Private Lender Link’s CEO, Rocky Butani interviewed Shaye Wali to learn more about Baseline’s loan origination and servicing software for private lenders. Watch the video or read the transcript below.
ROCKY BUTANI:
So tell us about Baseline, the product. What is included? Is it origination, servicing, investor management? Tell us about everything that’s included in the software platform.
SHAYE WALI:
Yeah, the idea of Baseline is to be an end-to-end solution. We are hyper-focused on the private lending industry. So we really see this as an opportunity for our users to consolidate all the solutions that they use today. So, if they’re using, you know, DocuSign or any digital e-signature solution, anything for draw management, anything for payments, all of those things, we believe that if we can build a solution that’s hyper-focused on private lending, those should all be consolidated into one solution. And that can serve as their central source of truth. So, for the majority of lenders, if they use Baseline, they don’t have to use any other solution when it comes to managing their lending business.
ROCKY BUTANI:
A lot of what you said is mainly about loan origination. So the lender getting the client, processing the loan, closing the loan. But what about after that? How about loan servicing? Is that part of the solution?
SHAYE WALI:
Yeah, so we have loan origination. We have loan servicing, which includes payment
processing. We have an integrated payment processor. So you can run your monthly payments, pre-authorized debits, borrowers can make payments through the borrower portal, We have reporting for servicing, we also have draw management, which has been a big hit for a lot of our users who are doing fix and flip loans with the rehab component. They can do draw management, so borrowers can submit draw requests directly from the borrower portal. Lenders can send it back for revisions or approve it right on the spot and then record their disbursement directly from there. We also have investor management. That’s a huge feature that allows them to raise capital for their loans.
ROCKY BUTANI:
Just to clarify, investors, meaning the loan investors or the capital providers, or the mortgage investor, essentially, not the real estate investor.
SHAYE WALI:
That’s right, yeah. So borrowers would be the real estate investors, but we offer an investor portal, a very robust investor portal. We’ve had some of our users describe that as on par with Robin Hood or Charles Schwab, and they get to invite their investors into a portal of that caliber, and they can raise capital through that. So if a lender is doing a deal or if they’ve just created a fund, they can market that directly in the investor portal. So imagine a data room but with a really nice user interface and so they can market those opportunities investment opportunities like individual loans or funds and then they also provide a dashboard to investors that investors can log into and view the status of their investments has documents statements all their transaction activity, So it’s really it’s a really robust investor management tool which we found has helped our our customers raise more capital.
ROCKY BUTANI:
There’s a lot of different private lending companies out there, each with different capital models. Some have individual trustee investors, some manage a debt fund. Some of them just fund the loans with a balance sheet and sell them off to the secondary market. Can your investment solution accommodate all of these different capital models?
SHAYE WALI:
Yeah, absolutely. Because we’re focused on private lending, we’ve thought of the different scenarios and the different structures that lenders use to raise capital or access liquidity. So we can have fractional investors, we can have whole note investors, we can have funds, we can have pools. Lenders can sell their loans to our table funding partner. If you wanna go even beyond just fractional investing or whole note investing, we even have ways which I haven’t seen with other systems where you can have different classes that you can create within your loan or within an investment offering and do like an A B note structure or like a senior, junior, you know, so having a single mortgage but being able to split that into two depending on the risk appetite of your capital source.
ROCKY BUTANI:
How specifically does that investment system work? Is it where the loan’s in Baseline and then let’s say I wanted to sell a loan, I give the loan buyer access, they log in and they can look at all the details. Is that typically how it works?
SHAYE WALI:
It depends. If you’re selling the loan, and if that note buyer is using Baseline, they can access it directly from there. It stays within the system. Or you can printout a report and send it to them, or download like a tape or something and send it to them. So that’s if you’re selling the note. For a lot of our customers, they have, and a lot of our customers are small to mid-sized lenders, and they’re direct lenders. investors. So they’ll have investors that they manage their relationships. And so what they do is they create an investment offering directly from within our system. And there’s no double entry. That’s the beauty of having an end-to-end system, having everything in one place. They can create an offering out of an existing loan or existing set of loans or out of a fund and then market it to their investors. Their investors get an email. They sign into the investor portal, they look at all the details, and then from there they can subscribe to that investment offering without the lender having to do really much at all.
ROCKY BUTANI:
So if there’s a case where you want to take a loan and then you’ve got all these investors in your network and you want to pitch this deal to them and say, hey, I want to fund this loan. Are you interested? The lender can send out the offering to all their investors or a select group of investors, right? And then all the investors log in or they take a look at the offering and then they, like you said, subscribe where they say, I’m interested and it could be fractional or it could be the whole loan.
SHAYE WALI:
That’s right. And the beauty is they can do this all from the same system. So the same loan origination system that they were using is the same loan servicing system is the same as the investor management system. So, there’s no double entry or manual data entry for these things. It’s all the data stays in the same place and it all carries over across the system. So that’s a big value proposition that someone who’s using Baseline doesn’t have to have double entry or enter the data in multiple places. They can manage it all in a single source of truth.
