SURVEY OF ONLINE CONSUMER AND SMALL BUSINESS

FINANCING COMPANIES 01/01/2010 through 06/30/2015

SUMMARY REPORT OF AGGREGATE TRANSACTION DATA
CALIFORNIA DEPARTMENT OF BUSINESS OVERSIGHT (DBO)
BACKGROUND
The DBO on Dec. 11, 2015 launched an inquiry into the so-called online, or alternative,
lending sector. The inquirys objective is to determine whether market participants are fully
complying with state lending and securities laws. It also aims to assess how the states
regulatory regime is working, and should work, with respect to the industry.
As part of the inquiry, the DBO sent a data and information survey to 14 firms. The firms
that responded include: Affirm, Avant, Bond Street, CAN Capital, Fundbox, Funding
Circle, Kabbage, LendingClub, OnDeck, PayPal, Prosper, SoFi and Square. The only
company that did not respond was CircleBack.
As requested by the DBO, the 13 firms also submitted information about their business
models and platforms. The DBO will analyze that information and may send companies
follow-up requests for documents and information.
To obtain a complete picture of the firms consumer and small business financing activities,
the DBO requested data not just for term loans, but also lines of credit, merchant cash
advances, factoring transactions and other products.
The data showed the 13 firms grew their businesses at a much faster pace in California than
the U.S. as a whole. That quicker growth produced an expanded market share for the state.
From 2010 through the first half
of 2015, Californias share of the
total dollar amount of financing
provided by the 13 firms
increased by 33.72 percent (from
11.15 percent to 14.91 percent).
The states increased market
share was due in large part to
growth on the consumer
financing side.

U.S. Consumer and Small Business Financing

Transactions: CA Share of Aggregate Dollar Amount
14.91%
15.00%

11.15%

10.00%
5.00%
0.00%
2010

Jun-15

The following pages highlight, in aggregate form, the data on transactions provided by the
13 companies.

OVERALL TRANSACTIONS: DOLLAR AMOUNTS

The data confirmed the fast-paced growth of the online financing industry. From 20102014, the companies total dollar amount of consumer and small business transactions in the
U.S. climbed from $1.99 billion to $15.91 billion. Thats an increase of 699.5 percent. And
through the first half of 2015, the firms were on pace to far outstrip their 2014 performance,
having already amassed $12.47 billion of transactions.
U.S. Consumer and Small Business Financing Transactions
$ amount in billions
15.91
16
14

12.47

12
10

8.23

8
4.89

6
4

3.15
1.99

2
0
2010

2011

2012

2013

2014

Jun-15

California saw even faster growth. The firms total dollar amount of transactions in the
state from 2010-2014 increased at a 936.0 percent clip, from $222.19 million to $2.30
billion. Through the first half of 2015, Californias total dollar amount had already reached
$1.86 billion, signaling the companies would surpass their 2014 total.
CA Consumer and Small Business Financing Transactions
$ amount in billions
2.30

2.5

1.86

1.5
1.14
1
0.612
0.5

0.363
0.222

0
2010

2011

2012

2013

2014

Jun-15

CONSUMER FINANCING TRANSACTIONS

Nationally, from 2010-2014, the dollar amount of the firms consumer financing
transactions grew by 715.7 percent, to $12.97 billion. Through the first half of 2015, the
transactions already totaled $10.21 billion.
U.S. Consumer Financing Transactions
$ amount in billions
12.97

14
12

10.21

10
6.80

8
6

4.11

2.62
1.59

2
0
2010

2011

2012

2013

2014

Jun-15

In California, the transaction dollar amount from 2010-2014 grew by 981.9 percent, to $1.85
billion. Through the first half of 2015, the total had reached $1.51 billion.
CA Consumer Financing Transactions
$ amount in billions
1.85

2
1.8

1.51

1.6
1.4
1.2

0.927

1
0.8
0.501

0.6
0.4

0.296
0.171

0.2
0
2010

2011

2012

2013

2014

Jun-15

SMALL BUSINESS FINANCING TRANSACTIONS

Nationally, from 2010-2014, the dollar amount of the companies small business financing
transactions increased by 629.5 percent, to $2.94 billion. Through the first half of 2015,
transactions totaled $2.26 billion.
U.S. Small Business Financing Transactions
$ amount in billions
2.94
3
2.26

2.5
2
1.42
1.5
0.781

1
0.403

0.533

0.5
0
2010

2011

2012

2013

2014

Jun-15

In California, the aggregate dollar amount increased by 786.3 percent, to $452.2 million in
2014. The total through the first half of 2015 was $350.7 million.
CA Small Business Financing Transactions
$ amount in billions
0.452

0.5
0.45
0.4

0.350

0.35
0.3
0.210

0.25
0.2
0.111

0.15
0.1

0.051

0.066

0.05
0
2010

2011

2012

2013

2014

Jun-15

The number of U.S. small business financing transactions grew from 12,868 in 2010 to
240,277 in 2014, an increase of 1,767 percent. Through the first half of 2015, the number
totaled 189,194. In California, from 2010-2014, the number of transactions increased by
1,784 percent, from 1,527 to 28,773. The total through the first half of 2015 was 24,069.

