[LoanMe]

First off we wanted to thank Zach for starting this thread. Also a "Thank you" to everyone here that has said some great things about our Business Development team, product and programs. We truly enjoy being a part of this online community where brokers and lenders ask each other for direction in helping their merchants secure the funding they need. We would like to keep our input on this particular thread “Is LoanMe going to disrupt our space?” at a minimum and encourage others to share their thoughts and ideas.

That being said, if there are inaccuracy’s in our product description from posters, we will respond to give the community an accurate picture of LoanMe Small Business Loans.

Loan Me, correct me if I'm wrong is built on the CashCall platform, which has been in the personal loan and consumer mortgage space for years here in Orange County, CA. CashCall makes megabucks, so I'm guessing that the LoanMe funds come from that side of the company.

LoanMe’s internal algorithm for scoring borrowers and businesses is based and has grown from a 13 year old internal scoring model. While there are employees at LoanMe that were former employees at CashCall. LoanMe, Inc. Is a separate company not affiliated with CashCall.

Does anyone know what the typical deal size their going after on this program is? I figure that even at 5% commission if the average deal size is 1MM then you're still walking away with some bucks, no? Sometimes it helps to put things in perspective. You do that 2X a year(on top of your other funding) and you've made enough money on those 2 deals to put yourself in a pretty decent income bracket.

LoanMe offers loans from $3,500 - $250,000. We can offer a borrower up to 3x their gross monthly business income. In most cases we only need to take a look at the last 2-3 business bank statements, Driver’s License and Voided Check. You are correct that 5% commissions on our product is hard to compare to other commissions and should be put into perspective. 5% commissions on a LoanMe offer to your merchant could be more (hard $ commission) to the 10% commissions on your MCA offer to that same borrower.

Recent example: Business with $18k gross monthly business deposits was submitted to LoanMe and other popular lender. Popular alternative lender offered merchant: $12,500. The broker’s commission with them was 10% which would have earned them $1,250. LoanMe approved and funded: $35,500 (10% origination fee) = net funded $31,950 @ 5%= $1,597.50.

Many of our partners also want to monetize the deals they are unable to place with their “A” Lender. They can do that with LoanMe because our “Box” is much broader. We do not have any restrictions on industries or SIC codes, they just must be a “For-Profit” business. As a monthly payment product we do not look at (# of negative days, ending daily balance, NSF’s, number of deposits) the same way a daily repayment product does. Therefore earning an additional commission on these types of turn downs could and does make sense for the brokers we currently work with.

Additionally, they give absolutely no reason on declines so it is impossible to learn their UW guidelines and I have had almost the opposite experience with their closing team. My merchants have been told that they cannot prepay, reports of rudeness after a decline or if merchant asks questions... all sorts of BS from these guys.

When a borrowers application is run through the system and the system set-internal scoring declines them, we cannot see the exact reason for decline. It is LoanMe’s proprietary scoring system which makes us tick. Its system driven based on the borrowers history which quite literally turns it into an internal scoring number. If the number is lower than the threshold for that program, the system declines them. For declines that do not meet our minimum criteria, we do share that with our partners.

We are sorry to hear your merchant had a bad experience. All LoanMe calls are recorded, so please DM/Email us the name and number of the merchant you are referring to and we will pull the phone recordings. If we found this situation actually occurred the LoanMe agent will be reprimanded, which could include verbal/ written warnings, suspension up to and including termination. We take rudeness seriously and want all borrowers to have a pleasant experience when applying for one of our loans. All LoanMe loans offer no pre-payment penalties. We understand business’s capital situations are all different and sometimes In order to make the loan make business sense borrowers need to pay-off early. This is why we designed our loans to have no pre-payment penalties. Feel free to take a look at our website where it gives detailed examples on early payoff examples. https://www.loanme.com/smallbusiness/HowItWorks

I have seen quotes that have monthly payments just as high as the monthly sum of daily ACHs, for the same amount of funding, with a term that is 2 years instead of 6 months.

Christian, you must be referring to our Tier E Term Loan. This is the lowest tier LoanMe is able to offer a borrower any funds and is the only Tier offering a 24 month term. Our minimum FICO remember is 500. If you were able to get that type of borrower a 6 month MCA term with a decent factor, then that’s awesome! Check out all of our other Tiers here: https://www.loanme.com/smallbusiness/Rates. Just select the state to see which Tiers are available.

Remember, during the application process LoanMe scores the borrowers first and then the business. If there is another owner with at least 25% ownership we could take an application with them and they could qualify for a better tier/rate/term. That being said we will only fund one borrower for that business.

When you have longer terms like LoanMe does, you have to look carefully at the individual applying for the loan. This is where the product differs immensely from an MCA product. LoanMe only requires a borrower to have 25% ownership in the business to apply for a loan, therefore each business can have up to (4) chances to get a rate/term/amount that works for them.


