RepublicBuy.com

photo credit: Alan Nakkash

If you were thinking of investing in peer to peer loans and were scared away by the commitments, Lending Club’s trading platform has just added some liquidity.

Investors in peer to peer loans like it for several reasons. One is they could be helping someone. The borrower might need funding to start a business or pay for school. Second is the often the nice return investors see on their money, with many loans earning above 10%.

Certain investors liked the idea, but stayed away for a couple different reasons. One major reason is once you entered into a peer to peer loan you were locked in for the duration of the loan. With most loans being three years, peer to peer loans were not considered a liquid asset. If times changed and you needed access to money, your peer to peer loan was not the place to look.

Today, this might be different and has to do with the major changes to the industry in the last year. The SEC has stepped in and stated that issuing peer to peer loans without proper registration is illegal. This effectively shut down the industry and has done so for some time. Banks that want to open back up have to fill out the appropriate paper work with the SEC before issuing any more peer to peer loans. For those banks that do register, their peer to peer loans become securities and are tradable.

Today, Lending Club is one of the first to complete the registration and back open issuing loans. They have also added a trading section to their website. There, visitors will find it is being managed by Folio a member of Financial Industry Regulatory Authority (FINRA). This is a huge securities regulation firm that clients include the NASDAQ and ASE.

This addition has resolved the problem of liquidity. Read the rest of this entry »

photo credit: juhansonin

Starting a business is an overwhelming thought. One of the first things to consider is the funding you will need to get off the ground. In the past, you would need to either find investors, an angel investor, or attempt to get a business loan. Today, peer to peer lending is a new option that people are finding it as a viable option for funding a business.

The advantage of using peer to peer lending is the scale of your application. When you apply to a bank or approach an angel investor this is just one potential lender. If you use peer to peer lending, you are submitting a request for funding to thousands of potential investors. Everyone that is on a peer to peer lending site is a potential investor. Large sites like Prosper have a couple hundred thousand members. That is an exposure not easily achieved through the other models.

There are specific peer to peer lending sites that are designed for entrepreneurs. 40 billion is one of these sites. Read the rest of this entry »

photo credit: A6U571N
Imagine making money like E-Bay, but in the world of loans. Two years ago, if you lent me money with principal and interest from a family member or friend I would’ve said you are “crazy”! But today there is such an opportunity to get a loan from people who want to lend money. Rather than get “burned” from our family and friends for lending money anyway we should look to other alternatives. There is an alternative much like E-Bay. It’s called Peer to Peer Lending. They are called “lenders” and these are ordinary people. These lenders could be your boss, friend, grandmother, aunt, dad, or even a stanger. Their job is to fund loans on a website called Prosper.com. It is a good idea that if a family member or friend borrows from each other, do it in a format where relatives and friends can get lend their money and get paid back with interest and principal. Peer to Peer Lending was founded on the very same principal as E-Bay. Namely to allow online bidding through an auction style process of lending. Chris Larson who is the co-founder of E-Bay is the owner and founding father of Peer to Peer Lending. If you have made a lot of money selling on E-Bay or made a deal through buying that product, the same goes for Peer to Peer Lending. Except the item is a person who needs a loan, and the bidders are the lenders who have cash$$$ A person who needs a loan becomes a borrower. Read the rest of this entry »

photo credit: karpov the wrecked train

In the past getting a loan used to be a pretty intimidating process, getting dressed in your Sunday best, looking your best and venturing into town to the bank for a date with the Bank Manager. Once there you used to have to throw yourself at the mercy of the manager and plead for them to lend you money, getting declined for a loan was often a demoralising and embarrassing process.

These days applying for a loan is much more stress-free with the decision on whether you get given the money being based more on details such as your income, credit report and other factors, but still people can get turned down for reasons other than a poor credit record. In light of the recent credit crunch many banks are being more cautious about whom they lend money to and in some cases have ceased offering unsecured loans. Read the rest of this entry »

photo credit: karpov the wrecked train

As the credit crunch continues, more and more business owners and entrepreneurs are turning to less traditional methods of business financing. Usually, the requirements for receiving these non-traditional business loans are not as strict as bank requirements, even during times of a booming economy. Now, as people who would normally qualify for bank loans are facing bank denials, the various non-traditional business financing sources are experiencing an influx of qualified applicants.

Peer-to-Peer Lending

Wikipedia describes peer-to-peer, or P2P lending, as a lending system that “…occurs directly between individuals (“peers”) without the intermediation/participation of a traditional financial institution.” According to a recent article, many peer-to-peer lending sites, say users are frequently listing “credit crunch” or “banks tightening their credit policy” as reasons for turning to social lending networks. Read the rest of this entry »

photo credit: The Digital Movement

For individuals seeking a loan for the reasons of debt consolidation, auto loan, student loan, small business loan or any other personal loan, there is a new option of funding through peer to peer lending. This option is relativity new and has become a completely separate industry. It is growing at a fast pace and for many people find it services a need not easy filled by other options.

The idea is based in person to person lending and is much like lending family members or a friend money. The bank involved acts to connect individuals who want to engage in lending or borrowing. For the borrowers, the bank helps find lenders. For the lenders, it does all the due diligence on borrowers such as a credit check and handles collection of payment. The credit checks have the purpose to reduce risk to the individual lenders and assign a max amount the borrower can get and sometimes the interest rate on a loan. Read the rest of this entry »