High LeverageExtremely high leverage materially increases funding and refinancing risk, especially for a lender dependent on wholesale capital. High debt amplifies earnings volatility, limits balance sheet flexibility to grow originations, and constrains the company’s ability to absorb credit losses or rising funding costs.
Negative Operating Cash FlowPersistent negative operating cash flow undermines the core lending model’s sustainability because loan growth requires cash or external funding. Ongoing cash burn forces reliance on new capital, increases dilution or leverage risk, and weakens the firm's ability to self-fund reserves and regulatory capital needs.
Unprofitability & Margin PressureDeclining and negative margins suggest pricing pressure, rising costs, or higher credit expenses that erode ability to convert revenue into sustainable profits. Without margin recovery, the company will struggle to build capital buffers, repay debt, or reinvest in technology and product development.