Top 5 in Marketplace Lending

The Top 5 Largest US Commercial Lenders in the P2P or Marketplace Lending segment


As mentioned in my previous blog State of the Small Business Lending Industry, there is a lot of activity in the marketplace lending space.  Funding activity in 2014 and 2015 grew significantly, however with the recent downturn in the markets we have started to see capital tighten and many new and less established companies FinTech companies may fold. But the top of the marketplace space is starting to show through.  

The purpose of this post is to highlight those to 5 or so successful marketplace lenders that are focused on the commercial lending market. Note that I’m using the term ‘commercial’ rather than ‘small business’.  Ideally we’d like to be able to understand how these new entrants are helping small business owners specifically.  However, we are limited by the data that is available.  (Although we will try to drill down to small business loans in a future post.)  For this analysis our data is based on whatever is provided by the companies themselves as well as by other analyses (appropriately referenced.)  We will use small business and commercial interchangeably in this article, but note that there are underlying differences which are noted in the final section for those that are interested.  However for the purposes of this article, mixing the definitions doesn’t change the analysis or results.

The Top

Our top small business loan provider in marketplace lending is OnDeck. While Lending Club (see our honorable mentions section) gets a lot of attention as one of the largest marketplace lenders, it has a broad range of products and has been consumer focused.  OnDeck focuses exclusively on small business loans and originated $1.9 billion in loans to small businesses in 2015.  The company launched in 2007 and have originated over $4B total, obviously making significant strides in loan volume over the past two years growing 152% from 2013 to 2014 and another 62% from 2014 to 2015.  

From their 2015 Annual Report “Our mission is to power the growth of small business through lending technology and innovation. We are combining our passion for small business with technology and analytics to transform the way small businesses access capital. Our solution was built specifically to address small businesses’ capital needs and consists of our loan products, our end-to-end integrated platform and the OnDeck Score. We offer a complete financing solution for small businesses, including short term loans up to 12 months, long term loans up to 36 months and flexible lines of credit.”

In addition they highlight their ‘solution’, their product offering, their ‘simplicity’ which is the speed at which they can approve a loan, and their customer ‘service’.  If you do a little more research on their website, they favorably compare their loans to banks and companies that provide credit card advances (i.e. high interest rates loans.)  They also provide a rough listing of minimum requirements which isn’t a very high bar (1 year in business, 100k in revenue, owner credit score of over 500) and their focus is clearly on lending, unlike some other vendors that try to provide advisory services, which studies have shown many small business owners find valuable.

Second in small business lending is Can Capital.  Their growth has only been 29% CAGR but have been lending to businesses since 1998 originating over $5.5 billion in total.  I estimate that they originated $1.3 billion in new loans in 2015 but their details aren’t readily available.  Can Capital can be characterized as a bootstrap startup which was primarily self-funded for many years.  The have also weathered a couple of significant market downturns in the popping of the dot-com bubble in the early 2000s as well as the financial crisis of 2007-2008, and clearly shown resilience and the ability to deliver and maintain reasonable growth.  Their business model is characterized as merchant cash advances which relies on daily payments by their borrowers, taken as a percentage, from credit card and cash payments and they also offer some light small business advisory.  They also provide term loans and a product they call TrakLoan:

TrakLoan™ is the newest concept in flexible loan financing and can help small businesses smartly manage their cash flow. Ideal for businesses with credit card processing. With TrakLoan, your daily payments are tied to your payment card sales so you remit more when your sales are high and less when sales are low.

Also, at the end of 2015 a good article about Can Capital and it’s CEO appeared in deBanked, an online alternate banking news site.  The article, titled “Can Capital: Beyond Hyperbole” details the company’s origination, growth and direction if you are interested in knowing more.