CONSUMER FINANCING TRANSACTIONS: ANNUAL PERCENTAGE RATES

(APR)
The firms median consumer financing APRs in the first half of 2015 ranged from 5.74
percent to 34.01 percent in the U.S. In California, the range during the same period was
5.37 percent to 35.94 percent.
Over the entire period 2010 through the first half of 2015, median APRs generally declined,
both in the U.S. and California.
U.S. and CA Consumer Financing Transactions: Median APR
First Half 2015

34.01%

40.00%
35.00%

35.94%

U.S.
CA

30.00%
25.00%
20.00%
15.00%

5.74%

5.37%

10.00%
5.00%
0.00%
Low

High

For the most part, the median APR for the U.S. and California did not vary substantially.
One exception was 2014. In that year, the average of all reported median APRs was 5.39
percentage points higher in California than the U.S.
With respect to APR distribution, all consumer financings fell in the 40 percent-and-under
range prior to 2013. In 2013 and 2014, however, loans were reported in higher ranges,
including some at 81 percent or higher.

SMALL BUSINESS FINANCING TRANSACTIONS: APRs

In the first half of 2015, the companies U.S. median APR for small business transactions
ranged from 15.50 percent to 51.80 percent. The California numbers were similar, with the
median ranging from 18.56 percent to 51.40 percent.
The high median (covering both the U.S. and California) declined over the period, from
74.0 percent in 2010 to 51.80 percent in the first half of 2015.

U.S. and CA Small Business Financing Transactions: Median APR

First Half 2015

51.80%

60.00%

51.40%

U.S.
CA

50.00%
40.00%
30.00%

15.50%

18.56%

20.00%
10.00%
0.00%
Low

High

With respect to APR distribution, the companies provided the most comprehensive data in
2014 and 2015. In those two years (through first half of 2015), the group as a whole
reported the majority of their transactions carried APRs of 11 percent to 30 percent in the
U.S. and California. Some firms, however, reported the majority of their loans carried
higher APRs in both jurisdictions, ranging from 41 percent to 101 percent or higher.

CONSUMER FINANCING TRANSACTIONS: DELINQUENCY RATES (delinquent

defined as 30 or more days past due)
At the end of the first half of 2015, the firms number of delinquent consumer financing
transactions in the U.S. as a share of total outstanding transactions ranged from 0.03 percent
to 17.94 percent. In California, the range was 0.90 percent to 25.30 percent.
U.S.and CA Consumer Financing Transactions: Number Delinquent as Share
of Total Outstanding Transactions
End of First Half 2015

30.00%

25.30%

U.S.
CA

25.00%
17.94%
20.00%
15.00%
10.00%
5.00%

0.03%

0.90%

0.00%
Low

High

As a share of the total outstanding dollar amount at the end of the first half of 2015, the
delinquent dollar amount ranged from 0.03 percent to 20.24 percent in the U.S. In
California, the ratio ranged from 0.99 percent to 20.30 percent.
U.S. and CA Consumer Financing Transactions: Delinquent $ Amount as
Share of Total Outstanding $ Amount
End of First Half 2015

20.24%

25.00%

20.30%

U.S.
20.00%

CA

15.00%
10.00%
5.00%

0.03%

0.99%

0.00%
Low

High

SMALL BUSINESS FINANCING TRANSACTIONS: DELINQUENCY RATES

(delinquent defined as 30 or more days past due)
As a share of total outstanding transactions at the end of the first half of 2015, the firms
number of delinquent small business financings in the U.S. ranged from 0.36 percent to 8.96
percent. In California, the range was 0.48 percent to 8.45 percent. Though not prevalent
throughout the group, much higher numbers were seen in prior years, particularly in
California. There, double-digit delinquency rates up to 25 percent were reported.
U.S. and CA Small Business Financing Transactions: Number Delinquent as
Share of Total Outstanding Transactions
End of First Half 2015
8.96%
9.00%
8.00%

U.S.
CA

7.00%
6.00%
5.00%
4.00%
3.00%
2.00%

0.36%

0.48%

1.00%
0.00%
Low

High

8.45%

The dollar amount of delinquent financings at the end of the first half of 2015, as a share of
the total outstanding dollar amount, ranged from 0.89 percent to 7.31 percent in the U.S. and
0.55 percent to 6.79 percent in California. Again, higher rates were seen in prior years up
to 17.01 percent in the U.S. and 21.76 percent in California.
U.S. and CA Small Business Financing Transactions: Delinquent $ Amount
as Share of Total Outstanding $ Amount
End of First Half 2015
7.31%
8.00%

U.S.

7.00%

CA

6.79%

6.00%
5.00%
4.00%
3.00%
2.00%

0.89%

0.55%

1.00%
0.00%
Low

High