Stilt raised the amount from Silicon Valley Bank.

Stilt provides loans and financial services to immigrants and people underserved by the banking system. The five-year-old startup announced Wednesday its raise of $100 million as a warehouse lending facility from Silicon Valley Bank (NASDAQ: SIVB). With this loan, Stilt has raised in aggregate $225 million of loans for onward lending to its customers. (WEBWIRE)

“This debt facility will be instrumental in helping Stilt reach north of $350 million in annualized loan volume,” said Rohit Mittal, co-founder, and CEO of Stilt.

San Francisco-based Stilt will use the debt facility for lending to its borrowers and checking account holders.

How warehouse lending works

In warehouse lending, a loan originator such as Stilt handles the loan processing from application to disbursement. However, it does not lend out its own capital. Instead, it finances these loans from the warehouse facility availed from Silicon Valley Bank.

The loan originator then sells the loans paid to its clients to another creditor in the secondary market. With the sale proceeds, it pays back the warehouse lender.

In this way, it opts to profit from loan origination fees instead of from interest and fees by making the loans on its own account.

Stilt’s customers in a crunch due to COVID-19

Stilt said its immigrant customers, even international students, were particularly affected by the pandemic.

Their families in home countries suffered lay-offs, reduced working hours, or wage cuts due to lockdowns. Immigrants needed to send money back home and used Stilt’s service to instantly remit money to families.

“We are seeing a significant increase in loan applications from immigrants and thin-file customers who are facing even more financial difficulty and uncertainty due to COVID-19,” Mittal said. “So it is vital that we provide a holistic set of products — from bank accounts to loans, and remittance — to meet the growing needs of some of our most important, yet underserved populations.”

Stilt checking accounts

Concurrently, Stilt announced the launch of checking accounts that are structured to meet the needs of immigrants and people without Social Security numbers. Powered by Evolve Bank & Trust, these accounts have enjoyed a growth of 50% month over month.

The checking accounts feature spot-rate remittance, the ability to build credit, and cashback on services that immigrants use frequently.

In an industry-first, customers can also get a pre-approved loan transferred to their account in under a minute.

“We are pleased to support Stilt as the team expands its portfolio of financial services products for immigrants and individuals without credit,” said Nick Christian, Head of Specialty Finance at Silicon Valley Bank. “Stilt is in a strong financial position and we have been impressed with the company’s organic customer acquisition.”

Immigrant founders

Immigrants Rohit Mittal and Priyank Singh founded Stilt five years ago.

“When I moved to the U.S., we didn’t have credit,” Mittal said to Crunchbase. “I wasn’t able to rent an apartment, so I was sleeping on my co-founder’s [Priyank Singh] couch, who also moved to the U.S. They were asking for credit scores, and I had none of those things.”

Stilt is backed by Y Combinator, Liron Petrushka, Hillsven Capital, Eyal Shinar, Dalton Caldwell, Kevin Hale, and others.

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