Nu Direction Lending Funds First Million Using Fintech Partnership

A business lending CUSO subsidiary, which launched softly in September, has funded $1 million in loans.

Nu Direction Lending, LLC, the new subsidiary of Member Business Financial Services (MBFS) based near Philadelphia announced Dec. 14 it had reached the milestone as it prepares to expand nationwide next year.

The subsidiary was founded to offer successful small businesses an easy way to finance their growth outside of loans backed by real estate. For credit unions, it offers an easy way to participate in these loans and manage the risk.

“This is a huge opportunity for credit unions to serve an unmet financing need for their small business members without taking on undue risks,” Tammy Baker, SVP of Nu Direction Lending and vice president of fintech lending for MBFS, said.

So far, 15 credit unions have signed on as referral partners and another 10 have signed up as network partners, who pool their risk as the loans are divided into participations.

The loans offered by Nu Direction Lending are designed to leverage a fintech partnership to compete on speed and reliability for creditworthy loans from $25,000 to $250,000 (with a target of $100,000) and terms of one to three years.

The subsidiary was designed to combine the infrastructure and business lending experience of MBFS with the fintech business lending expertise of Credibility Capital. They have developed an online program for originations and electronic closings. Even with Nu Direction’s credit analysis, the target time from initial application to funding is only five days, the CUSO’s news release said.

The Newark, N.J.-based Credibility Capital has developed an online platform that has served businesses with averages of $3 million in revenue, 13 years in business and owner FICO scores of 728. The system for Nu Direction Lending blends automated underwriting with a dedicated loan manager and manual checks on aspects of the business that need further support.

MBFS is owned by 13 credit unions, the largest being American Heritage Federal Credit Union of Philadelphia ($3.1 billion in assets, 209,737 members).

NCUA data showed that credit unions have been increasing commercial lending, but the vast majority of the loans are backed by real estate.

Out of the nation’s 5,349 credit unions, 1,695 of them held $84.9 billion in commercial loans backed by real estate on Sept. 30, up 17.9% from a year earlier. There were 1,355 credit unions holding just $8.3 billion in commercial loans not backed by real estate Sept. 30, up 7.9%.