All posts by Gavin Harding

This year’s Marketplace Lending and Investing Conference explored issues of transparency, partnership, consistency and sustainability.  There was healthy debate on each of these topics and the audience, presenters and panelists frequently returned to the theme of the relationship between Marketplace Lenders, Fintech, Banks and Investors.  As the conference unfolded I thought about the role of small businesses in the relationship between these stakeholders.  How do mom and pop small businesses fit into these complex, rapidly evolving relationships? In mid-2015 The Federal Reserve of Cleveland published a report.  The title was “Alternative Lending Through The Eyes of ‘Mom & Pop’ Small-Business Owners: Findings from Online Focus Groups”.  The report found that the small business owners participating in the online focus groups had a number of common concerns: Marketplace Lenders’ sites are attractive … but how secure? How private is the information the small business provides? It is difficult to compare product offerings, features and pricing The small business owners bank is a source of advice but is not necessarily considered as an option for funding There are some clear parallels with the conference’s focus on transparency, partnership and sustainability.  See if any of these sound familiar: Regulators at the federal and state level are researching the Marketplace Lending industry and exploring ways and means of regulating the space. They are particularly focusing on issues of disclosure, fairness, privacy and governance.  The CFPB – Consumer Financial Protection Bureau has been particularly active.  There are two recent examples that illustrate increasing protection for small businesses. Dwolla was hit with a $100,000 fine in March of 2016, directly related to data security practices.  Then, in late September LendUp was fined $3.5 million for deceiving its customers.  The list of lenders who have strayed from fair and transparent business practices is long and growing.  Fortunately, regulatory supervision of the online marketplace is here to stay. Banks largely abandoned the small business segment post 2008. Lack of profitability is most often cited as the reason for the exodus.  Marketplace Lenders entered the space, delivered a wide range of product offerings, high levels of responsiveness and a relatively painless customer experience.   Now, eight years later, banks and Marketplace Lenders are partnering to make the most of their relative strengths – deep customer relationships and the capability to deliver exceptional customer choice and experience, through technology. Leaders in the various stakeholder organizations are still focused on surviving, meeting goals for growth, managing risk and optimizing returns.  In the past these may have conflicted with the small business owners interests.    In late 2016, they are in alignment … and that is good news for small business owners throughout the US economy. If you would like to hear more of what I learned at Marketplace Lending and Investing, check out the Live Marketplace Lending & Investing Q&A I recorded from the conference.          

Simply put, online marketplace lending is here to stay. Virtually unheard of just 10 years ago, Web-based companies that offer funding options beyond traditional bank loans have grown considerably. Small businesses — drawn by the easy application process and flexible repayment terms, have become increasingly comfortable working with online lenders, which offer rapid access to capital, a wide array of niche products, and a low-friction customer experience.  The lack of regulation and higher-than-market interest rates that often accompany these “alternative” loans have not deterred borrowers from trying this new source of business financing. Despite their growth, however, online lenders still make up only a small segment of the overall small-business loan market. While that paints a clear picture of the current online marketplace lending environment, what does the future hold? How is the industry, still in its infancy, likely to change as it responds to pressures from competitors, borrowers and regulators? Here are some trends we can expect to see over the next several years: Growth — As online lending becomes more mainstream, look for the industry to expand exponentially. In 2014, online lenders combined to issue loans totaling about $12 billion in the United States. In a recent report, Morgan Stanley said it expects the U.S. number to grow to $122 billion by 2020 and the global number to surpass $280 billion in the same time period. "Online marketplace lenders are still very small players relative to the overall market, but they’re growing fast. They could be very disruptive or an entirely new [source] of capital for both small businesses and consumers that aren’t necessarily serviced by larger banks.” James