But we do have about 30% of y our profile that features property
Brendan: But we do have about 30% of our profile which includes property as security even though loans by themselves may be a lot more like a busine loan, but where we are able to really affix to real-estate as security therefore we aren’t completely 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. Therefore then how can you decide on the financial institution to utilize? After all, looking for for…obviously you’ve got a return target that you would like going to, it is here any such thing else that you’re looking whenever you’re registering a unique deal?
Brendan: positively, therefore the very first thing that individuals desire to comprehend could be the story and that’s because unique deal movement is one thing that people place this kind of premium on therefore we wish to know the way the lender is likely to measure and where it should be getting its clients from in a way to ensure that they’re not competing against lots of other loan providers if not 1 or 2 other loan providers. So we want those unique relationships where they are able to find those borrowers then when they have that and then we know how they’ll scale that then we’re going to dig within their information. You clearly understand Bryce extremely well, Bryce or Dr.Mason, another pioneer in this industry that arrived aboard more than an ago now and he’s our chief investment officer so bryce then digs into data year.
Exactly exactly exactly What we’re searching for is two things; the very first thing of course we’re trying to find may be the performance through the security as well as the 2nd thing that we’re looking has reached minimal that the model that they’re making use of, the underwriting model that they’re utilizing to get the loans may be the way to obtain their exceptional comes back. In order to imagine a loan provider this is certainly delivering exemplary comes back, but actually doesn’t have a good underwriting model.
Peter: Right.
Brendan: Because it is really smart people which are making the distinction here and undoubtedly that won’t scale therefore we need great data showing good performance and now we should be in a position to link it to an underwriting model that people think works. And because we’ve seen therefore many of these underwriting models and Bryce himself has really built some, we’re exceptional judges associated with relationship between good performance plus the underwriting model.
Then after that there‘s a lengthy evaluation proce because we’re audited and because we hold ourselves to a really high standard we do plenty of exactly what are called procedures testing so we’re to locate the control points during the lender…where their computer software and where in fact 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 an entire pair of tests we do in order to make sure their busine is wholly buttoned down and we might even have tips for them, we frequently do. When they’re throughout that there’s things like criminal background checks that happen and then we could arrive at a phrase sheet that is a rather long appropriate document then reach an agreement that is definitive. It is perhaps maybe maybe not an especially long proce if we’re really interested in the lending company, but it is a really in level proce.
Peter: Yeah, it surely seems like it. I do want to discuss the SEC and also the filing you did…i understand we published you give us an update on that and what went on about it on Lend Academy back in January, can?
Brendan: positively, so that the method this works is you file what’s called an N-2 then you get comments back from the SEC and the comments reflected an interest that the SEC had in really very, very current valuation and if you look at the succe of the two firms that have launched in this space, they’ve both been able to do daily valuation if you’re going to create a closed end fund so we did that in December and. It is really difficult to value that is daily loan center which includes a borrowing base. Banks don’t do this on a regular basis, they might typically get it done from month to month so because we look a lot more such as a bank than we do such as a buyer of market loans, the final outcome that people stumbled on is the fact that new installment loans for California we simply weren’t likely to be capable of getting to day-to-day valuation and that we might be well offered by pulling the N-2 that will be a easy action to take.