Funding Circle, DreamSpring Team to Offer SMB Funding

Small business loan platform Funding Circle has teamed with DreamSpring, a nonprofit community development financial institution (CDFI), to increase funding access for small businesses in underserved communities.

“Through this lending-as-a-service program, DreamSpring will be able to expand its distribution and impact throughout the nation and originate more loans faster and at a lower cost, all while ensuring a seamless experience for customers,” the two organizations said in a news release Tuesday (July 5).

Read more: Funding Circle Founder Raises $30M to Disrupt Payments Giants

DreamSpring small business customers who apply through the DreamSpring and Funding Circle portal will get one-on-one support from a Funding Circle Account Manager, approval within hours, and access to funds in as few as 48 hours.

“Funding Circle is committed to helping small businesses get the funding they need to thrive by working closely with financial institutions — including national, regional and community banks and CDFIs — to achieve this mission, most recently launched a small business lending-as-a-service partnership with Pitney Bowes,” the companies said in the release.

The release cites a study by the Philadelphia Federal Reserve, which found that Funding Circle has expanded credit access to underserved small business owners who were unlikely to receive funding from traditional lenders, and at a lower cost to borrowers.

Learn more: Federal Regulators Propose New Low-Income Lending Rules

The news comes two months after U.S. regulators said they were trying to rework the way banks lend money to lower-income communities by updating the 1977 Community Reinvestment Act.

The Community Reinvestment Act was written to end the practice of “redlining,” in which banks avoided lending in certain areas, particularly lower-income communities.

The new proposal by the Federal Reserve and other regulators is an attempt at making the rules more transparent and objective, while also helping banks understand what the regulations require of them. However, some banks could face stricter reporting rules under the changes.