Upstart Has Quietly Entered the Small Business Lending Market

Upstart, once known as the AI-fintech lender for student loans, has gradually added products over time. Today, the company has entered the small business lending market, making good on the plans it announced last year.

Launched shortly before the close of the 2nd quarter, Upstart CEO Dave Girouard said during the earnings call that “We’ve already seen some more than 40 small business loans originated, totaling more than $1 million in principal in just a few weeks.” He further added that the company is “well ahead of schedule” in terms of rolling the program out.

“That team is quickly ironing out operational issues with an eye toward rapidly expanding this product in the coming months and years,” Girouard stated.

Previously, Girouard acknowledged that small business lending is becoming a crowded field.

“While there is no shortage of credit options to business owners, we aim to deliver the zero-latency affordable credit solution that modern businesses require,” he said last year.

There is a lot on the line for Upstart with this new product. Its core consumer lending business experienced a setback in the 2nd quarter when revenues declined on weaker demand for loans originated through its marketplace.

“In the last few months, lenders and institutional credit investors reacted more quickly and abruptly than we anticipated,” Girouard said. “Despite the fact that our bank partners have seen consistently strong credit performance, meaning portfolios performing at or above plan across quarterly cohorts, several of them have paused or reduced originations due to fear about the future of the economy.”