Asset Classes

Asset classes within the private securitization market can be divided into two broad categories, those transactions with underlying credit exposures to borrowers that are individuals (Consumers) and those transactions with underlying credit exposures to borrowers that are small to medium sized businesses (Businesses). Please note that this list is not exhaustive but is indicative of the exposures of Eligible Transactions.

Consumers

Buy Now Pay Later Loans

Consumers who purchase goods and services both online and in brick and mortar retailers now have many options to pay over time in unsecured installments via a variety of non-bank fintech lenders. These lenders have proprietary algorithms to assess the credit quality of the consumer at the point of sale and usually debit payments directly from the consumers bank accounts over a selected schedule to pay for the item.

Debt Consolidation Loans

Consumers who have amassed extensive debt from primarily credit cards and want to consolidate all outstanding obligations into one have many lenders to chose from that will pay off existing balances entirely and become a singular lender to the consumer. Many of these lenders receive certain concessions from prior lenders holding delinquent balances that ultimately allow them to provide more favorable terms to the consumer and enable a path to credit recovery.

Earned Wage Advances

Consumers who wish to receive wages they have earned but have not yet been paid by their employer on regular payment cycles can receive an unsecured advance from a variety of non-bank fintech lenders. These lenders typically integrate with employers and/or the payroll provider to determine how much each employee has accrued in earned wages up to the day or hour and provide an up to date offer on receiving an advance on these accrued amounts. Once the next payroll date is reached, the lender receives repayment plus interest directly from the employer and/or their payroll provider.

Litigation Financing

Consumers who may have suffered a personal injury or are simply awaiting a settlement or judgement on an outstanding lawsuit have the option to receive some portion of their expected future settlement or award. Many non-bank lenders experienced in law are able to decipher the merits of the case, make a reasonable estimation of expected settlements or awards based on precedent cases and lend to interested plaintiffs.

Residential Mortgages

Consumers who purchase primary or secondary homes often do so by obtaining a secured loan from a lender. While consumers with higher credit scores typically get favorable loan terms from a myriad of banks, those consumers with low credit scores, minimal credit history or outside of the U.S. where bank financing is tougher to obtain for certain segments of the population are typically served by non-bank lenders.

Vehicle Loans

Consumers who purchase cars, motorcycles and recreational vehicles often do so by obtaining a secured loan from a lender. While consumers with higher credit scores typically get favorable loan terms from a myriad of banks, those consumers with low credit scores, minimal credit history or outside of the U.S. where bank financing is more scarce are typically served by non-bank lenders.

Business

Invoice/Receivables Factoring

Many small and medium sized businesses (SMBs) provide goods and services to large, high credit quality corporations. However, these large corporations often have long timelines for payment as the invoice runs through layers of bureaucracy before getting approved. This delay in payment can negatively impact SMBs who need ongoing cash flow to pay its employees and suppliers. Invoice factoring is a type of financing where a lender pays amounts owed under outstanding invoices to the SMB in advance. This provides the SMB upfront cash to satisfy working capital needs. The lender will then collect then be repaid from the invoiced customer once they fulfill their payment obligation.

Merchant Cash Advances

Many small and medium sized businesses (SMBs) endure working capital shortfalls for a variety of reasons including cyclicality, capex or expansion costs. Merchant cash advances are designed to alleviate working capital issues on a short term basis by advancing the business a certain percentage of its expected revenues and establishing the right to receive repayment on the advance directly from these future revenues. Many non-bank lenders that extend merchant cash advances are data-driven and technology-enabled for enhanced underwriting and monitoring.

Purchase Order Financing

Many consumer packaged goods ("CPG") brands receive purchase orders ("POs") from major retailers such as Walmart or Costco. These large, stable, and in many cases investment grade companies are largely non-cyclical and have historically performed well in recessionary environments. However, given these purchase orders from large retailers, the CPG company may need to raise cash to manufacture and deliver their goods to fulfill the purchase order. The CPG company can use its Costco purchase orders as collateral to receive financing. Lenders are willing to provide this financing because they can collect money through the Costco purchase orders if the CPG company does not pay back its loans.

Hybrid

Crypto-Collateralized Loans

Many consumers and businesses who are interested in monetizing crypto holdings without selling the underlying crypto have a variety of non-bank lenders to chose from to obtain a fiat loan secured by their crypto. These non-bank lenders are very technology and data-oriented, as many take possession or control of the collateral, have developed proven risk-management frameworks against fraud, theft and volatility, and offer borrowers the ability to leverage crypto wealth.