Wall Street goes to Main Street. That would be Goldman Sachs partnering with Walmart to offer working capital loans to small businesses that sell on the retailer’s marketplace site. They join other payment players and fintechs, such as PayPal, Square, and Stripe, in providing funds to their small business stakeholders.
All these companies have good data on the risk profiles since they handle the sales transactions for their merchant clients. It’s also another added-value service in addition to core offerings. But remember that small businesses are most impacted by the trials and tribulations of the economy, and the jury is still out on the timing of the post COVID-19 recovery.
The following excerpt from a Motley Fool article reports more on the topic:
Until a couple of years ago, Goldman Sachs was almost exclusively an investment bank. However, over the past few years it has started to make a big push into the consumer banking side of the business. First, it rolled out the Marcus brand, which offers personal loans and high-yield savings accounts. Then, Goldman jumped head-first into the credit card business by partnering with Apple to launch the Apple credit card product.
More recently, Goldman introduced an investment platform for everyday Americans, and partnered with Amazon to provide small business credit lines to merchants. And as if pairing up with Amazon didn’t give Goldman enough reach into the e-commerce world, another major partnership was just announced.
The latest expansion of the Marcus brand’s reach comes in the form of a small business lending partnership with Walmart.
Goldman’s consumer banking unit is launching small business credit lines to merchants who sell on Walmart’s Marketplace. Initial credit lines will range from $10,000 to $75,000, but the bank eventually wants to offer lines of as much as $1 million to qualifying merchants. And these could be highly profitable for Goldman, as the credit lines will come with fixed interest rates between 6.99% and 20.99%.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group