Marketplace lender DirectMoney has been forced to refer "excess loan applicants" to another lender because it does not have enough investors to buy its loans. The company's business model, which relies on recycling its small balance sheet, has run into a bottleneck.DirectMoney sells unsecured personal loans of up to A$35,000 for terms of three and five years.It has several funding sources: a strategic partnership with Macquarie Bank that includes a loan purchase facility; a managed fund designed for small investors; and institutional investors.In February DirectMoney announced that Macquarie had used its loan purchase facility to acquire $5 million of loans.The DirectMoney Personal Loan Fund was launched in May last year but in October the company disclosed that the prospectus had been taken off the market for revision.A new prospectus was issued earlier this month. It included enhanced investor protection measures, including an annual independent review of the effectiveness of DirectMoney's credit assessment and fraud prevention procedures, as well as a review of delinquent loans. DirectMoney has undertaken to bear the risk of loss resulting from a breach of its credit assessment or fraud prevention procedures.As for institutional investors, the company said in a statement to the Australian Securities Exchange yesterday that it "remains intensely focused on progressing loan sales to institutions and development of a funding warehouse."Since it launched in October 2014, DirectMoney has written 810 loans worth $15.6 million, with an average interest rate of 12.7 per cent.At the end of March the loan book was worth $6.8 million (the $5 million Macquarie transaction had been completed by then). It settled $4.7 million of loans during the quarter.DirectMoney did not say which lender it was working with or how long it expected to have excess loan applications. Nor did it say whether it actually had established relationships with any institutional investors.