LENDINGCLUB is planning to stop lending to small businesses and will instead refer prospective borrowers to Funding Circle US and Opportunity Fund.
The US peer-to-peer lending giant, whose core business is personal finance, said it provided loans to a “small fraction” of 14 million business applicants last year.
Instead, LendingClub will refer established, creditworthy businesses to Funding Circle’s US platform.
Additionally, those with weaker credit profiles will be pre-qualified and referred to non-profit business lender Opportunity Fund, which specialises in helping businesses owned by minorities, women, and immigrant entrepreneurs.
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Funding Circle will use its proprietary technology for credit assessment while Opportunity Fund will use LendingClub’s technology for the online application process.
“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,” Scott Sanborn, chief executive of LendingClub, said.
“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.”
Bernardo Martinez, US managing director of Funding Circle, said the collaboration “solidifies our strategy of growing Funding Circle’s presence in the United States by working with partners who share our commitment to helping small businesses thrive.”
Opportunity Fund chief executive Luz Urrutia said combining LendingClub’s credit technology would “dramatically expand access to affordable and responsible capital to underserved small business owners across the country.”