Francis Executive Vice President, Consumer Lending Group MUFG Union Bank N.A Participation — Exponential growth likely will be fueled by the growing acceptance of online lending by small businesses, especially those run by millennials comfortable with virtual transactions. As the customer base grows, look for competition to increase as both new and established lenders fight for the attention of this attractive market segment. "Small-business owners in general are increasingly turning to online options to seek capital. According to a recent study by the Fed, 20 percent of small-business owners sought a business loan online during the first half of 2014. Small businesses are using new technologies to manage their customers, process payments, handle point-of-sale — it makes sense they’d turn online for capital as well.” James Hobson Chief Operating Officer OnDeck   Innovation — New, even more, efficient ways for borrowers to secure business loans — not to mention the nature of the financial products themselves — will continue to appear as competition drives innovation. Look for lenders to develop: Faster, more user-friendly interfaces along with algorithms that further accelerate the review and approval process Frictionless access Improved customer engagement and experience Platform and product innovation "Certainly there are more players in the space today, which is great because it pushes not only us but the category as a whole to generate more awareness, more credibility and better platforms to help small businesses. The category as a whole has been built on this idea of making things a little bit more simple and easy. We’re always asking, ‘How can we provide our offerings in a frictionless way and time-sensitive manner?” Jason Rockman Vice President, Brand Marketing CAN Capital   "There are a lot of lenders offering similar products to the same customers. There will be more competition to offer more products, which is better for borrowers.” Meredith Wood Editor-in-Chief Fundera   Consolidation — Industries often go through a period of hyper expansion followed by a period of consolidation as larger, better-financed players acquire smaller competitors and underperformers go out of business. One hundred years ago, more than 100 companies were making automobiles in the United States alone. Today, there are fewer than a half dozen. Twenty-five years ago, scores of companies were making personal computers. Today, a handful of brands dominate 90 percent of the market. We can expect the online marketplace lending sector to experience similar consolidation. Spillover — As online lending becomes increasingly mainstream, look for traditional lenders — particularly commercial banks — to enter the fray. Some forward-looking banks already are working directly with online marketplace lenders, referring customers based on their needs and qualifications or re-creating the frictionless look and feel of online lenders. Look for the dramatic differences between “traditional” and “alternative” lenders to blur in the coming years. "There are several key reasons why banks would want to partner with online lenders. The first is to drive customer retention. A bank says yes to small-business borrowers roughly 20 percent of the time based on their lending criteria. What happens to the other 80 percent? Banks don’t want to lose those customers. Partnering with marketplace lenders is one way to retain those customers and create a good user experience. “Customer loyalty is another driver. Access to capital does more to build loyalty than any other product or service. Finally, the biggest motivator is access to new technology and data, especially for institutions forward-thinking enough to recognize that there are opportunities for them to monetize their existing data as well as learn from the data analysis and data science that some of the more sophisticated marketplace players are executing.” Glenn Goldman CEO, Credibly Regulation — Regulation is on the horizon for the online lending industry. While the absence of regulation has facilitated rapid growth and innovation, this lack of oversight also has led to an environment in which some borrowers have complained of unfair lending practices and a lack of transparency. Most leading online lenders believe some kind of regulation is good for the industry. A set of rules and standards defines the playing field and provides the confidence and consistency the industry needs to grow sustainably. “Some government oversight is going to happen. It’s just a matter of time,” said Levi King, Founder and CEO of Nav (formerly Creditera), which was founded in 2012. “Small businesses are not sophisticated. There’s a lot of predatory lending extended to small-business owners, who are, as a rule, not sophisticated enough to know what’s happening.” “We believe it’s important to foster greater transparency in business lending