Silicon Valley Bank gives immigrant lender Stilt $100 million loan facility

Y-Combinator fintech Stilt has secured a new loan facility from Silicon Valley Bank to diversify its funding sources and expand its lending efforts to immigrants and thin-file borrowers.

The new $100 million wholesale loan facility will be used by Stilt, with Silicon Valley Bank retaining ownership of those loans once they are made. This facility allows Stilt to diversify its source of funding, which until now had largely been reliant on the Smart Asset Management firm from France, which is supplying a $125 million line of credit. By having both lines in place, Stilt expects that it will be able to generate an annualized loan volume in excess of $350 million.

“This will help us expand our lending efforts to both immigrants in the U.S. as well as underserved U.S. citizens,” said Rohit Mittal, co-founder and CEO Stilt. “We serve immigrants from more than 150 countries including India, Philippines, China, Canada, England, as well countries in Africa and Latin America. While our mission has always focused on lending to immigrants who struggle to gain access to credit, since the beginning we’ve also been able to serve U.S. citizens who are thin files and lack the same credit access.”

Mittal noted that the primary driver behind gaining the new source of funding was to scale the business and the secondary driver was to diversify its funding sources.

Stilt

Stilt was founded in 2015 and joined the accelerator Y Combinator in 2016 as part of the Wave 16 batch of 125 startups. Other notable graduating startups from Y Combinator include Airbnb, DoorDash, Stripe and Coinbase.

Stilt’s earlier debt financing round, which closed in May 2020 was for $100 million and was supplied by two firms – Smart Asset Management and FourthGreen Capital, based on data from Crunchbase, a website that tracks funding in private companies. Mittal commented that in the time since that deal was struck, FourthGreen exited and Smart Asset Management took over the commitment and increased the total amount to $125 million.

“Traditional banks historically rely on credit scores to underwrite customer loans,” added Mittal. “This makes it difficult, if not impossible, for them to underwrite immigrants and thin-file U.S. citizens. We look at customers more holistically. This includes looking at their Visa status, education and bank transactions in their checking accounts. We even give loans to people without social security numbers which is something most lenders won’t do.”

Stilt's average loan size is around $10,000 and the average term is about 18 months in length. Mittal added that the average interest rate its customers pay is typically between 12% and 14%.

As a comparison, the average interest rate offered on all credit card accounts, based on data from the Federal Reserve of St. Louis, was 14.65% in November 2020; and on accounts that had revolving balances, was 16.28% for the same period.

Pew Research estimated that there were 44.8 million immigrants in the U.S. in 2018, of which about half are U.S. citizens.

The group often called “thin files” is defined as a cluster of individuals that the Consumer Financial Protection Bureau terms the “credit invisible and unscored population.” The credit invisibles have a file so thin that it may not have a traditional record of payments, such as an auto loan or credit card spending. The CFPB deems that the thin files who are “unscored” have very old payment records or incomplete records that can render the output of a traditional credit scoring model as unusable.