For companies such as LendingClub (LC) - Get Report and Square (SQ) - Get Report , establishing the public's trust is key.

Both of the comparatively small-shop companies base their businesses on luring consumers and investors away from larger, more established firms, including the country's consumer banking behemoths.

But LendingClub has recently fallen into a crisis of confidence -- with formerly reliable buyers of its loans, including Jefferies and Goldman Sachs(GS) - Get Report , turning away -- and shareholders paying the price. 

Shares of the San Francisco-based online marketplace opened 12% lower Tuesday morning, following an after-market filing with the Securities and Exchange Commission Monday, in which LendingClub acknowledged a number of key investors have begun to lose faith in the integrity of the company's loans after a disastrous week.

LendingClub's market cap of roughly $1.5 billion was more than halved last week alone, and shares are down 67% so far this year, as of Tuesday morning trading.

The sharp selloff of shares comes on the heels of last week's sudden announcement that LendingClub CEO Renaud Laplanche will be stepping down after the company admitted to improperly altering dates on its loans in a $22.3 million buyback  -- prompting a Justice Department investigation.

"In one case, involving approximately $3 million in loans, an application date was changed in a live company database in an attempt to appear to meet the investor's requirement, and the balance of the loans was sold in direct contravention of the investor's direction," the company said in an after-market SEC filing. "Employees involved in directing the sales of the near-prime loans that did not meet the investor's non-credit, non-pricing requirement were terminated or have resigned their positions."

The principal levers LendingClub has left to pull in order to restore confidence include debt and stock offerings to shore up capital and lowering its fees, which could adversely pressure LendingClub share prices, according to the company's filing.

"In order to obtain additional investor capital to our platform, we may need to enter into various arrangements with new or existing investors and we are actively exploring several possibilities," according to the filing. "These structures may enable us or third parties to purchase loans through the platform. Such actions may have a material impact on our business and results of operations and may be costly or dilutive to existing stockholders."

And while it's unclear how LendingClub will attempt to refurbish its brand and attract loan buyers, investors of San Francisco neighbor Square would be wise to recognize similar risk factors inherent in its business.

Square, headed by Twitter(TWTR) - Get Report co-founder and CEO Jack Dorsey, is also a small shop in comparison to the country's consumer banking giants, all of whom have begun tinkering with their own forms of mobile payments. Square's market cap of about $3 billion is about the size of LendingClub's -- that is, before shareholders ran off with half LendingClub's market cap last week. 

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"Our business depends on a strong and trusted brand, and any failure to maintain, protect and enhance our brand would hurt our business," the mobile-payment company said in its annual statement with the SEC, noting the imperative to protect Square's reputation for providing secure and reliable technology. 

And in light of the remarkable amounts of private data flowing across LendingClub's sprawling mobile-payment channels -- including Social Security numbers, card numbers, expiration dates and names -- a public slip-up such as LendingClub's alterations to loan documents could translate into a similar one-strike policy, prompting an investor flight.

"We, our sellers and our partners, including third-party data centers we use, obtain and process large amounts of sensitive data, including data related to our sellers, their customers, and their transactions," Square said in its 10-K filing, highlighting two of its chief payment businesses: Square Cash and Square Payroll. "We face risks, including to our reputation as a trusted brand, in the handling and protection of this data, and these risks will increase as our business continues to expand."

The company went on to outline the threat of third-party hacking, citing risks of "malware, phishing, hacking attacks, system error, trickery," and other unauthorized access of private data.

"Any perceived or actual breach of security could have a significant impact on our reputation as a trusted brand, cause us to lose existing sellers, prevent us from obtaining new sellers, require us to expend significant funds to remedy problems caused by breaches and to implement measures to prevent further breaches, and expose us to legal risk and potential liability," Square said.