Student loan refinancing company Social Finance (SoFi) is looking for a loan of its own: The company is in talks with banks to secure a revolving credit line of as much as $1 billion after posting a second-quarter loss.
According to Bloomberg, sources have revealed that SoFi has approached several financial institutions about the potential loan. The deal would come before an initial public offering, which is expected to happen sometime next year.
There were reports last month that SoFi had been in talks for a $500 million unsecured credit line that could be used for acquisitions. Terms of the loan aren’t set, according to sources. A spokesman for SoFi declined to comment.
Earlier this month, the company posted a second-quarter adjusted loss of about $200 million.
A source revealed that the company took a one-time charge on loans originated before the second quarter — and the $200 million figure is before interest, taxes, depreciation and amortization.
“Our Q2 financial results were negatively impacted by significantly lowered valuation of legacy loans and assets, as well as the slow start to increasing prices in the face of a rising interest rate environment,” the company said in a shareholder letter.
SoFi has been trying to transform itself into a broad online financial-services company as it works towards an IPO, but has faced a number of obstacles. Last year, the company lost a number of key executives, including Mike Cagney, its co-founder, chairman and chief executive, who was ousted after sexual harassment allegations.
This past May, SoFi’s new Chief Executive Officer Anthony Noto wrote his first quarterly missive to shareholders highlighting the company’s mission and values. Noto used the letter to highlight key milestones such as its SoFi at Work program, which hooks up with companies to help employees pay down their student loans and other debt. He added that SoFi plans to expand its robo advisory services to offer individual stocks and other investment asset classes.