Online lender Avant Inc. is putting most of its marketing partnerships on hold to pull back on the company's volume of loans because of concerns over capital availability, according to a person familiar with the situation.

Avant was originating about $150 million of consumer loans per month, the person said. The marketing cuts will result in a loan-volume reduction of about two-thirds, the person said. The slowdown efforts started earlier this year but are accelerating now.

"We are moderating loan volume to focus on the immediate profitability of our core personal loan products," said a spokeswoman for Avant, who disputed the cutback figures.

The move underscores a sharp reversal of fortune for the Chicago company that was valued at $2 billion last year. It also raises concerns about institutional interest in funding these loans, which is core to Avant's business.

Avant's lending pullback comes as the company has also undertaken severe cost-cutting measures. It offered buyouts to all of its 760 staff members on Tuesday. The person said that more than half of the employees are likely to take the offers. They have about a week to make the decision.

The company had about 50 partnerships and has turned off 45 of them, the person said.

Avant's deal with Regions Bank is probably not affected, the person said.

Just recently, consumer lenders were spending large amounts on marketing to reach more borrowers. But cooler capital markets reduced the demand for loans, which caused several companies, including Avant, Prosper Marketplace, and Lending Club to cut spending on marketing.

Avant has been drawing on capital from such financial institutions as Jefferies LLC, J.P. Morgan Chase & Co., and Credit Suisse Group AG.

Founded in 2012, Avant has raised about $659 million in funding to date. Most recently it closed a $325 million funding round in October of 2015 that valued the company at $2 billion. General Atlantic, Tiger Global Management, August Capital, RRE Ventures, DFJ Growth and PayPal co-founder Peter Thiel are among its investors.

Write to Yuliya Chernova at yuliya.chernova@wsj.com

(END) Dow Jones Newswires

July 07, 2016 00:55 ET (04:55 GMT)

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