The American Dream Takes Good Credit
Today, we announced the completion of a $25M social bond securitization backed by 20,000 of our responsible, credit-building loans. This represents a new class of investment securities that allows traditional fixed income investors to meet growing demands for social returns.
Since 2013, we have been quietly, and boldly, building a unique crowdfunding-for-debt approach that is paying off for our investors and the high-need communities we serve. To date, we have completed 15 private market securitization issuances for a total of $247M and we have provided an estimated 200,000 loans to low-income households in the US.
All of this, and we are just getting started.
Our direct-to-investor micro-securitization platform supports our mission to disrupt the predatory lending industry and build financially healthy low-income communities. Investors in our program get access to high frequency, short duration, high yield returns at approximately 4 to 10%, in addition to the social coupon they receive. Financial institutions and foundations can also fulfill their Community Reinvestment Act (CRA) obligation by investing in INSIKT securities.
What is unique about our investment program is that our loans are pooled to secure a bond that investors buy into. We believe this approach diversifies risk across multiple loans and is smarter than buying directly into one loan at a time. Investors can still see exactly how each underlying loan is performing by reviewing the data on our website. What is different about our approach is that we are committed to full transparency, to ensure that people really know what they are buying and who their investment is benefiting. In this case, it’s the approximately 90 million Americans who are either unbanked or underbanked with little to no access to affordable capital or a credit score.
The success of our securitization program to date allows us to expand our loan-making services to people in need in California, Texas, Arizona, and Illinois at increasingly lower costs that we can pass on to our customers. We call it “lending as a service,” and as a Community Development Financial Institution(CDFI), we have built a track-record of responsible lending. Our loans are rigorously underwritten to ensure a borrower’s ability to repay and are structured for borrower repayment success. And, on-time payments are reported to the major credit bureaus, so borrowers can build their credit scores.
This means that consumers in banking deserts or harmed by predatory lending practices have both free and wide-scale access to affordable capital. In addition, we are particularly proud of our efforts to improve credit scores. Customers who take a second loan from us have improved their score by an average of 312 points and are that much closer to making their financial dreams a reality.
While we are very excited about this milestone in our short history, we know we have a long way to go to make affordable credit accessible to millions more Americans. With the help of pending legislation to potentially increase our lending limit to $7,500 in California and expand the number of investors in our bond issuances to tens of thousands nationally, our vision is to create a culture of financial inclusion to help millions of people who have been excluded for far too long.