Real estate lending marketplace Groundfloor announced on Tuesday it has entered into a whole loan purchase relationship with Direct Access Capital (DAC), a specialty finance company focused on providing liquidity to non-bank lenders of short term residential backed business loans. According to the online lender, this is its first institutional partnership to enable the company to scale its loan origination volume and expand its product offerings over the next year and the shared target is $100 million in loans through 2018.
Groundfloor revealed that DAC will leverage its loan origination pipeline, proprietary grading algorithm, underwriting criteria and asset management practice the company has built over the past three years. The real estate lender will then service loans for DAC alongside loans held by retail investors, leveraging the same personnel, standards, and practices to maximize timeliness and extent of repayment. Groundfloor’s historical loss ratio to date is just 70 basis points, returning 14.85 percent net on 134 loans and $12.4 million of principal repaid with an average repayment term of 7.7 months. While sharing more details about the partnership, Brian Dally, Co-Founder and CEO of Groundfloor, stated:
“Direct Access Capital is a highly expert, value-added financing partner whose support will enable Groundfloor to triple revenue growth. Our target to supply $100 millionof loans is a testament to the market demand for value-added real estate investment credit, as well as the strength of Groundfloor’s underwriting and servicing.”
Noah Martin, Chief Investment Officer of Direct Access Capital, then added:
“Groundfloor has demonstrated the potential for hyper-growth while maintaining their track record of originating a quality debt product in the market tor real estate investment loans. We believe in their unique business model and are proud to contribute to their mission to democratize investing for all.”
Groundfloor currently lends in 27 states, is growing its retail base at a rate of over 10 percent per month, has sold $40 million worth of securities on its platform and has raised $8.5 million in venture capital from leading fintech investors.