SAN FRANCISCO Feb 2 Alibaba Group Holding Ltd
is teaming with LendingClub Corp to offer
financing to U.S. businesses to buy from Chinese suppliers,
hoping to make it easier for American firms to tap the world's
LendingClub, an eight-year-old San Francisco startup, said
it will provide its core service of matching small business
borrowers with lenders on Alibaba.com, the Chinese company's
global wholesale platform.
In the exclusive arrangement, LendingClub becomes the main
source of U.S. buyer financing on Alibaba.com. It will offer
loans of up to $300,000, typically for a few months, at rates of
0.5 percent to 2.4 percent - a fraction of the double-digits
that credit cards incur.
"They were looking for a technology-aware platform and also
a partner that can operate at a low cost, so that the cost of
credit for U.S. buyers would be lower," LendingClub founder and
CEO Renaud Laplanche told Reuters.
Alibaba derives the lion's share of its revenue from retail
platforms Taobao and Tmall. But it got its start supporting
small businesses with Alibaba.com, which Jack Ma co-founded out
of his Hangzhou apartment in 1999.
The service is used by businesses on the lookout for cheap
products. Alibaba posted revenue of $631 million in
international wholesale commerce in the year to March 2014, a
sliver of the $8.5 billion in revenue over the same period.
Alibaba intends to grow its U.S. footprint by connecting
American sellers with increasingly affluent Chinese buyers. It
is also trying to aid smaller businesses and merchants, an
effort analysts say earns it goodwill while laying the
foundation for a longer-term expansion.
The Chinese company settled on LendingClub because it found
its platform faster and easier to use than a traditional bank.
The startup, which has provided some $6 billion in loans since
its 2007 inception, is capable of keeping up with demand, said
Michael Lee, Alibaba.com's global marketing director.
"They're capable of providing an instant approval
decision..., that a traditional bank may not be able to. This is
really critical to the borrowers," Lee said.
The lending risk will be borne by its pool of institutional
investors including foundations, endowments and pension funds.
Laplanche said the short-term nature of the envisioned
loans, typically six months, tended to reduce overall risk.
Alibaba will now look for similar providers to extend
financing beyond the United States, to major markets such as
Britain, Australia, Germany and Canada, Lee said.
(Reporting by Edwin Chan; Editing by Cynthia Osterman)