Democrats Chris Van Hollen of Maryland and Elizabeth Warren of Massachusetts wrote to the company last week to voice their opposition, arguing that OppFi’s business model is based on “predatory lending practices,” such as triple-digit interest rates.
“OppFi—a nonbank lender that provides financial services to consumers through installment loans—brands itself as a lender that ‘empower(s) everyday consumers to overcome financial hurdles and build long-term financial stability,’” the senators’ letter said. “But, a closer look into its business model reveals persistent, predatory financial strategies.”
The letter noted that OppFi’s effort to acquire BNCCORP and its subsidiary to become a bank holding company comes months after lender Enova attempted to do the same thing with Grasshopper National Bank.
Enova has since called off that deal, saying last month that the acquisition process is “susceptible to political pressure and outside advocacy.”
OppFi’s products, Warren and Van Hollen argued, have “the potential to be even more harmful than Enova’s,” saying that OppFi lends up to 195% APR and has “very aggressive refinancing practices.” By contrast, Envoa had proposed loans that were “limited to a still-egregious 99.99% APR,” the letter said.
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The senators added that, given these practice and rising opposition to the application, OppFi should withdraw its application.
A spokesperson disputed the senators’ characterization of OppFi’s lending business in a statement to Banking Dive, saying that attacking the application harms consumers.
“Transitioning into the regulated banking system will subject OppFi’s already proven and fully compliant business model to rigorous federal oversight – reinforcing OppFi’s commitment to fair and responsible lending for those who need it most,” the spokesperson said.
Both the Enova and OppFi deals have been challenged by a group of 20 state attorneys general (AGs), who asked federal banking regulators in June to deny banking privileges to companies they argue use bank partnerships to skirt state-level limits on interest rates.
“The rate issue carries considerable economic weight,” PYMNTS wrote at the time. “According to the AGs, 45 states and Washington, D.C., impose interest-rate caps on small to midsize installment loans, with 36% a widely accepted maximum for very small loans.”
The states say that OppFi and Enova “work with banks chartered primarily in states without rate caps and offer loans carrying rates reaching 195% and higher,” that report added.
OppFi has said BNC had about $1 billion in deposits at the end of last year carrying a cost of less than 2%. It projects at least $60 million of synergies in the first year after closing, more than $90 million in the second and upwards of $115 million in the third.
“Crucially for the rate-cap dispute, OppFi says those estimates are based on ‘geographic expansion’ and ‘funding optimization,’“ the report added, with the company expecting adjusted EPS accretion above 25% in 2027 and 40% in 2028.
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