RateSetter, the UK peer-to-peer lending site that competes with Zopa and, less directly, Funding Circle, has announced that it has seen £1 million lent through its platform since the site launched just two months ago. That’s a fairly big number, although perhaps a reflection of the lousy interest rates offered by high street banks at the moment and the hard times people are facing. → Read More
Funding Circle is a newly launched peer-to-peer lending site in the UK with a number of heavy-weight backers including Andy Homer, Chief Executive of Towergate Partnership, and Jon Moulton, the founder of private equity firm Better Capital and former managing partner of Alchemy Partners.
A sort of Zopa-for-small businesses, the ‘social lending platform’ facilitates loans to SMEs instead of individuals, giving lenders the opportunity to get an estimated 6 to 9 per cent return on their money. It’s also possible for lenders to get their money back before a loan is repaid by reselling their part of the loan onto other lenders, a first says the company and something that they think will be popular since in this instance interest can be earned immediately without the need to wait for the loan arrangement to be completed. → Read More
Good news for P2P lending and trading platform Prosper as it concludes its 9-month hiatus during which it was not allowed to continue its loan operations in the United States.
The Securities and Exchange Commission is now greenlighting Prosper to facilitate peer-to-peer lending in 14 states with more on the way, borrowing nearly nationwide. Prosper is now the first and thus only Internet auction-based P2P loans platform to have its registration statement declared effective by the SEC, which is evidently good news for other players in the P2P lending industry, such as Lending Club.
SEC’s approval of Prosper’s secondary marketplace, which enables people to loan money directly to other individual and institutional investors, comes a couple of months after the startup had already reignited its lending platform in the State of California. → Read More
Prosper, the people-to-people lending service that launched way back in May 2006, has found itself on a rocky road so far. Last October, Prosper suspended new lending in order to register with the Securities and Exchange Commission to create a secondary marketplace for the loans on its site (the SEC wanted to evaluate whether the company should register as a securities broker, as evidenced later when it formally issued its cease-and-desist letter).
But now Prosper is back despite the fact that the SEC hasn’t yet approved its operations, and while they have respected the requested silence up during the six-month hiatus, they haven’t exactly stalled development of the service.
Prosper and other peer-to-peer lenders like Zopa and Lending Club may turn out to be collateral damage from the credit crisis. Yesterday, Prosper suspended new lending in order to register with the S.E.C to create a secondary marketplace for the loans on its site. As recently as Monday, Prosper didn’t think it would have to register as a seller of securities. But the new climate of heightened regulatory oversight in light of the current financial meltdown has changed all of that.
Lending Club previously had to do the same thing and suspend new lending last April . (The S.E.C just gave it the green light to start lending again on Tuesday). Zopa shut down it’s P2P lending site in the U.S. last week.
Even before the increased regulatory scrutiny, P2P lending took a massive hit along with the rest of the financial industry. → Read More
Despite sub-prime loan worries rocking the economy, peer-to-peer loans are gaining some traction. You’d think loans between individuals would be much riskier than loans from a bank, but it turns out that individuals can be more risk averse than banks when it comes to lending out money. If you look at Prosper, the leader in P2P lending with more than $100 million in loans out so far, only 7 percent of its loans in October were sub-prime, despite their higher interest rates. Prosper is about to get a lot more competition. After more than a year of waiting, UK-based Zopa got the go-ahead from regulators to launch its U.S. Website last week. Zopa, which doesn’t allow sub-prime loans at all, has a 0.1% default rate, whereas Prosper has a 3 percent default rate. And Lending Club, which started as a Facebook-only application, just got clearance today to operate nationwide. (It had been awaiting approval from half a dozen states, including big ones like California, Michigan, Illinois, and Pennsylvania). Lending Club launched six months ago on Facebook, and opened up its own Website three months ago. In that time, its members have issued 489 loans worth $3.5 million. Of that amount, only $16,000 worth are between 16 and 30 days late on payments (see stats here). It also does not allow sub-prime loans. Lending Club’s loan portfolio is too small and its loans have been out too short a time to really know what its average default rate will be. But if it can match its larger competitors, it should do fine. Social lending is here to stay. CrunchBase Information Lending Club Prosper Zopa Kiva Information provided by CrunchBase → Read More
