Google has recently made significant investments in alternative lending businesses, one with explicit plans to offer small business loans by the end of the year.  On May 2, it was announced that Google was providing the majority of a $125 million investment in peer-to-peer lending website Lending Club.  This announcement came a day after Google Venture (Google’s venture capital fund) expressed plans to invest $17 million in alternative lender On Deck Capital.

On Deck Capital distinguishes itself from traditional lenders by using unique algorithms to determine which businesses qualify for loans.  Payroll figures and credit card processing records are a couple of the metrics that On Deck analyzes.  The company’s methods allow it to identify borrowers more quickly than most banks, and keep its average loan size relatively small–about $30,000.

On Deck Capital CEO Noah Breslow reports that his company expects to make $450 million in loans this year, and that the investment from Google Ventures brings “a lot of functional skills” to On Deck’s expansion plans.

The larger question raised by Google’s involvement with lenders such as On Deck is to what extent the lenders–and by extension Google–are interested in offering small business loans.  The recent investments creates a noteworthy connection between Google’s nearly ubiquitous branding and steadily-expanding alternative lending infrastructures.

Further evidence of a future in which small businesses may be able to seek loans from Google comes with the company’s investment in Lending Club.  It was Google itself, not Google Venture, which made the investment in the peer-to-peer site.  Lending Club CEO Renaud Laplanche, in an interview with The New York Times, said “We’re really excited about partnering with Google.  Lending Club is using the internet to reshape the financial system and profoundly transform the way people think of credit and investment.”

Peer-to-peer lenders such as Lending club aim to eventually replace some bank branches as a lower-cost, more convenient alternative to traditional lending avenues.  Although Lending Club deals primarily in personal loans, senior management at the startup have recently confirmed that they have plans to start issuing small business loans less than a year from now.


Clark, Patrick. “Does Google Want to be a Small Business Lender?” Bloomberg Businessweek, 5/3/13.

De la Merced, Michael J. “Lending Web Site Gains a Shareholder in Google.” The New York Times, 5/2/13.