Local lending is something of a hot topic within the peer-to-peer space. A number of new entrants are sporting a narrower geographic focus in order to pull customers away from the more established platforms. LendSquare is one such example. The platform believes that its local focus opens up a number of valuable, non-financial benefits to both lenders and borrowers. On the borrower side, for example, the fact that lenders will typically be familiar with the business that they’re investing in means that they can also play an active role in supporting the success of that business – via promotion, frequent visits, and so on.
We caught up with LendSquare for further insight into the platform.
1. Could you give us a little info about the management team and how and when LendSquare came about?
LendSquare was founded by Sebastian Villarreal and Jose Valdes in 2012 after Sebastian visited a cafe near his apartment in Chicago's Hyde Park neighborhood. He valued the cafe because it provided him a place to meet friends, eat, work, and relax in his neighborhood. After talking with the owner, he found there was no convenient way to lend the business money when they needed some new equipment.
After spending a year completing the regulatory and legal filings with the state of Illinois, LendSquare was launched in February 2014.
2. How much has been lent via the platform thus far in terms of cumulative volume?
LendSquare has received $7 million in requests for capital nationally. We don't share the cumulative amount lent at this time.
3. What is the primary benefit of LendSquare's local focus?
One of the key benefits for businesses is that their lenders become advocates. Their lenders can share business news, frequent more often, and help the business grow. LendSquare gives businesses affordable credit AND helps businesses make more money.
4. Are there any particular communities that you focus on at present?
As Chicago and the outlying suburbs make up the third largest city in the U.S., we started our focus there. LendSquare thrives in a city like Chicago because of the neighborhoods that newcomers and many generations of families love and support. One of our favorite things about LendSquare is how applicable it is to different socioeconomic and demographic groups.
5. What are the platform's plans for expansion?
We are looking to expand into other states soon.
6. Does the neighbours/friends/family lender focus exclude institutional capital from being put to work on the platform?
No. While we require most of every loan to be funded locally, we allow institutional or repeat investors to participate in the loan as well. The local lenders provide additional knowledge about the businesses and can help the business grow, while the institutional lenders can provide more capital. It's an ideal combination.
7. Where do you see the platform in a year's time?
We hope to be involved in every community and neighborhood across the U.S. We want to empower neighborhoods to shape themselves.