Peer-to-peer lending marketplace Lending Club is announcing a major expansion today into business loans.
Lending Club brings together lenders and borrowers who want to cut out banks in the process of investing among peers, has facilitated a total of $3.8 billion in consumer loans, and is growing at a pace of over $750 million a quarter. And the company has more than doubled annual loan volume each year since launching in 2007.
We’re told Lending Club business loans will range from $15,000 to $100,000 initially, increasing to $300,000 in the future. The loans carry fixed interest rates starting at 5.9 percent with terms of one to five years, no hidden fees and no prepayment penalties. We’re told the average interest rate on the platform hovers at around 12.5 percent.
Lending Club CEO Renaud Laplanche says that the company’s existing tech and credit products catered towards consumer loans can easily extend to other types of loans, including auto, business, home mortgage and others. “We want to cover the entire credit industry,” he says.
The company has raised just over $200 million from Google Capital, Foundation Capital and KPCB and was valued at $1.5 billion in its last round in 2013. Kleiner Perkins’ Mary Meeker, ex-chairman and CEO of Morgan Stanley John Mack and former U.S. Treasury Secretary Larry Summers are all board members.
Moving into the business vertical makes a lot of sense for Lending Club. The company will now compete woth CAN Capital and OnDeck, both of which focus exclusively on the small business lending market.
The alternative lending space is heating up, more players are growing fast and investors are placing their bets. Many of these companies could be interesting acquisition targets for traditional banks. And some, like Lending Club and Prosper, could also be IPO hopefuls.
Rao, L. (March 19, 2014). Google-Backed Lending Club Brings Peer-To-Peer Lending To Business Loans. Retrieved on October 10, 2014 from TechCrunch. Link to website: http://techcrunch.com/2014/03/19/google-backed-lending-club-brings-peer-to-peer-lending-to-business-loans/