The Ontario government is providing P2P lender Lending Loop with $3 million to support loans to small businesses.
The two-year pilot project will see the government providing 10 percent of each Lending Loop loan, meaning that over the duration of the project, it will help fund over $30 million in loans to Ontario businesses.
“This partnership is a major step forward for peer-to-peer lending in Canada,” said Cato Pastoll, co-founder and CEO of Lending Loop. “Globally, over $40 billion has been lent to businesses through the peer-to-peer model, and we are incredibly excited to see the Ontario government involved in helping support the growth of businesses across the province.”
The Toronto-based lending marketplace allows Canadians to invest their money in small business loans, giving businesses access debt financing.
To date, Lending Loop has funded 350 loans worth over $20 million to businesses in Canada.
This announcement comes just over two years after Lending Loop halted new loan requests after the Ontario Securities Commission stepped in with concerns that the startup wasn’t adhering to Ontario Securities Act guidelines. By October 2016, Lending Loop completed registration with the OSC as an exempt market dealer.
“We have to be flexible to fit this new framework into rules and regulations that were developed 50 or 100 years ago,” Pastoll said at the time about the process of working with regulators. “You’ve also got to make sure your business model is profitable and sustainable.”
To date, Lending Loop has funded 350 loans worth over $20 million to businesses in Canada, and said that over 130 loans were worth over $8 million to businesses in Ontario. In August 2017, the company raised $2 million in part to explore new lending areas.
“This pilot program is important as it will significantly benefit small businesses, accelerate FinTech adoption, and provide new opportunities for financial institutions,” said Jeff Leal, Minister Responsible for Small Business. “This partnership is another example of how this government is committed to helping businesses save time and money.”
Photo via Burst.