marketing,” said Rebecca Shapiro, Director, Brand & Strategy, Funding Circle. Along with Fundera, Lending Club, Opportunity Fund and Accion, Funding Circle recently helped craft the Online Borrowers Bill of Rights, which attempts to establish ethical standards the industry can use to police itself. “We don’t assume the bill can replace government regulations. We do believe that, by encouraging responsible regulations, we’ll have a model for what the government should do,” said Shapiro. The Future Is Bright Customer engagement, access, frictionless applications, and a wide range of product choices are at the heart of the online marketplace lending industry. The mainstream banking industry is starting to take note, looking externally at possibilities for collaboration and internally at ways of updating systems and processes to improve the customer experience. Ethical standards and regulations will increase transparency, accountability, and consistency. If these trends continue, both the small-business owner and the economy will reap the benefits. The State of Marketplace Lending In 2008, a short two years after the first online marketplace lenders opened for business, the Great Recession began to wreak havoc on worldwide financial markets. Small businesses struggled to survive, banks failed and access to capital was limited. More online lenders saw an opportunity and opend for business. These technology-driven newcomers hired an army of data scientists, coders and digital marketers. In the fall of 2015 the innovation, industry disruption and regulatory uncertainty that characterize this dynamic sector led Experian to produce a series of articles focusing on different aspects of online marketplace lending. This report contains those articles.   Download eBook Related articles Just how alternative are today’s online marketplace lenders? How online marketplace lenders are changing the rules of small-business finance Self-Regulatory Program for Nonbank Small Business Lenders Top regulatory priorities for commercial lenders Playing to Your Strength - Opportunities for Regional Banks to Build Better Lending Portfolios Game Changer - How Marketplace Platforms Are Bringing Financial Institutions Back to Small-Business Lending Marketplace Matchmakers - How Loan Aggregators Bring Borrowers and Lenders Together New Frontiers - What's Next For Marketplace Lending?

Marketplace lending has become a dynamic source of small-business financing. In 2013, marketplace lenders funded customers to the tune of about $3 billion, twice the volume from the previous year. These numbers are expected to continue to rise steeply throughout the rest of the decade as customers become increasingly comfortable with the concept. Operating almost exclusively via the Internet, thesefintech companies can be particularly helpful to newer, less-established retailers, such as restaurants and B2B service companies that don’t have the documented track record that most traditional banks prefer. These alternate financing sources also can be an excellent resource for smaller loans in the $5,000 to $200,000 range. Larger banks often are reluctant to consider smaller business loans. Business owners looking for quick access to capital have a wide variety of sources to choose from: Nonprofit lenders Invoice financing Online business loans Loan aggregators Peer-to-peer financing Crowdfunding But how can potential borrowers locate these new lenders? When it comes to matching small-business borrowers to the most appropriate lenders, a new breed of marketplace matchmaker or loan aggregator is finding success bringing the two parties together. Aggregators compare the needs and qualifications of borrowers with lenders in their network matching their target criteria. Think of it as speed dating for business financing. Organic Online Searches Not surprisingly, many online lenders rely on technology to find potential customers. Common online marketing tactics include pay per click and search engine optimization (SEO). “Most of our customers come from the Internet itself,” confirmed Meredith Wood, Editor in Chief of Fundera, an aggregator for about 30 individual marketplace lenders. Founded in early 2014, Fundera has helped more than 1,200 small businesses acquire loans totaling more than $60 million this year. “We do paid acquisition and also use content to generate organic searches. We rank well for competitive terms like ‘business loans.’” Nav (formerly Creditera), founded in 2012, is another successful fintech company, offering an array of commercial financial services, including credit cards, credit card processing and small-business loans. Like Fundera, Nav relies on SEO for many of its leads. “Of all the lead channels we have, SEO organic is the most difficult to get going,” said Levi King, Founder and CEO of Nav. “You’re competing for attention with millions of other people. But