It has become very easy to get a personal loan in the United States thanks to Silicon Valley.

Many venture capital-backed companies have sprung up in recent years, fueled by new underwriting technologies, consumer-friendly websites, and a willingness to lend money where banks won’t.

Personal loans funded on the internet finance site Credit Karma jumped 148% in 2015, after growing 374% in 2014, the San Francisco-based company told CNBC. For primary borrowers, interest rates can be half of credit card rates.

Lured by growth prospects, venture capitalists almost tripled their investments in financial services companies last year to $3.05 billion, the most since 2000, according to the National Venture Capital Association. Meanwhile, institutional investors and family offices flooded the market with boatloads of debt to fuel lending, generating handsome returns.

The model is about to be tested.

Competition drives up marketing costs. In addition to industry leaders LendingClub and Prosper, there’s SoFi (which bought a Super Bowl commercial), Earnest, Avant, Best Egg, Upstart and Payoff Loan, whose board of directors includes Arianna Huffington. and former Pimco CEO Mohamed El-Erian.

In addition to increased competitive pressure, venture capitalists are now pulling out of deals, limiting future expansion opportunities. The credit market is simultaneously tightening, raising fears that defaults are imminent.

“It could be the perfect negative storm later this year. When investors start to pull back, it becomes more expensive to get borrowers onto the platforms and investors demand higher returns,” said Peter Renton, founder of the industry blog and research site Lend Academy and a market lending investor. “It’s a very different environment now than we were 12 months ago when there was a lot of exuberance.”

There’s not a lot of exuberance in tech right now, with the Nasdaq down 9% to start the year, IPOs non-existent and start-ups lowering their valuations and reducing their workforces.

Online lenders find themselves in a particularly sensitive position, due to the uncertainties surrounding the performance of their loans if global economic weakness leads to higher unemployment. After all, all of the growth in the industry happened during the bull market that followed the financial crisis of the past decade.

Equity investors have punished LendingClub – the only public company in the market – despite the fact that revenue over the past year more than doubled and the company posted profits in the third and fourth quarters. The stock has plunged 23% this year and is 44% below its December 2014 IPO price.

LendingClub CEO Renaud Laplanche resists trying to explain the stock, but says neither competition nor the economy has had a big impact on the company.

Sales and marketing costs doubled last year alongside revenue, with much of the increase used to promote the company’s growth in education and health loans. When it comes to personal loans, LendingClub finds customers on comparison sites like Credit Karma, LendingTree, and NerdWallet, while also investing in direct mail, display ads, search, and retargeting.

Even with increased competition, the San Francisco-based company is seeing an increase in demand as consumers dislike high credit card rates and fees.

“There are more personal loan providers than before, but there’s also a lot more knowledge about personal loans as a product,” Laplanche said. It’s becoming “a mainstream alternative to credit cards and one that’s a more affordable and responsible way to manage credit.”

A challenge for all lenders is to differentiate their brand from the pack, an expensive proposition for start-ups that aren’t household names. According WordStream.

From a marketing perspective, the boldest move came from SoFi, which started refinancing student loans and recently branched out into personal loans and mortgages.

Viewers of Super Bowl 50 earlier this month might recall an ad showing city dwellers running, walking, talking on the phone and eating. The ad characterizes each as “great”, “not great at all”, or “never was great”. The tagline is “great loans for great people,” and the idea is for potential borrowers to check out SoFi’s website and see if they qualify for a loan.

Read moreSoFi Super Bowl commercial

The $5 million cost for a Super Bowl commercial is a big change for a company-backed startup, but an affordable amount for SoFi, given that the company raised $1 billion by the end of the year. year for a valuation of $4 billion ($800 million more). than the current market capitalization of LendingClub).

In an interview with CNBC ahead of the game, SoFi COO Joanne Bradford said the ads on sites like YouTube and Facebook are great, but nothing gets the exposure of a Super Bowl spot. .

“We want to be associated with great financial products, and we think now is the time to tell the world that,” Bradford said.

In January, the 5-year-old company surpassed $7 billion in funded loans, just four months after surpassing $4 billion. This type of growth is happening across the industry. Avant, founded in 2012, just surpassed $3 billion in loans and says it’s the fastest platform to reach that milestone.

LendingClub took five years to reach its first $1 billion, and in the past three years it has jumped to $16 billion in creations. Prosperity is now over $6 billionless than two years after hitting $1 billion.

Thus, the online personal loan appears to be a saturated market. Until you consider that total outstanding US consumer debt hit a record $3.5 trillion last year, including $935.6 billion in revolving debt (mostly credit card ), according to Federal Reserve.

It’s a giant market for new players to attack.

“Granted, there’s a lot of growth, but it’s still relatively small compared to the size of the market,” Credit Karma CEO Kenneth Lin said of emerging alternative lenders. “It’s still mostly dominated by large financial services institutions.”

Credit Karma connects its 50 million members to financial companies based on a consumer’s credit score and a lender’s underwriting standards. Last year, the company helped originate more than 2.5 million loans.

There are many concerns about the ability of online lending to withstand an economic downturn.

This month, Moody’s placed certain loans issued by Prosper on review for possible downgrade. In a February 11 Remarkthe ratings firm cited “a faster accumulation of delinquencies and charges than expected”.

Higher defaults would be inevitable across much of the lending landscape if unemployment rises dramatically, but no cracks in the global economy have yet been revealed in jobs reports. In fact, unemployment in the United States fell to an eight-year low of 4.9% last month as employers added 151,000 jobs.

“All of the consumer fundamentals that we would look at look fine,” said Al Goldstein, CEO of Chicago-based Avant, which lends loans averaging $8,000 to borrowers at slightly below prime.

Avant was valued at $2 billion in a $325 million funding round last year, just above Prosper’s $1.9 billion valuation, and uses some of those own funds to finance brand promotion. Goldstein said customer acquisition costs have been fairly consistent over the past two years, with spending on Credit Karma being part of a diverse marketing approach.

Similarly, Earnest CEO Louis Beryl said his company invests in all digital channels, but is lucky with existing customers telling friends and colleagues about the service.

Earnest issues personal loans, although its primary business is student loan refinancing. It touts a personalized product that puts borrowers in control of their monthly payment amounts.

According to Beryl, no start-up would enter the loan market if it was not prepared enough to face fierce competition. The four largest US banks control more than $8 trillion in assets.

Rather, it focuses on the huge opportunity to couple software-based subscription and online distribution with a focus on customer satisfaction. This is not a story the giant banks can tell.

“Financial services globally is one of the most competitive spaces in human history,” said Beryl, who previously worked at Morgan Stanley, Lehman Brothers and Deutsche Bank. “What we’re really doing is taking a huge market share away from incumbents who are providing a worse experience.”

Who can do it profitably? This is the question of 2016.