Money Talks: This Week In the World of P2P
One Partnership To Rule Them All //
One of the top IPOs of 2014 was Lending Club, a peer-to-peer lending service that is disrupting the business of commercial lending. With share prices up over 45 percent since its IPO launch, Lending Club connects individual investors with startup businesses looking to make a name for themselves.
The news for them got even bigger this week. Yesterday, Lending Club announced a deal with Google to establish a line of credit to over 10,000 of Google’s partnership businesses using Google’s own money and Lending Club’s loan service to help expand the reach of Google’s resale partners, and ultimately grow Google’s bottom line as well. It’s like a win-win-win.
Since Lending Club works by crowdsourcing investment funds, they have lending caps on their loans, which are $50,000 for businesses and $300,000 for small businesses. Here’s the thing about the Google deal though: their partners can access up to $600,000 in loans. That’s twice the lending cap in case Friday is getting to you or you skipped kindergarten math.
This is technically a pilot program for now, so definitely consider this a trial-run experiment. But a pretty cool one.
Google, as per usual, is sitting pretty. Lending out its own capital to partner firms allows those firms to keep selling Google’s business services as their footprint grows, meaning that Google will also be increasing its revenue. I know, it’s a big surprise.
This is a pretty big move from Google, as it already has direct investment arms (Google Ventures and Google Capital) that take equity from companies it likes and wants to nurture and grow. The Lending Club partnership program is different, though… it provides capital without equity, which can be used for business development and “other growth opportunities.” This may include hiring staff and other expansion initiatives.
TL;DR: Google can now invest greater sums in its partner network, while Lending Club gains more clients and increases its market advantages in P2P lending. Plus, partnering with a big player like Google increases trust in Lending Club, which puts them kind of on top of the world after their IPO late last year.
Spread the Wealth //
Turns out LendingClub (LC) and OnDeck’s (ONDK) stellar December IPOs are good for the rest of us littler P2P guys because they have been catching the interest of investors. This sets the stage for other consumer and small business lending platforms (like LendLayer!?) to go public this year or later on.
Student loan-focused peer-to-peer lender SoFi and OnDeck competitor CAN Capital are both weighing an IPO. Private investors have also poured capital into other fin-tech startups like mobile payment providers (like Square) and consumer finance websites (like Credit Karma).
Basically, get ready to see a P2P IPO takeover in the near future!
Partnership Number Two //
Funding Circle, a business oriented peer to peer lending platform, has signed onto a new partnership with Herefordshire Council, a local government in England, to launch a “pioneering” agreement. The new partnership is designed to boost local economic growth and job creation via improved access to business finance.
Herefordshire Council has committed to lend £50,000 directly to businesses in the area. The loan program will use the Funding Circle platform. Funding Circle stated that if demand was high the amount loaned to businesses could be increased.
Partnerships like this one are excellent examples of how alternative finance platforms can connect and collaborate to create positive change.
Originally published at blog.lendlayer.com on January 16, 2015.