But we do have about 30% of y our profile that features estate that is real
Brendan: But we do have about 30% of y our profile that includes real-estate as security even though loans on their own might be similar to a busine loan, but where we could really affix to real-estate as security therefore we aren’t entirely unsecured. I think can eentially be considered secured we are about 48% secured and maybe 52% unsecured consumer and small busine if you were to add receivables and real estate, both of which.
Peter: Interesting, interesting. So then how can you select the lending company to work alongside? After all, looking for for…obviously you’ve got a return target you’re signing up a new deal that you want to hit, but is there anything else that you’re looking for when?
Brendan: positively, therefore the very first thing that individuals place such a premium on so we want to know how the lender is planning to scale and where it will be getting its customers from in such a way so that they’re not competing against dozens of other lenders or even one or two other lenders that we want to understand is the story and that’s because unique deal flow is something. They can find those borrowers and then once they have that and we understand how they’ll scale that then we’re going to dig into their data so we want those unique relationships where. You demonstrably understand Bryce extremely well, Bryce or Dr.Mason, another pioneer in this industry that arrived aboard more than a year ago now and he’s our main investment officer therefore bryce then digs into information.
Exactly What we’re hunting for is two things; first thing of course we’re searching for could be the performance through the security plus the second thing that we’re shopping for are at the smallest amount of that the model that they’re making use of, the underwriting model that they’re utilizing to get the loans could be the supply of their excellent comes back. To help you imagine a loan provider this is certainly delivering exceptional comes back, but actually does not have an underwriting model that is good.
Brendan: so we need great data showing good performance and we need to be able to connect it to an underwriting model that we believe works because it’s actually smart humans that are making the difference there and of course that won’t scale. And because we’ve seen therefore a number of these underwriting models and Bryce himself has really built some, we’re excellent judges regarding the relationship between good performance as well as the underwriting model.
Then after that there‘s a long evaluation proce because we’re audited and because we hold ourselves to a rather high standard we do lots of what exactly are called procedures testing therefore we’re seeking the control points in the lender…where their computer software and in which the people intersect to do critical such things as ‘okay’ a loan, cable cash, exactly how cash is gotten and where all of that money goes generally there is a complete collection of tests that people do in order to be sure that their busine is totally buttoned down and we might even have strategies for them, we usually do. When they’re throughout that there’s things like criminal record checks that happen after which we could arrive at a term sheet that is a reasonably long appropriate document then arrive at a definitive contract. It is maybe maybe maybe not a really long signaturetitleloans.com sign in proce if we’re really interested in the lending company, however it is a really in level proce.
Peter: Yeah, it certainly feels like it. I would like to speak about the SEC while the filing you did…I’m sure we had written about any of it on Lend Academy back January, is it possible to provide us with an enhance on that and what proceeded?
Brendan: definitely, so that the method this works is you file what’s called an N-2 if you’re likely to develop a shut end fund therefore we did that in December after which you will get commentary right back through the SEC while the responses reflected a pursuit that the SEC had in actually very, extremely present valuation of course you appear during the succe associated with two organizations which have launched in this room, they’ve both been in a position to do day-to-day valuation. It is really difficult to daily value a loan center which has had a borrowing base. Banking institutions don’t accomplish that every day, they might typically take action on a month-to-month foundation therefore than we do like a buyer of marketplace loans, the conclusion that we came to is that we just weren’t going to be able to get to daily valuation and that we would be well served by pulling the N-2 which is a simple thing to do because we look far more like a bank.