A recently-rebranded short-term lender has closed one of the largest startup funding rounds of 2016, after raising $33.5 million in debt and equity capital.
Short-term lender Enably, which recently rebranded from Loan Ranger, has closed a $33.5 million funding round from American fund manager Richard Driehaus and New York-based hedge fund Corbin Capital Partners.
According to Enably CEO Andrew Kirkwood, the “fairly substantial debt proportion” will be used to fund the company’s loan book going forward, and help the company offer larger loans as a consequence.
Speaking to Mortgage Business, Mr Kirkwood explained: “Corbin [Capital Patners] were keen to help us out and were interested to move away from the payday lending market, and that’s exactly what we're trying to move away from, and move towards more online personal loans.
“We’re starting with large loans of up to $10,000 to begin with, but who knows where to after that?”
Mr Kirkwood said that while the average loan term at the moment is for around three months, and for smaller amounts, it is often the case that payday lenders see customers take out several loans back-to-back. As the company is hoping to move away from the payday lending market, Enably is now offering loans of up to $10,000 over a period of two years, and is aiming to make its average “well upside of the $2,000 range”.
“Whenever we survey or speak to our customers, they always say they are crying out for larger over a longer duration of time,” Mr Kirkwood explained.
“We wanted to make sure that people were given the opportunity to get the amount of money that they want, that they aren't stuck in a spiral of [debt]. I think that's the benefit of our product. Our loans do have a finite end date but it’s long enough for people to be able to afford them.”
The Enably CEO added that by looking at 90 days' worth of transactional data from the customer, and reviewing their credit file, credit score, and in-house technology to categorise what type of payments they are making, the company can “understand the amount of disposable income that the customer has got and what they can afford”. This then feeds into the decision-making process when it comes to term and value of the loan.
He added: “If we don’t feel that will put them in the best place, then we will reject those customers. For that reason that we only approve about 1 in 10 applicants.”
Mortgages 'not off the table'
Although the lender is currently only looking at offering larger loans, Mr Kirkwood said that “nothing was off the table” and hadn’t ruled out potentially offering mortgages in future.
He commented: “Nothing is off the table, certainly mortgages are not on our radar right now, but we're trying to keep an open mind and really understand what our customers are wanting. It’s going to be a case of listening to what our customers are looking for and making sure that we can create and tailor specific loan products to meet customers' needs, so who knows?”
[Related: ASIC announces payday lending changes]