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PACE Provider Expanding into Unsecured Lending

Renovate America, one of the largest providers of Property Assessed Clean Energy Loans, is expanding into unsecured lending.

Since 2011, the company has financed more than $2 billion in energy efficiency upgrades through programs that are repaid through a new line item on homeowners' property tax bills. In October, it launched a product that can be used to finance many kinds of home improvement — even cosmetic upgrades such as kitchens or baths.

The new product, called Benji, is currently available in four states, California, Florida, Kansas and Missouri, where Renovate America has existing relationships with contractors through different PACE programs. Contractors can download a Benji app on their mobile phones or tablets, allowing them to offer financing in the home, where most improvement and replacement projects are proposed and accepted.

Last week, the company obtained a $100 million credit facility with Credit Suisse that will allow it to expand the offering to all 50 states. Later this year, Benji will be available on Renovate America's website, allowing homeowners to arrange financing themselves before they evaluate project proposals.

This puts the San Diego-based company more squarely in competition with other kinds of unsecured lenders as well as with banks offering home equity loans or lines of credit.

While unsecured debt is generally more expensive than a home equity loan, Renovate America is banking on its relationships with contractors as an advantage. Contractors offering the financing must agree to be paid only when homeowners have agreed that the project is complete. Renovate America will also provide support in any post-funding disputes.

"Benji helps expand our network of vetted contractors, and is a natural extension of our commitment to make home improvement more efficient," Patrick Moore, Renovate America's senior vice president of consumer lending, said in a press release.

The average Benji loan is around $13,000, according to a company spokesman. The loans pay fixed rates of interest that range between 6% and 10%. Terms range from five to 12 years.

Renovate America is not the only lender offering loans via an app on contractor cell phone. In January, EnerBank, an industrial loan company with $1.25 billion in assets, rolled out a mobile app that allows home contractors to offer home improvement financing on the spot. Enerbank has also rolled out a web-based version of the product. So far about 2,000 of its customers have downloaded the app, and it expects that eventually half of its loans will be originated this way.

Both Renovate America and EnerBank developed their respective apps in-house. Renovate America started development in late July using an agile software development process that allows it to release new features and functionality in two-week cycles.

The Benji app has GPS functionality that locates the home and prepopulates an application with the address. It features a calculator that allows homeowners and contractors to estimate the monthly payment, allowing homeowners to select the term that works for them

Approval decisions are made within seconds of submission of application via the mobile app.

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