A specialty consumer lender to Hispanic communities is securitizing its latest round of collateralized loans through a two-note, $125 million asset-backed structure.
Oportun Financial Corp., formerly Progreso Financiero Holdings, is offering $102.9 million in Class A notes and $22.07 million in Class B notes. The Oportun Funding III LLC Series 2016-B transaction has received preliminary structured finance ratings (‘A’ for the Class A, ‘BBB’ for the Class B) from Kroll Bond Rating Agency, which has rated two of the company’s prior five pools of loans.
The notes are supported by 30% credit enhancement on the Class A notes and 15% on the Class B – similar to prior deals from Oportun and its predecessor company.
The 77,735 loans in the $147.1 million pool have an average loan balance of $1,892, with an average seasoning of four months and 21 months remaining on the original lending terms.
The small-dollar, unsecured loans carry balances of $300 and $2,700, with average interest rates of 32.4%. While “significant,” Kroll notes the high interest rates are lower than other available non-prime funding sources for customers in these communities.
The loans are originated and serviced by Redwood City, Calif.-based Oportun, a U.S. Treasury-certified community development financial institution (CDFI) with a primary mission to bring economic opportunity to low-income and/or underserved communities. Although 41% of its customers have no credit score, 70% also have no derogatory credit history.
Oportun’s five prior ABS transactions totaled $602 million. The company has originated more than 1.4 million loans totaling $2.5 billion since its 2005 founding. As of May 31, the company had $768.5 million in outstanding loans to 409,288 customers.