while it’s the slowest channel, it also tends to yield leads of super high quality. The people who find us organically are looking for what we offer.” Social Media Social media is one tool being used more frequently in Web-based marketing. Using advanced algorithms, marketplace lenders can target ads directly at businesses that fit a specific profile. “We use Facebook, Twitter, LinkedIn — anywhere small businesses are showing up and you can target them effectively,” King explained. “Small-business owners behave a lot like consumers. Their business and personal communications are almost identical. While social media is a great way to connect with this market, it’s definitely not the way you’d market to enterprises.” Referrals Referrals are another significant and valuable source of customer leads and tend to come from one of two principal sources: Other funding sources — Often, a lender, such as a bank, that is unable or unwilling to write a loan for a small business will refer that business to an alternative lender with more flexible requirements. Banks generally refer customers only to companies they have worked with before and have established credibility in terms of reputation, integrity and professionalism. Lenders that make referrals under these circumstances usually do so as a courtesy and receive no fee or other consideration for their efforts. Their intent is to cultivate good relationships with customers who may someday migrate to more traditional banking services. Satisfied customers — Perhaps the most valuable referrals are those that come from other business owners who already have received loans from a particular marketplace lender. Getting referrals from friends, relatives and business acquaintances sets a customer’s mind at ease and helps the customer overcome the hesitation and anxiety sometimes associated with dealing with a new company. Partnerships and Aggregators Many marketplace lenders have developed formal partnerships with companies or with other lenders that provide them with customer referrals. Unlike the casual referrals discussed above, these often involve fees or other consideration as part of a contracted business arrangement. For example, Fundera works with FTD® to help their florists find financing. “Borrowers complete one aggregated application that we send off to various lenders,” said Wood. “We present the offers we receive to the borrowers and work through them together so they understand what each offer means, what they really cost, etc.” The Future of Online Lending Not surprisingly, both Wood and King are bullish on the future of marketplace lending. Wood in particular sees the option as being very attractive to young people who have some experience in the business world and now are ready to start companies of their own. The online marketplace lending industry is growing by leaps and bounds. Fintech companies continue to rapidly innovate, developing niche products and efficient data-driven marketing approaches. At the same time, the banking sector remains the dominant source of funding for small businesses, with close community ties and deep customer relationships. Fintechs and banks are beginning to explore ways to work together to make the most of what each brings to the small-business funding market. Regulators are engaging with the online marketplace lending industry and considering factors related to disclosure, transparency and lending practices. The outcome for small businesses is increased choice, information and access. That is good news for them and for the economy. The State of Marketplace Lending In 2008, a short two years after the first online marketplace lenders opened for business, the Great Recession began to wreak havoc on worldwide financial markets. Small businesses struggled to survive, banks failed and access to capital was limited. More online lenders saw an opportunity and opend for business. These technology-driven newcomers hired an army of data scientists, coders and digital marketers. In the fall of 2015 the innovation, industry disruption and regulatory uncertainty that characterize this dynamic sector led Experian to produce a series of articles focusing on different aspects of online marketplace lending. This report contains those articles.   Download eBook   Related articles Just how alternative are today’s online marketplace lenders? How online marketplace lenders are changing the rules of small-business finance Self-Regulatory Program for Nonbank Small Business Lenders Top regulatory priorities for commercial lenders Playing to Your Strength - Opportunities for Regional Banks to Build Better Lending Portfolios Game Changer - How Marketplace Platforms Are Bringing Financial Institutions Back to Small-Business Lending Marketplace Matchmakers - How Loan Aggregators Bring Borrowers and Lenders Together New Frontiers - What's Next For Marketplace Lending?

