Personal finance company SoFi is expanding its loan platform with a new $2 billion investment.
The new “loan platform business agreement,” announced Monday (Oct. 14), is based on funds that will be managed by affiliates of Fortress Investment Group.
The agreement expands the capabilities of SoFi’s loan platform business, where the company refers pre-qualified borrowers to loan origination partners, while also originating loans on behalf of third parties.
“SoFi’s loan platform business is an important part of our strategy to serve the financial needs of more members and diversify toward less capital-intensive and more fee-based sources of revenue,” Anthony Noto, CEO of SoFi, said in a news release.
“We’re pleased to see continued strong demand for SoFi’s loan platform business. Fortress’ collaboration, seamless execution, and appreciation of the platform’s value proposition makes them an exceptional partner.”
Added Dominick Ruggiero, co-head of specialty finance at Fortress: “SoFi’s platform — and its focus on innovation and providing valuable credit solutions to its members — create a compelling investment opportunity for Fortress’s funds.”
The announcement follows last week’s news that SoFi had added two new credit cards to its digital financial services offering: one for consumers who prioritize earning rewards on their daily spending, the other for those focused on building or improving their credit scores.
“Expanding SoFi’s credit card offering enables us to better serve more people’s spending and borrowing needs, whether it’s helping them earn rewards for everyday purchases or building their credit,” Noto said in a news release.
The company’s new loan program comes at a time when, as noted here last week, personal loans and debt consolidation offerings might seem more attractive as consumers shoulder an increasing amount of credit card debt.
“Among the avenues for some relief, so to speak: debt consolidation loans and personal loans, too, where, in the first instance, multiple cards (and other debt) can be rolled into a single loan and a single payment,” PYMNTS wrote. “In the second instance, a personal loan can be used to pay off more expensive debt, and the personal loan itself carries a relatively lower (and more affordable) rate.”
SoFi has seen demand for loans, with its latest earnings results showing that in the second quarter, personal loans (which can be used for debt consolidation) were $4.2 billion, up from the $3.3 billion in the first quarter, and up from the $3.7 billion seen in the second quarter a year ago.
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