Fintech Investments

Startup Bread Raises Funds To Offer Consumers Financing On Big Purchases

FinTech startup Bread, which offers consumer financing on large online purchases, has raised $126 million in a Series B venture capital (VC) funding round.

Forbes reported news that Bread is one of the FinTech startups that wants consumers to ditch their credit cards and instead opt to finance major online purchases, such as furniture and large home appliances, with a loan that has lower rates and predictable monthly payments.

The New York-based company will use this Series B VC funding round to expand the number of retailers that offer its consumer financing. Menlo Ventures led the equity portion of the venture capital investment, with participation from Bessemer Venture Partners, RRE Ventures and others. A debt facility was also provided by Victory Park Capital.

Founded in 2014, Bread offers white-label solutions for retailers who wish to offer convenient online lending to their customers in the hopes that they will spend more money, on more things, when they have the ability to pay later.

Retailers can choose the lending terms they want to offer customers, including interest rates starting at 0 percent and going as high as 29.99 percent, with repayment periods between three and 48 months. Bread is currently working with 100 smaller retailers and is beginning to add more well-known companies. It declined to share figures relating to its lending volume, but said it has grown five-fold since last year.

“When we go to merchants, they’re aware that financing will have a real impact on their sales,” says Josh Abramowitz, co-founder and CEO of Bread.

If a consumer is interested in taking out financing, they simply enter a few pieces of personal information, including their name, address, social security number and contact information. After a soft credit inquiry, they’ll be told if they’ve been approved and what the terms of the loan are.

Right now, payments on a Bread loan won’t be reported to the credit bureaus or be reflected in a consumer’s credit score. However, they could be penalized for late or missed payments. Bread plans to report all payments to the credit bureaus in the future.

As part of the funding round, Menlo Ventures Managing Partner Mark Siegel will join Bread’s board of directors.

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