ATLANTA–A new point-of-sale lender is emerging quickly and becoming a significant player.
GreenSky, LLC, a $3.6-billion company that helps merchants close sales by matching customers with lenders at the point of sale, now ranks third in the U.S. by valuation among financial technology companies that are privately held and backed by venture capitalists, according to Bloomberg. CB Insights now ranks only Stripe and SoFi, two much better-known companies, ahead of GreenSky on its list of “fintech unicorns,” Bloomberg reported.
GreenSky is primarily owned David Zalik, who has kept a low profile. But that profile is rising, as Fifth Third Bancorp in Cincinnati has just announced a partnership with GreenSky and simultaneously bought a $50-million stake that implies a value for Zalik’s company of $3.6 billion, Bloomberg said.
The GreenSky model isn’t new, and credit unions have over the years either announced or rolled out similar initiatives. GreenSky doesn’t make the loans but instead signs up merchants who sell big-ticket items such as furniture and home improvement projects—and more recently, elective medical procedures. Then it matches the merchant with one of a group of banks willing to extend loans to qualified consumers.
According to Bloomberg, GreenSky doesn’t work with overextended borrowers and most of its customers take out loans for convenience rather than necessity. Zalik told Bloomberg FICO scores among its borrowers average 760, ranging from the mid-600s to the mid-800s.
Among the promotional financing GreenSky has offered is 0% for 12 months, after which the rate jumps to 17.99%. Those customers who opt not to take the promotional rate typically choose a rate that averages 6.99%, according to the company.
Bloomberg reported that GreenSky has approximately 650 employees, facilitated about $2 billion in loans last year and will be close to $4 billion this year. The company’s goal is to reach $20 billion by 2020.