Neo Financial Secures $185 Million Warehouse Facility to Fuel Credit Card Growth

Neo Financial has announced the closing of a $185 million syndicated warehouse facility designed to expand the funding capacity for the company's credit card receivables, as BetaKit first reported. The arrangement allows the fintech to borrow against a pool of assets, avoiding the need to issue traditional loans or relinquish equity.

The agreement is being led by ATB Financial, an Alberta Crown corporation. BetaKit reports that the facility includes participation from several Canadian credit unions, specifically Innovation Federal Credit Union, Alterna Savings and Credit Union, Beem Credit Union, and Vancity. While the current facility stands at $185 million, Neo co-founder and chief commercial officer Jeff Adamson stated via social media that the terms allow for the amount to be increased to a maximum of $250 million.

Adamson characterized the move as part of a broader effort to create a platform where various financial institutions can participate in the company's growth, noting that building a competitive banking system in Canada is a "team sport."

This capital injection follows a period of aggressive expansion for Neo's credit card offerings. BetaKit notes that in June, the company introduced four new credit cards, which included partnerships with United Airlines and Mastercard. The company has been identified as one of Canada's fastest-growing fintechs by Deloitte and The Globe and Mail.

However, the strategic shift toward this credit facility comes as the company navigates several headwinds. BetaKit reports that Neo lost two of its most significant loyalty card partnerships this year: The Hudson’s Bay Company and Tim Hortons. Additionally, in September, Neo reduced its workforce by approximately 10 percent in an effort to streamline its operations.