Online Lending Shakeout Claims New Victim as Bizfi Sells Assets

  • Credibly to buy servicing rights for $250 million of loans
  • Bizfi has originated $2 billion in business loans since 2005

Bizfi, an online lender to small businesses, sold the servicing rights to its $250 million loan portfolio to rival Credibly.

Credibly, which has originated $500 million in loans since its founding in 2010, will be able to provide additional capital to Bizfi’s 5,200 customers, Credibly said Thursday in a statement. The Troy, Michigan-based firm also hired 15 of Bizfi’s employees in technology, portfolio management and collections roles, Chief Executive Officer Ryan Rosett said.

The sale is the latest sign of disruptions in the digital-lending industry, where companies including LendingClub Corp. and CAN Capital Inc. have struggled with operational troubles and securing sufficient capital. CAN Capital considered putting itself up for sale this year after failing to properly disclose loan losses, while LendingClub, the largest online lender, ousted its founder after it was found to have improperly sold loans to investment bank Jefferies Group.

“There are people who grow for growth’s sake and then there are people who grow prudently,” Rosett said in an interview. “We’re starting to see a little bit of a shakeout, and the companies more focused on credit and underwriting seem to be experiencing success in today’s environment.”

‘Radical Growth’

Bizfi, founded in 2005 as Merchant Cash & Capital, explored filing for an initial public offering in 2015, but wasn’t satisfied with valuations it received, according to a former Bizfi executive, who asked not to be identified discussing internal matters.

Later that year, Bizfi’s founder touted the “radical growth” it had achieved, with a 72 percent year-over-year jump in gross originations, according to a December 2015 statement announcing a financing facility. That growth came with higher loan losses, and in June, Bizfi notified employees to expect layoffs and hired Barry Kasoff to lead its restructuring, the person said. Kasoff had previously led CAN Capital’s restructuring.

Bizfi has originated more than $2 billion of small-business loans in the past 12 years, according to its website.

    Before it's here, it's on the Bloomberg Terminal.