CROSSING PATHS: Niche lending and fintech intersect in Silicon Slopes.

• Author: Andra, Jacob
• Position: Crossing Paths

Utah provides fertile soil for financial innovation. As technology infiltrates finance, a new breed of institution, known as fintech, grows out of the union. But innovation in lending is more than a technological phenomenon. It also results from capitalism's signature dynamic: that of supply and demand. As it turns out, conventional finance leaves a lot of demand unfulfilled. So a ready market awaits the availability of alternative lending models.

People borrow money for a variety of reasons. Starting a business. Buying a new car. Replacing a refrigerator. Common to all borrowing arrangements: the borrower seeks liquidity. Maybe they can easily afford the desired item or endeavor, maybe they can't--and for this article's purposes we must set aside moral arguments for or against living within one's means--but people often do, for a variety of reasons, want or need an infusion of outside cash.

There are, however, entire demographics not serviced by tried-and-true lending institutions. Often, these folks' credit score fails to meet a bank's minimum standards. Or they need unconventional terms on an equipment or business loan. Whatever the reason, these transactionally marginalized sectors find themselves at the mercy of high-interest lenders. Or with no access to capital at all.

"There is a significant population of U.S. consumers who can't get a loan," notes Nate Heward, CFO at Acima Credit, a company that provides a point-of-sale credit platform.

CAPITALISM ABHORS A VOID

From the ubiquitous strip mall payday lender to the world of microfinance, a plethora of entrepreneurial solutions has emerged to get cash in the hands of would-be borrowers cut off from other avenues. These alternative lending practices have various degrees of reputability; a wide spectrum exists between the purely predatory lending shop, on the one hand, and the creative value-adding venture, on the other.

For the underserved consumer, three Utah lenders offer financing on purchases. Snap Finance (based near downtown Salt Lake City), Acima Credit (formerly Simple Finance, based in Sandy), and Progressive Leasing (based in Draper) all cater to the under-capitalized would-be borrower seeking financing on consumer purchases.

EnerBank, based in Salt Lake City, fills a very different niche. The company offers easy loans to homeowners for home improvement projects. Their primary customer, however, is the general contractor bidding for a home renovation; the contractor can offer...