This Philly-area fintech company is growing like gangbusters, with a 50% staff increase expected this year

LoanStar Technologies, which offers a platform to make loan applications simpler and more available, has seen roughly 100% growth each year since starting in 2016, per the Philadelphia Business Journal.

The company acts as the middleman between credit unions and banks and what founder and CEO Andrew calls “merchants,” such as contractors, healthcare providers and retailers. Customers get easier access to money when they need it, and the company gets a percentage of funded loan amounts. 

“What’s unique about us is we sit on top of the technology that already exists at the banks and credit unions, but we make it easy to transact with them for non-finance professionals,” Turner told Technical.ly. 

Embedded lending, which integrates lending services into other digital transactions is becoming more and more popular — if you’ve been offered the option to finance a purchase without leaving a shopping cart, you’ve seen it. By 2026, businesses and consumers are expected to spend $7 trillion annually via embedded finance, nearly triple the 2021 total of $2.6 trillion.  

These services make it easier for banks to offer loans and for nonfinancial businesses to make money off loans. For the customer, the services could present a risk of over-borrowing. Customer education and transparent terms can help mitigate this issue, according to credit card processor Stripe. 

LoanStar now facilitates over $1 billion in loans annually, Turner said, with 70 banks and credit unions using its services. 92% of loans on its platform lead to the bank or credit union involved getting a new customer, according to the CEO. 

Turner previously spent 15 years in the lending division of banking company FIS. He left to pursue his own idea for how banks and credit unions should be involved in loans. 

LoanStar’s model rests on a service-minded approach. The company currently offers programs specifically for veterans, vehicle accessibility, disaster relief and sustainability. 

“Our goal is to continue to innovate around banking products, and the channels that we service today,” Turner said. “Think of us as being able to position banking products without a retail banking branch or a digital presence of a bank.”

A hiring spree to keep up with expansion

The Delaware County-headquartered company has also earned praise for its workplace culture.

Last year LoanStar made the Business Journal’s Best Places to Work, was a finalist for Ernst & Young’s Entrepreneur of the Year and was nominated for the Philadelphia Alliance for Capital and Technology (PACT) Enterprise Awards.

Though far from the top 10 regions for fintech, Philadelphia has seen growth in the sector since at least 2017, according to Ben Franklin Technology Partners, with stalwarts such as Vanguard, Susquehanna Bank and SEI Investments joined by startups like LoanStar. 

Last year the Philly metro area saw 47 venture capital deals and $265 million raised in fintech, according to PACT’s annual venture report. That’s a big year-over-year drop after a recent spike, but still much higher than pre-pandemic numbers.

Earlier this year, LoanStar closed a $27.85 million funding round. About $16 million will be used to buy out original investors and the rest will go towards company expansion, Turner told Technical.ly, including hiring more salespeople, operational people and product employees. The company’s current headcount is 48, but they hope to be at 76 by the end of the year. 

LoanStar started with the use case of home improvement professionals, allowing contractors to present links to loan applications to clients embedded with their project quotes, so people can apply without having to go to a physical bank branch. LoanStar can also embed its software into the contractor’s operating system so that loan information can be organized by project. 

Going forward, Turner said, the company would like to offer more banking products for consumers, such as credit insurance, to leverage opportunities where people are already interested in loans. 

Sarah Huffman is a 2022-2024 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Lenfest Institute for Journalism.