Chinese e-commerce giant Alibaba Group and peer-to-peer lending website Lending Club have combined forces to offer short-term loans to small US businesses buying from China.
San Francisco-based Lending Club is an online match-maker connecting borrowers with lenders for a fee. The firm does not lend money itself.
The Alibaba-Lending Club partnership allows American businesses to apply for working capital, on Lending Club, needed to pay for Chinese goods being bought on Alibaba.com, both companies said on 3 February.
Monthly interest rates range between 0.5% to 2.4%.
The partners said in a statement: "Under the newly formed partnership and a new product called 'Alibaba.com e-Credit Line powered by Lending Club', US-based business buyers can apply for the critical working capital they need when purchasing goods from China-based suppliers on Alibaba.com.
"With this new product, a US-based small business can apply in under five minutes through a streamlined process and obtain a line of credit from $5,000 to $300,000 to make a payment to a supplier for purchases on Alibaba.com. The line of credit matches repayment terms to the cash flow cycles of the business, vets suppliers and shipments, and even transfers the funds directly to the supplier... "
Michael Lee, Alibaba.com's global marketing and business development director, said: "...We want to make financing as efficient as possible for the millions of US buyers that do business through Alibaba.com and are pleased to bring Lending Club's simple, low cost and transparent financing products to our US buyers."
Lending Club's founder and CEO Renaud Laplanche said: "...We believe that access to affordable credit through Alibaba.com and the Lending Club platform can become a competitive advantage for small businesses across America."
Alibaba's business practices
Alibaba Group Holdings chairman Jack Ma, on 2 February, said that he was not frustrated with Chinese regulators, but wanted his company, which is similar to Amazon in China, to be considered world class.
Ma's comments followed allegations by Chinese regulator State Administration for Industry and Commerce (SAIC) that the issue of fake goods and other illegal businesses on Alibaba platforms was widespread and that the company was not doing enough to fight it.
Separately, an SAIC report, published on 28 January, sparked concern that Alibaba failed to disclose risk factors to investors prior to its bumper listing in September 2014, and several law firms have said they will take action.
Of America's 28.7 million small businesses, half are home-based, according to a July 2014 Harvard Business School study.
Around 23 million of all small firms are sole proprietorship, while the remainder have employees.
Small businesses employ about half of America's private sector workforce – or about 120 million people – but they "have been slow to recover from a recession and credit crisis that hit them especially hard", the study noted.