Prosper Marketplace, the second-largest consumer finance marketplace lender by origination volume, and OnDeck Capital, a direct online lender to small businesses, have agreed to partner on customer referrals.
Each company will pay a referral fee to the other for customers received. Neither lending platform directly competes with the other, said OnDeck chairman and chief executive Noah Breslow.
"We felt these efforts were complementary mainly," he told American Banker shortly after arriving at the LendIt conference, ongoing this week in New York. "We have customers who come to us who don't have fully formed businesses yet. They look more like consumers."
Hence the companies reckon a strategic partnership benefits them more, at least in the short-term, than branching out into different types of lending and the different credit scoring required to support it.
"Underwriting consumers and underwriting small businesses are very different," Breslow said. "Customer acquisition is very different as well."
Though he would not elaborate much, Breslow said his company and Prosper anticipate "getting more and more integrated," though no merger's in the works. "OnDeck and Prosper are both very successful, independent companies," he said.
Lending Club, rival to Prosper and the leading consumer finance marketplace loan originator, has already begun to diversify into small-business lending. Small-business customer acquisition and underwriting remain challenges for the company, its founder and chief executive Renaud Laplanche acknowledged Monday.
Still, Laplanche said (without giving specific numbers) that the platform's small-business lending numbers are, "slightly ahead of plan," thanks to partnerships with Google and Alibaba.
Lending Club has gathered more data to make its small-business lending more efficient, he said. "We've learned a lot over the first year."