What exactly do i am talking about by that? We want to innovate and test things and draw conclusions because quickly as we are able to. Therefore sometimes we may not need the blissful luxury of developing data sets such as thousands of information points, in other words. when we had the luxury of time to make a thousand of those loans and watch how they perform over the next 12 to 18 months if we wanted to test a new type of loan product, it would be ideal.
Therefore in place of that individuals might use processes to smaller data sets that people draw from. This drug or this new technique, but you know what, we want to limit it to 100 subjects or 200 topics as an example, the pharmaceutical room or the medical area in which the FDA might say, guess what happens, you can attempt this on topics. You to draw conclusions without needing much larger data sets so you have to apply techniques to the smaller data sets that allow. Then when we think of information technology and information i usually choose to talk in regards to the techniques because that is a differentiator aswell.
Peter: Okay, I would like to go up to one other region of the equation here and speak about loan money and exactly how youвЂ™re actually providing the main city of these loans.
You talked aboutвЂ¦you have bank line, yeah letвЂ™s just talk a bit you funding the loans exactly aboutвЂ¦do you have a marketplace, how are?
Glenn: So we securely think as you should diversify the manner in which you originate your assets, you ought to diversify the way you fund your assets and I also look at the alternate methods for funding your assets in state three broad groups. Number 1 is on-balance sheet, this one is pretty simple; number 2 is securitization and number 3 is entire loan purchase and entire loan purchase might be real sale of entire loans, it may be product product product sales of participations, they are often gently organized in which you simply simply take an initial loss place, but broadly defined whole loan purchase.
Amongst those three i might additionally declare that in the event that you had the chance to bother making a choice that you begin off with on-balance sheet because funding assets on-balance sheet what your location is undoubtedly coping with the risk day-to-day does force an amount of discipline and rigor around credit that no other capital strategy forces one to build up and use and thus that was how Credibly started out it is life, as an on-balance sheet loan provider. Today, our company is offering loans that are whole our company is also doing participations aswell. Within our entire loan product product product sales weвЂ™ve got a few people who are purchasing entire loans from us and in the long run weвЂ™re going to incorporate entire loan buyers.
From a involvement viewpoint, our company is sharing the chance on specific deals which, for instance might end up in us surpassing a covenant or perhaps a limitation within our bank center. WeвЂ™re really very happy to be partnered with SunTrust Bank and so we may be limited by a maximum of 20percent of your profile in just about any a definite large town or MSA, however, if we have actually a good loan opportunity we would state, you realize letвЂ™s, to keep this inside our covenant limitation letвЂ™s participate out 50 % of this loan, however in all those instances our company is sharing into the danger.
Peter: Right, right, okay. Along the line could you go towardsвЂ¦add the securitization piece, is the fact that your plan?
Glenn: definitely, therefore the reasons why we state that is quantity one, it could be a tremendously effective price of funds together with other benefit is the fact that each one of these various sources or various ways of funding your online business help in keeping the others truthful. What exactly a debtor might spend to their senior credit facility or on-balance sheet warehouse center has to be competitive using the securitization market and vice versa for every single of the two areas become viable.