- 1Credibly boarded a business loan portfolio on Figure's Democratized Prime on July 21.
- 2Investors can lend YLDS tokens into the pool and withdraw anytime, subject to liquidity.
- 3Facility protections include a 95% advance rate cap and full recourse provisions.
Credibly's business loan warehouse line is now open to investors through Figure, less than two months after the two companies announced a partnership to bring small business capital markets onto blockchain rails.
How it works
On July 21 Credibly onboarded a portfolio of business loans, and it is already able to draw funding against that portfolio through Figure's Democratized Prime. Investors share in the line's earnings by lending their own money into the pool. The yield depends on how much capital is contributed and how heavily the facility is used. Investors can withdraw at any time, provided liquidity is available.
Participation runs entirely on blockchain rails. Investors fund an account with dollars, crypto or stablecoins, convert the balance into Figure YLDS tokens and lend those tokens into available pools. Those pools currently include HELOCs, auto loans and crypto loans, and now small and medium business loans, which are sourced from Credibly. The process runs on the Provenance blockchain and can be completed through the Figure Markets mobile app.
Because the pools are warehouse lines on institutional-grade portfolios, returns are likely to resemble warehouse line rates rather than the higher yields typical of direct syndication with smaller funders. For Credibly, the potential payoff is lower borrowing costs than other capital markets routes, which it could pass on to customers.
Risk and collateral
Figure's pool page describes a structured facility backed by a diversified set of prime small business receivables. Protections for lenders in the pool include a ceiling of 95% on the advance rate, a funded reserve account, overcollateralization, a requirement that originators buy back loans, and full recourse terms. Receivables must meet eligibility rules and be performing when included.
The collateral is underwritten with proprietary cash-flow models, business verification and personal guarantees from owners. The portfolio has an average owner FICO score of about 700, an average of 10 years in business and covers more than 330 industries.
Source reporting: deBanked.