Lots of news form UK-based peer-to-peer lending startup Zopa, which is prepping its US launch this week. Zopa is also launching officially in Italy this week after a ‘friends and family’ trial. Meanwhile, the new listings service (a sort of 21st Century version of the begging letter, covered here), has produced £250K worth of bids in the first month of operation. Among those looking for loans include an organic wine farm wanting money for a mobile home for volunteers, a father wanting money for his son to buy a fishmonger business and a recent graduate wanting to train as an energy efficiency assessor. Go figure. Zopa in the US will operate slightly different to previous localities, which they outlined in an email, which TechCrunch US picked up on: • No risk for investors. • Funds will be federally insured. • Pick who you want to help. • Investors will choose exactly who they want to help. • Set your rate. • Investors will choose how much they want to earn, up to a ceiling. • No waiting. • Borrowers will get their loans immediately upon approval. • Lower your monthly payment. • Borrowers can reduce their loan payments after they’ve borrowed. → Read More
U.K.-based peer to peer lending startup Zopa is gearing up for their U.S. launch. Reports of the launch have been circulating for some time (WSJ), but now it seems only days away. The service will be available at us.zopa.com, but is currently under password protection. Zopa’s peer to peer lending service differs from U.S. rivals by working with credit unions to offer person-to-person loans instead of a loans coming directly from lenders on the service like Prosper and Lending Club (works through Facebook). GlobalFunder.com is a yet-to-launch competitor. With Zopa, lenders will place their money in Zopa branded CDs that are then loaned out online. Borrowers apply for loans through their online community by posting their case for the loan and filling out relevant details about their credit risk. Interest rates on five year loans can range from 8.75% to 16.99%, depending on their credit risk. It’s worth noting that Zopa’s investor, Benchmark also invested in Prosper. The lending market is anticipated to be very large. According to the research firm Online Banking Report, around $100 million in new P2P loans will be issued this year, mostly by Prosper, with new loans growing to as much as $1 billion in 2010 and $9 billion in 2017. Prosper already registered an S-1 with the SEC and reported $96.4 million in loans. Adding further details to the launch, Allen Stern received an email outlining some differences between the U.S. and U.K. (which TCUK covered) versions. The key differences listed are: No risk for investors. Your funds will be federally insured. No more worrying about whether your borrowers will pay your loan back. Pick who you want to help. Investors will choose exactly who they want to help. Set your rate. Investors will choose how much they want to earn, up to a ceiling. No waiting. Borrowers will get their loans immediately upon approval. Lower your monthly payment. Borrowers can actually reduce their loan payments after they’ve borrowed. They’ll do that using rich profiles… CrunchBase Information Zopa Prosper Lending Club Information provided by CrunchBase → Read More
Zopa, still (it would appear) the world’s first peer to peer online lending service, has launched Zopa Listings, allowing individual borrowers to post their own specific requests for loans for individual lenders to review and then bid against. Zopa already has a Markets product where lenders meet borrowers. The new Zopa Listings (to be found here) allows individuals to ‘pitch’ online for the loan they want, giving details of what they are borrowing for, the interest rate they are seeking and their own personal circumstances. Lenders then choose between these individual borrowers and bid, eBay-like, to lend to them, offering an amount and the interest rate they are prepared to lend at. A listing can include photographs and (eventually) a video. When the listing closes, if the full loan amount has been achieved and the borrower is happy, it will go ahead at the aggregate interest rate of all the offers. If the amount is not achieved, the process stops there, although the borrower will have the chance to re-list. Lenders can bid with a lower interest rate offer to any listing that has yet to close, even if the loan amount is fully covered – keeping the competitive process live until the very last moment. Zopa hopes that the bidding process