July 6, 2016
By Bob Coleman
Editor, C-Suite Wednesday
C-Suite Wednesday — American Express Enters FinTech Small Business Lending Market
Looking to replace the revenue stream with the termination of its exclusive Costco credit card processing partnership, AmEx is eyeing the small business lending market.
AmEx’s venture, Working Capital Terms, will approve loans in minutes for existing small-business cardholders, who can use the money to pay vendors. Debts may range from $1,000 to $750,000 with fees of 0.5% for a 30-day loan to 1.5% for a 90-day loan. AmEx will deposit funds directly into vendors’ accounts in as soon as two days.
“We’ve combined the convenience of the online lender with the competitive pricing of a bank loan,” says Susan Sobbott, AmEx’s president of global commercial payments “It’s a big opportunity for us to go into an area where businesses want to pay vendors that don’t accept any credit cards.”
Former SBA Administrator Karen Mills, now on AmEx’s payroll, adds, “”AmEx can do this because they have good credit knowledge.This will challenge the online competitors, whether or not they respond.”
AmEx’s move mirrors Wells Fargo’s foray into the FinTech lending space, also promising funding in one day. JP Morgan Chase partners with OnDeck Capital and AmEx currently partners with Lendio.
AmEx’s moves into a online small business lending marketplace that is in turmoil with the Street questioning FinTech lending models.
On Deck’s stock is down 49% this year. LendingClub, which lends to both consumers and small businesses, is down 60%.