a decent rate. When we dove deeper, we found that starting in 2008 with the recession, many banks pulled out of the smaller end of the small business lending market.
They left for many reasons. The main one, though, is that it cost them just as much to originate a $200,000 loan as it did a $2 million loan.
We felt we could convert our existing base technology for use in small business lending. The concept, and what we have been working on since, is three-fold.
• First, it was key that we be able to tap into banks with their low cost of capital to provide well-priced loans to small business. But we had to make it economically feasible for the banks to make these loans, so we developed software that enables banks to auto-underwrite and auto-originate SBA loans quickly and easily.
• Second, small businesses want it to be easy to apply for a loan. SBA loans are typically very difficult to get—they can take months and months. So we made the process easier, automating a lot of the more difficult work, and put it online.
• Third, one of the most important things for a small business is get to a “yes.” So we created the first online SBA loan marketplace, in which we have multiple banks [currently five] looking at the loans.
BE: Do you concentrate on SBA 7(a) loans?
Singer: Yes. We’ve been focused on 7(a) loans in the sub $350,000 market for working capital. About six months ago we launched commercial real estate loans up to $5 million on the platform—also 7(a) loans.
BE: How is the underwriting handled working with the banks in your marketplace?
Singer: Unlike a traditional fintech company, which brings its underwriting model to a bank and says “Use this,” we do the opposite. We take the bank’s underwriting and digitize it. So we customize the underwriting software that each bank uses. That way we can refer the right borrower to the right bank.
BE: What percentage of applications that come into your system don’t make the cut?
Singer: I don’t think we’ve published anything on that. [SmartBiz is a private company.] It would be interesting for a new bank to note, however, that a little over 90% of what we refer to our bank partners they fund.
BE: In general, how do terms and rates in your network compare with others in the online marketplace?
Singer: All of our loans under $350,000 have a ten-year term. Most of the other players in the market—OnDeck or Funding Circle, for instance—are going to have somewhere between a one- and five-year term—most typically it’s two or three years, and at much higher cost. Our average APR is between 7% and 8%—prime plus 275 [basis points], compared with other online marketplace lenders where the average APR is as much as 44%.
BE: Are you reaching out to other potential bank partners?
Singer: Well, I’m not sure we want to add hundreds of banks. We’re picky and choosy about which bank we’re going to add on the platform. They’ve got to be a PLP [Preferred Lending Partner] with the SBA. Essentially the SBA establishes PLP banks as having delegated authority so they can make a loan decision without sending the file to SBA for approval.
What’s critical is that the bank wants to embrace technology; is focused on SBA lending; and has the mindset at the top where they want to partner with a fintech company.
Banks cede market share in auto lending (American Banker), Rated: A
New industrywide data confirms what bank CEOs have been saying for months: The banking sector is retreating in automobile finance.
During the first quarter of 2017, banks provided 32.5% of the financing for U.S. auto loans and leases, down from 34.8% in the same period a year earlier, according to an Experian report.
Attention New Mexico Lenders: New Regulations Coming Soon (Clarity Services Email), Rated: A
New Mexico House Bill 347 overhauls the state’s regulatory oversight of small-dollar lending. If you conduct business in New Mexico, these regulations will apply to you.
Effective January 1, 2018
The bill includes the following components:
- Complete Repeal of Payday Lending
- Dollar Threshold Changes – All loans of $5,000 or less shall be made under the Small Loan Act or the Bank Installment Loan Act.
- Mandatory Credit Reporting – Loans of $5,000 or less must be reported to a credit reporting agency. We have your back!
- Limits on Loan Terms – Loans of $5,000 or less:
- Must not have an APR that exceeds 175 percent.
- Must have minimum maturity period of at least 120 days.
- Must be repayable in a minimum of four substantially equal payments.
AvidXchange Inc., a firm that automates bill-payment processes for businesses, said Thursday that it raised $300 million in equity from a group of new investors to bring its service to new industries, potentially acquire smaller competitors and to expand internationally.
