Upstart Halts Small Business Lending Division

Upstart, the embattled online lender that recently announced a 20% reduction in headcount, revealed on Tuesday that it had also suspended its small business lending operations. The sudden about-face is notable given that the company just entered that market in mid-2022.

“With th[at] reduction in staffing, we also decided to pause development of our small business lending product,” said Upstart CEO David Girouard during the quarterly earnings call. “This was a necessary step to ensure we can adequately resource the rest of the roadmap. We look forward to the day when we can resume our pursuit of the world’s best AI-powered business loan.”

In the previous quarter, talk of small business lending had sounded more celebratory, which had just crossed $10 million originated since inception at the time.

“In many ways, last year was the perfect storm for our business model,” Girouard said. “The withdrawal of federal stimulus disproportionately harmed our borrowers, akin to a simulated recession for millions of mainstream Americans suddenly lost what had become their primary source of income. The Fed’s interest rate hikes, the fastest in several decades, left both lenders and capital markets cautious and concerned about what might come next in our economy.”