With a new pool of $275 million in credit to draw on, New York-based marketplace lending platform CommonBond says it expects to fund more than $1 billion loans this year.
CommondBond specializes in student loans, and the strong performance of the loans it’s made helped it to secure warehouse lines of credit from investors including Macquarie Capital and Barclays.
Warehouse lines of credit, commonly used in the mortgage industry, allow companies to fund loans and then package them into securities that are sold to investors.
CommonBond already has a track record of securitizing student loans, selling $100 million in graduate school loans last summer to investors that included insurance companies, banks and hedge funds. It was the first time Moody’s Investors Service had issued an investment-grade rating for a marketplace lending platform making a first-time issue, the company said.
CommonBond CEO David Klein called the June transaction “a major milestone … that reflects the quality of our underwriting” as well as the scale of the company’s platform, where qualified investors can also purchase loans directly. To help put together more loan securitizations, CommonBond announced it has hired Beth Starr, a veteran of Jefferies and Lehman Brothers, as head of capital markets. Last summer, the company hired Morgan Stanley finance veteran Morgan Edwards as its chief financial officer.
Klein told the New York Business Journal that Starr’s goal will be to use her banking contacts to complete two to four more securitization rounds this year. He told Business Insider that CommonBond plans to expand into personal loans and is also eyeing mortgages.
CommonBond raised $35 million in September in a Series B funding round led by August Capital, with participation by Nyca Partners and existing investors. The new lending capital brings CommonBond’s total funding to date to more than $625 million.
In the last three months, CommonBond has doubled its staffing to 60 employees, and expects to have more than 100 workers within a few months.