Citibank Wants to Sell its Small Bank Loaning Platform

It’s an idea that sounds like it was conceived in a ketamine-fueled late-night Silicon Valley brainstorm: Tinder, but for bank loans.

For the past two years, Citibank’s Bridge has been connecting small regional banks with small businesses looking for loans. Now, according to a Financial Times report on Thursday, the massive financial institution is looking to sell off the platform.

Checks in the Citi

Demand for commercial and industrial loans (C&I) has fallen steadily since the small and mid-sized regional bank crisis earlier this summer due to high-interest rates and an uncertain outlook. In its most recent twice-a-quarter report, The Dallas Federal Reserve Banking Conditions Survey found that C&I loan demand fell for the eighth straight period, while the total amount borrowed fell to the lowest point in a year.

That’s led small banks to turn toward big brother Citibank — specifically, Citibank’s Bridge, which has been a boon for small banks in search of potential borrowers:

• Bridge essentially works by allowing small businesses to submit loan proposals, which small banks can then bid on. According to its website, 75 small banks have signed up for the service so far.
• Since 2021, Citi says that Bridge has facilitated $1 billion in loans, which typically range from $100,000 to $10 million.

Citi Slickers: Citi doesn’t take a cut on either side of transactions, operating as a pure facilitator. But the project was hatched in Citi’s in-house incubator, giving it equity upside. And now Citi could potentially cash out in the next few months, the bank told the FT, though it’s likely to retain some equity in a sale. Sounds like giving up “Tinder for loans” is a bridge too far.