Sunbit co-founders Arad Levertov, Ornit Dweck-Maizel, Tal Riesenfeld and Tamir Hazan launched the company in 2016.
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LAngeles-based lending startup Sunbit has raised $355 million in new debt financing led by JPMorgan Chase, Tokyo-based bank Mizuho and private equity firm Waterfall Asset Management. Sunbit offers consumer loans ranging from $50 to $20,000 for in-person payments at places like car dealerships (for car repairs), dentist offices and eyeglass stores in 47 US states. The new credit facility follows another $310 million Sunbit debt financing secured by Citi and Ares earlier this year.
Sunbit co-founder and CEO Arad Levertov, 47, says he targeted US brick-and-mortar sales for several reasons. They constitute a huge market, reaching $7 trillion in 2023. There is much less competition for payment options in physical locations versus online, where checkout pages are filled with buttons ranging from buy-now providers, payment later to PayPal and Apple Pay. And the business categories he is focusing on have loyal customers. “It is non-discretionary and repeatable business. I call it un-Amazonable,” says Levertov. Sunbit charges an average interest rate of 20% — a few percentage points below the average credit card interest rate of 24% — and its loans typically last six to seven months.
The seven-year-old, 550-person company originates more than 100,000 new loans per month, with an average loan size of $1,000. It expects revenue to reach $260 million this year, up from $198 million last year. Levertov says Sunbit will become profitable on a GAAP basis in the fourth quarter of this year or early next year, and that the company will burn less than $2 million in 2024. Last time was valued at $1.1 billion in a May 2021 fundraising.
Levertov grew up in Israel and served for five years in the Israeli unit Shayetet-13, often referred to as the Israeli Navy SEALs. He then worked at computer chipmaker Intel on manufacturing systems and operational efficiency before moving to the US in 2008, when he enrolled in Duke’s MBA program and began working at Chicago-based online lender Enova. Levertov eventually became chief operating officer of the 700-person company, and a few years before he left, he began recruiting co-founders for Sunbit. He got the idea for the company after having his own problems accessing credit as an immigrant with little credit — he applied for a Costco credit card while standing in line at the store and was turned down.
In January 2016, he started Sunbit with entrepreneur and sales executive Tal Riesenfeld, 47, software development executive Ornit Dweck-Maizel, 45, and machine learning professor Tamir Hazan, 50. The co-founders spent $100,000 of their own capital and raised $2.9 million from several small investors in September 2016, which they survived for three years. In 2019, they raised a $26 million funding round led by billionaire venture capitalist Oren Zeev of Zeev Ventures. Zeev holds a seat on Sunbit’s board and has continued to invest in Sunbit ever since – he currently owns a third of the company.
Sunbit’s target customers are lower- to middle-income Americans — its users have an average credit score of 700. For the 30% of its borrowers with the highest credit scores, it offers 0-interest loans %. Like other buy-now-pay-later businesses like Affirm, Sunbit charges the merchant a fee every time one of their customers pays through a Sunbit loan. But Sunbit’s merchant fee is on average a profitable 8% to 9%, much higher than the fees charged by Affirm and Klarna. “We earn more from the dealer because we have less competition,” says Levertov. Forty-five percent of its revenue comes from commercial fees. The company also recently began making deals to offer co-branded credit cards with companies like discount retailer Ollie’s.
Sunbit says it approves 90% of applicants and that its interest rates are a maximum of 36%. For riskier customers, it requires a larger down payment along with the loan and charges a higher fee. There are no late fees, origination fees or deferred interest payments where you have to pay interest if you miss a payment on a 0% interest loan.
For merchants to offer these credits, Sunbit gives them an iPad with its software pre-installed. Levertov says Sunbit is available at more than 9,000 car dealerships and 12,000 dentist offices.
In addition to Los Angeles, Sunbit has corporate offices in Nevada, where it has a call center with 250 customer service representatives; Israel, where its research and development team is based; and outside of San Francisco in San Ramon. It also has over 100 employees who work remotely.
Sunbit originates the loans through its Utah-based banking partner, Transportation Alliance Bank, then funds them through its own lines of credit. Levertov says Sunbit’s delinquency and default rates on its loans average below 5%. (The average U.S. credit card loan delinquency rate was 3.25% in the second quarter of 2024.) He adds that the startup has about $70 million in cash left over from the $300 million total it has raised in funding. of capital.
Of course, any consumer lending business comes with significant risks, especially one that serves Americans with average and below-average credit scores. If growth slows, startups are often tempted to loosen underwriting standards, though Zeev insists Sunbit has been extremely disciplined so far.
Reporting consumer payments to the credit bureaus is also a complicated business. In September 2024, consumers filed eight complaints with the Consumer Financial Protection Bureau (CFPB) about Sunbit’s handling of credit reporting. Many of the complaints say that the information presented to them by Sunbit was incorrect or belonged to someone else. “We take complaints very seriously,” says Levertov. “We have a call center here in the U.S. We work closely with them to make sure it’s a friendly call center … We make some mistakes and errors [in our credit reporting]and we learn from them and improve.”