But we do have about 30% of y our portfolio which has had property
Brendan: But we do have about 30% of y our profile which has property as security even though loans on their own could be a lot more like a busine loan, but where we could really affix to real-estate as security therefore we aren’t entirely unsecured. If you decide to include receivables and real-estate, both of that we think can eentially be viewed guaranteed we have been about 48% guaranteed and perhaps 52% unsecured customer and tiny busine.
Peter: Interesting, interesting. Therefore then just how do you select the lending company to work well with? I am talking about, are you searching for…obviously you have got a return target you’re signing up a new deal that you want to hit, but is there anything else that you’re looking for when?
Brendan: definitely, therefore the very first thing that people place such a premium on so we want to know how the lender is planning to scale and where it will be getting its customers from in such a way so that they’re not competing against dozens of other lenders or even one or two other lenders that we want to understand is the story and that’s because unique deal flow is something. They can find those borrowers and then once they have that and we understand how they’ll scale that then we’re going to dig into their data so we want those unique relationships where. You demonstrably understand Bryce extremely well, Bryce or Dr.Mason, another pioneer in this industry that arrived aboard more than a year ago now and he’s our chief investment officer therefore bryce then digs into data.
Exactly exactly just What we’re searching for is two things; first thing of course we’re to locate could be the performance through the security therefore the thing that is second we’re shopping for has reached the smallest amount of that the model that they’re utilizing, the underwriting model that they’re utilizing to get the loans may be the supply of their exceptional comes back. To help you imagine a loan provider this is certainly delivering exemplary comes back, but actually does not have an underwriting model that is good.
Peter: Right.
Brendan: Because it is really smart people which are making the real difference here and undoubtedly that won’t scale so we require great data showing good performance and now we have to be in a position to link it to an underwriting model that people think works. And because we’ve seen therefore a number of these underwriting models and Bryce himself has really built some, we’re exemplary judges of this relationship between good performance together with underwriting model.
Then after that there‘s a lengthy evaluating proce because we’re audited and because we hold ourselves to a really high standard we do lots of what exactly are called procedures testing therefore we’re searching for the control points at the lender…where their computer software and where in fact the people intersect to do critical such things as ‘okay’ a loan, cable cash, exactly how cash is gotten and where all of that money goes generally there is an entire group of tests that individuals do in order to make sure their busine is totally buttoned down and then we could even have strategies for them, we usually do. When they’re throughout that there’s things like criminal background checks that happen after which we could reach a phrase sheet that is a reasonably long legal document then arrive at an agreement that is definitive. It is maybe maybe perhaps not a really long proce if we’re really interested in the financial institution, but it is a rather in level proce.
Peter: Yeah, it really feels like it. I would like to mention the SEC and also the filing you did…i understand we composed you give us an update on that and what went on about it on Lend Academy back in January, can?
Brendan: definitely, therefore the method this works is you file what’s called an N-2 if you’re likely to produce a closed end investment therefore we did that in December after which you will get commentary straight back through the SEC additionally the commentary reflected a pursuit that the SEC had in actually really, extremely present valuation of course you look in the succe of this two companies which have launched in this room, they’ve both been in a position to do day-to-day valuation. It is really difficult to day-to-day value a loan center which has a borrowing base. Banking institutions don’t accomplish that every day, they might typically take action on a month-to-month foundation and thus than we do like a buyer of marketplace loans, the conclusion that we came to is that we just weren’t going to be able to get to daily valuation and that we would be well served by pulling the N-2 which is a simple thing to do because we look far more like a bank.