Direct Marketing
We have originated small business term loans through the direct marketing channel
since 2007 and began originating lines of credit in 2013. Through this channel,
we make contact with prospective customers utilizing direct mail, outbound calling,
social media and online marketing.
Our direct sales team is located in our New York City and Denver offices. This
team primarily focuses on generating loan originations and assisting potential
customers throughout the application process by responding to their questions,
collecting documentation and providing notification of application outcomes.
While our website facilitates the majority of the loan application process,
customers may elect to mail, fax or email us documentation. In such cases, our
direct sales team assists in collecting this documentation. Members of the direct
sales team have a commission component to their compensation that is based on
loan volume in the case of term loans and number of lines opened in the case
of lines of credit.
When a customer that has previously taken a loan from us returns for a repeat
loan, including customers initially acquired via a strategic partner or funding
advisor, our direct sales team typically interacts directly with the customer
to help facilitate the process. We generally still pay commissions to such strategic
partner or funding advisor as well as our internal sales agent based on the
amount of the new loan to the customer, but the commission, on a percentage
basis, is generally less than the commission on the initial loan.
Strategic Partners
We have originated small business loans through our strategic partner channel
since 2011. Through this channel, we are introduced to prospective customers
by third parties, who we refer to as strategic partners, that serve or otherwise
have access to the small business community in the regular course of their business.
Strategic partners conduct their own marketing activities which may include
direct mail, online marketing or leveraging existing business relationships.
Strategic partners include, among others, banks, small business-focused service
providers, other financial institutions, financial and accounting solution providers,
payment processors, independent sales organizations and financial and other
websites. The material terms of our agreements with strategic partners vary.
In general, if a strategic partner refers a customer that takes a loan from
us, we pay that strategic partner a fee based on the amount of the funded loan.
If the strategic partner uses our technology and platform, they pay us a fee
and may pay additional fees to us based on volume and productivity metrics.
Such agreements also typically contain other customary terms, including representations
and warranties, covenants, termination provisions and expense allocation. Strategic
partners differ from funding advisors (described below) in that strategic partners
generally provide a referral to our direct sales team and our direct sales team
is the main point of contact with the customer. On the other hand, funding advisors
serve as the main point of contact with the customer on its initial loan and
may help a customer assess multiple funding options besides those we offer.
As such, funding advisors' commissions generally exceed strategic partners'
referral fees. We generally do not recover these commissions or fees upon default
of a loan. We have entered into a general marketing agreement with one strategic
partner that provides for common stock purchase warrants that vest upon reaching
certain performance goals. No other fees are paid to strategic partners. Strategic
partners represent a growing portion of our originations.
We provide term loans and lines of credit to a diverse set of small businesses.
We have funded more than $4 billion of loans across more than 700 industries
in all 50 U.S. states and Canada, and we have recently begun lending in Australia.
The top five states in which we originated loans in 2015 were California, Florida,
Texas, New York and New Jersey
