By Kevin Wack | National Mortgage News
By now there’s a well-worn playbook for tech companies trying to upend established lending markets.
First they seek a toehold in a relatively barren corner of the market they are eyeing. For consumer lenders, that has often meant refinancing credit card debt or student loans. For small business lenders, it has usually involved courting companies that are too risky to qualify for a bank loan. Then the newcomers look to expand.
The latest target of this strategy is the real estate lending industry. A raft of startups are setting their sights on two relatively narrow niches — loans to house flippers and smaller commercial real estate loans — where they see an opportunity to establish themselves.
“That’s the beachhead, but it’s no more the end game than Lending Club’s end game is to only compete with credit card companies,” said Brendan Ross, president of Direct Lending Investments, an institutional investor that follows these startups closely.