Investors in the funding round include Mastercard Inc., Singaporean state investment firm Temasek Holdings Pte Ltd., Canadian pension fund Caisse de dépôt et placement du Québec and and Peter Thiel, the investor and co-founder of payments company PayPal Holdings Inc.
Since its founding, Charlotte, N.C.,-based AvidXchange has raised over $500 million, more than amounts raised by Stripe Inc., Credit Karma Inc. and other well-known fintech players.
The latest investment, one of the largest for a fintech company since lender Social Finance Inc. announced a $500-million fundraising in February, values AvidXchange at around $1.4 billion, according to people familiar with the matter.
VA Loan Captain Announces Partnership with EXIT Realty (PR Newswire), Rated: A
EXIT Realty Corp. International and VA Loan Captain (www.valoancaptain.com), the #1 VA Loan Marketplace, have announced a partnership to help educate veterans on their VA Home Loan benefit. As part of the partnership, EXIT Realty will offer veterans unbiased educational content in the form of an eBook, The Ultimate Guide to VA Loans, a VA Loan Learning Center on www.exitrealty.com, and a VA Loan Marketplace powered by VA Loan Captain to increase awareness of the 0% down home loan benefit available to all those who have served in the United States Military.
In addition to educating veteran home buyers, beginning on July 4th, 2017, EXIT Realty will also offer VA Loan Captain’s VA Loan Certification (VALC) to all of its agents. The VALC Certification provides real estate agents and lenders comprehensive knowledge of the VA Home Loan benefit to establish themselves as a local expert for the largely untapped military real estate market while simultaneously helping those who served the country.
Reg A+ Crowdfunding Conference Exclusive Savings Inside (Financial Research Associates Email), Rated: B
Exclusive Discount Code: SAVE 25% w/code FMP206
Early Bird Savings End 6/16/17
You are invited to attend July 19-20th at the LA Athletic Club in Los Angeles.
Money360 Closes $ 17 Million Bridge Loan for an Office Property in Morris County, New Jersey (Money360 Email), Rated: B
Loan Type: Bridge
Loan Amount: $17 million
Term: 3 Years
Amortization: Interest Only
UK house prices fall for third month in a row for first time since financial crisis (The Guardian), Rated: AAA
House prices in Britain have fallen for the third month in a row, for the first time since the height of the financial crisis in 2009.
The fall further dragged down the annual growth rate in May, to 2.1%, the lowest in nearly four years, providing further evidence that the housing market is losing steam, according to Nationwide, the UK’s biggest building society.
Its closely watched monthly house price index showed that the average price of a home fell by 0.2% between April and May, to £208,711. This compares with monthly declines of 0.4% in April and 0.3% in March. The annual growth rate of 2.1% is the lowest since June 2013, and compares with 2.6% in April.
The UK’s other main house price index, from mortgage lender Halifax, is also on a downward trend. It showed a 0.1% fall in April, taking the average property price to £219,649 – nearly £3,000 below the peak in December 2016.
Peer-to-peer lenders have their say ahead of election (AltFi), Rated: A
Funding Circle, which recently overtook Zopa as the UK’s largest P2P lender by total lending, said that ensuring continued access to capital for small businesses throughout the Brexit process is critical.
“Whatever the background or make-up of the new government, we will be urging it progress the (already fairly advanced) commitment made by Theresa May’s government to partner with alternative lenders to lend more,” she said. “That means empowering state-backed vehicles like the British Business Bank to put more money onto alternative lending platforms that will in turn lend more into the economy.”
Meanwhile, RateSetter, one of the UK’s “big three” peer-to-peer lenders, has also called on the next government to be active in its support of the fintech sector:
“The next government must steer the country through a series of huge challenges, not least keeping us safe and managing Brexit. As it does so, it should make the most of opportunities to get behind businesses so that they can thrive, leading to more jobs, output and economic growth.”
OakNorth, the ‘bank for entrepreneurs,’ lent £300 million last year (Business Insider), Rated: A
Entrepreneur-focused startup bank OakNorth lent £300 million to small businesses last year and is expecting to lend out £800 million in 2017.
