As bank credit for small businesses continues to remain significantly constrained, alternative lenders, leveraging new technology to drive down costs and access new pools of capital, are stepping in to fill the void left by their older, less innovative, counterparts. Is this a cyclical trend or part of a bigger structural shift in capital market structure?
The partnership, according to Staples, will allow Staples small business customers access to Lendio’s alternative lending platform, giving those businesses access to a number of lenders. Lendio provides multiple loan options within minutes, unlike traditional bank loans, which can take days to approve an application. (Lendio users still have to get underwritten by lenders.) The partnership gives Lendio access to a number of small businesses that might not otherwise find it, and presumably, Staples gets a cut of whatever loans result from the referral. Staples described the statistics around small businesses’ access to capital as “despairing,” and added that the company “is now taking on the challenge of closing the capital access gap for its small business customers by entering into the Marketplace Lending Space.”