Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C. Peer-to-peer lending to small businesses Traci L. Mach, Courtney M. Carter, and Cailin R. Slattery 2014-10 NOTE: Staff working papers in the Finance and Economics Discussion Series (FEDS) are preliminary materials circulated to stimulate discussion and critical comment. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors. References in publications to the Finance and Economics Discussion Series (other than acknowledgement) should be cleared with the author(s) to protect the tentative character of these papers. Peer-to-peer lending to small businesses Traci L. Mach* Board of Governors of the Federal Reserve System
[email protected] Courtney M. Carter* Board of Governors of the Federal Reserve System
[email protected] Cailin R. Slattery University of Pennsylvania
[email protected] January 2014 Abstract The current paper examines loan-level data from Lending Club to look at peer-to-peer borrowing by small businesses. We begin by looking at characteristics of loan applications that were and were not funded and then take a more in-depth look at funded applications. Summary statistics show an increasing number of small business loan applications over time. Beginning in 2010—when consistent measures of loan purpose were recorded for all applications—loan applications for small businesses were on average less likely than loans for other purposes to have been funded.