In business, the importance of long-term relationships is the closest you’ll come to a universally accepted truth. But for OppLoans, the best kind of customer is one who never comes back.
That philosophy has made the Chicago fintech startup one of the country’s fastest-growing companies, landing it on the Inc. 500 two years in a row and ballooning its team from 15 employees to nearly 200 over the past year and a half.
Not wanting repeat customers is a byproduct of the industry OppLoans operates in. As a subprime lender, the company provides credit to consumers who don’t qualify for traditional bank loans or credit cards — typically because they have FICO credit scores in the 600s or below.
“The majority of Americans are living paycheck to paycheck, and there’s more non-prime citizens out there than prime ones,” said CEO Jared Kaplan. “Historically, these borrowers have been using payday loans, auto title loans and bank overdrafts to fund their lives. The idea behind OppLoans is to provide a better alternative to them.”
These loans are typically used to cover unexpected expenses like car breakdowns, medical bills and expenses related to childcare or education.
Kaplan said OppLoans can offer better terms than its competitors thanks to its data-driven credit scoring algorithm, which looks at factors like income, employment and banking activity. But despite its data-driven approach, OppLoans is still more expensive than a traditional bank loan.
To Kaplan, that makes “graduating” customers to more affordable loans an essential part of being a responsible actor.
To that end, the company provides a suite of online resources about budgeting and credit-building best practices to its customers. OppLoans also reports payments to the major credit bureaus to help the borrower build payment history.
“We’ll lose the customer, but our mission is to graduate people to better forms of credit,” he said. “And it's kind of our secret sauce, because a lot of our business comes from customer referrals.”
Founded in 2009, OppLoans got its start as a brick-and-mortar lender before going completely online in 2012. Over the past three years, the company’s revenues have grown by nearly 2,000 percent.
And the company is still hiring aggressively.
“The hardest part of my job as we continue to grow is to ensure that we don’t lose the core of our success, which is hiring the right people,” said Kaplan. “We look for people who respect each other, and who will enjoy spending time with us inside and outside the office.”
Image via Opploans.
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