With alternative lenders LendingClub and OnDeck grabbing headlines with healthy IPOs, the rest of the alt-lending business is feeling the benefits. Alt-lending service provider Biz2Credit has just a received a $250 million commitment from investment firm Direct Lending Investments, TechCrunch reported.
Direct Lending is already the largest investor on Biz2Credit's marketplace, with $65 million in loan commitments. Union Bank, TD Bank, and other mid-tier regional banks have also made loans through the startup.
Biz2Credit has a proprietary scoring system for issuing loans, and collects reams of data on lenders across the country. That analytics platform has led to one of the lowest default rates in the industry (only 0.7 percent of the company's borrowers have defaulted). Roughly 70 percent of the small-business borrowers have been in business for more than three years and have more than $1 million in revenue.
Borrowers, who range from warehouse operators to small retailers like restaurants and service businesses like hotels and motels, want to borrow between $25,000 and $500,000, which co-founder Ramit Arora calls the sweet spot in which most banks won't lend directly, but will through a marketplace. Biz2Credit vets potential borrowers, connects them with lenders, then handles all the follow-up.
The company expects about $80 million in revenue in 2015 and is looking to have an IPO of its own by 2016.