CommonBond recently received $50 million in Series D funding from a few different sources.
CommonBond, an online lender for students and graduates, has announced an additional $50 million in funding.
According to a press release, the company received a Series D financing round with Fifth Third Capital Holdings as the lead, and Columbia Seligman Investments and First Republic Bank also participating. CommonBond now has more than $130 million in funding. Its last financing round occurred in the summer of 2016.
With the new funds, the company plans to use it for growth and technology – including automation and blockchain investments.
“We will likely start investing in blockchain and heavily leveraging it as a tool to make our operations more efficient and to make our data more secure,” CommonBond CEO and co-founder David Klein told Forbes.
This is good news for the industry, as it has an estimated 45 million Americans carrying more than $1.45 trillion in student loan debt. CommonBond offers a suite of student loan solutions: current students seeking new private loans, graduate students refinance loans, and employers contributing to help pay off employees’ student loan debt through the CommonBond for Business platform.
Launched in 2012, CommonBond to date has funded over $1.5 billion in loans and endured two credit defaults. It has more than $3 billion in lending capacity, according to Forbes, and about 25,000 members – indirectly known as borrowers.
New Collaboration Opportunities
Along with their financing, the Fifth Third Capital Holdings and First Republic Bank involvement represents the first time that banks have purchased stakes in an established online lender, reported The Financial Times. This could build stronger connections between the two types of institutions, sometimes perceived as adversaries, and in the future, could provide opportunities for products and collaborations.
Presently, Fifth Third doesn’t offer student loans. In 10 cities, First Republic has a refinance-only, limited product.
In response to the banks’ financing, Klein said there’s an opportunity to “bring the best of both worlds together.”
With the continued growth of online lending, students and graduates sometimes go this route to supplement federal aid with additional financing. Online lenders, including CommonBond, offer financing with different interest rates and fees.
According to experts, when considering this avenue, review different lenders and simultaneously apply for more than one loan to compare returns. Keep in mind lenders will conduct soft credit pulls, which enables borrowers to review potential loan approvals without affecting their credit.
Furthermore, if borrowers conduct numerous formal applications, credit hits can be avoided by shopping around within a two- to four-week timeframe. Be sure to conduct solid research as online lender perks are available including lower rates for good grades and opportunities to release cosigners.