TruStage to Invest in Personal Loan Fintech

A subsidiary of Madison, Wis.-based TruStage is planning to invest an undisclosed sum in a fintech known for working with credit unions to provide payoff loans to consumers.

A Nov. 15 news release from Happy Money Inc. of Torrance, Calif., said TruStage Ventures and other institutional investors are “entering into a strategic transaction to help fund the next phase of Happy Money’s growth and advance the company’s mission.” The transaction is expected to close by year’s end with Happy Money remaining a privately held company with independent operations.

SEC documents show the company, formerly known as Payoff.com Inc., raised $52 million from a private offering in 2022.

Unsecured consumer term loans have been one of the faster growing segments of credit union loan growth, and the growth among all lenders has been accompanied by legions of fintechs reaching consumers online. Many of the fintechs work through regular banks and credit unions.

CUNA shows credit unions held $71 billion signature loans on Sept. 30, up 12.5% from a year earlier as total loans grew 10.6% to $1.61 trillion.

Happy Money’s website touts the company’s “Payoff Loan,” which offers personal loans of $5,000 to $40,000 with terms of two to five years and interest rates that start at $11.75%. The loan “streamlines paying off credit card debt,” allowed some members to improve their FICO score by up to 40 points and allowed some to qualify for lower interest rates.

TruStage Ventures, which invests in financial technology companies focused on innovation, first began its relationship with Happy Money in 2017 as an early-stage investor. It said the new investment will “enable a path to profitability and provide a significant growth opportunity for Happy Money.”

Brian Kaas, TruStage Ventures’ president and managing director, said TruStage’s national sales team will bolster efforts to bring Happy Money’s technology platform and lending capabilities to more credit unions.

“Lending is critically important to credit unions, and more credit unions need digital lending capabilities to serve the needs of their members,” Kaas said.

Happy Money’s website displays eight “key lending partners”:

• Alliant Credit Union of Chicago,  ($18.9 billion in assets, 831,626 members).
• Greenstate Credit Union of North Liberty, Iowa ($11.2 billion in assets, 447,703 members).
• Teachers Federal Credit Union of Hauppauge, N.Y. ($9.8 billion in assets, 470,471 members).
• Veridian Credit Union of Waterloo, Iowa ($7.2 billion in assets, 329,417 members).
• Blue Federal Credit Union of Cheyenne, Wyo. ($1.9 billion in assets, 120,472 members).
• USAlliance Federal Credit Union of Rye, N.Y. ($3 billion in assets, 177,043 members).
• Michigan State University Federal Credit Union of East Lansing, Mich. ($7.7 billion in assets, 353,287 members).
• First Tech Federal Credit Union of San Jose, Calif. ($16.8 billion in assets, 656,384 members).

First Tech has a testimonial on the website that says one of the benefits of Happy Money is that it draws younger consumers into First Tech’s orbit. “It provides us with a high-quality asset through the Payoff Loan as well as the opportunity to develop a deeper relationship with a member who tends to share our values.”

First Tech held $707.3 million in unsecured personal loans as of June 30, up 9.4% from a year earlier, while total loans grew 11.2% to $12.1 billion.

The Happy Money news release includes a comment from First Tech President/CEO Greg Mitchell about its six-year collaboration with Happy Money.

“We have partnered with Happy Money on loan originations to strengthen and diversify our lending portfolio while simultaneously furthering our commitment to improving consumers’ financial well-being,” Mitchell said. “We’re excited for the future of Happy Money as they continue to bring their expertise in unsecured lending and portfolio management capabilities to credit unions nationwide.”

Happy Money also announced that it has appointed Joe Heck, previously its chief operating officer, as CEO.

“We believe credit unions’ community-oriented approach is vital for the financial ecosystem,” Heck said. “We’re committed to leveraging our platform to help them unlock greater balance sheet connectivity, simplicity, and diversity.”