In the wake of the Great Recession, numerous entrepreneurs began to use online lending platforms to offer capital funding programs, short-term loans and other business-to-business (B2B) credit plans to small-business owners who were otherwise unable to do business with traditional banks. Today, much has changed, and "marketplace lending" has grown with loans coming in a wide variety of types, sizes, lengths and terms. The characteristics marketplace lenders tend to share include: An easy application process facilitated by Web-based platforms Fast approvals, often within 24–48 hours Higher-than-normal Annual Percentage Rates to compensate for the market’s higher risks The absence of state or federal regulation The borrowers also share similar characteristics: They are often small, relatively young companies (between one and five years in business) Many are retailers, such as stores and restaurants, or B2B service companies, such as marketing and advertising agencies They have strong cash flow As an industry, marketplace lending has enjoyed considerable success over the past five years. In some entrepreneurial circles, names such as Lending Club, Fundera, Creditera and Funding Circle are as well-known as Citibank, Bank of America and Wells Fargo. According to a recent report from Morgan Stanley, in 2014 marketplace lenders issued a combined $12 billion in loans in the United States and more than $24 billion worldwide. Morgan Stanley expects that activity to grow to $122 billion and $280 billion, respectively, by 2020. Granted, such numbers are modest compared to the $15 trillion controlled by the total U.S. financial sector, but the market is large, fast-growing and has gained the attention of many “traditional” financial institutions. Many full-service banks see these newer online platforms as opportunities to increase their own efficiencies as well as a way to capture future long-term customers. Union Bank Partners With Lending Club to Expand Opportunities MUFG Union Bank N.A, a large financial institution that operates 398 full-service branches throughout California, Oregon and Washington, recently partnered with Lending Club, the San Francisco–based peer-to-peer lending company founded in 2006. “Our relationship started as an investment,” said Donald Stroup, Chief Credit Officer for MUFG Union Bank N.A. Retail Banking group. “We have not been in the credit card business for many years and have had no exposure in auto finance or student lending. Lending Club offered us an opportunity for diversification, for expanding our banking services and for products that could help us broaden our household penetration.” James Francis, Executive Vice President for MUFG Union Bank, N.A. Consumer Lending Group, also noted, “Online lenders are still very small players relative to the overall market, but they're growing fast. Banks have a great deal of flexibility when it comes to working with marketplace lenders. Investors, such as banks, can pick and choose where they want to play; for example, we decided to purchase high-end consumer paper from Lending Club. Because it operates throughout the United States, we can purchase from Texas and New York, and not just the West Coast. Lending Club is very transparent with its criteria, so we know where the loans originate.” Both Francis and Stroup believe that full-service banks can learn from marketplace lenders when it comes to speed, convenience and electronic applications. This is particularly true when it comes to working with millennials, many of whom are far more comfortable with the online environment than they are with brick-and-mortar establishments. “Businesses may begin by shopping for cheap loans online, but once a business reaches a certain size and complexity, it looks to one provider to handle all its needs,” Francis added. “In addition to simple capital lending, this can include cash management, investments, liquidity, stock ownership plans, estate planning, etc. Online marketplace lending companies can't provide that broad array of services and relationships. It takes a traditional bank to do that.” While acknowledging the success marketplace lenders have had connecting with a segment of the market that for a time was underserved, Francis remains concerned about its resilience and longevity. “This is still a largely untested business model," he noted. “Having been born out of the Great Recession, marketplace lending hasn’t gone through a complete business cycle. It will be interesting to see how these lenders perform in a down cycle. I suspect that, in a down market, these lenders will have a harder time funding loans. Investors may get skittish when they see the lower returns that will inevitably occur.” Despite their concerns, both Stroup and Francis remain open to exploring further opportunities in marketplace lending. MUFG Union Bank N.A. is just one of many large financial institutions now exploring partnerships with online lending concerns. We expect these alliances to become increasingly common over the next two to three years, with new synergies creating more markets and opportunities, for borrowers and lenders alike.   Related articles Just how alternative are today’s online marketplace lenders? How online marketplace lenders are changing the rules of small-business finance Self-Regulatory Program for Nonbank Small Business Lenders Top regulatory priorities for commercial lenders Playing to Your Strength - Opportunities for Regional Banks to Build Better Lending Portfolios Game Changer - How Marketplace Platforms Are Bringing Financial Institutions Back to Small-Business Lending Marketplace Matchmakers - How Loan Aggregators Bring Borrowers and Lenders Together New Frontiers - What's Next For Marketplace Lending?

