Marcus branches out further into US SMB lending through partnership with C2FO

Goldman Sachs’ direct bank Marcus is deepening its involvement in lending to US small and medium-sized businesses (SMBs) through a new partnership with working capital platform C2FO. Marcus will start offering loans to C2FO users this summer, with amounts ranging from $10,000 to $1 million and coupled with fixed interest rates—borrowers’ creditworthiness and financial needs will be underwriting factors. Additionally, Marcus will not require borrowers to have assets designated as collateral, removing what has historically been an obstacle for some SMBs. The partnership is intended to offer a fast review process, with loan term offers generated in minutes and lending decisions given in two business days.

Marcus’ collaboration with C2FO is the latest among the direct bank’s SMB lending partnerships, following deals it struck over the past year with retail giants to lend to their sellers.

  • Amazon: The direct bank partnered with the etailer last June to make lines of credit available to thousands of platform sellers in amounts of up to $1 million, with interest rates ranging from 6.99% to 20.99%. 
  • Walmart: Goldman followed up in September with a deal that allows Marcus to offer lines of credit to the retailer’s Marketplace sellers in amounts between $10,000 and $75,000, with the future possibility of raising the figure as high as $1 million. The Walmart partnership includes the same interest rates as the Amazon deal.

The direct bank’s C2FO partnership lets it grow its business banking operations by branching out from retail sellers to working capital applicants. By adding another partnership, Marcus is boosting the breadth of its US SMB lending activities, which could be beneficial for its bottom line. We’ve recently seen the benefits of increased SMB lending activity illustrated by OakNorth, a business-focused, UK-based neobank that is planning a US entry: Its 2020 pretax profit jumped by 18% compared with 2019, and its deposits climbed by 15% over the same period. Marcus could take another page from OakNorth’s profitable playbook by adding depository accounts geared to SMBs, which would allow it to build a source of cheap funding to bolster its future lending.