Avid Acceptance LLC’s new warehouse facility will put the lender on track to double its securitization volume next year, Chief Financial Officer Curtis Ash told Auto Finance News.
The $50 million funding facility from JPMorgan Chase “will allow [Avid] a larger securitization in 2019,” Ash said, likely in the third or fourth quarter. The warehouse facility is a move to support the lender’s short- and long-term growth strategies and to diversify its funding model, he added.
Salt Lake City-based Avid had reached out to JPMorgan Chase in January for help with its inaugural securitization, a $114 million deal, but those plans fell through.
“[Avid Acceptance] is a new venture, and larger banks want us to grow up a little bit first,” he said. However, after S&P Global Ratings and Kroll Bond Rating Agency rated that initial securitization, talks of the warehouse facility began.
Avid serves a niche subprime consumer, those in Chapter 7 or Chapter 13 bankruptcy. Despite Avid’s lower-tier consumers, Kroll pointed out in a presale report that bankrupt borrowers have recently discharged debt, which reduces their debt burdens.
“Bankruptcy borrowers are also restricted from filing bankruptcy again for several years,” Kroll noted. Another benefit to serving this niche consumer is the lack of competition, Ash said.
Other lenders in the space are Prestige Financial Services Inc. and Tidewater Finance Co. Avid ended 2017 with a $103 million portfolio, up from $88 million the year prior, according to S&P.
Avid operates in 17 states, and originations from its 395 dealerships primarily come via RouteOne and Dealertrack.