Glossary · legal

Bank Partner Model

Also called rent-a-charter, rent-a-bank, bank origination model, partner bank program.

An arrangement in which a chartered bank is the lender named on the note while a non-bank platform sources the borrower, drives the underwriting and takes most or all of the economics after origination.

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What it means

A bank operating under a charter has authority a non-bank does not, including the ability to charge interest permitted by its home state and to rely on federal preemption principles when lending across state lines. A non-bank lender generally must hold a licence in each state that requires one and comply with that state's rate rules. The bank partner model sits on that difference.

The mechanics

  1. The platform markets the product, takes the application and applies credit criteria it developed
  2. The partner bank is the lender of record. It originates the loan under its charter and its home-state authority
  3. Within a short period the loan, or a participation in it, is sold to the platform or to a funding vehicle
  4. The platform services the account and takes the credit risk and the yield

Where the law stands as of 2026

Two distinct questions, often confused.

Whether a loan stays valid after transfer.Federal banking regulators issued rules addressing the interest permitted on a loan after it is sold or assigned, sometimes described as the "valid when made" question. Those rules exist and have themselves been litigated.
Who the lender actually is.That is the true lender question, and there is no federal bright-line test. A federal rule that would have supplied one was disapproved by Congress under the Congressional Review Act, leaving the analysis to courts and to state law. Several states have enacted anti-evasion statutes applying their own predominant-economic-interest tests. Outcomes differ by state and by facts. Treat any confident summary of the current position with suspicion, including summaries from a funder.

Where this one catches people

The entity named on your note decides a great deal that is invisible in the sales process: which state's rate rules are argued to apply, whether a licensing requirement was engaged, which regulator supervises the product, and where a complaint goes. It is frequently not the brand you dealt with, and it is often a small bank you have never heard of.

Read the note for the lender's legal name and the governing law clause before signing. If the lender is a bank chartered in a state with no meaningful commercial rate ceiling, the pricing you are being offered may be built on that authority rather than on anything available in your own state. That is not by itself unlawful and it is not a reason to walk away. It is a reason not to assume your state's protections apply, and a reason to compare the offer against alternatives on total dollar cost rather than on any assumption about caps.

Where you will meet this term

Working Capital Term Loan Business Line of Credit Business Credit Cards

Read next

FunderThe party providing the money, named as buyer under a purchase agreement or lender under a note, as distinct … Jurisdiction clauseThe provision fixing which state's law governs the contract and where any dispute must be brought — the claus… Lending licenseState authorisation to make or broker loans, required in some states, for some products, at some sizes — and … Non-bank lenderA funder deploying its own or investors' capital without a bank charter, and therefore without deposit fundin… RecharacterizationA court treating a purported purchase of future receivables as a secured loan instead, which brings the trans… True LenderThe doctrine asking which party is really making a loan when a bank is named on the note but a non-bank marke… UsuryCharging interest above what state law permits on a loan; the doctrine applies to loans, which is why the loa… Usury capThe maximum interest rate a state permits on a loan, set by statute, differing by state, by type of lender an… White LabelAn arrangement where one company's funding product is presented under another company's brand, so the name on…

Bank Partner Model — common questions

What does bank partner model mean?

An arrangement in which a chartered bank is the lender named on the note while a non-bank platform sources the borrower, drives the underwriting and takes most or all of the economics after origination.

Where does bank partner model catch people out?

The entity named on your note decides a great deal that is invisible in the sales process: which state's rate rules are argued to apply, whether a licensing requirement was engaged, which regulator supervises the product, and where a complaint goes. It is frequently not the brand you dealt with, and it is often a small bank you have never heard of.

Is bank partner model the same as an interest rate?

Bank Partner Model is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.

Which products does bank partner model apply to?

Working Capital, Term Loan, Business Line of Credit, Business Credit Cards.

Is there a worked example of bank partner model?

Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.

What else should I read alongside bank partner model?

Funder, Jurisdiction clause, Lending license, Non-bank lender, Recharacterization.

Has this definition been checked?

Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.

Is this legal advice?

No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.

Can I suggest a term?

Yes — [email protected]. The glossary grows from what people are actually shown in contracts.