Citigroup looks to join the online lending market
Citigroup Inc has followed its competition into the small business lending market, connecting with Biz2Credit to provide access to business loans of up to $1 million for qualified small firms. Based on the lack of promotion for the new service, it seems the company may be looking simply to “fulfill its obligations to small and undeserved borrowers under the Community Reinvestment Act” Whether this is a requirement fulfill meant or a genuine business strategy matters not for the hundreds of small businesses who should qualify for the new service.
While the service looks to challenge other recent partnerships including JP Morgan Chases’ offering with popular online lender OnDeck, another Citigroup lending service will be shut down for good. DCSmallBizLoans.com “a small business lending website backed by Citigroup and the U.S. Treasury Department and run by Biz2Credit”, will cease operations. The initiative was geared towards helping low-income communities match with ” four Community Development Financial Institutions (CDFIs), government backed lenders”.
According to Fox Business ” Citigroup had agreed to fund the website for two years, after which it was expected to become self-sustaining, said Steve Glaude, president and chief executive officer of the Coalition for Nonprofit Housing and Economic Development, a non-profit that organized the effort.
Though it would only have cost each CDFI about $1,000 per month to keep the site operating, there was not enough interest to warrant even so small an investment, according to Glaude.” This is unfortunate as I’m sure the service positively impacted a few businesses within the area. With no information on the reasoning behind the lack of support, the new small business lending service should go well for Citigroup as it looks to develop a new revenue stream within the industry.
I am always a fan of new, innovative, and time friendly ways for small businesses to obtain funding opportunities. With more experience, promoting, and advertising, Citigroup may have a great opportunity on its hands.