CircleUp, which runs an online platform where institutional investors provide equity capital to small businesses, is expanding into lending.

The San Francisco-based company announced Tuesday that it has started offering secured lines of credit, in an extension of a five-year-old business that specializes in providing financing to early-stage consumer brands.

The line of credit, which ranges from $25,000 to $600,000 and can be secured by inventory, is meant for firms that need to smooth out their cash flow.

CircleUp is betting on its expertise in the consumer packaged goods industry. “We’re going very deep into that world,” said Asher Hochberg, the firm's director of corporate development.

CircleUp said that it has made 50 loans since March, when it launched a pilot program. The loans are currently being funded with a $20 million credit facility from San Francisco-based Community Investment Management.

So far, the borrowers have included a cosmetics seller that specializes in cruelty-free products and a high-protein yogurt brand, according to CircleUp.

Because early-stage consumer brands often operate in the red, they can typically only obtain high-cost loans. CircleUp said that annual percentage rates on the lines of credit are as low as 14%, but it declined to disclose the upper end of the range.

CircleUp is betting that its expertise in the consumer packaged goods industry will pay dividends as it moves into the lending business.

“We’re going very deep into that world,” said Asher Hochberg, CircleUp’s director of corporate development, “to help pick the best companies for this product.”

Companies that need to raise more money, typically to fund an expansion, can seek an equity investment on CircleUp’s platform, where they can raise $1 million to $5 million. Those deals are funded by accredited investors.

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Kevin Wack

Kevin Wack

Kevin Wack is a California-based reporter for American Banker who covers the U.S. consumer finance industry.