Toronto-based Hostaway, a company that sells property-management software, has announced that it will be offering business loans to its customers through a new venture called Hostaway Capital. The underwriting for these loans will be done by Parafin, a company founded by former employees of Robinhood, a popular stock trading app. Hostaway will share property manager data with Parafin to help determine loan eligibility based on revenue from bookings on platforms like Airbnb, Booking.com, and Vrbo.
Josh Loe, Hostaway’s chief customer officer, explained that many property management companies who are clients of Hostaway struggle to secure loans from traditional banks using their booking data. Traditional banks often require several years’ worth of tax returns and other documentation, making it difficult for short-term rental property managers to access financing. Hostaway hopes to address this issue by providing easier access to small business loans through Parafin, which can use the data from Hostaway’s system to underwrite loans without the need for extensive documentation.
Hostaway’s partnership with Parafin represents a growing trend in the financial services industry where technology companies are leveraging data and analytics to provide innovative lending solutions to underserved markets. By sharing data with Parafin, Hostaway aims to help vacation rental property managers access the capital they need to grow their businesses. This model is similar to the small business loans provided by companies like PayPal and Stripe to their vendors, and it has the potential to unlock new opportunities for property managers in the short-term rental space.
Hostaway recently secured $175 million in funding, making it one of the largest rounds raised by a software firm in the short-term rental industry. The company, founded in 2015, offers a range of tools for property managers to streamline their operations, including managing inquiries, automating tasks, channel management, analytics, and marketing. With over 100,000 properties managed across more than 100 countries, Hostaway has established itself as a key player in the vacation rental management market, supporting property managers in scaling and expanding their businesses.
The success of Hostaway’s business model demonstrates the growing importance of software solutions in the vacation rental industry, as property managers look for ways to streamline their operations and improve their overall efficiency. By offering business loans through Hostaway Capital, the company is further expanding its suite of services to provide a more holistic solution for property managers. With Parafin underwriting the loans, Hostaway aims to open up new opportunities for property managers to access the capital they need to invest in their properties and grow their businesses in an increasingly competitive market.
Overall, Hostaway’s decision to partner with Parafin to offer business loans to property managers reflects a broader trend in the financial services industry towards leveraging technology and data analytics to provide more flexible and accessible lending solutions. By utilizing data from Hostaway’s platform, Parafin can evaluate the creditworthiness of property managers and provide them with the financing they need to succeed in the competitive short-term rental market. This partnership has the potential to address a key challenge faced by many property managers and unlock new opportunities for growth and expansion in the vacation rental industry.