will create competition amongst lenders to offer the best rates they can, creating a more efficient loans market. Charges for the new service will be the same as the existing Zopa Markets – successful borrowers pay 0.5% of the value of the loan and lenders will pay 0.5% of the value of their loans per year, as an annual charge to Zopa. There are no other charges. This ‘Social Lending’ approach is likely to appeal to the Facebook generation, used to seeing these kinds of pathetic cries for attention… sorry, I mean witty requests for cash. The key thing here is that borrowers get to tell their own personal story in all its glory, tugging at the heart-strings of potential lenders. Heard of irrational exuberance? You ain’t seen nothing yet. “New nursery needed for little tike” already has 3 offers for its £4,000 loan (since when did a lick of paint for the spare room cost that much?), while the “New internet venture seeks financial help” listing has had two offers (at a 7.4% rate) for its £2,000 loan request. I don’t hold out much hope for its → Read More
Peer to peer lending service Lending Club will close a $10.26 million series A round of financing from Norwest Venture Partners and Canaan Partners tomorrow. This comes a few months after the company’s $2 million angel round. Coinciding with the investment, Jeff Crowe and Dan Ciporin (former ceo of shopping.com) are joining Lending Club’s board of directors. Similar to other P2P lending sites (Prosper, Zopa, Kiva), LendingClub matches borrowers and lenders. However, LendingClub doesn’t work through their own website, but solely through Facebook on the application they launched at the F8 platform launch conference. Borrows and lenders a linked up using their “LendingMatch” system, which recommends loans based on credit and their social relationships to each other. The idea being that trusted relationships make lending more likely and defaults less likely. The application currently has over 13,000 installs. Unlike Prosper, interest rates aren’t determined through bidding, but calculated based on the borrowers credit score, debt to income ratio, and amount of the loan. There are no hidden fees, and the interest rate is fixed for three years. In July the service surpassed $500K in loans. They recently claimed a little more than 4 out of 5 loans get funded and haven’t reported any defaults or late payments. It’s still the early days for this industry, and as TC commenters point out, it’s very much a case of Caveat Emptor. → Read More
Company: Zopa Launched: March 2005 Status: Funded by Benchmark Capital and Wellington Partners Location: London Overview: Zopa, based in London, is a lending network. Zopa synidicates loans requested by “borrower” members out to “lender” members, based on criteria and parameters set by both parties. Zopa stands for “Zone of Possible Agreement”, which “is the overlap between one person’s bottom line (the lowest they’re prepared to get for something) and another person’s top line (the most they’re prepared to give for something). It’s the way people negotiate all sorts of stuff – buying a car, getting a mortgage – even a teenager negotiating with parents about staying out late. If there’s no Zopa, there’s no deal.” Zopa is the first lending and borrowing exchange. What we do is very simple. We put people who want to lend in touch with credit-worthy people who want to borrow. And because there’s no middle-man – the borrower pays just a 1% exchange fee to Zopa upfront – both benefit. We’re not sure about the “no middle-man” argument since Zopa is, in effect, acting as a middle-man and taking a 1% cut, but the idea is brilliant nonetheless, and it certainly seems to make it easier for people to borrow small amounts of money at reasonable rates. Borrowing and Lending: In order to lend or borrow, Zopa does a background and credit check on you to ensure that you are appropriate for their market. They attempt to do this online and with as little hassle to you as possible. Once you are approved you can lend or borrow money within various limits. For instance, you may borrow from £1000 to £15000, in £500 increments. Lenders can loan a minimum of £500 and a maximum of £25,000. If you’d like to lend more than £25,000, you must obtain a license to become a “consumer lending business”. Zopa will help you through this process. Zopa spreads the lending risk among many borrows to reduce overall loss risk. Contracts are set at £10 each and must be spread among at least 50 different borrowers. And Zopa aggresively pursues bad debts: How does Zopa deal with bad debts? If one of your borrowers defaults, Credit Resource Solutions Ltd, a collections agency, will undertake to recover any money outstanding. Should it be unable to do so after 120 days, you agree to sell the debt to a collections agency for → Read More
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