Has the Lending Club debacle taught the alternative lending industry anything? Perhaps, but the lesson isn't that the players should abandon the market.
The marketplace lending space has continued to expand, even following the fallout of Lending Club revelations about improper loan management and the sudden exit of its CEO. The latest to join the industry is RateSetter, which already operates in the P2P consumer lending space but recently revealed plans to focus on business lending.
Perhaps encouraging the company is that it is based in Australia, half a world away from the Lending Club controversy. The company announced on Friday (May 27) that it secured a license to provide loans to businesses on its site.
It marks a first for the country's market, as the license will allow RateSetter to facilitate business loans by retail investors, according to reports.
"Traditional lenders are rigid and formulaic in how they decide to lend," said RateSetter Chief Executive Daniel Foggo to local reporters. "It's all about the home. We will look at a wider range of security options, including the assets of the business or personal guarantees."
Reports said lenders using the RateSetter platform will not predetermine whether they are lending to a consumer or a business but will instead set forth their terms, loan amount and interest rates. RateSetter then matches up those terms with an appropriate borrower, which may now include businesses.
Interest rates begin at 7.3 percent for small businesses taking out a two-year $30,000 loan, reports said. Financing can reach as high as $150,000 for small business borrowers.
RateSetter has grabbed a hefty portion of the alternative lending space outside of Australia, too. Reports last year said the company was one of the U.K.'s top two P2P lenders, followed by business lender Funding Circle.