WILMINGTON — Fortress Investment Group has committed to purchasing up to $500 million in loans previously provided by Best Egg, signaling renewed confidence investors have in Delaware’s rising fintech company.
Best Egg handles roughly $7.5 billion in personal loans on an annual basis — While this deal is not the largest for the Delaware-based company, it is helping fuel the company’s efforts to expand efforts to lend to traditionally high-risk borrowers with low FICO credit scores.
First branded Marlette Funding when it launched in 2014, Best Egg has served around 2.9 million customers and lent $30 billion in personal loans alone. One of the company’s hallmarks is an easy online application process and has since branched out to offer a credit card to those looking to improve their credit score as well as vehicle equity loans and a flexible rent tool.
“We’re in the business of providing as many loans to as many people as possible, and we’re aiming to do that up to a point where we can’t responsibly do that,” Best Egg Chief Financial Officer Andrew Deringer said. “We definitely don’t think this is going to be the only deal we do with Fortress. When you think about large investors, they want to invest in something long-term. And after all the due diligence with this deal, they want to work with us to open the door for more customers.”
Fortress Investment Group is a highly diversified global investment manager with a portfolio of $48 billion assets. That represents 2,000 institutional clients and private investors and just recently, the firm also closed a $2 billion deal with SoFi Technologies on its loan-platform business.
For Deringer, Fortress’s deal with the company shows that Best Egg’s suite of services is catching the attention of a major player in the capital market space.
“There’s a spectrum when it comes to capital markets, there’s long-term and highly integrated partnerships and others are highly transactional. We’re built for long-term deals, and with an institution with a significant amount of capital resources interested, it shows they appreciate what we’re doing for customers – and the returns we can generate as fund writers,” he said.
With inflation causing prices to rise, like those seen in grocery stores across the country which saw a spike in spending between January 2020 and June 2024 by 22% and housing which saw an increase in rent costs, consumers are looking for ways to either cut costs or find new ways to pay for items like cars, a mortgage and everyday expenses. Earlier this month, FICO, often considered the standard for credit analysts, found that more people are missing mortgage and auto loan payments while credit card usage is up to 35% of the population.
But as FICO uses various data to determine a score, including metrics such as payment history, current debts and the amount of new credit sought, Best Egg uses its own underwriting model designed by in-house data scientists to offer loans to those who rely on credit to make their finances work and have the ability to pay it back.
“A lot of people are looking for a loan and using income and credit profile to secure one to pay off credit card debt. When you look at our core business, it’s an installment lending business that’s a better form of a credit card over three, five years versus 30 years with a credit card,” Deringer said.
Best Egg has grown over the past four years, adding hundreds of new employees and many are within driving distance of its headquarters in the Brandywine Hundred. Earlier this year, the company expanded its vehicle equity loan program that offered cash-out refinancing options to the value of a car or for additional funds. Now, that program can be accessed by 90% of people in the United States.
Deringer said the program has had a slow ramp-up but is expecting more customers to tap into the vehicle equity loan program in 2025.
“When you think of the major assets a consumer has, this is how we can tap into them to provide the widest spectrum of credit possible,” he said. “We think that it’s going to expand our reach and our ability to serve customers.”
