Stilt, an immigrant financial services provider in the United States, announced today that it has raised a $ 100 million warehouse facility from the Silicon Valley Bank for loans to its clients. This brings Stilt’s total debt structures so far to $ 225 million and will allow him to reach more than $ 350 million in annualized loan volume. The company also announced the public launch of its free checking accounts, which have been in private beta since September.
AY Combinator alum, Stilt was founded five years ago by Rohit Mittal and Priyank Singh. Both faced the challenges of accessing financial services as immigrants and wanted to create a company to serve other people with no social security numbers or credit history.
For applicants without traditional credit relationships, Stilt’s loan application process considers their personal information, including banking transactions, education, employment, and visa status, and also uses proprietary machine learning algorithms that they draw on demographics from a wide range of financial and non-financial sources.
ProWellTech last spoke about Stilt when it announced a $ 7.5 million seed round in May 2020. During the pandemic, loan demand increased for a variety of reasons. Some clients have applied for new loans because their working hours have been reduced. The work of other borrowers was not affected, but they had to transfer money to family members in other countries who had lost income. Several have used loans to pay for further visa processing, and many customers have turned to Stilt because other financial providers have closed or curtailed their loan programs over repayment concerns.
Despite the economic challenges caused by the COVID-19 pandemic, Stilt’s loan performance has remained stable. Many of Stilt’s clients are using their loans to build a credit history in the United States, and even borrowers who have lost revenue from the pandemic have continued to make timely payments (Stilt has also created temporary programs, including forgoing interest payments for a few months, to help those who were struggling financially).
Mittal said immigrants are also generally more trustworthy, as many have moved to the United States to pursue education or career opportunities. The difficulty of obtaining visas means that “all immigrants move to the United States after overcoming many obstacles,” Mittal said. He added that “it’s not just people from other countries. We also see this in the DACA candidates. They tend to be the best risk-adjusted return clients. These are people who go to school, work, have seen their families work, are helping their parents, are doing all of these things and understand the value of money, so they end up being much more financially responsible. “
Stilt’s new checking accounts, powered by Evolve Bank and Trust, are also designed for immigrants, with features like fixed-rate remittance in around 50 countries. Users can also apply for pre-approved lines of credit and loans through their accounts. Since opening to existing customers in September, the number of active checking accounts is growing by 50% month-over-month, and many are using it to collect their salaries directly.
Silicon Valley Bank’s new debt line means Stilt will be able to provide higher loan volumes and better interest rates, Mittal said. Stilt’s average interest rate is around 12% to 14%, compared to 30% to 100% applied by other programs, such as paycheck loans, which often use people without social security numbers or credit reports.