NEW YORK: Climb Credit, a financial technology startup that lends to students to pay for professional training, has secured a US$50 million debt facility from Goldman Sachs Group Inc, the companies said on Wednesday.
New York-based Climb will use the funds to offer financing to individuals for courses ranging from computer programming to heavy equipment operation, the companies said.
The funding will be provided by Goldman's Urban Investment Group, the bank's division that makes investments to benefit low income communities in the United States, the companies said. Through the deal Goldman has committed to buying up to US$50 million worth of Climb's loans which it will hold on its balance sheet, according to a Goldman spokesman.
"The funding helps us meet the demand we are seeing in market," Angela Ceresnie, CEO of Climb, said in an interview.
Climb allows students to pick from hundreds of courses at schools across the United States that it has pre-selected because of their track record in helping graduates improve their earning potential. The assessment takes into account factors such as job placement rates and starting salaries, Climb said.
The company is among the growing number of startups that use digital technologies to make it easier for individuals and businesses to borrow money online.
Launched in 2014, Climb has originated US$100 million worth of loans to almost 10,000 students so far. It lends US$10,000 on average at an average rate of between 8.5 percent and 9 percent, Ceresnie said.
She added that the company targeted an underserved market as most student lenders focus on loans to pay for university degrees, rather than professional training.
(Reporting by Anna Irrera; Editing by Frances Kerry)