Funding Circle, an online lender that operates in four countries, is partnering for the first time with a U.S. bank.
On Thursday, the 7-year-old company announced a deal with Intrust Bank in Wichita, Kan., under which it will sell $20 million worth of its small-business loans to the $5 billion-asset institution.
It’s a relatively modest upfront commitment, but over time the relationship could expand, according to Sam Hodges, the U.S. managing director of Funding Circle. Eventually it could involve customer referrals between the two firms, in addition to a longer-term commitment by Intrust to buy more Funding Circle loans.
In the U.S., Funding Circle offers small-business loans of $25,000 to $500,000 at annual interest rates between 4.99% and 26.99%. The loans are funded by a mix of individual and institutional investors.
Hodges said that Funding Circle was attracted to Intrust for its stable base of deposits.
“They make really good long-term partners,” he said in an interview.
Online lenders often see bank deposits as less likely than other sources of funds to disappear as a result of changing market dynamics.
Brian Heinrichs, the chief financial officer at Intrust Bank, described the Funding Circle partnership as an opportunity to serve more small-business customers.
“Funding Circle’s customer-focused philosophy and technology platform are an ideal fit for Intrust,” he said in a press release.
Funding Circle, which is based in London, has lent out more $5 billion in the U.S., U.K., Germany and the Netherlands. It has partnered in Europe with big banks such as Royal Bank of Scotland and Banco Santander.
The privately held online lender is reportedly laying plans to go public as early as late autumn.