LoanHero, a point of purchase lending platform has received an additional $2.5 million in seed funding. This follows a $1.7 million funding round announced last June when the platform also announced a $20 million debt facility. According to information provided by LoanHero, Mucker Capital and Alsop Louie Partners provided the capital injection.
LoanHero was founded to provide consumers with loan products at the point of sale while facilitating the credit process for merchants and lenders. LoanHero finances their loans as a balance-sheet lender but has also partnered with several strategic lenders said to address a broad range of consumer verticals.
Steve Connolly, CEO of LoanHero, stated his company had seen “meaningful growth” since launch last April. Connolly stated it was clear they were filling a void in the market.
Speaking with Crowdfund Insider, Connolly was asked how his rates compared with more traditional credit providers, such as credit card issuers;
“Many credit card companies have interest rates ranging between 24.99 to 29.99%. At LoanHero, our mission is be a “hero” for the consumer by matching their rate specifically to their credit background (ranging from 13.99- 34.99%), not the “one size fits all” approach that is usually offered at the point of sale,” explained Connolly. “And ultimately, we intend to offer rates that are less than 10% as we build out our lender partner suite.”
LoanHero is said to be experiencing excellent traction in auto repair, pet retail, home improvement and alternative health industries. But the platform has targeted additional verticals as the service grows.
LoanHero is not the only point-of-purchase loan provider. Bread and Affirm are also competing for this space. But Connolly said his platform is different;
“These companies do play in the point-of-sale space, but as an e-commerce play by using a “shopping cart” approach on-line. Our platform is a SaaS offering which the merchant/consumer uses in store or from home for a pre-approval for a specific transaction at check-out. The consumer is present in location for the majority of our transactions, and this in-store financing has very few disruptors.”
Derek Barclay
, LoanHero President, said the “point of sale financing” industry is valued at approximately $500 billion and is prime for disruption. “Lenders struggle to gain meaningful deal flow from merchants, and merchants are forced to apply for customer financing through a number of incompatible financing programs,” states Barclay. Ultimately the merchant risks losing the sale and the customer may seek alternatives. Barclay says they are redefining the financing ecosystem for merchants, lenders and consumers.
In the past 6 months, LoanHero has made “thousands” of loans to prime, mid-prime and sub prime consumers. Their services are now available in multiple states and 100 merchant locations. LoanHero anticipates more than tenfold growth in its loan portfolio over 2016.
Asked about expanding beyond the US borders, Connolly states;
“Our initial plan is to grow first within the US. We are currently operating in five states and looking to expanding into all 50 states very soon. We are certainly open to international growth, but are focused on our core market for the immediate future.”
Will Hsu, co-founder and Managing Partner of Mucker Capital, invested in the young lending platform due to the impressive growth and the LoanHero approach to point of sale lending.
“The team has built a seamless loan origination platform that will differentiate LoanHero from competitors as it scales nationwide,” predicted Hsu.