Disruptive technology has radically changed how we shop, socialize, book vacation rentals — and even how we hail a cab. Now we have another Web-based disrupter upending yet one more venerable American institution: how we secure small-business loans. Over the past two to three years, online marketplace lending (OML) — also called alternative lending — has made dramatic changes in the landscape of financing businesses. Companies like OnDeck, Kabbage, Funding Circle, CanCapital, Lending Club and dozens of others have created what amounts to a $1 trillion market, according to a recent article on TechCrunch. This doesn’t mean that OML is going to send traditional banks the way of typewriter and buggy whip makers. Your neighborhood bank branch and small-business lender still do and will have an important function to perform. But strict regulation and rigid business models within the traditional lending industry have left major gaps when it comes to funding activity in the small-business marketplace. It is in these voids that creative and aggressive entrepreneurs are finding not only amazing business opportunities, but also an entire class of customer that until now has been grossly underserved. What is online marketplace lending all about? How does it work? Why is it so attractive? Who are the customers? And why now? The answers to all these questions lie in one of those serendipitous confluences of economic necessity, technological advancement and entrepreneurial creativity that creates a paradigm shift in what we believe is possible. The result is a new model for commercial financing that may soon become the primary medium many small to medium-size companies use to secure the capital they need to grow and prosper. Over the next eight weeks, Experian® will deep dive into the State of Online Marketplace Lending, examining the lending market from all sides, piecing it together with opinions from thought leaders throughout the space and publishing our findings in a compendium ebook. Let’s begin by tracing this trend to its source. The roots of online marketplace lending It is said that the Chinese character for disaster is the same as that for opportunity. If so, then it makes sense that the disastrous Great Recession of 2008 to 2010 should serve as the crucible from which the alternative lending industry should spring. When the economy crashed in 2008, the Western financial industry responded by replacing its overly lax lending requirements with regulations and lending standards so strict that many businesses, especially younger or smaller ones, found it all but impossible to secure financing under any conditions. Having been burned by their formerly liberal attitudes, banks and other traditional lenders decided the best way to minimize risk was to avoid lending to all but their most financially secure customers. (In other words, the only way to get a loan was to prove you didn’t need one.) Enter the online marketplace lenders. OMLs — particularly peer-to-peer lenders — began to appear a year or so before the market crashed. The rise of Facebook and similar social media platforms coupled with rapid advances in Big Data management allowed those with capital to quickly qualify potential customers via the Internet and issue short-term loans without the red tape and regulations that made borrowing from banks such a challenge. "Technology is what has made online lending possible, online lenders benefit from having a much lower cost basis than banks. As a result, they can price their loans differently. And they can often make their lending decisions on the same day they receive an application.” Laura DeSoto Senior V.P. Strategic Initiatives   Once the Great Recession hit in force, small and medium-size businesses, finding that traditional capital sources had dried up like Lake Shasta in the California drought, flocked to these aggressive start-ups en masse. OML marketing messages soon became ubiquitous, ranging from 30-second radio spots to robocalls to business owners’ cell phones. Web-based payment services like PayPal began to offer their own business capital lending programs. To the surprise of the cynics, many of the new lending platforms actually worked. Businesses were able to borrow the funds they needed. Lenders enjoyed solid returns on their investments. And consumers reaped the benefits of an economy offering a broader range of goods and services. Today, OML looks like it’s here to stay — which is not to say that banks have reason to panic. “It’s important to note that many online lenders actually get their funds from traditional banks,” DeSoto stated. “Some people call OMLs ‘shadow banks’ because they’re able to use banks’ funds in ways that are not subject to all the same federal regulations.” What makes online lending “alternative” It is not just the source of the loans that distinguishes alternative lending from traditional commercial banking. The method, speed, qualifications and form of the loans themselves are also distinctive. As the name implies, online lending is done via the Internet. Borrowers need not walk into a brick-and-mortar bank to fill out reams of mind-numbing paperwork. Instead, they need only fill out a usually brief online application and attach whatever documentation the