The third company on our list is Kabbage, based out of Atlanta.  They rolled out the first version of their automated loan origination system in 2011 with a focus on small business loans.  According to Peter Renton’s LendIt 2105 presentation, they originated $400 million in 2014 and were on track to originate $1B or more in 2015.  Their processes involve looking through a company’s financial transactions to determine cash flow, spending patterns and history to assess credit worthiness.  They also charge a set fee for the short term (6 or 12 month) loans as opposed to an interest rate.  They are often mentioned in comparison to OnDeck, but their approach is more of a working capital one as opposed to term loans.  

The Next

Rounding out the top 5 marketplace lenders has us looking a little deeper.  After those three lenders the amount originated drops off significantly.  But with the growth rates of the market in the recent past, I felt we should highlight the next few as they could quickly jump into the top realm with the right investments.  

Our 4th and 5th small business lenders are bizfi (formerly known as Merchant Cash and Capital) and Strategic Funding Source.  They each take a slightly different approach to the small business lending space.  Bizfi or Business Finance has recently expanded their model from a single product of revenue based lending (also known as a merchant cash advances) to now include additional products.  They also appear to have broadened their sources of funding to their applicants, now using 45 different partners (including OnDeck) and now call themselves an aggregation platform.  This is evidence of my earlier point of capital investments in these companies affecting their trajectory.  Bizfi received funding themselves in December of 2015 of $65 million and as we see, the impact was significant.  Through the first 10 years of their existence, they originated about $1billion in loans.  In 2015, I estimate that they originated between $350million and $450million.  

Strategic Funding Source, another New York based company (like bizfi), has a couple of funding options, but which are more traditional like revenue and receivables based financing, although they also offer some term loans.  In addition, they tried their hand at the portal concept with a white label lending platform that they sell to partners and other loan originators.  In 2015 at the LendIt conference, Peter Renton, founder of Lend Academy, showed a slide that listed Strategic Funding Source as having originated $200M in loans in 2014.  They don’t provide any additional details on their site, nor have they published much in the way or press releases, so I would estimate that they were in line with that that same number in 2015.  

The Honorable Mention/‘Also-Ran’ Small Business Lenders

The next few companies, while not in the Top 5 are honorable mentions.  I think they deserve to be highlighted because of the small and dynamic nature of the space.  They each have key benefits and deserve to be watched.  

The first company on the honorable mention list is Lending Club.  They are not primarily a small business lender as mentioned above, but are focused on loans to individuals.  However, because they garner the lion’s share of the ‘alternate lending’ press and have one of the highest profiles in the market due to their public offering of stock in 2014, they could easily become a force in this segment.  Based out of San Francisco and in business since 2007, Lending Club originated $8.4 billion of loans overall in 2015, however less than $100 million or about 1% were commercial loans.  

According to their annual report:

Small Business Loans and Lines of Credit. In March 2014, we began facilitating unsecured small business loans, and in October 2015 we began facilitating small business lines of credit. Both of these loan products are offered through our marketplace in private transactions with qualified investors. These loan products enable small business owners to expand their business, purchase equipment or inventory, or meet other obligations at an affordable rate. Small business loans and lines of credit are fixed- or variable-rate loans in amounts ranging from $5,000 to $300,000, with maturities of 3 months to 5 years, and contain no prepayment penalties or fees. The small business lines of credit allow borrowers to draw funds in amounts they need, thus reducing their interest cost. Small Business loans are offered to private investors only and are not made publicly available on the marketplace.

Funding Circle is another company that focuses on small business lending but is primarily working in the UK.  They started making loans in October of 2013 and since then have made over $2B in small business loans globally and noted on their website that they originated $750MM worldwide in 2015 alone.  However, they don’t break out their US operations from the other areas and I would assume that not a significant amount of lending has been done in the States.  They did begin US operations in 2013 with the first loan made in February of that year, but details on balances and growth in 2014 or 2015 aren’t available.  

