Funding Circle partners with community banks for small business loans
Online lender Funding Circle partners with a network of more than 325 community banks to enable participating lenders to purchase interest in small business loans from the digital platform.
The partnership will be open to member banks of the BancAlliance network and will provide an “efficient and cost-effective way” for local and regional banks “to invest capital in high street businesses”, according to a statement from the two companies. .
“Community banks have long been strong supporters of small business,” Lori Bettinger, president of BancAlliance, said in the statement. Working with Funding Circle underscores the network’s “commitment to expanding access to working capital for small businesses,” she said.
A spokesperson for BancAlliance and Funding Circle did not respond to an interview request.
Chris King, president of the ATM division at ICI Consulting, a banking and credit union advisory firm, said Funding Circle’s “streamlined” small business loans will give community banks “a little more leniency in making loans.” loans to individual enterprises”.
Funding Circle “seeks to circumvent some of the requirements that banking institutions must meet,” King said. “They charge a higher interest rate so they can compensate for taking some risk.”
BancAlliance was founded in 2011 by the investment company Alliance Partners and its parent company Forbright Bank. The network helps facilitate the underwriting and approval of loans between community banks and small businesses in need of financing. BancAlliance claims to have contributed to the granting of more than 350 loans totaling approximately 4 billion dollars.
In 2015, BancAlliance formed another partnership with LendingClub, an online lending platform specializing in consumer credit. This agreement required BancAlliance members to refer clients seeking smaller loans to LendingClub’s platform, in exchange for access to a nationwide pool of “co-branded” loan opportunities.
Funding Circle, which also operates in the UK, was launched 12 years ago to provide investors with access to small and medium-sized business lending opportunities. Lenders who have used its platform have provided around $18 billion in loans to 120,000 businesses worldwide, according to the company.