lender requires. What kind of documentation? Often, alternative lenders don’t require the detailed financial statements and tax returns commercial banks demand. Instead, a month or two of retail receipts may be all that’s necessary. This is because many alternative loans are not the long-term, interest-based instruments to which we’re accustomed. Instead, many alternative lenders use “factoring” or revenue-based lending in which they take a small portion of each sale as repayment on the loan. Steady cash flow is more important than yearly sales volume or annual profits/losses. Another popular vehicle is so-called “peer-to-peer” lending that often involves small loans of $5,000 to $50,000 with terms of just one to five years. And now that online lending has become legitimate in the eyes of many, we’re seeing loans or “working capital advances” in the millions of dollars. Like the most sophisticated banks, many OMLs — even some of the smaller ones — have access to advanced algorithms that allow them to evaluate a potential borrower’s suitability based on readily available business credit data in addition to cash flow, and activity data. But because their systems are mostly or even totally automated, OMLs can prequalify applicants in a matter of hours, if not minutes. Following prequalification, additional documentation may still be necessary before a loan is approved. Of course, the larger the loan, the more documentation lenders require. Online lending reduces paperwork, but it doesn’t eliminate it altogether. “Some companies still rely partly on manual application reviews. Some even promote their ‘live’ customer service,” DeSoto noted. “Still, it probably won’t be long before most online lending is 100 percent automated.” Are you a candidate for online marketplace lending? The ideal candidate for today’s online marketplace lending is a small to medium-size retail or commercial B2B company with a steady cash flow and a need for small, quick cash infusions to buy new capital equipment, hire new personnel or otherwise expand operations. Restaurants, retail stores, and B2B service companies like office equipment suppliers and marketing/ad agencies fit this profile perfectly. Because cash flow is essential, most marketplace lenders are not interested in financing start-ups. These are still the purview of venture capitalists. Most online lenders also are not interested in manufacturing companies that make perhaps one or two large sales every couple of months. Expanding the market, not cannibalizing it DeSoto stressed that online lenders are not taking business away from traditional lenders but are serving customers who probably would not qualify for traditional business loans. As such, they’re expanding the market, not cannibalizing it. “Most small businesses that have been in business just one or two years wouldn’t even be on a commercial bank’s radar,” she noted. “These people would otherwise have to rely on friends, family or personal credit for funds. Online lending offers opportunities that simply did not previously exist.” The role of business credit information The role of business credit information — including any history of missed payments, delinquencies, pending judgments, bankruptcies and overextended lines of credit — is obviously critical to marketplace lenders’ ability to quickly and accurately assess risk and advance capital responsibly. “Experian, the industry leader in consumer and business credit reporting, is proud of the part we play in making marketplace financing available to thousands of businesses nationwide and of the good this new and growing industry sector is doing to expand the economy” Laura  DeSoto concluded. So in summary, a few key points about online marketplace lending: Online applications usually are fast and simple and require minimal documentation Technology allows lenders to prequalify borrowers in hours, sometimes minutes Loans can be as low as a few thousand dollars or as high as several million dollars Most lenders eschew traditional long-term interest rates in favor of cash flow or other short-term repayments Prime customers are small, younger retail or services businesses with high, consistent cash flow Online lending is expanding the market, creating opportunities where none existed previously In future articles, we will dive even deeper into the world of alternative and online lending, identifying the major players, looking closer at the risks and benefits, and predicting as best we can where the industry is headed. Next week, Charles H. Green from AdviceOnLoan will join us to examine how different yet similar online marketplace lending is to traditional lending.   Related articles Just how alternative are today’s online marketplace lenders? How online marketplace lenders are changing the rules of small-business finance Self-Regulatory Program for Nonbank Small Business Lenders Top regulatory priorities for commercial lenders Playing to Your Strength - Opportunities for Regional Banks to Build Better Lending Portfolios Game Changer - How Marketplace Platforms Are Bringing Financial Institutions Back to Small-Business Lending Marketplace Matchmakers - How Loan Aggregators Bring Borrowers and Lenders Together New Frontiers - What's Next For Marketplace Lending?