Upgrade Sought Industrial Loan Company Charter
The fintech firm joined other non-bank lenders in seeking a Nevada charter to streamline its credit funding operations.
Updated on Oct. 12, 2026 in Financial Services
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Upgrade has applied to the Federal Deposit Insurance Corp. and the Nevada Financial Institutions Division for an Industrial Loan Company (ILC) charter. This status would allow the company to operate a subsidiary for its credit products while remaining exempt from the Bank Holding Company Act.
Why it matters
The charter would allow Upgrade to better fund credit products by establishing its own subsidiary, effectively reducing reliance on partner banks for capital. This shift reflects a broader strategy among financial firms to gain greater control over lending operations through state-regulated bank charters.
Since its founding in 2016, Upgrade has provided more than $53 billion in credit to 8.5 million customers. Its application follows a trend that has seen the FDIC approve nearly two dozen national trust charters since 2025.
The players
Upgrade
A San Francisco-based fintech company providing consumer credit and lending products.
Federal Deposit Insurance Corp.
The independent federal agency responsible for regulating banks and maintaining stability in the financial system.
Nevada Financial Institutions Division
The state regulatory body responsible for overseeing the operations of Nevada-chartered financial entities.
Edward Jones
A financial services firm and wealth management provider that successfully obtained an ILC charter.
The details
An ILC charter allows a firm to be regulated by the FDIC and avoid the Bank Holding Company Act, provided it avoids offering demand deposit accounts. Upgrade plans to establish a Nevada-chartered subsidiary featuring independent governance and internal controls to manage its credit products directly. This structure preserves existing relationships with loan purchasers while diversifying funding sources.
Timeline
Upgrade was founded in 2016.
The FDIC withdrew a rule regarding ILC applicant independence in July 2025.
Edward Jones received ILC charter approval in February 2026.
Flex Rent applied for an ILC charter in July 2026.
Market Landscape
The application highlights the continued strategic importance of the ILC charter for non-bank lenders operating under the Bank Holding Company Act. This move follows a July 2025 resolution by the FDIC to withdraw proposed independence rules for ILC applicants, signaling a more accessible pathway for such charters.
Operators in the lending space should monitor how ILC charter holders manage capital costs compared to those reliant on partner banks. The ability to shift to an in-house, FDIC-insured subsidiary may offer competitive advantages in pricing and credit capacity for firms scaling similar loan volumes.
The takeaway
Securing an ILC charter represents a significant shift toward internalizing credit funding for non-bank financial firms. Owners should track the FDIC’s recent approval trends and the competitive advantage gained by peers like Edward Jones and Toyota to evaluate if a similar charter could support their growth.
Further reading
For more on evolving sector oversight, visit the Financial Services section.
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