The peer-to-peer, online-only lending platform Lending Club is moving into small-business lending, the San Francisco-based company announced today.
Lending Club says its expansion into the small-business loan market will be welcome because of unmet loan demand. “Bigger businesses can get large loans from banks, but smaller businesses are not well served by existing banking products from traditional banks,” Lending Club CEO Renaud Laplanche said in a statement released today.
The company says its new business loan platform will make credit "more available and more affordable" to small businesses.
Businesses that apply and are approved can get loans of between $15,000 to $100,000 with fixed interest rates starting at 5.9 percent and terms of one to five years. Loans are repaid with a fixed monthly payment, but there are no penalties for paying off a loan early.
Lending Club is launching the program with a select group of accredited investors and large institutions experienced in making commercial loans. While it may consider making the program available to retail investors as well, the company says it needs to gather enough data to know what the repayment and default rates will be.
Since brokering its first loan in 2007, Lending Club has facilitated almost $4 billion in individual loans with the peer-to-peer model. More than 4 in 5 loan recipients report using the money to pay down more expensive debt. Investors on the platform have made more than $365 million.
Lending Club has been through more than a half dozen various rounds of fundraising, according to the venture-capital database on CrunchBase. It has taken investments from Google Capital and a bevy of top-notch venture capital firms including Union Square Ventures, Foundation Capital, Norwest Venture Partners and Morgenthaler Ventures. Expectations are that Lending Club will head towards an IPO in the not-too-distant future.
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