Online Lenders

LendingClub gets out of direct SMB lending, wants to be a platform again

  • Lending Club changes tack on its growth plans for SMB lending.
  • With Funding Circle and Opportunity Fund, look for the lender to announce more lending partnerships.
close

Email a Friend

LendingClub gets out of direct SMB lending, wants to be a platform again

LendingClub will stop directly funding business loans and begin funneling prospective business borrowers to partners.

In an announcement today, the lender formally launched a partnership with SMB lender Funding Circle and Opportunity Fund, a nonprofit small business lender.

How it will work: LendingClub will continue to own the user experience and provide loan applications and prequalified offers to SMB prospects. LendingClub will route ‘established, creditworthy’ businesses to Funding Circle for credit analysis and underwriting — Opportunity Fund will address the rest.

What’s happening here: LendingClub is effectively pulling the plug on direct business lending, a business it started five years ago. Business lending never took off like the firm’s consumer products.

Now, the firm sounds like it’s headed back to its roots as a marketplace lender, using partnerships to scale. In 2018, the firm received 14 million loan applications, but funded just a small fraction of them. Opening up the platform to other lenders will provide Lending Club with growth channels and less exposure to credit risk.

“With partners like Opportunity Fund and Funding Circle, we’re creating an ecosystem where LendingClub’s members can take advantage of additional services from trusted providers that can help them generate more savings,” said Scott Sanborn, CEO of LendingClub.

“This enables us to both deliver greater value to our applicants and capture a new revenue stream for LendingClub, while further simplifying our business and setting the stage for more partnerships and innovations for Club Members.”

Ecosystems are all the rage: For its part, Funding Circle is also executing on an ecosystem strategy, partnering with banks and with other financial products, like Stripe. This combination of direct lending and working with partners is behind Funding Circle’s performance — the company has loaned more than $2 billion to 12,000 SMBs in the US.

“This relationship with LendingClub will play a key role in accelerating our growth as well as increasing access to affordably priced capital for businesses whose credit needs remain unmet by the traditional financial system,” said Bernardo Martinez, US managing director at Funding Circle.

0 comments on “LendingClub gets out of direct SMB lending, wants to be a platform again”

New banks, Online Lenders

Digital lender LendUp launches a challenger bank

  • LendUp has introduced its own challenger bank, Ahead Financials.
  • Ahead will provide digital banking and financial education to emerging middle class consumers.
Rimal Farrukh | December 02, 2020
Online Lenders

What Affirm’s IPO and Chase’s new installment product say about the BNPL market

  • Affirm files to go public and Chase unveils BNPL feature My Chase Plan.
  • As the pandemic rages on, BNPL products remain more relevant than ever.
Rimal Farrukh | December 01, 2020
Online Lenders

After COVID-19’s initial shock, lenders begin ramping up originations once again

  • With PPP no longer an option, lenders have to look for new ways to stay relevant during the pandemic.
  • For many lenders, Q3 is proving more successful than Q2 in loan originations, though still nowhere near pre-pandemic numbers.
Rivka Abramson | November 12, 2020
Online Lenders

BlueVine’s new CMO Patrick Adams on the potential of getting SMB banking right

  • BlueVine has hired its first chief marketing officer.
  • Tearsheet talks to Patrick Adams, who most recently led PayPal's US marketing efforts.
Zachary Miller | October 07, 2020
Member Exclusive, Online Lenders

Goldman Sachs partners with Walmart to offer SMB loans to online sellers

  • Goldman Sachs has built its retail Marcus brand into a $100 billion bank.
  • It continues to sign partnerships with leading brands to provide financing to their customers.
Zoe Murphy | September 24, 2020
More Articles