ROCKY BUTANI:
What types of lenders do you serve? Do you focus on smaller lending shops, individuals and family type lenders, midsize? Can you accommodate large lenders? What’s the customer profile typically?
SHAYE WALI:
So our core focus is small to midsize private lenders. We recognize that they were severely underserved. All the current systems out there that are designed for private lenders, they have long implementation processes, big implementation fees, long contracts, and small to mid-sized private lenders often don’t have the resources to go through that implementation process.
ROCKY BUTANI:
So what if I’m just a one-man shop where I’ve got my warehouse line with a bank, I’m really doing most of the work and I’ve got such a small operation, is Baseline going to be a good fit for someone like me in that case?
SHAYE WALI:
Yeah, absolutely. What we found was that a lot of private lenders like that, they just ended up using Excel or some other generic tool because they didn’t want to go through the hassle of the implementation, onboarding, locking into a two, three-year contract. So really, that’s who this product, Baseline, is really designed for small to midsize lenders, like the one you described, that can just plug and play.
ROCKY BUTANI:
What do you consider mid-size? Are we talking companies with 10 users, 20, more than that?
SHAYE WALI:
There’s two ways you can look at it. 10 to 20, I would consider mid-size. Anyone who’s managing $100 million, $150 million, those would still be mid-size.
ROCKY BUTANI:
There’s a bunch of private lending shops out there where right now, there are only one or two people, but they’ve got this growth plan. They’re only doing a few million at this time, and then they eventually plan to get to 150, 200, maybe more millions annually in the next few years. Is Baseline going to be a good fit for a lender in that situation?
SHAYE WALI:
A lot of lenders think that because they’re small, they’re not doing much. They can use Excel or some other tool, but really they’re going to, if they have ambitions to scale their business, they’re going to outgrow that. Using a solution like Baseline from the very beginning can really help them avoid the hassles of migrating and switching to a different solution when they do grow. So we are really designed for small to mid-sized lenders. They can get started pretty easily and then they can scale into a larger portfolio and raise capital using our system and be able to manage large volumes once they’re in. But when I say we serve small to mid-sized private lenders, really what we mean is we make that onboarding and implementation process very seamless. We have plans that help them get started with very little upfront cost where they can, as they’re growing their business, it really makes sense for them to get started with a software solution.
ROCKY BUTANI:
So in the private lending industry, there are several software providers out there. They’ve been around quite a long time. If a lender is using one of those other companies, what’s something that might make them switch over to Baseline?
SHAYE WALI:
The single biggest reason that we’ve heard from lenders on why they switch is usability. We’ve just made our software a lot more intuitive. It’s modern, it’s easier to work with, and that’s a big thing for a lot of lenders. And another reason that lenders typically want to use Baseline is because it consolidates a lot of their tools into a single one. So, we’ve heard lenders talk about using 12, 13, 14 different tools, and by using Baseline, they can cut out half or more of those. It really is a consolidation opportunity for them to just simplify their tech stack.
ROCKY BUTANI:
Can you tell us about the pricing model? How are you charging? Is it per user? Or is it a flat monthly?
SHAYE WALI:
So we have tiered pricing for small lenders who have less than 50 active loans. We charge them $995 a month. For anyone who has more than that, it’s $1,995 a month. And for enterprise, it’s $3,000 and up, depending on what sort of features and if there’s any customization or anything. For most lenders, they pay $995 a month and there’s no implementation. They onboard on day one and it’s really a plug and play solution. So, there’s no implementation fee, onboarding fee, they just start paying $995 a month.
ROCKY BUTANI:
So there’s no implementation, but is there a training fee?
SHAYE WALI:
There’s no training fee. Typically, what happens when a lender signs up and starts using Baseline, we’ll have one of our customer success people reach out to them and really show them how to get the most out of their system. Our users can get value out of it on day one, but then they’re up and running fully within two to three training sessions.
ROCKY BUTANI:
There’s always some configuration that needs to be done when you’re getting onboarded. Can the lender just do that themselves and if they get stuck, could they just pick up the phone and call you guys?
SHAYE WALI:
It’s intuitive enough where they can do it themselves, but if lenders need help, if it’s someone who’s using a loan origination system or a loan servicing system for the first time, then we can absolutely help walk them through that entire process.
ROCKY BUTANI:
What do you consider Enterprise? Is that a certain number of loans or a certain number of users?
SHAYE WALI:
So typically, we put a soft limit of 250 loans and about 25 people. Beyond that, we look at it as Enterprise.
ROCKY BUTANI:
But is that 250 loans per month or per year?
SHAYE WALI:
250 active loans at any given time within their origination and servicing system.
ROCKY BUTANI:
What about the contract? Do you have a contract term, a minimum set term that a lender has to sign up for?
SHAYE WALI:
Right now we offer month-to-month, so lenders don’t have to get into lengthy contracts. And we find that because we’re serving the small to mid-sized lenders, we don’t want them to get locked into something that they feel nervous about or they’re not happy with. That’s the reason a lot of them still use Excel, is because they don’t want to sign those lengthy contracts with some of our competitors. so we really give them the flexibility to go month to month.