Key Metrics for Small-Dollar Lenders

  • Time-to-Fund
    • How quickly a borrower/applicant can access their loan funds after they click your website application “Submit  Button.” Small-dollar loan borrower’s single pain point is “slow loan processing!”
  • Customer Acquisition Cost [CAC]
    • How much does it cost you to acquire a “funded” loan; ALL IN. Sales, marketing…
  • ABA First Payment Default
    • Example CRA loan logic:
      • ABA 1st Payment Default Percent example: 11%
        • This is the percentage of your borrower applicant’s trade segments with their bank account [ABA Number] resulting in an FPD [First Payment Default].
      • ABA 1st Payment Default Look Count: 6001
        • The number of FPD’s associated with your borrower’s bank [ABA].
      • What would be considered good/bad metrics by a Lender? Sophisticated Lenders visibility on this metric logically concludes that a “high” percentage of FPD’s reveal the borrower applicant to be a higher risk than those applicants experiencing lower trending ABA 1st Payment Default Percentages.
  • Compound Annual Growth Rate [CAGR]
Compound annual growth rate (CAGR) is a business and investing specific term for the geometric progression ratio that provides a constant rate of return over the time period. The compound annual growth rate (CAGR) is a useful measure of growth over multiple time periods. It can be thought of as the growth rate that gets you from the initial investment value to the ending investment value if you assume that the investment has been compounding over the time period.
  • The Current Expected Credit Loss model (CECL)
    • Is the new accounting model FASB has issued for the recognition and measurement of credit losses for loans and debt securities. The new standard will generally be effective for SEC registrants’ 2020 financial statements and in 2021 for banks that are not SEC registrants.

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