Online payday lender Loan Ranger is forging ahead with plans to rapidly expand the business and push into new lending sectors, after securing a multi-million funding injection from London investment bank Liberum Capital.
Online payday lender Loan Ranger is forging ahead with plans to rapidly expand the business and push into new lending sectors, after securing a multi-million funding injection from London investment bank Liberum Capital.
Incubated out of Tony Brennan’s Delta Capital, Loan Ranger would not reveal what Liberum had paid for its equity stake in the micro-loans operation except to say it was “very significant, in the millions.”
The funds will support a national television advertising campaign to rapidly expand Loan Ranger’s customer base, particularly on the east coast.
Within two years, Loan Ranger managing director David Brennan said, the business expected to be funding several million dollars worth of micro loans a month compared with its current levels of about $160,000 a month.
But the goal is quality, not quantity.
“The target isn’t money out the door, it’s about continually keeping that quality of customer high and that default rate low,” Mr Brennan said.
“Eventually we are going to reach that inflection point where we will have to reduce the quality of the customer to lend out more money and we won’t ever do that; we will then strap on another asset class to get that growth.”
The business plans to launch new lending services within the next 18 months and has identified the small business market as a primary target.
“Liberum has a strong desire to expand this (model) into a lot of different asset classes, using our management team and our structure to do that,” Mr Brennan said.
Liberum is already active in the peer-to-peer lending space in the UK and the US and it was central in the development of P2P Global Investments, the first UK-listed company investing in loans originated by peer-to-peer lending platforms.
Loan Ranger was launched 12 months ago after investing 18 months and about $1 million in developing and refining the operation’s online lending platform.
The Loan Ranger business provides very small loans, on average $294 on a 30-45 day contract. The loans are funded from Loan Ranger’s balance sheet and its online model delivers a very quick approval process.
It’s a direct-funding model that cuts the traditional banks out of the equation and challenges some of the service standards provided by the big financial institutions.
Mr Brennan compared the rise of direct lending businesses with the impact of online car service Uber on the taxi market.
“In the same way Uber has destroyed the taxi market, we are removing inefficient players from the traditional system,” Mr Brennan said.
“We can give customers what they want, fast access to capital in the way they want it, on their phone, on their tablet or at home so they don’t have to go into a store or have a face to face interaction.”
Loan Ranger’s key competitor in the payday lending space is Cash Converters, which benefits from its national chain of retail outlets. But it also goes head to head with fellow online lender Nimble and Perth-based online lender PAID International.
