Lending Club small business loans
Last week, we discussed how a tight loan environment has paved the way for different avenues for business lending. PayPal is one such company that has begun to offer its clients the opportunity to borrow money directly, without having to meet with a bank. Judging from the way the market is moving, it will not be the last.
A recent article on Bloomberg Businessweek discussed how LendingClub—a peer-to-peer lending service that has already made a name for itself in the individual loan market—is expanding its services to businesses.
In a press release, the company announced that it has appointed Sid Jajodia, the former senior vice president at Capital One Bank, to the position of vice president, small business. This move clearly suggests that LendingClub is serious about becoming a major player in the small business lending world, as Jajodia has experience building a data-driven risk management strategy for Capital One.
Not that this comes as much of a surprise. Last spring, just after Google invested $125 million in the company, Chief Operating Officer Scott Sanborn said that investors had “specific interest in small business as an asset due to its short duration and attractive yield.”
For his part, Jajodia cited LendingClub’s emphasis on technology, which will help it offer better customer service while reducing the cost of banking. Technology can also help companies in this sector manage risk when processing loan applications.
Since LendingClub is still new to lending to small businesses, it may need to adjust some of its practices to adapt to its new market. Implementing proven loan management software can help companies in this position expand their business while mitigating risk.