P2P-Banking.com

Kiva did billboard advertising on highway 101. Apparently the ad was sponsored by Paypal.

Matt Flannery of Kiva speculates whether the board brings 125 additional visits per day to the website (0.04% conversion rate) or if user growth on the sampled weeks had other causes.

(Photo Source)

Prosper.com announced yesterday that the offers received for late loans to be sold off as defaults were to low to be acceotable. Doug Fuller, Vice President of Operations says, that with offers at 1.5 cents for the dollar, Prosper believes "the prudent course of business is NOT to sell them at this time". More on the Prosper blog post.

Credit card issuer Advanta entered into a partnership with Kiva. The initiative is called KivaB4BProject and Advanta will match the loans made by business card holders with up to 200 US$ per card. Card holders simply select a business owner to sponsor through Kiva and make a grant using their Advanta Business Card. Advanta matches that grant, dollar for dollar, and Kiva distributes the total resulting funds.

The loans funded by this project can be seen on this Kiva lender page. Already contributed to more than 500 loans.

When the project was announced at Advanta's headquarters, Advanta flew in Kiva borrower Senerita Lilli a dressmaker from Samoa to share her story. 

Prosper will run television ads (preview them online). The TV spots will be aired in test markets starting this week.

MyC4 has just published a quarterly magazine to accompany it's website. The first issue of Change has 20 pages, looks stylish and has lots of information (e.g. Senegal will be the next market, where loans are available to borrowers starting in June). Here is what MyC4 says about it's magazine:

We have just released the very first issue of CHANGE - the magazine that comes all way around MyC4: Vision, business model, partners, supporters, etc.

Yesterday the headline of Dutch De Financiele Telegraph read "ABN AMRO brings together borrowers and lenders". ABN Amro is a large bank in the Netherlands. The article mentioned Boober and that ABN Amro is offering a different service.

So what is ABN Amro offering? P2P lending?

Actually the service in question can be found on this page and it is a free download document that lenders and borrowers can use to agree on a loan contract between them. Other the supplying the download ABN Amro is not involved in any resulting loans. In fact the site states (in Dutch):

… The general information on this page has not been meant as a recommendation. ABN Amro will not take liability …

I guess that can be filed under marketing using the 'peer-to-peer loan' buzz or at best under customer service.

Prosper.com is actively promoting it's marketplace to hedge funds.

Prosper is America’s largest peer-to-peer marketplace with over 600,000 members,” stated Kirk Inglis, CFO of Prosper. “As credit markets experience unprecedented changes, institutional lenders, including hedge funds, are using Prosper to diversify portfolio returns without the lack of transparency and fees associated with structured consumer debt products.

(via ProsperousLand)

Another recent Prosper related topic was the concern raised by lenders that in select states Prosper stops any collection activities on small loans, if the borrower sends a Cease-and-Desist letter (the example given is a 2,500 US$ loan in Texas). The author of the blog post argues that the risks for lenders rise, if this example really shows overall practise.

Moreover, they won't pursue legal action to recover small loans. So all small loans are now risky since the borrower has an easy method to halt payment, collections and legal proceedings. Prosper simply seems unwilling to go after small borrowers.

Finally, even for larger loans, it seems unsafe to lend, since Prosper will only sue in select states. I don't recall Prosper saying anything about selective enforcement in my many lender agreements, but before I put another penny into Prosper, you can be damn sure I will ask them what states they will take legal action in and what the minimum loan amount is for which they will sue.

German p2p lending service Smava.de yesterday introduced an optional insurance for borrowers. Borrowers can take out an insurance together with their loan. In the case of death, disability or unemployment (through no fault of one's own), the insurance will pay the repayments. To offer the residual debt insurance (see a definition of residual debt insurance), Smava partnered with an insurance company. The costs for the insurance paid by the borrower are:

• death hazard only: approx. 0.5% of loan amount
• death and disability: approx. 2.5% of loan amount
• all three: approx 4.7% of loan amount

It will be interesting to see how many borrowers are willing to opt in to the insurance.

Lenders profit because this lowers the default risk. Unfortunately at the moment lenders can not on a borrower's loan listing whether the borrower selected insurance or not.
11 months after launch defaults at Smava are still rare. Only 3 of 368 loans have defaulted and only 2 are currently late. A chart shows the development of the Smava interest rates since start.

Prosper Days 2008 took place Monday and Tuesday. Judging from the impressions of attending lenders, who blogged about it, it was a well organised event, but for seasoned lenders there were few news announced. No news about the long awaited secondary market. One blogger sees the Bidding via API function as highlight. Further news is that Prosper will start suing borrowers who defaulted on their loans. This could improve results in the collection process, where effiency is low. Explanations of Prosper about which changes were tested in the collection process were appreciated. 
A good improvement will be Prosper's plan to change payment dates. So far the date a payment is due has been dependent on the initiation date of the loan. Soon payment dates will be matched with borrowers pay day. I am sure this will reduce lates, but I do wonder why such an obvious and easy change was not implemented much earlier. Some of the international sites from inception took into consideration at which time of the month the borrowers are likely to be liquid when setting payment dates.

I hope Prosper will publish videos of the session on their website, like they did with the Prosper Days 2007. 

As P2P-Kredite.com reports the first 2 loans at German p2p lending service Smava.de have defaulted. Since the Start in March 2007 a loan volume of 1 million Euro (approx. 1.4 million US$) has been funded at Smava. The amounts of the two defaulted loans are 4,000 and 6,000 Euro resulting in a default rate of about 1%. At Smava loans default 40 days after they are late and are sold in a debt sale for a fixed rate of 25% (22% on lowest credit grades) to a collection agency.
2007 has been a very good year for Smava lenders as defaults (and late payments) have been significantly below expected rates.