Lender Maps Asset-Backed Bond Program
Education lender Climb Credit is eyeing securitization as a funding source.
The New York firm, which writes loans to vocational students attending pre-approved schools, is aiming to conduct its first asset-backed bond offering in late 2020 or early 2021. Its annual origination volume currently is about $100 million.
For now, Climb is funding its lending activity by selling its accounts via so-called flow agreements with investors including Goldman Sachs unit Urban Investment.
Climb lends to students pursuing careers in industries with predictable incomes, including cosmetology, culinary arts, education, hospitality and technology. Graduates of its partner schools also enjoy high rates of employment and competitive salaries.
Take the American Beauty College of West Covina, Calif., which offers a one-month course for manicurists. A student who funds the entire tuition through Climb could expect to pay $223 per month for 18 months — or $2,676 in the first year after graduation. Climb estimates that graduate would earn $33,200 per year.
The loans have average interest rates of 8.5% to 9%.
“Our loans terms are set with an understanding of the future income after graduation, ensuring that the service on the loan will be reasonable relative to the income,” Climb chief executive Angela Ceresnie said.
Ceresnie, who joined Climb in 2016, previously co-founded Orchard Platform, a data-analytics firm focused on marketplace lending. Orchard was acquired by small-business lender Kabbage in April 2018.
Ceresnie’s duties include co-heading a capital-markets group with senior vice president Casey Powers and head of finance Gautam Setty. Powers’ resume includes work at Goldman Sachs and Lehman Brothers, while Setty previously was a portfolio manager at LyonRoss Capital.