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The mobile-centric consumer lender is turning to MoneyGram's vast retail network in an effort to reach borrowers who prefer to use cash. The partnership applies to borrowers in 15 states, but LendUp hopes to partner with a bank to take its service nationwide.
August 11 -
Bankers are mulling new ways to serve consumers with low incomes and poor credit profiles after the crackdown on deposit advances, but the prospect of smaller profits and continuing uncertainty about regulations may dissuade a serious effort.
February 19 -
Once billed as a safer alternative to traditional finance, the new crop of tech-powered lenders is starting to resemble previous generations of finance companies whose fortunes rose and fell with each economic cycle.
December 29
LendUp, which makes subprime consumer loans online and over mobile phones, announced Wednesday that it has raised $50 million in equity funding, plus an additional $100 million in debt financing.
The San Francisco company, which launched in 2012, said that it will use the money to build a nationwide business. LendUp's small-dollar loan product is currently offered in 23 states. The company also announced a subprime credit card in October, but the credit card is available only on a limited basis.
"With this latest round of funding, we're expanding the platform to include national products that allow us to solve new challenges and meet the needs of more customers," Sasha Orloff, a former Citigroup executive who is the company's chief executive, said in a press release.
The funding round was led by the venture capital firms Susa Ventures and Data Collective. Victory Park Capital, another equity investor in LendUp, is also providing a credit facility that will be used to fund new loans, according to the press release.
LendUp markets its small-dollar credit products as a better choice than payday loans for consumers who cannot get credit from banks.
Still, LendUp loans carry triple-digit annual percentage rates, at least initially. In California, a 14-day loan of $100 carries a $12.50 fee, which translates to a 326% APR, according to LendUp's website. A 30-day loan of $100 to a California resident carries a $17.30 fee, which comes out to a 210% APR.
The firm's customers can qualify for lower interest rates - annual percentage rates on installment loans may be as low as 29% - by paying their loans on time, taking credit education courses, and referring their friends to LendUp.
