Retail Companies and Lease Accounting
Retail companies have traditionally been one of the largest users of real estate in the world. It is common for retail companies to lease out large commercial retail spaces and utilize them in their business. Over the years, the usage of real estate has drastically come down because of the increase in online retailing. However, […]
Personal Financial Statements
It is common practice for businesses to prepare financial statements. This is because they need to get these financial statements audited. Once these statements are audited and found to be correct, they become an official record that can be used in loan applications as well as for tax purposes. However, since individuals do not need […]
The Bias Blind Spot
We are now aware of the fact that investment markets are not driven by mathematical decisions alone. They are heavily influenced by the emotional quotient of investors. In fact, a large number of successful investors attribute their success to their ability to manage their emotions. This is done by understanding the different types of behavioral […]
Zero-Coupon Bonds: Pros and Cons
Zero-coupon bonds are those bonds that are sold at a deep discount to their face value. This means that these bonds do not receive any periodic interest. Instead, the investors have to invest a lump sum amount at the beginning of their investment and get paid a higher lumpsum amount at the end of their […]
What is Commercial Banking?
The banking industry is a highly specialized field. To the layman, it may appear like all banks perform the same function. However, this is not the case. There are a wide variety of departments within a bank that perform different functions. Commercial banking is one such department. In most banks, it functions like a different […]
When investors look at the list of companies that have become unicorns in the recent past, Goodleap tends to stand out. The company has stayed under the radar for a long period of time. It is only in 2021 that the company left the stealth mode and started publicizing some aspects of its business. It has recently been valued at $12 billion and the company expects to enter the public markets with an IPO soon. Goodleap was formerly known as Loanpal. However, the company recently rebranded itself with a view to getting ready for the forthcoming initial public offer.
Goodleap is a finance company that is focused on cleantech, mostly solar energy projects. The company is well known for providing financing to homeowners who want to reduce their electricity bills by taking advantage of solar energy.
Goodleap has become very popular with consumers in the recent past. This is because the prices of electricity are increasing by leaps and bounds every year. Also, the United States government provides homeowners with various incentives in order to use solar energy in their homes.
Homeowners have access to loans with very low-interest rates. Also, they can obtain tax credits in lieu of the investment which they make in their solar energy projects. Some states also provide cash incentives in addition to tax rebates. All this makes investing in solar energy projects a financially viable option. Over a long period of time, homeowners end up with lower electricity bills, and also since their house is powered by solar energy, they help the planet become more sustainable.
The founder of Goodleap, Bernard Hayes, was earlier employed in a cleantech venture called SolarCity. Hayes was a part of the leadership team at SolarCity and played a pivotal role being the chief revenue officer at that company. Hayes had spent his career learning how to use financial innovation to make cleantech more viable for the average consumer. In 2017, the company got acquired by Tesla for a whopping $2.6 billion. Most of the SolarCity employees were reassigned to work on the Tesla Model 3 car.
However, since Hayes was passionate about the use of solar energy to improve home efficiency, he resigned from the company and decided to venture out on his own and create Loanpal. In the very short span of five years, Hayes has been able to grow Loanpal (now called Goodleap) into a company with a $12 billion valuation!
Goodleap has been able to generate interest from some eminent investors such as tech mogul Michael Dell who is a major investor in the business. Goodleap has a zero debt business model and is cash-flow positive. The company makes regular dividend payments to investors.
Goodleap helps individual homebuyers set up solar projects to improve the efficiency of their homes. Most homeowners do not have the cash required to set up a home improvement project on their own. Hence, they need to borrow money to do so. Goodleap provides financing to these homeowners through a mobile application. It can be considered to be a point-of-sale loan facility for home improvement projects.
Homeowners can apply for the loan only if they have a decent credit score and their name appears on the utility bill of the house. The interest rate offered by Goodleap is quite low. They can offer finance at an interest rate of as low as 3%. Goodleap makes both secured as well as unsecured loans. Obviously, the interest rate charged on secured loans is much lower as compared to the interest rate charged on unsecured loans.
In most cases, Goodleap will have a lien on the solar equipment which has been financed by the loan. They will have no lien on the house itself. This means that in the event of a default, Goodleap only has access to the solar equipment and cannot foreclose the house itself. Also, Goodleap makes it easier for owners to transfer their solar loan to the buyer if they decide to sell the house. Goodleap loans also have other consumer-friendly features. For instance, there is no prepayment penalty if the owners want to close the loans earlier than expected.
The Goodleap business model is simple. It makes money in two or three important ways.
The bottom line is that Goodleap has a unique business model which allows it to use its financial expertise as well as technological capabilities to make viable solar loans. The company has been able to grow at a rapid speed due to a lack of competition. However, in the near future, the company is expected to face some competition. As a result, the company may not grow at the same speed in the near future.
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