(January 18 – 10:45 ET) – A pair of Canadian banks are opening online loan shops. Royal Bank Ventures Inc. is launching PrimeStreet, an Internet company that auctions small business loans to selected banks. Bank of Montreal today launched bmolending.com, a new web site that allows Canadian businessesto apply for loans on behalf of their customers online.
Through the new site BMO offers bilingual access to a range of credit products, including personal loans, personal lines of credit, homeowner lines of credit, RRSP loans, and investment loans.
Meanwhile former BMO merger partner RBC is touting its own online loan business. PrimeStreet (www.primestreet.com) accepts online loan applications for up to US$100,000 from entrepreneurs, then presents them to a roster of banks that can bid for the business in a secure online environment. The goal is to minimize lenders’ costs, cut loan approval time, and give business owners more choice in financing. PrimeStreet collects a fee, about 1% of the loan from the successful bidder.
PrimeStreet began operating in the U.S. because of the larger market but it intends to offer a similar service to Canada sometime in the future.
PrimeStreet is officially launching with anchor banks Bank One, Mellon Bank, Enterprise Bank, and Security First Network Bank and will feature more than 100 financial institutions by the end of the year. Other Internet auction products are also being developed, such as insurance and leasing products. PrimeStreet plans an IPO of its own within 12 to 18 months.
Royal Bank Ventures Inc. is a subsidiary of RBC, it initially provided the $2.2 million of required seed financing for the venture. It is supplying another $8 million to PrimeStreet, which is in the process of raising a new round of financing. RBC will own approximately 45% of PrimeStreet after the next financing closes.