Fundation has secured $100 million credit from Goldman Sachs, reported the WSJ. The cash flow will enable the “credit solutions provider” to expand recent partnerships with traditional banks, such as Regions Financial Corp. and a network of community banks, and to extend loans to the banks’ business customers. Paying a fee to Goldman Sachs, Fundation will now place a portion of the loans it holds in this new credit facility; these loans can later be sold to investors via securitization, but there is no current plan to do so, Fundation CEO and co-founder Sam Graziano informed the WSJ.
Launched in 2013, Fundation provides digital tools such as online applications and data-intensive credit algorithms to its partners. Through its partners, Fundation offers conventional business term loans of up to $500,000 with annual rates under 30%, retaining a small percentage of the loan as a fee.
“Marketplace lending was going to change the state of banking, but that’s not really the case,” Graziano, a former investment banker at Centerview Partners and Keefe, Bruyette & Woods told the WSJ. “It’s saturated. Hundreds of platforms are going after the same pool of customers. We decided to be an integrated partner of the banking system.”
Majority owned by Garrison Investment Group, Fundation also partners with business-service providers such as Wolters Kluwer N.V. to make loans, having recently begun working with the U.S. Department of Commerce’s Minority Business Development Agency to facilitate lending, reported the WSJ.