A Blackstone Group executive has joined the board of Magilla Loans, the operator of a search engine that matches consumers and commercial borrowers with banks.
Joe Baratta, Blackstone’s global head of private equity, said that he was drawn to the Sacramento, Calif., company because he believes its technology offers lenders a more efficient way to find customers.
Magilla is premised on the idea that banks often operate inside relatively small geographic footprints, frequently serve fairly narrow niches of the credit market, and need better ways to find potential customers, who are scattered across the country.
“For the banks, the cost and burden of sourcing small and medium-sized loans for small and medium-sized businesses and real estate transactions is high,” Baratta said.
Magilla, founded in 2015, helps users search for residential mortgages, personal loans and commercial credit. It seeks to distinguish itself from other lead generators in a couple of ways.
First, Magilla allows prospective borrowers to shop for a loan without providing sensitive personal information like their names and Social Security numbers.
Users answer a series of questions about the kind of loan they want and the basic outlines of the transaction. But they have the ability to choose which lenders can contact them, which enables them to avoid being barraged with phone calls and emails.
Only after potential borrowers agree to be introduced to a particular lender do they turn over more of their personal information.
“This was built from the borrower’s perspective,” said Magilla CEO Dean Sioukas, a commercial real estate developer turned entrepreneur. ”I built this because there was nothing out there that catered to me.”
The second way that Magilla differs from other lead generators is that it charges lenders a monthly subscription fee, rather than referral fees for each potential loan. Banks can opt to pay $1,000 per month for each loan officer who uses the site, or they can elect to pay an organizationwide fee.
The privately held company does not have to obtain state licenses as a loan broker, according to Sioukas, because it is not collecting personal information from its users, and it is not charging banks for referrals. That approach results in lower compliance costs for banks, he said.
“Because we are not transaction-based, we are not acting as brokers,” Sioukas said. “We are a safe place for borrowers and bankers to meet.”
Magilla is integrating with other services that loan officers already use in order to make its own site more useful to banks. For example, the company said it is integrating with Optimal Blue, the maker of software that lenders use to price loans.
