The sharing economy equivalent of bank loans, Lending Club, is now doling out cash to small businesses.
The Lending Club launched in 2007, around the dawn of the sharing economy, as a marketplace for peer-to-peer lending. People have applied for loans to pay off credit card debt, finance a college degree or fund a home improvement project. The online lending platform boasts better rates than banks and fewer penalties, and conditions of the loans are often worked out between the borrower and the investor, based on each person’s circumstances.
Now, the Lending Club says it’s offering loans to small businesses that may not be able to — or may not want to — get a loan from a big bank.
“Everyone recognizes that small businesses are an engine of job creation and economic growth, yet their access to capital has been constrained,” Renaud Laplanche, Lending Club CEO.
From 2008 to 2011, the rate of small businesses lending fell from 44 percent to 29 percent.
Lending Club business loans range from $15,000 to $100,000, 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. Business owners can apply online and the money becomes available in a few days.
The Lending Club’s foray into business loans is the latest example of how the sharing economy is shaking up traditional commerce. The Internet and social networks have provided the foundation for a new economy in which consumers lend what they already own — money, cars, houses and clothes — directly to those who want it, and usually for cheaper and without the layers of big corporations or retailers. All Lending Club loans are facilitated, and repaid, online. Lending Club has loaned more than $3.9 billion to date.