Los Angeles-based lending startup Sunbit has raised $355 million in new debt financing led by JPMorgan Chase, Tokyo-based bank Mizuho and private credit firm Waterfall Asset Management. Sunbit offers consumer loans ranging from $50 to $20,000 for in-person payments at places like car dealerships (for auto repairs), dentist offices and eyewear shops in 47 U.S. states. The new line of credit follows another $310 million debt fundraising Sunbit secured from Citi and Ares earlier this year.
Sunbit cofounder and CEO Arad Levertov, 47, says he has targeted U.S. brick-and-mortar sales for a few reasons. They comprise a huge market, reaching $7 trillion in 2023. There’s much less competition for payment options at physical locations versus online, where checkout pages are crowded with buttons ranging from buy-now, pay-later providers to PayPal and Apple Pay. And the business categories he’s focusing on have loyal customers. “It’s non-discretionary, repeatable business. I call it non-Amazonable,” Levertov says. 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 makes more than 100,000 new loans a 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 generally accepted accounting principles basis in the fourth quarter of this year or early next year and that the company will burn less than $2 million in 2024. It was last valued at $1.1 billion in a May 2021 fundraise.
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Levertov grew up in Israel and served for five years in Israel’s Shayetet-13 unit, 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 U.S. in 2008, when he enrolled in Duke’s MBA program and started working at Chicago-based online lender Enova. Levertov eventually rose to become chief operating officer of the 700-person company, and a few years before leaving, he started recruiting cofounders for Sunbit. He got the idea for the company after he had his own problems accessing credit as an immigrant with little credit history–he applied for a Costco credit card while standing in line at the store and was denied.
In January 2016, he launched Sunbit with entrepreneur and sales executive Tal Riesenfeld, 47, software development executive Ornit Dweck-Maizel, 45, and machine learning professor Tamir Hazan, 50. The cofounders put up $100,000 of their own capital and raised $2.9 million from a few small investors in September 2016, which they survived on for three years. In 2019, they raised a $26 million round of funding led by billionaire venture capitalist Oren Zeev of Zeev Ventures. Zeev holds a Sunbit board seat and has continued to invest in Sunbit since–he currently owns one-third of the company.
Sunbit’s target customers are lower to middle-income Americans–its users have a 700 credit score on average. Thirty percent of its loans carry a 0% interest rate. Just like other buy-now, pay-later businesses such as Affirm, Sunbit charges the merchant a fee every time one of their customers pays through a Sunbit loan. But Sunbit’s merchant fee is a lucrative 8% to 9% on average, well above the fees Affirm and Klarna charge. “We make more from the merchant because we have less competition,” Levertov says. Forty-five percent of his revenue comes from merchant fees. The company also recently started striking 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 max out at 36%. For the riskiest customers, it requires a larger down payment alongside the loan and charges a higher rate. There are no late fees, origination fees or deferred interest payments where you must pay interest in arrears if you miss a payment on a 0% interest loan.
For merchants to offer these loans, Sunbit gives them an iPad with its software pre-installed. Levertov says Sunbit is available in 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 reps; Israel, where its research and development team sits; and outside San Francisco in San Ramon. It also has over 100 employees who work remotely.
Sunbit originates loans through its Utah-based bank partner Transportation Alliance Bank, then finances them through its lines of credit. Levertov says Sunbit’s delinquency and charge-off rates on its loans are below 5% on average. (The average delinquency rate on U.S. credit card loans was 3.25% in the second quarter of 2024.) He adds that the startup has about $70 million in cash left from the $300 million total it has raised in equity financing.
Of course, any consumer lending business comes with big risks, especially one catering to 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 consumers’ payments to the credit bureaus is also tricky business. In September 2024, consumers filed eight complaints to the Consumer Financial Protection Bureau (CFPB) about how Sunbit has handled credit reporting. Many of the complaints say the information Sunbit filed about them was incorrect or belongs to someone else. “We take complaints super seriously,” Levertov says. “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 do make some mistakes and errors [in our credit reporting], and we learn from them and get better.”
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