LoanHero, an online lender specializing in consumer loans at the cash register, announced that it has raised $2.5 million in seed funding.
The equity fundraising round was led by the venture-capital firms Alsop Louie Partners and Mucker Capital, LoanHero said in a press release. The influx of cash follows an earlier $1.7 million equity funding round.
LoanHero makes installment loans in partnership with retailers that sell big-ticket products or services. They include furniture stores, automotive repair shops and laser hair removal centers. The San Diego company has partnerships with roughly 60 undisclosed merchants operating in five states, and plans to use the additional funding to expand nationally, according to Chief Executive Officer Steve Connolly.
"We've seen meaningful growth since we launched in April," Connolly said in the press release, "and we have validated the problem consumers and merchants have in securing capital from traditional sources."
The company’s loans can be used to finance purchases of up to $25,000. Borrowers pay annual percentage rates from 13.99% to 34.99%, Connolly said in an interview.
Shoppers can apply for the firm's loans from their phones while they are in the store. Loan applicants are required to provide their Social Security numbers and their income, among other information, and can complete the application process in 10 to 15 minutes, Connolly said.
LoanHero keeps on its own balance sheet loans made to borrowers with prime and midprime credit scores, he said. For subprime borrowers, the company acts as a technology provider for other lenders.