NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, April 23, 2019

LendingClub Corporation, America’s largest online credit marketplace connecting borrowers and investors; Opportunity Fund, the country’s leading nonprofit small business lender; and Funding Circle, the leading small business loan platform in the United States, today announced a collaboration designed to substantially increase small business owners’ access to transparent, affordable and responsible credit.

Beginning this month, LendingClub will connect applicants looking for a small business loan on its platform to Opportunity Fund and Funding Circle. Opportunity Fund will leverage LendingClub’s technology to provide an online application experience with prequalified offers to underserved small businesses before applying its established relationship-based lending model to fund and service loans. Funding Circle will apply its leading proprietary credit assessment process to fund fast and affordable loans to established, creditworthy businesses. This alliance is intended to expand efficient access to affordable credit to a broader range of small businesses.

“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.”

“Our relationship with LendingClub is a crucial component of our ambitious new strategic plan to grow our lending from 13 to 45 states and lend $1.2 billion by 2023 in responsible, affordable capital to women, people of color, immigrants and other underserved entrepreneurs seeking to build a better life for themselves and their families,” said Opportunity Fund CEO Luz Urrutia. “By combining LendingClub’s leading credit technology with Opportunity Fund’s mission-based, high-touch lending model, we hope to dramatically expand access to affordable and responsible capital to underserved small business owners across the country.”

“This 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,” said Bernardo Martinez, US Managing Director, Funding Circle. “We’re proud to have helped more than 12,000 US small businesses access more than $2 billion in financing to date, enabling us to become the largest online small business loans provider in the United States. 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.”

To better serve the millions of Club Members looking to improve their financial health, LendingClub is opening up its platform to include integrated offers from trusted partners. In 2018, the company received more than 14 million applications but facilitated loans to a small fraction of them.  The integration with Opportunity Fund increases accessibility and fairness for harder to underwrite small businesses, while the arrangement with Funding Circle simultaneously expands near frictionless access to low cost credit for more established businesses.

This relationship between Opportunity Fund and LendingClub builds on a pilot program launched in 2016, a first between an online lender and a non-profit Community Development Financial Institution (CDFI). Together, the companies have increased access to capital for disadvantaged small business owners through an online platform that delivers funding quickly to those who may have been shut out by the traditional financial system, mostly businesses owned by minorities, women, and immigrant entrepreneurs – all with impressive repayment rates.

The arrangement between all three companies accelerates LendingClub’s strategy to offer a multi-sided platform to members with a wider range of benefits that save them money and enhances its mission to improve the financial health of its customers through increased access to transparent, affordable and responsible credit.

As three co-creators of the Small Business Borrowers’ Bill of Rights and founding members of the Responsible Business Lending Coalition, the three organizations have long worked together to promote access to responsible, transparent credit for small businesses. This collaboration is expected to help thousands of small businesses grow, create jobs and vitalize economies across the country.

Photo courtesy of Pexels.com.