CUSO Creates Online Connection For Sellers, Buyers Of Loan Participations
CHATSWORTH, Calif.-Business Partners, LLC has created an online marketplace named BP Connect designed to connect sellers with buyers of loans.
Jean Faenza, president and CEO of Business Partners, which is a CUSO, told Credit Union Journal BP Connect is still in "soft launch" mode, meaning only limited marketing efforts are being made to Business Partners' existing client list.
"We are taking between three and four calls per week from credit unions interested in subscribing to the service. There are three current subscribers," she said. "We expect this will take off in 2012. We are treating 2011 as an introductory period and we will do full marketing next year.
"As with any business, we love early adopters," she added.
The BP Connect process works as follows: the company's technology allows participations to be bought or sold within a network. Lenders pay subscription fees to be included in the network.
"If a credit union has loans to sell, the hardest part is to find an interested buyer," said Faenza. "What we are doing is connecting buyers and sellers through our pre-established network. Anyone who is a subscriber of BP Connect has access to our partners. We are allowing them to use our relationships and our technology, the two hardest things to find. Our technology is secure and behind firewalls, so information that is shared is protected."
For example: Credit Union X has loans to sell in order to reduce concentration, diversify its portfolio or manage liquidity. It contracts with Business Partners, which contacts other participating CUs about the pool of loans that is now available. If a buyer is interested, BP Connect does just that-connect them.
"Due-diligence information between the two is available through the network," Faenza said. "Without our technology, this part of the process is being done by e-mail or fax. Our technology acts as a repository of information."
Importance of Due Diligence
Earlier this year, NCUA Chairman Debbie Matz told Credit Union Journal the regulator was going to be taking a hard look at loan participations. Faenza said the system will meet all due-diligence requirements.
"We have invested a significant amount of money into our infrastructure, and we built a proprietary network that surpasses SAS Type 2 certification," Faenza said. "Sellers and buyers can use the technology to assist them with their due diligence, because we are connecting sellers to buyers though technology."
Faenza said the team that is launching BP Connect is "truly excited" about it. "Often it is difficult for credit unions to be efficient and to meet due diligence requirements, and this helps both."
Business Partners was founded in 1995 as a subsidiary of Telesis CU, but now is owned by 17 credit unions. It offers several business lending services to financial institutions, including origination, underwriting, documentation, servicing, risk management and reporting. It has more than $1.5 billion in business loans under asset management.