Leap Finance secures $100M debt to expand study loans

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Leap Finance, a leading student lending platform, has secured a $100 million debt facility from HSBC under its ASEAN Growth Fund. This funding will enable the company to expand its services, particularly in the US, deepen its presence in India, and strengthen university partnerships. Since its inception, Leap Finance has provided over $250 million in education loans to more than 5,000 students. The company’s innovative model offers collateral-free, USD-denominated loans based on future earning potential rather than a family’s financial status. This new funding follows Leap’s recent $75 million Series E equity raise, bringing its total capital raised to over $450 million. The company’s co-founder, Vaibhav Singh, emphasized that the funding would support students’ global education aspirations. HSBC’s Southeast Asia head of structured banking, Shaun Sakhrani, stated that Leap’s expansion aligns with the fund’s objectives.

1. Understanding Leap Finance: Business Model and Services

1.1 Working Model of Leap Finance

Leap Finance operates as a fintech-driven education loan provider, enabling Indian students to study abroad. Unlike traditional banks that require collateral, Leap provides loans based on a student’s future earning potential. This approach makes higher education more accessible and less stressful for students lacking strong financial backing. The company utilizes AI and data analytics to assess a student’s career prospects before approving loans, ensuring a seamless experience.

1.2 Revenue Model

Leap Finance earns revenue through interest on education loans. Additionally, it monetizes its services through LeapScholar, LeapFinance, GeeBee, and Yocket, which offer test preparation, admissions counseling, and visa guidance. By integrating these services, Leap Finance generates multiple revenue streams, making its model sustainable and scalable.

2. Funding Journey and Growth

2.1 Background and Previous Funding Rounds

Leap Finance has been on an aggressive growth trajectory since its launch in 2019. The company recently secured a $75 million Series E round led by UK-based Apis Partners. This funding round included participation from existing investors such as Owl Ventures, Jungle Ventures, and Peak XV Partners. To date, Leap Finance has raised over $450 million in equity and debt.

2.2 The $100M Debt Facility from HSBC

This $100 million debt facility comes from HSBC’s ASEAN Growth Fund, a $1 billion initiative launched in 2024. The new funding will allow Leap to scale its lending portfolio, expand into new US states, and strengthen university partnerships. This will also help the company diversify its student base globally.

3. Services and Impact on Students

3.1 Education Loans Without Collateral

Leap Finance provides collateral-free, USD-denominated loans covering the total cost of studying abroad. Unlike banks that consider family income, Leap evaluates a student’s future earning potential based on the university, course, and job market trends.

3.2 Comprehensive Study Abroad Solutions

Leap offers a complete ecosystem for students, including:

• International test preparation for exams like IELTS, TOEFL, and SAT.
• Admissions and visa counseling to ensure smooth application processes.
• University partnerships for better placement and guidance.

4. Market Trends and Future Expansion

4.1 Growing Demand for Study Abroad Loans

The demand for study abroad loans has surged as more Indian students seek higher education opportunities overseas. Traditional banks often impose rigid requirements, making Leap’s flexible financing model a preferred choice.

4.2 Expansion Plans

With this new funding, Leap Finance aims to expand its presence in additional US states and explore new international markets. The company plans to enhance its digital infrastructure and streamline loan approval processes for better customer experience.

5. Learning for Startups and Entrepreneurs

1. Innovative Financing Models Work – Leap’s approach of evaluating students’ future earning potential rather than family income showcases a new way of assessing creditworthiness.
2. Data-Driven Decision Making – Leveraging AI and analytics to approve loans improves accuracy and minimizes risk.
3. Market Timing is Crucial – The rising number of students pursuing international education makes Leap’s model highly relevant today.
4. Diversification Strengthens Business Models – Offering related services such as test prep, admissions counseling, and visa support helps generate additional revenue streams.
5. Strategic Partnerships Drive Growth – Collaborating with major financial institutions like HSBC ensures sustainable expansion.

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