[CO1]

http://www.bloomberg.com/news/2013-1...t-funding.html

[Sean Cash]

wow that is crazy. And I noticed the CEO acknowledged there was an expectation for them to go public next year. I might actually be interested in buying their stock.

[MCAVeteran]

Disintermediation - that's what I see here with a company like this entering business loans-

[Sean Cash]

Disintermediation - that's what I see here with a company like this entering business loans-

I admit I had to look that word up lol, so do you mean like they will disrupt the reseller market like square has done with payments?

[MCAVeteran]

If they replicate their consumer based peer to peer platform it will be direct to business model marketing- time will tell if the wholesale channel is of interest to their growth strategies -

[Finance1]

I had a good conversation with an industry vet on this topic. P2P lending and other similar forms will likely gain a foothold in our space. Will it disrupt the market? I suppose in some ways it will but then we're back to the "working capital shouldn't be permanent capital". IMO 2-3+ year terms are permanent capital. A short term need being filled with a long term payment.

Luckily, these types of deals are viewed more as a tradeline than a priority secured interest. We've funded a dozen or so merchants the last year or so who had lending club loans. One thing they had in common was decent credit because P2P requires decent credit regardless of what they advertise.

To be a market disruptor, a new product has to directly compete with the existing products. Even Amex advances aren't able to achieve that even though you can lose deals to them from time to time. Lending club type loans will end up co-existing with our space (imo) vs taking market share away.

There will always be a strong demand for a quick shot of cash on short terms. Also, 2+ year terms will require a level of creditworthiness that the majority of MCA/ACH clients don't have. The growing trend of Lending Club type loans will put price pressure on premium price programs but the bread and butter of this industry will likely remain unscathed.