We’re excited to announce traditional fixed rate loans on the Upstart platform, available today in all 50 states. You can apply for a 3-year loan for up to $25,000 at rates starting below 7% APR. You can receive funds in as soon as a week, and there are no fees for early repayment.
Money When it Matters Most
We launched our income share agreement in early 2013 for entrepreneurs, whose income tends to be unpredictable and lumpy. In just over a year, backers have made 2,224 offers totaling $3.5M to 320 upstarts. With the support of their backers, upstarts have launched amazing companies from ice cream shops in Brooklyn, to medical applications for Google Glass. And we’ve seen 3,056 unique repayments to backers in 14 months without a single default.
At the same time, many people have shorter term needs for money, and a simple loan can often do the trick. This can include paying for a coding bootcamp, making that last college tuition payment, bridging the gap from graduation to first paycheck, or just paying off credit cards. With Upstart loans, you’ll have more options to finance your career and life.
The Credit You Deserve
While the emergence of online lending has been a shining example of innovation, it hasn’t served people with shorter credit and work histories particularly well. In fact, the leading lender requires borrowers to have at least 3 years of credit history. And just 2% of all loans are made to individuals with less than 6 years of credit.
Why is this? Lenders rely on credit reports and employment history to estimate the likelihood that a borrower will default on a loan. With little or no history to measure, young people are systematically judged as high risk. Of course, all young people aren’t risky borrowers - in fact, this study released by the Federal Reserve in November concludes that borrowers in their 20s are among the least likely to default. Unfortunately, traditional underwriting techniques fail to distinguish between high and low risk individuals.
This is where we come in. Upstart’s underwriting model complements credit information with education-related data that helps us understand the borrower’s economic ability to repay a loan, as well as their propensity to repay. Our model estimates an individual’s employability and earning potential by considering where they went to college, their area of study, academic performance, and income earned to date. By simulating thousands of scenarios and outcomes for each borrower in just a few seconds, it can estimate the likelihood of default and price the loan appropriately.
Fast, Simple, and Fair for Investors
Online lending has generated admirable returns, leading to a surge in interest from both individual investors and institutions. Yet these platforms haven’t delivered the experience investors deserve in 2014. For example, certain loans are available only to particular investors. And most loans are funded in a matter of minutes, providing an advantage to those who have access to automated investing.
On Upstart, all loans are available to all investors on equal terms. And it’s easy to create a diverse portfolio of loans by setting up filters that automatically invest in loans as they become available.
Today begins the next chapter in our company’s history, and we couldn’t be more excited to make another leap forward on behalf of the Upstart community.