Fair, a used-vehicle leasing subscription service, has closed a $500 million revolving-credit deal with Mizuho Bank.
The companies announced the deal Tuesday. The arrangement is expected to help Fair grow a fledgling partnership with Uber that helps drivers — regardless of their credit — access vehicles that come ready for ride-hailing operations.
The partnership with Mizuho Bank, one of Japan's largest financial services companies, marks the latest for Fair, a 3-year-old startup founded by former TrueCar CEO Scott Painter.
It's the third line of credit that Fair has closed in recent months, following a $100 million debt facility and minor equity investment from Ally Financial in August and a $50 million increase to an existing credit line with Silicon Valley Bank in July.
SoftBank Group Corp. is among several credit providers partnering with Mizuho in the latest financing arrangement. The transaction, Fair says, should increase the supply of potential ride-hailing vehicles for prospective Uber drivers who may not qualify for traditional loans or leases.
"Too often, people who want to drive for Uber can't get reasonable rates on a car loan or even get access to one at all, so we're taking care of that for them," Painter said in a written statement.
Fair works with car dealerships to provide used and certified used vehicles. Customers can return their vehicles whenever they want, with five days' notice. Fair touts the possibility dealers can foster relationships with these customers.
For Uber drivers, each vehicle's weekly payment includes unlimited miles, insurance, maintenance and roadside assistance. Payments vary depending on the vehicle selected.
Fair's subscriptions help bridge a gap for customers who don't want to lock into long-term car loans or leases. Those customers often are ride-hailing and other gig-economy drivers.
"Not only do subscriptions make sense for ride-sharing drivers who want to access a vehicle on their own terms, but they essentially replace a system built on auto debt with a recurring-revenue model and steady cash flow," said Andrew Karnovsky, managing director and head of automotive banking at Mizuho Americas. "We believe Fair is an appealing partner for institutional lenders looking to manage the consumer credit risk associated with traditional auto finance."