Our Take:

LoanMe is not looking to "replace" MCA products. We believe there is a place in alternative lending for both MCA’s (Daily and Weekly repayment products) and the LoanMe (Longer Term Loan, Monthly repayment product). We designed this product to be complementary to MCA’s and believe MCA’s by nature have a very fixed schedule of payback, term and few (if any) early payoff discounts. This does not work for all borrowers.

LoanMe offers a daily accruing simple interest loan. Designed to be more flexible, by allowing the term to be stretched out up to 120 months. This gives borrowers a lower minimum monthly payment and breathing room by not squeezing daily/weekly liquidity. They can then make the best business and repayment decision for themselves by:

1.) Making minimum monthly payments for a short period of time, churn a profit with the newly acquired funds, and pay off the loan balance early. Interest stops there and this borrower behavior would eliminate future interest charged on their original longer term.

2.) Making payments above the minimum each month reducing the principle balance, which shortens the effective term and reduces interest charged.

Additionally a borrower’s first monthly payment is deducted on the 1st of the month. Borrowers funded between the 1st and 14th will have a lower prorated payment come out on the 1st of the next month. Borrowers funded the 15th-31st will have a slightly higher 1st months pro-rated payment, which would not be due that next month, but the month following. This gives the borrowers the ability to have the money work for them for up to 45 days before a 1st payment is even due.


LoanMe is growing and we are welcoming new partners. Please give us a call at 949-535-7798 to find out if this product would be a good fit for you and your clients.

[rick_clsfunding]

LoanMe offers loans from $3,500 - $250,000.

1) Isn't your max loan size of $250k only offered in California?
2) Must the broker also have a California lender's license in order to receive commissions from California merchants referred to LoanMe?
2) Isn't your max loan size outside of California (approved states) $75k?

Just seeking further clarification.

[LoanMe]

1) Isn't your max loan size of $250k only offered in California?
2) Must the broker also have a California lender's license in order to receive commissions from California merchants referred to LoanMe?
2) Isn't your max loan size outside of California (approved states) $75k?

Just seeking further clarification.

1.) Yes. We launched the premier product at the end of November in CA only (for now). This gives premier borrowers 14.9%-24.9% loans all with 120 month terms. Loan amounts for this premier product is $76,000 to $250,000

2.) Yes. In order for LoanMe to compensate brokers for CA funded files. Brokers must have either a California Finance Lenders License or Real Estate License through the California D.R.E.

3.) Yes. For now. See #1

[rick_clsfunding]

1.) Yes. We launched the premier product at the end of November in CA only (for now). This gives premier borrowers 14.9%-24.9% loans all with 120 month terms. Loan amounts for this premier product is $76,000 to $250,000

2.) Yes. In order for LoanMe to compensate brokers for CA funded files. Brokers must have either a California Finance Lenders License or Real Estate License through the California D.R.E.

3.) Yes. For now. See #1

Thanks for clarifying these important distinctions.

Rick

[LoanMe]

Thanks for clarifying these important distinctions.

Rick

No problem Rick. If you or anyone else would like to see amounts/terms/rates on a state by state basis, they are published on our website.

Here is the exact link: https://www.loanme.com/smallbusiness/Rates

Simply select the state to see minimum and maximum loan amounts. Any borrower that is pre-qualified, approved and funded by LoanMe for a small business loan will fall into one of these set categories and tiers. Site is updated as new programs are added.

[brokerCompany]

Interesting that Loanme took this approach. Some other term lenders with much better rates actually let you submit up to 5 deals in CA for funding before they require a license.

No problem Rick. If you or anyone else would like to see amounts/terms/rates on a state by state basis, they are published on our website.

Here is the exact link: https://www.loanme.com/smallbusiness/Rates

Simply select the state to see minimum and maximum loan amounts. Any borrower that is pre-qualified, approved and funded by LoanMe for a small business loan will fall into one of these set categories and tiers. Site is updated as new programs are added.

[bizzcash.com]

2.) Yes. In order for LoanMe to compensate brokers for CA funded files. Brokers must have either a California Finance Lenders License or Real Estate License through the California D.R.E.

LoanMe: Thank you for making yourselves available to the forum for response to inquiry. To that regard, and as to the above statement No. 2: Is LoanMe's policy to refuse unlicensed broker referrals on California funded erroneously based upon a mistaken impression that such unlicensed referrals remain in violation of California law?

Is LoanMe aware that California Governor Jerry Brown signed legislation authorizing lenders such as LoanMe to accept these very referrals from and to specifically compensate brokers for such referrals, effective January 1st, 2016?