OakNorth’s annual accounts, filed with Companies House this week, show the bank made net income from its lending of £7.1 million last year, up from £156,000 in 2015, its first year of operation.
Notable deals include £19 million lent to healthy fast food chain LEON in August to fund expansion.
Lendy to sponsor world-famous sporting event (Bridging&Commercial), Rated: B
The peer-to-peer lending platform will begin sponsoring the world-famous sailing regatta – which will now be called Lendy Cowes Week – from 29th July 2017.
China Rapid Finance targets 3 million new users by year’s end (SCMP), Rated: AAA
China Rapid Finance (CRF), the Chinese financial technology business that recently listed in New York, expects to add up to 3 million users on its lending platform this year despite the government’s push to tighten restrictions on the burgeoning online lending sector.
In the first quarter of this year, the company attracted 545,000 new borrowers who obtained credit ranging from 500 yuan to 6,000 yuan (US$73.50 to US$882.50) per transaction.
Why Alibaba is eyeing India’s payments market (The Asset), Rated: AAA
To say digital payment volume in India has grown dramatically over the past few months would be an understatement. Since Modi’s demonetization policy in November 2016 the monthly digital payment volume via India’s Unified Payments Interface (UPI) has increased by almost 2300% as of March 2017.
Most P2P Lending platforms have finished bank depository before the deadline (Xing Ping She Email), Rated: A
China’s p2p regulator requires platforms must finish bank depository before the end of June. Currently, some platforms have signed depository agreement with banks. According to the latest news, Xeenho announced that they have signed the bank depository. The bank depository system docking is undergoing, which is expected to operate online in the late June.
Under the wave of Internet financial compliance, more and more fintech platforms attach importance to bank depository. According to data, 433 normal operating platforms have signed bank depository up to the end of May, accounting for 20.16% of the total. Among these platforms, 221 of them have finished the docking of depository system used online.
In response to the regulatory policy, Xeenho Wallet signed the bank depository to guarantee the independent management between funds of platform and users, so as to eliminate the risk of misappropriation.
Dr. Yang Li, CEO of Xeenho, said that the agreement of bank depository has laid a solid foundation for the future development of the company, and they will continue to proactively response to regulatory policies, aiming at achieving the goal of universal finance.
EZUBAO THE ONLINE LENDER BILKED INVESTORS OF OVER $ 7.6 BILLION (Petro Global News), Rated: A
An online finance company in China bilked its investors of over $7.6 billion, that was spent on lavish gifts, salaries and buried that evidence according to authorities who described it as being a huge Ponzi scheme.
These accusations throw a big shadow over the online China finance industry, a lucrative sector that has nurtured global leaders. However, it is one that authorities are saying also has seen a number of flameouts and frauds.
How late payments help create a billion-dollar market (The Asset), Rated: A
In China, there has been an increase in long-term overdue payments. From 2015 to 2016 the number of corporates experiencing average payment delays of between 90-119 days increased by 25% (from 21% to 26.3%), according to a survey of Chinese corporates, conducted by Coface. The survey also shows that corporates dealing with overdue payments of 150 days or more grew by 60% from 2015 to 2016 (from 9.9% to 15.9%).
In Asia-Pacific (ex-China) invoice trading volume grew from almost nothing in 2013 to a US$116.95 million market in 2015, as noted in the Asia-Pacific Alternative Finance Benchmarking report. Within China, invoice trading in 2015 represented a US$1.46 billion market compared to only US$25.59 million in 2013.
The Future of Finance (The Portugal News), Rated: A
Crowdfunding and Peer-to-Peer lending appear to be the areas which are bringing real business and willing investors together.
The World Bank has predicted the Crowdfunding industry will be worth $95 billion by 2025 and Goldman Sachs said in a report $1.2 trillion of opportunities could be addressed by Crowdfunding in the coming years.
Camden Town Brewery raised £1.5m in Equity Crowdfunding in July 2015, valuing the business at £28m. By December the company had been bought by AB InBev for £85m, netting investors a healthy return.
