As the online lending market heats up, another alternative lender has secured a chunk of funding to help push its capital lending goals.
Reports yesterday (Jan. 5) show that CommonBond, the student loan lender, brought in another $275 million in lending capital in a round that involved Macquarie Capital and Barclays, among other financial investors. Those investors, according to reports, are leveraging CommonBond with a line of credit to enable more loans for its student borrower base.
Last fall, CommonBond announced it had secured $35 million in a Series B funding round. The FinTech company, which is aimed at both lowering the cost of student loans for borrowers, as well as ensuring financial returns for investors, also reported that it was on track to exceed $500 million in funded loans by the end of 2015.
CommonBond said at the time that the funding would be used to support an aggressive hiring plan, double down on its investment in technology and significantly increase marketing efforts. That funding round was led by August Capital, with Nyca Partners and existing investors participating.
According to the company, its loan originations surged more than sixfold year over year through the first half of 2015, and it anticipates topping $1 billion in loans funded in 2016.
Now, with this most recent funding under its belt, CEO David Klein will be able to achieve that goal.
“Capital sources for new FinTech lenders have evolved over the past few years. From credit funds in the beginning (high cost of capital) to specialty finance companies (medium cost of capital) to big banks (low cost of capital),” Klein wrote in an email to TechCrunch.
“As FinTech lenders mature and prove out performance, their access to low-cost capital (i.e., capital from big banks) increases. Not all FinTech lenders have gotten to that other stage yet. In fact, only a few have. This announcement puts us in that camp,” Klein wrote in the email.
Klein cited statistics that said there is roughly $1.3 trillion worth of student loans in the U.S. that are outstanding as a result of students having difficulty financing their education. CommonBond’s goal is to help borrowers with good lending credentials find better ways to pay off those loans that could otherwise build up. Financing loans creates a majority of CommonBond’s business, but Klein said the company plans to eventually expand its business plans.