Online lender Avant is cutting about 7% of its workforce, another indication of turmoil in the sector resulting from funding troubles.
Avant experienced a 27% drop in loan volume during the first three months of 2016. It is laying off nearly 60 employees after scrapping plans to expand its product offerings into credit cards and refinanced auto loans.
CEO Al Goldstein said the Chicago-based firm will focus on achieving profitability as soon as possible through its well-established online consumer lending platforms in Denmark, the U.S. and the U.K. Since Avant was founded in late 2012, it has originated more than $3 billion in loans.
“Our biggest competitor just fell down, and the whole space is at an inflection point,” Goldstein told Crain’s Chicago Business.
He was referring to the May 9 resignation of Lending Club CEO Renaud Laplanche after an internal review found the sale of $22 million in near-prime loans to an investor violated its business practices.
Avant has grown in less than four years to employ 800, mostly in Chicago. The decline in its loan volume to $514 million in the first quarter was the first time volume had fallen sequentially since its inception.
“We saw the capital markets really change in the beginning of the year, and we were the first lender to take appropriate action,” Goldstein said. “We saw what happened to the other lenders who didn’t.”
The chief executive said he still intends ultimately to offer credit cards to near-prime consumers that most credit card companies won’t serve and also offer an auto-lending product to refinance car loans.
Avant formed its first major bank partnership last month in an agreement with Birmingham, Ala.-based Regions Bank that will give it access to customers who come in through Regions’ website but don’t meet the bank’s tighter lending criteria.
Another online lender, Prosper Marketplace, announced earlier this month it was laying off more than a quarter of its workforce after its loan originations fell by 12% in the first quarter.