From Nuptials to Nose Jobs: Marketplace Lending's Odd Niches
June 29, 2015 6:01 PM
As investment dollars flood into the alternative lending sector, fueling the rapid growth of early entrants such as Lending Club, lots of smaller online loan platforms are also popping up. Many of these new firms are specializing in narrow lending niches, touting their expertise in underwriting particular forms of credit. Heres a rundown of some of these specialties.
Wedding Loans
A new Hoboken, N.J.-based firm, Promise Financial, describes itself as "the first marketplace lending platform exclusively focused on the underserved market for wedding finance." The company offers three-year loans, funded within a few business days, from $3,000-$35,000.
"When so many of the other large purchases we make allow us the flexibility to pay over time," Chief Executive Joshua Jersey said in a press release, "the absence of a dedicated financing option for weddings was surprising and unacceptable."
Divorce Loans
So maybe you're starting to regret not only that wedding loan, but also the wedding itself.
Balance Point Divorce Funding which funds divorce fees, attorney fees, and fees for forensic accountants is one place to turn. Novitas US Inc. offers another option under the slogan: "Funding to untie the knot."
Pro Athlete Loans
Professional athletes, many of whom earn multimillion-dollar salaries, are not obvious targets for a lending business. But a New York-based company called YieldStreet says that some pro athletes particularly younger ones, whose income is relatively low have a hard time getting a bank loan.
The company says on its website that its athlete customers typically have "guaranteed, multiyear contracts," "extremely high wages" and a "low loan-to-contract value." YieldStreet also states that investors get additional protection from insurance policies that pay out in cases of death or disability.
Loans for Solar Panels
Because it's a still-burgeoning industry one that has crept into profitability only in the last few years solar energy projects have struggled with financing, often relying on government subsidies. A drop in power generation costs has helped solar become more viable in recent years.
Enter Open Energy. The company connects accredited investors with solar energy projects for loans of $500,000 to $10 million. The company's founder, Graham Smith, has experience with the industry. He founded a renewable energy consulting business prior to Open Energy, and secured $75 million of construction finance for solar construction in the United Kingdom.
Energy Efficiency Loans
Noesis in Austin, Texas, partners with companies that sell equipment to make businesses more energy-efficient. Beyond just providing financing for investments in LED lighting, heating and cooling systems, and other energy efficiency measures, Noesis also provides reports projecting the cost savings that the improvements are expected to yield.
Elective Health Care Loans
Specialty finance companies have long partnered with dentists, orthodontists and other health care professionals to offer loans to patients for procedures that aren't covered by their insurance. This business requires specialized underwriting expertise determining the risk of default on a loan for plastic surgery, for example.
Today, newer entrants, including PrimaHealth Credit, are aiming to making the loan-application process simpler for both the borrower and the health care provider.
Loans to Tech Startups
Lighter Capital, in Seattle, loans money to tech startups as a way of bridging the gap between bank loans and venture capital money. The company makes loans between $50,000 and $1 million and then takes a monthly payment based off a percentage of the startup's revenue, rather than using traditional loan payments and interest rates.
Tech startups typically have to raise equity funding to grow they're usually too risky for a small-business loan from a bank so Lighter Capital has sold itself as a way for tech firms to partially fund themselves without ceding part of the company.