LoanMe: as I think and dictate this reply, a thought comes to mind. That is, may this inquiry constitute bizzcash.com's official request to LoanMe, on presumptious behalf of brokers wishing to offer LoanMe business cash advance product in California, that LoanMe re-examine this issue and reconsider its prohibition on compensating brokers for referrals of California funded; just as the state of California re-examined and reconsidered this self same issue, with California government ultimately coming to the conclusion that brokers were a vital and vibrant contributor to the local financial industry and deserve to be properly compensated. No licensing is required.

Please review the following: http://www.consumerfinancialservices...erral-sources/

[rick_clsfunding]

Please review the following: http://www.consumerfinancialservices...erral-sources/

Yes, but that provision only applies when the commercial loan’s APR does not exceed 36% and the referring broker does not participate in the gathering of loan documents from the borrower or delivering the documentation to the licensee.

[jfranz17]

When a borrowers application is run through the system and the system set-internal scoring declines them, we cannot see the exact reason for decline. It is LoanMe’s proprietary scoring system which makes us tick. Its system driven based on the borrowers history which quite literally turns it into an internal scoring number. If the number is lower than the threshold for that program, the system declines them. For declines that do not meet our minimum criteria, we do share that with our partners.

So what exactly do you disclose when giving adverse action notices? The Equal Credit Opportunity Act requires specific reasons for denial and in official staff interpretations, they go into detail as to what needs to be disclosed when using credit scoring systems:

4. Credit scoring system. If a creditor bases the denial or other adverse action on a credit scoring system, the reasons disclosed must relate only to those factors actually scored in the system. Moreover, no factor that was a principal reason for adverse action may be excluded from disclosure. The creditor must disclose the actual reasons for denial (for example, “age of automobile”) even if the relationship of that factor to predicting creditworthiness may not be clear to the applicant.
5. Credit scoring—method for selecting reasons. The regulation does not require that any one method be used for selecting reasons for a credit denial or other adverse action that is based on a credit scoring system. Various methods will meet the requirements of the regulation. One method is to identify the factors for which the applicant's score fell furthest below the average score for each of those factors achieved by applicants whose total score was at or slightly above the minimum passing score. Another method is to identify the factors for which the applicant's score fell furthest below the average score for each of those factors achieved by all applicants. These average scores could be calculated during the development or use of the system. Any other method that produces results substantially similar to either of these methods is also acceptable under the regulation.

[LoanMe]

So what exactly do you disclose when giving adverse action notices? The Equal Credit Opportunity Act requires specific reasons for denial and in official staff interpretations, they go into detail as to what needs to be disclosed when using credit scoring systems:

What is disclose in an adverse action letter is between the borrower and the lender. If you have ever seen an adverse action letter, you know it shows a few comments from information gathered by the credit reporting agencies where credit was pulled.

LoanMe has over 150 loan agents taking an average of 15-20 applications per day. Internal scoring and the algorithm used to assess a pre-qualification decline are not something that agents are given access to. This is done for the privacy and protection of the borrower applying for a LoanMe loan.

[jfranz17]

What is disclose in an adverse action letter is between the borrower and the lender. If you have ever seen an adverse action letter, you know it shows a few comments from information gathered by the credit reporting agencies where credit was pulled.

LoanMe has over 150 loan agents taking an average of 15-20 applications per day. Internal scoring and the algorithm used to assess a pre-qualification decline are not something that agents are given access to. This is done for the privacy and protection of the borrower applying for a LoanMe loan.

You are referring to an FCRA Adverse Action, which only must be provided to a consumer applicant. They are not required for business credit because the commercial entity is the applicant, the consumer is a guarantor and does not meet the definition of an applicant.

An ECOA or Reg B adverse action notice is required for business credit and the notice must contain "either a statement of the specific reasons for the action taken or a disclosure of the applicant’s right to a statement of specific reasons and the name, address, and telephone number of the person or office from which this information can be obtained"

[LoanMe]

Privacy is of the utmost concern for LoanMe on both consumer and business information. I'm not sure you understand how our lead referral and application process (initial pre-qual, initial declines, UW declines, etc.) works, and how we are able to abide by the laws for consumer and business loans. If you would like to give us a call directly we would be more than happy to discuss them with you. We can be reached at any of the numbers listed in our signature below.

[jfranz17]

Privacy is of the utmost concern for LoanMe on both consumer and business information. I'm not sure you understand how our lead referral and application process (initial pre-qual, initial declines, UW declines, etc.) works, and how we are able to abide by the laws for consumer and business loans. If you would like to give us a call directly we would be more than happy to discuss them with you. We can be reached at any of the numbers listed in our signature below.

If you and your legal counsel are confident in your compliance program, that's great and I'm sure you are providing adverse action notices directly to your merchants as required by the ECOA.

[FUNd]

I have not faced adverse action from you nor am I your regulator so I'm not particularly interested going into this any further than this discussion.

Really? You seem like you have a serious bone to pick and have sure done a lot of typing for someone who isn't "particularly interested".