P2P-Banking.com

Today I have added the new ‘Peer to Peer Lending Jobs‘ section and started it with listing the current 4 positions startup Loanio wants to fill in Nanuet, NY.

As P2P Lending is a very new and emerging field there are very few experts who have gathered previous practical experience in this field and these are highly sought after. One example is Arkadiusz Hajduk, who founded Fairrates in Denmark, then worked for IOU Central in Canada and now works at Smava.pl in Poland. (more…)

Kiva has now enacted changes in how currency risks are accounted for. The model was first proposed in March.
Now MFIs can choose “currency risk protection” for their new loans. If this option is selected lenders will have to cover any losses that arise from a devaluation of the local currency exceeding 20% (for the part that is over the 20%).

On listed loans at Kiva there will be a new information status on the “about the Loan” Section under “Currency Exchange Loss”. The status will either be:

• “Covered”: Meaning the MFI covers any losses (like it has been in the past)
• “Possible”: The MFI has opted for the new rule - the lender covers currency losses above 20%

I browsed some new loan listings today - most are still offered under the “covered” rule, one example of a loan under the new “possible” rule is this Tajikistan loan. (more…)

Loanio has filed a S-1 registration with the SEC. P2P lending service Loanio had been briefly active in October and November last year before voluntarily closing to new users in order to seek SEC registration approval.

In the new SEC filing Loanio wants approval for offering 50 million US$ in notes based on peer to peer loans via their website Loanio.com. The filing includes the outlook for a secondary market (loan trading platform via a broker) and the plan that Loanio might partner with a “national financial institution”. Should that be achieved, borrower loans could be originated through this lending institution and then sold and assigned to Loanio. This would allow Loanio to offer loans to borrowers in more than the 22 states it has individual state lending licenses for now, and would eliminate (some) state interest caps.

The filing also gives insights into the company structure and expenses since foundation. Founder Michael Solomon hold 97% of the company shares.

Under the requirement to file with the SEC, starting a peer-to-peer lending company in the US market takes an unusual long pre-launch phase compared to other internet based business models.

Lending Club already completed the SEC approval process, while IOU Central and Prosper currently undergo this process. Pertuity Direct operates under a p2p lending model with a different setup.

The State of Montana signed an agreement with Prosper Marketplace Inc. to resolve matters relating to unregistered securities and securities fraud. (more…)

Unithrive is a non-profits that allows alumni to help students by granting interest-free loans. Currently only alumni and students of Harvard can sign up, but Unithrive plans to expand to other schools in fall 2009.

Students can borrow between 500 and 2,000 US$ per semester. Repayment begins after they graduate.

The founders Joshua Kushner, Nimay Metha and Tanuj Parikh recently graduated from Harvard. For more on Unithrive read this recent New York Times article.

Matt Flannery has written a great article recapitulating the story of Kiva. “Kiva at four” centers on the developments in the past two years. Flannery shares his vision what Kiva might develop to.

I won’t even try to extract the highlights as the whole article is a fascinating read.

I just guaranteed $25 of a loan to Sakho Devi and group, Ritudih, India via Unitedprosperity.org. United Prosperity has launched on May 28th. See my earlier United Prosperity review including an interview with CEO Bhalchander Vishwanath for more information on the concept.

Signing up and selecting the loan went smoothly. For the requested loan of 1,052 US$ a guarantee of 579 US$ needs to be raised.

Sakho Devi has a grocery shop of her own, with which she earns her living. She has applied for a microloan to expand her small grocery shop, so that she can meet the demand from customers.

The listing also states some data about the partner MFI - Ajiwika Society - it’s interest rate, delinquency rate, default rate and target clients.

Tomorrow Kiva will announce that it will start to fund loans to borrowers in the United States. Kiva, which so far lets anyone support loans to small entrepreneurs in developing countries, is reacting to lender suggestions who wanted to use Kiva to help borrowers in need in the US.

In the US Kiva will partner with Accion USA and Opportunity Fund to select eligible borrowers. Initially the small business owners borrowing will be from the areas of Atlanta, Boston, Miami, New York and San Francisco. (more…)

It always seemed to me that traditional banks tend to make most of their money on the backs of people that pay penalties for small errors rather than just charging for capital as their business model might otherwise suggest. Credit card companies seem to be doing the same thing, jacking rates to the maximum allowable limit if their customer goes late on a payment. All of this makes it look like the traditional banks and credit card companies are making money by being deliberately opaque, hiding their true cash cow of fees in fine print.

The peer to peer lending market has been exploiting the opportunity this opacity creates. Who would have thought these peer to peer lending sites had a chance against traditional banks? But borrowers and lenders warm up to them because they strive to become as transparent as possible.

But why do I have to get a loan for a specific need like an addition to my home? I don’t get a credit card for a particular need, its just so I have it if I need it. The reality is that the current peer to peer lending market is uncollateralized. I can’t go hold a chunk of a house ransom if a borrower doesn’t pay me back for a home improvement loan I gave him. I can’t “repo” the motorcycle I helped that guy in Utah purchase if he defaults, so what sense does it make that these are specific loans for specific goals? I’m merely making uncollateralized loans to individuals for whatever purpose they want. Its really just a bet on the person’s credit rating and “confirmed” financial situation.

So why couldn’t we think of it more like revolving credit? Why couldn’t I get a Visa or MasterCard from a P2P loan site instead? The P2P lending company would sponsor the process issuing a credit card to borrowers funded by lenders pooling their money. Adding to the existing P2P loan benefits, the lender makes more money because revolving credit interest rates are higher than “standard loans” and the borrower has much more clarity into the factors that can make his APR go down and credit limit rise over time. (more…)

Mastercard has announced that they will offer a payment platform for mobile person-to-person payments in the US. The service, called Moneysend, is set to go live this month.

When money is transferred from one user to another it is debited from the sender’s Mastercard account and credited to the receiver’s Mastercard.

(Photo credit: StewieD)