Lending Club (NYSE: LC), the world’s largest online marketplace connecting borrowers and investors and Citi ,(NYSE: C) announced today they are launching a new partnership with Varadero Capital L.P., an alternative management firm focused on specialized credit investments, to facilitate up to $150 million in loans designed to provide more affordable credit to underserved borrowers and communities.
Renaud Laplanche, founder and CEO of Lending Club, said, “Many banks across the country are looking for opportunities to enhance their community lending efforts for low- and moderate-income families. We’re excited to expand the use of the Lending Club platform to make this process easier for Citi and other banks, and help lower the cost of credit for borrowers.”
The poor are often considered high risk investments by traditional banks. With the financial established system offering them higher interest rates premiums or denying them access to capital altogether, banks force the poor out of the legitimate market and into the hands of loan-sharks. Overcoming this problem is one of the main promises advocated by P2P lending promote.
“It is important that we help increase access to financing alternatives for American families,” said John Heppolette, Co-Head and Managing Director of Citi Community Capital at Citi. “This partnership is a direct response to that need and will help provide a viable source of responsible credit. We are proud to be part of this initiative.”
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Citi Community Capital is the group within Citi that focuses on providing community development loans and investments that help meet the credit needs of communities and which receive consideration under the Community Reinvestment Act (CRA).
All of the program’s loans will be issued by WebBank, a Utah-chartered Industrial Bank, and purchased by Varadero Capital through a credit facility provided by Citibank.
Fernando Guerrero, Managing Partner and Chief Investment Officer of Varadero Capital, L.P., said, “This partnership benefits those consumers who need it the most, offering them better access to responsible credit at very competitive rates. We’re proud to be a part of it.”
This is not the first high profile partnership for Lending Club recently. Just earlier this month, Chinese eCommerce giant Alibaba announced that Lending Club became the exclusive solution for point of sale of up to $300,000 in financing for Alibaba.com’s US business buyers.