Intuit Becomes Latest Technology Company to Offer Direct Lending   

  • Will rely on QuickBooks customer data to evaluate borrowers
  • Amazon also make loans as tech firms edge into finance

Intuit Inc., the maker of tax-preparation and accounting software, will start lending directly to smaller businesses as it becomes the latest tech company to offer credit to firms.

The roughly 7 million businesses that use Intuit’s QuickBooks accounting software may be eligible to borrow up to $35,000 for as long as six months, the Mountain View, California-based company said Tuesday. Annualized interest rates would range from 6 to 18 percent, and loans would be available to borrowers in 43 states, said Rania Succar, head of the QuickBooks Capital unit and a former Google advertising executive.

“There’s no limitation being placed on the growth of the program,” Succar said in an interview. “We’re very bullish about it.”

Intuit follows Inc. as part of a push by so-called platform companies into banking. Amazon has made more than $3 billion in loans to more than 20,000 merchants that use its e-commerce platform, and Alphabet Inc.’s Google and Facebook Inc. are moving into payments.  Analysts at McKinsey & Co. issued a report last month warning that tech firms could put up to 40 percent of banking industry revenues at risk within eight years.

Intuit, the developer of TurboTax and QuickBooks, already allows businesses on its platform to connect with other lenders, and has acted as middleman in $700 million of loans since 2013. Now, Intuit will lend its own money, wagering that its access to businesses’ financial statements could help it evaluate creditworthiness and offer competitive terms.

Brent Thill, a Jefferies Group LLC analyst who has a “buy” rating on Intuit stock, said the move “would make a lot of sense.” Still, he said investors may be skeptical because smaller businesses — which tend to be newer businesses — fail more often, and smaller loans are less cost-efficient than big ones.

“What happens if a borrower goes belly up? That’s not something Intuit investors are used to dealing with,” Thill said.

Source: Bloomberg News