Peer to Peer Lending Market Expected to Reach $ 460,312 Million, Globally, by 2022 (Digital Journal), Rated: A
According to a new report published by Allied Market Research, titled, Peer to peer Lending by End-User Types and Business Model type: Global Opportunity Analysis and Industry Forecast, 2014-2022, the peer to peer (P2P) lending market was valued at $26,064 million in 2015 and is projected to reach $460,312 million by 2022, growing at a CAGR of 51.5% from 2016 to 2022. In 2015, small business loans dominated the market, whereas consumer credit loans is anticipated to grow at a robust rate, in terms of market share.
North America is leading the peer to peer lending market, followed by Asia-Pacific.
Asia- Pacific would witness the highest CAGR of 54.1% mainly led by China, owing to emergence of a number of small scale peer to peer lending service providers.
TSB Bank says it has lent $ 50 mln in unsecured consumer lending through P2P lender Harmoney (Interest.co.nz), Rated: AAA
TSB Bank has finally acknowledged that it’s lending money through peer-to-peer (P2P) lender Harmoney.
The bank has disclosed this in its annual report, released on Friday, saying it has lent $50 million through Harmoney to date.
Heartland Bank, which holds a 12.59% stake in Harmoney, also lends money through the P2P lender. By December 31 last year Heartland had lent $62 million through Harmoney’s online platform. TSB has not disclosed a shareholding in Harmoney.
Report on rapid growth in P2P lending – what does it mean for New Zealand? (Lexology), Rated; A
The key takeaways from the FSB’s report (which can be found here) are:
- A growing sector: In absolute terms, the largest FinTech credit market is China, followed at a distance by the United States and the United Kingdom.
- Benefits: The benefits include lower transaction costs, convenience for users, increased credit access for underserved segments of the population or business sectors, and (in relation to financial stability) a lower concentration of credit with traditional banks and more pressure on those banks to increase efficiency.
- Risks: The risks include: increased financial risk in platforms due to a greater credit risk appetite; untested risk processes and relatively greater exposure to cyber-risks; swings in investor confidence impacting the financial performance of platforms; and (in relation to financial stability) lower lending standards, incumbent banks taking on more credit risk in response to competition, securitisation increasing the connection between traditional and FinTech credit and the challenges posed to the regulatory perimeter.
- Business models: The nature of activity varies greatly across and within jurisdictions due to the diverse business models used. These models include: the ‘traditional P2P lending’ model (a borrower-lender matching service with the platform often providing a risk assessment); the ‘notary’ model (a matching service where the loan is originated by a partnering bank – Germany and Korea); the ‘guaranteed return’ model (the platform guarantees a return to lenders – prevalent in China); the ‘balance sheet’ model (the platform originates and retains the loans on its own balance sheet – Australia and Canada); and the ‘invoice trading’ model (factoring services to manage cash flow for the start-up and small business segments).
- Sources of funding: Securitisation capital markets have become an important source of funding for FinTech credit platforms in the US. Cross-border funding is higher in Asia Pacific (ex-China). The average retail investment is around US$8,000 in China but, due to regulatory caps, only €500 in France.
- Borrowers: The available data suggests that consumer loans are typically in the range of US$5,000 to US$25,000 with the US at the top end of that range. Average loans in China are much larger, at more than US$50,000.
Path clear for robo advisers in financial services (Nation Multimedia), Rated: A
The Monetary Authority of Singapore (MAS) has proposed to make it easier for digital advisory services providers to operate by offering some major concessions under the financial regulatory framework.
One is to allow digital or robo advisers operating as fund managers under the Securities and Futures Act to offer their services to retail investors. This could happen even if robo advisers do not meet track-record requirements, as long as they provide certain safeguards.
A MAS consultation paper released on Wednesday proposed that there would not be separate licensing for digital advice. But firms offering these services would have to comply with some safeguards.
One is that portfolios must be diversified and comprise non-complex assets.