Online lending marketplace Prosper has struck a deal with more than 160 community banks to offer its services to the banks’ borrowers — and to widen the banks’ access to capital for the customers’ borrowing needs.
The deal is with Western Independent Bankers, a consortium of more than 160 independent and community banks in 13 states in the western U.S. The agreement labels Prosper as a “WIB Endorsed” provider, and essentially encourages the member banks to consider using Prosper’s platform to facilitate consumer loans for their customers.
The unsecured personal loans will officially be made by WebBank, the Utah-chartered, FDIC-insured industrial bank that serves as the lender for Prosper’s loans. After the loans close, they’re assigned back to Prosper. (Utah is one of the 13 states covered by the Western Independent Bankers group, along with California, Oregon, Washington, Nevada, Idaho, Arizona, Montana, Wyoming, Colorado, New Mexico, Alaska and Hawaii.)
Neither the group or Prosper disclosed any financial terms of the agreement. Prosper handled more than $1.6 billion in loans in 2014.
“Banks are under increasing pressure to deliver attractive interest rates for all consumers, and smaller banks just can’t compete with the big institutions in offering credit, primarily because of overhead and other operating costs,” Prosper CEO Aaron Vermut said in a company blog post. “At Prosper Marketplace, we believe that independent and community banks are essential to the future of the American economy, and this partnership gives them the ability to broaden their product offerings and vie for a piece of the credit market.”
Community banks make up almost 97 percent of all U.S. banks and are the primary source of lending for small businesses and farms, Vermut said, making them a good match for Prosper’s lending approach.
San Francisco-based Prosper has also been expanding its loan-handling opportunities in other directions. In January the company agreed to pay $21 million for American Healthcare Lending, which lets doctors and other health care providers offer financing to patients for elective medical procedures at their offices.