LoanSnap, the self-styled “smart loan” company backed by Richard Branson and ex-NFL quarterback Joe Montana, this week secured $9 million. The company says the funding will be used to further develop its products and expand to additional markets.
It’s estimated that U.S. consumer credit card debt amounts to $1.04 trillion collectively and that high interest rate personal loans cost borrowers over $58 billion. LoanSnap claims its loan-borrower matching technology is one of the first to address this by considering the U.S. economic environment — particularly downturns like that caused by the pandemic — in addition to individual financial factors.
LoanSnap has applicants answer a few questions about student loans, credit cards, and other monthly bills before showing them their current money situations. It then sorts through thousands of refinancing offers, home equity lines of credit, military veteran loans, and mortgage options to make recommendations in seconds.
The rest of the company’s stack comprises fairly standard stuff, like compliance checks to minimize potential snags in the application process. When someone signs up for LoanSnap’s service, it pulls applicable personal data either by scanning their driver’s license (through apps on Android and iOS) or by cross-referencing their Social Security number and address, which it uses to identify the best-matched loans and mortgages.
LoanSnap says it takes 15 days or less on average to finalize contracts, even in cases that require a property appraisal. After customers sign on the dotted line, they get financial recommendations, like “Pay off your credit card debt and save $580 per month” and “Get cash back by tapping into your home’s equity.”
LoanSnap began making loans in 2018 after acquiring Costa Mesa, California-based lender DLJ Financial, and it says that it’s already helped customers pay off $12 million in debt and save $8 million in future payments.
Service is only available in California, Colorado, Florida, Illinois, and Tennessee, but LoanSnap plans to expand this year.
LoanSnap has raised a total of $26 million in venture capital. This latest round was co-led by True Ventures and Mantis — the tech investment firm created by The Chainsmokers. Additional investors include Branson’s Virgin Group and Montana’s Liquid 2 Ventures, along with Baseline Ventures, Core Innovation Partners, OVO Fund, Transmedia Ventures, Morado Ventures, Work Play Ventures, Accelerator Ventures, and undisclosed angel investors.
Other loan-matching startups and lenders that claim to use AI in their decision-making processes include Lendio, which last March raised $55 million for its small business loan platform. There’s also UpStart, which recently partnered with banks to expand its AI lending business; Kreditech, which targets emerging markets; and Zest AI, whose solutions are tailored to highly regulated industries.