Philly native Mike Petrakis built PowerPay, a fintech company for people who think banks are too slow
This loan salesman began by funding home improvement companies and wants to sell more insurance.
The Philadelphia region, once a banking center, is still home to financial innovators. One of the growing digital lenders based nearby is seven-year-old PowerPay, whose 225 staff members build a software platform to finance home improvement loans, personal loans for hearing aids and other medical needs, and a growing list of services, from its new offices just off U.S. 202 near King of Prussia.
PowerPay revenues more than doubled to $200 million last year, as the company processed $6 billion in loan applications.
The company raised its local profile last winter when it cosponsored the Christmas light show at the former Wanamakers in Center City. That got its name out to more prospective employees and borrowers.
Founder Mike Petrakis, a native of Northeast Philadelphia and Archbishop Ryan High School graduate, played varsity soccer at Drexel University and briefly went pro in England. He settled in Doylestown and a sales career, which led him to start PowerPay in 2017. Early backers included hoteliers Jay Shah and Eugene Mita.
He agreed to talk to The Inquirer about his company’s growth and prospects. Questions and answers edited for clarity and brevity.
What’s the difference between your company and a bank?
A lot of people think banks are inconvenient. Their loan docs are thirty-some pages. With fintechs, someone applies in seconds, and in milliseconds you can get an offer back.
We collect thousands of data points — email transmissions, phone checks, geotagging, information in databases that is available. Social media, not so much. We make sure we can recognize the device from which they are putting in the application. We put all this into our models.
We are onboarding more artificial intelligence. We take a driver’s license and check — does the signature match the customer on the platform? is that image theirs? It is done in an instant.
Lending has become an automated business. Why do you still do so much business by phone?
You get a loan with us, you are going to be connected to us for the next 15 years, and we need to be connected to each other. We are deploying digital routing that moves them from an initial inquiry to a specialized team member without the traditional “on hold.” And we have engineers on premise and around the world.
The goal is to work so hard to get the consumer that we can keep them in perpetuity.
Since you’re not a bank, how do you fund these loans?
Credit unions financed our loans early on. Now we have KeyBanc and Capital One and other major lenders.
We aren’t a bank, so we don’t have the same oversight, and we can move faster. But we work with banks, so our processes are built to be fully compatible with bank regulations. We process half a billion dollars’ worth of loans a month, which is larger than most banks.
What do you do any better than a bank?
We just built a new product, PowerPay 360. You pay interest only for 12 months, then interest and principal for 14 years. Leaves a little extra cash in their pocket for a year. We set that up in 30 days.
Banks are so conservative; for them to build that, with their large, core technology systems, it would take them years to get it into the market. Apple tried to get in the consumer financial business and left within two years.
We are adding credit card and mortgage products, and healthcare loans, too. We just opened a relationship with U.S. Bank to grow that relationship to half a billion dollars.
Credit cards have moved from plastic into a whole digital landscape for the consumer. We are making it so [in late 2026] you can tap your smartphone or mobile device at Home Depot and not just buy supplies but also hire your installer or service provider, and get an installment loan to pay for the whole project.
What else are you preparing to sell?
We now have an insurance business. We sell credit-default insurance for the benefit of our financial sponsors. Our underwriter is domiciled in the Cayman Islands under their financial regulations. We aggregate the risk into asset-backed securities [and sell loans in risk-based pieces to get higher returns]. We sell those to investors, and the insurance comes off.
We’re going to grow insurance. Involuntary unemployment, disability, credit, life. We would domicile that in the U.S. We are talking to large insurance carriers we could front for and share the risk.
How did you get into this business?
In 2017, I was a national contractor, [helping buyers finance] home generators for Generac, Cummins, Kohler, Briggs & Stratton. You pay $99 a month for 10 years, and we’d get them a loan with Synchrony or GreenSky [two online-lending pioneers].
Generac came to me and said, how can we make these loans, too? I said start a national call center. It took me six months to find a software platform and a credit union to finance us.
At first we were just a couple of people, sitting in the Whole Foods beer garden in Plymouth Meeting. We’d have breakfast, then set up our laptops that we bought at Best Buy, initiating loans and writing the code on third-party platforms. Then we grew out of Whole Foods, and we got our first office at the Life Time fitness club in Ardmore.
We took over an auto-loan platform and converted it to make home-equity loans. We were ready to really build it up, and then Generac backed out.
So we said, what else can we finance with this? We approached the big home improvement companies, Renewal by Andersen window installations, and others.
What was it like, launching into the pandemic?
The home improvement companies were sitting on millions in applications they couldn’t get funded. We underwrote those loans and got them funded, at first, by credit unions.
We onboarded 100,000 users overnight, and we nearly blew up the software platform we were using. So we built our own, and now we own all our intellectual property.
We went at first to many credit unions, and they shared participation with other credit unions, but then they would get scared and pull out. We still weren’t big enough for Goldman or JPMorgan. Even the second-tier banks would only lend part of the money. Finally, we found one credit union, Chartway [based in Virginia], they kept the doors open.
In 2023, we were ready to sell loans in our first securitization. We kept servicing rights. That legitimized us in the eyes of the bankers. Capital One agreed to help us with the securitization.
There were 50 lawyers involved! We only did a $118 million deal. But we have done much larger ones since, and now I can get it done with a lawyer on each side in a couple of days. We underwrite the loans, we insure them, and then we sell them, de-risking.
It becomes a cost-of-funds game — the lower the cost, the less onerous the rates we can offer consumers.
We can drive billions more through this platform.