From California to New York, Fintech Finds Loans for Almost Anyone

From small business loan makers to algorithm-based lenders, the fintech arena is producing alternative lending options for practically every type of consumer and small ventures. Since small business and consumer lenders OnDeck and Lending Club opened up the flood gates with initial public offerings in late 2014, the world of online and tech-based lending has garnered substantial investor, consumer, and borrower interest.

Now, the startup world is inundated with lenders that target seemingly every variety of audience: from auto buyers to cash-hungry businesses to millennials with no credit history. The sector has grown so dramatically that it has drawn the interest of traditional banks, and continues to attract new venture funding seemingly every month.

Just this week, four fintech companies broke news, led by New York-based Aprenita announcing its service that provides loans to small app developers. As Xconomy’s João-Pierre S. Ruth reported, Aprenita will make a loan to developers who have analytics that can be reviewed and revenue coming in from an app—a unique, algorithm-based method of determining credit worthiness. The company may provide growth-seeking developers, who may not want to sacrifice more equity, funding ranging from $5,000 to $1 million, co-founder Mark Loranger told Xconomy.

San Francisco-based LendUp announced the largest fintech deal of the week. The business, which says its target audience is the 80 million Americans “unable to obtain credit from traditional banks,” is taking $150 million in a Series B financing led by Susa Ventures and Data Collective. The company has some high-profile existing investors, including GV (formerly known as Google Ventures), Kapor Capital, Yuri Milner, and others, who also participated.

LendUp touts itself as a payday loan alternative, with the goal of helping customers get access to more credit at lower rates over time. Since its founding in 2012, the company has also launched financial education courses and a credit card business, the L Card.

Speaking of making borrowed money easier to access, San Diego-based LoanHero—which developed a loan origination tool that syncs with point-of-sales systems at retailers—added $2.5 million of seed funding to the $1.7 million it raised in June, as Xconomy’s Bruce Bigelow reported. The company says that it has a $20 million credit facility to fund loans.

LoanHero says it offers a streamlined application process for borrowers and solves “pain points” for merchants, providing instant decisions on competitive loan products for “prime to sub-prime consumers” (meaning everyone from borrowers with good credit history to risky ones). On its website, LoanHero says that it has integrated multiple lending products into its lending tool, which should help boost the approval rates for customers.

While the focus on consumers in the alternative lending market has grown, small businesses still attract plenty of attention. BlueVine, a Palo Alto, CA-based company that also has offices in Tel Aviv, Israel, has built an online lending tool for companies looking to purchase inventory, cover expenses, or expand operations. BlueVine uses businesses’ invoices from customers as a way to determine credit worthiness—a process called “factoring.”

The company just received $40 million in Series C funding led by Menlo Ventures, with participation from new investor Rakuten FinTech Fund. Lightspeed Venture Partners, 83North, Correlation Ventures, and other previous private investors also participated in the round. Fundbox, a San Francisco-based company that raised a $40 million Series B round led by General Catalyst Partners in March, is a competitor.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at [email protected] Follow @xconholley

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