Loans are nothing new. Customers have been borrowing on credit going back to the Greeks and Romans, using goods as collateral for loans. Over time, formal banks were created and became a trusted source for loans. The more recent addition of credit cards and credit scores further changed the loan business. GreenSky Credit is an innovative financial technology, or fintech, company that is widening access to loans for the common customer.
Advances in technology have created a new shift in how, when, and where people expect to access lines of credit. More mobile access has established a sense of urgency with customers. GreenSky Credit is at the forefront of mobile financial marketing, serving to save time by providing faster funding.
Traditionally, when a customer wants to make a big purchase, such as a home improvement project, they head to a creditor and apply for a loan or a credit card. That process can be lengthy and confusing for customers who don’t regularly deal with loans. However, GreenSky Credit is changing the game for customers with high credit scores who want that process to take place quickly.
Founded in 2006, GreenSky Credit is not a lender in the traditional sense. In fact, the company is more like a middleman, acting as a facilitator between the money holder and the customer. Companies that sell high-end products and services sign up to work with GreenSky Credit. In turn, the fintech company finds lenders willing to fund projects for the customers. When a qualified customer applies for funding for an expensive project, their approval arrives within seconds.
GreenSky Credit doesn’t accept paper applications at all. Most customers receive approval via a merchant program, although they may also apply through the website or a mobile app. Consumers applying for a loan can scan their driver’s license, add a few extra pieces of information, and wait for the results.
Because GreenSky Credit isn’t a lender, they face fewer risks, such as loan defaults. The company also protects its assets by only working with higher-end clients. The average client has a credit score of 760, though some scores go as low as the mid-600s and as high as the mid-800s, according to Bloomberg. The contractors who work with the fintech company pay an average of six percent of the loan amount as a fee. GreenSky Credit sits happily in the middle between the contractor, the pre-approved customer, and the banks, who fork over one percent of the loan totals each year as payment.
GreenSky Credit employs more than 600 people. With more than 1.6 million customers, the company’s projected growth could climb an additional 40 percent by the end of the year. Forbes expects the company to generate a net profit of $176 million at the end of 2018. To date, it has facilitated roughly 12 billion in loan transactions.
Customers and companies enjoy working with GreenSky Credit because it saves them time, and it can save them money. The near-instant approval process means customers can get started on their project faster than with typical loan lending.
GreenSky Credit offers two types of promotional financing. The first is zero percent financing for 12 months, after which the interest rate goes up to 17.99 percent. The second option is a flat 6.99 percent interest rate for the life of the loan. There are no prepayment penalties, so a customer could fully pay off a project without ever paying a dime of interest.
Other benefits of working with GreenSky Credit include no enrollment fee, higher credit limits, a completely paperless application and payment system, no sales contract proof, and no certification of completion requirement.
The Man Behind It All
David Zalik is the CEO and co-founder of GreenSky Credit. His origin may seem a bit unconventional for someone running a company worth an estimated $3.6 billion. Born in Israel, his family moved to the United States with he was four years old. The family settled in Alabama, and his father taught math at Auburn University.
David’s remarkable intelligence was recognizable early in his life. He aced the SATs at 13 and dropped out of high school to take college classes. He started building computers from used computer parts while in college to earn cash. He excelled at this hobby to such a degree that he opted to drop out of college and start his own computer assembly company, Microtech Information Systems, at the age of 14. He sold Microtech for a few million dollars at the age of 22.
Today, Zalik is worth an estimated $2.5 billion. This 44-year-old father of three is taking the financial world by storm, landing himself on the Forbes list of Top 400 Billionaires in 2017.
In April, GreenSky Credit quietly applied for an IPO with the Security Exchange Commission. When the IPO hits the markets, it will do so under the ticker GSKY on the Nasdaq. Industry experts expect the company’s value to jump by as much as $1 billion after going public.