After unveiling an online loan for subprime borrowers in July, ZestFinance announced Tuesday that it has raised $150 million in debt to finance the product's growth.
The unsecured loans, branded Basix, carry three-year terms and annual percentage rates between 26% and 36%. Loan amounts range from $3,000 to $5,000. The loans are currently available in 10 states.
Since July, ZestFinance has made a few thousand loans, according to Douglas Merrill, the firm's chief executive officer. The infusion of debt financing will help the Los Angeles company expand its portfolio, he said.
"It ultimately costs a lot of money to build big loan books," he said.
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The financing comes from Fortress Investment Group, which has roughly $70 billion in assets under management.
"Middle-class Americans in the near-prime segment are underserved by traditional lenders, providing significant opportunity for innovative players who can effectively evaluate creditworthiness," Dominick Ruggiero, managing director at Fortress, said in a press release.
In June, ZestFinance announced a joint venture with JD.com, a large online shopping site in China. Under the deal, the American firm's automated underwriting technology will be used to make loans to Chinese consumers.
ZestFinance, which was founded in 2009, has also partnered with Native American tribes that have used the firm's technology to make high-cost, small-dollar loans online