A few other companies to mention are:

  • Fundera, which matches small business borrowers and lenders (> 20 banks, brokers, etc.) based on the type of loan and other statistics that you input.  
  • Fundation is primarily a loan originator, but also partners with other companies to provide a channel for new loans to those partners (banks and brokers) as well as other business leads (software, services, etc.) depending on their partner business.  They could be considered a portal, but not just lending, more of a small business assistance as well as funding portal.
  • Behalf provides funding (or credit) to companies by working with their vendors as an intermediary, paying vendors directly while receiving payments weekly or monthly.  They don’t have the same requirements that others do by way of years in business or credit rating of the owner, focusing more on the business model (i.e. cash flow.) They publish rates of 1.1% to 3% per month, which is relatively expensive, but can work depending on the needs and structure of the business borrowing.

Additional Information

While we took the time to research in detail these companies, we had to choose a perspective in our analysis.  There are other analyses that are very similar in nature and which provide slightly different perspectives and which you might find helpful.  The links below show a few that I discovered in my work.  Please leave comments if you’ve found others that are interesting.  

TopTen Reviews (SBA) – This review is well done with plenty of detail, but the focus is on companies that make specific types of small business loans known as SBA 7(a) loans.  None of the above companies in my review are listed in this top list as they likely don’t make many of these types of loans if any.  

Nerd Wallet – This article provides an overview and some additional background on marketplace lending.  It also provides a link to a tool to help filter and guide you to potential lenders that could provide funding based on the criteria that you provide like loan amount, company profitability, etc.  

FitSmallBusiness – This article provides a good comparison of two of our lenders (and adds PayPal) providing details of what you can expect from the lending process, what reviews are available of the sites and companies as well as some of the possible loan details.   


If you are a small business borrower and have a need for capital, we hope that this has provided some insight and may help you get the funding you need.  To offer a little criticism, however, these companies are looking to be as profitable as possible and as I mentioned in my previous article, small business loans often struggle to provide that profitability.  So these lenders would ideally like to push further into the profitable areas that banks currently own.  Because of their cost structure, they will be able to make smaller loans more profitable, but that smaller margin business is not likely to be their primary focus.  Additionally, if you are finding it difficult to get funding from a bank, you may also find challenges with these companies.  

But on the positive side, there is also the opportunity perspective.  The following graph was provided by Renaud Laplanche, the CEO of Lending Club at the 2015 LendIt conference.  It shows the size of the various lending markets that banks and other institutions have.  

2014 Size of the lending market for various loan types
2014 Size of the lending market for various loan types

The blue circle on the far right shows that all of the small business loans as of 2014 was $300billion.  The tiny yellow dot at the bottom left edge is not a mis-colored pixel, it is all of the marketplace lending in the commercial space as of the same time period. So as you can see this online marketspace has plenty of room to grow (as do the other categories!).  However, at least for today, the players you may have to deal with are still the banks and other financing vendors. (We will look at the various financing options in our next article.)  




In the banking and lending industry, data is provided by lenders to their regulators based on specific templates and detailed instructions that the regulators supply which stems from federal, state or special industry regulations.  Agencies that watch over the banking system place requirements on banks to report the types of loans they make and in some cases the size of those loans.  The general categories that banks are required to report on are real estate (like mortgages and farmland), agricultural, personal and commercial.

In addition, there are a category of loans that banks are also required to break out, called SBA 7(a) loans.  These are loans made by an institution but partially guaranteed by the Small Business Administration.  These are detailed in reports required by the SBA.

But that’s still not the full story.  These classifications (aside from the SBA 7(a)) are not made based on the purpose of the loan, but the collateral used to secure the loan.  For example, if a small business owner who needs $100,000 in capital to keep their business running through a temporary downturn, but who uses the equity in their home as collateral for their small business loan, gets a loan that is actually classified in regulatory reports as a real estate loan.

So obviously there are apples and oranges in the numbers here as well as bananas and kiwi fruit!  But we will try to drill into those categories, looking at performance, growth and structure in a future post.

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