Showing posts from June, 2013

Do Small Business Loans Generate Significant Returns?

Originally @ Newfination

Editor’s note: Nik Milanovic is the head of business development & marketing analytics at Endurance Lending Network. He is also a Newfination Expert in crowdlending.

A recent blog post by Lend Academy founder Peter Renton on Lending Club’s entrance into the small business lending market brought up a too-familiar question: do small business loans underperform consumer loans? The concept of small business loans generating abysmal returns is a common misconception among peer-to-peer investors. But where does this myth come from? And what evidence is there to the contrary?

If you look only at peer-to-peer lenders focused on consumer loans, it’s easy to walk away thinking business loans are too risky to generate positive, reliable returns. Nickel Steamroller, which provides analytics and insights on the ROI of peer-to-peer lenders Lending Club and Prosper, highlights this issue. Over Lending Club’s historical performance, for instance, small business loans gener…