Year-End Review of Peer to Peer Lending in 2009

As the end of 2009 approaches here is a selection of main news and developments covered by P2P-Banking.com:


Off to new shores (Photo credit: Nattu)

Financial Startups Lobby for Congress to Ease Regulation on P2P Lending

Financial startups have formed the ‘Coalition for new Credit Models’. Among the founding enterprises are Prosper and Loanio. Two of the changes the coalition asks Congress and the Administration to make are:

Adopt legislation classifying person-to-person lending as a consumer banking service, not a securities offering.

Create a Start Up Liaison at Treasury Department or within banking regulators to guide and fast-track the development of new financial products by start-up companies and organizations seeking to innovate the way consumers and businesses raise and access capital.

(Source: press release; photo credit: Vince Alongi)

Peer to Peer Lending Jobs

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. Continue reading

Loanio Files S-1 SEC registration

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.

P2P lending trends to expect in 2009

As last year I’ll again attempt some predictions on what trends and developments can be expected in peer-to-peer lending 2009.

More competition and entering more national markets (probability 100%)
In many markets multiple p2p lending services will compete for the attention of lenders and borrowers. In other markets, where there is no national p2p lending service active yet (e.g. Canada, New Zealand), p2p lending will be introduced by the launch of a service. Possible candidates include Communitylend and Nexx.
It is hard to predict when the dormant US players (e.g. Prosper, Loanio) will overcome the regulatory hurdles and if that step is lasting.
The British market which has (compared to other markets) rather low regulatory barriers so far is dominated by a single player –  Zopa. I wonder if we’ll see the launch of a competitor there.

Boom of social lending services/p2p microfinance (probability 100%)
2008 saw the launch of Babyloan, Veecus and Wokai. Kiva funded more the 1 million US$ new loans in a single week in the end of December. The steep growth of Kiva, MyC4 and other services will continue and new p2p microfinance platforms will launch.

First Banks experiment with own p2p lending applications (probability 50%)
While p2p lending volumes are far from being a business threat to banks – banks do watch the developments. Possibly in 2009 a bank will launch its own p2p lending application. The principal aim will not be to generate revenue, but rather to collect experience and to gauge acceptance by the bank’s customers. It will be interesting to see banks testing the water on their path to implement a p2p lending concept that supplements their core business.

Continue reading

Review of peer to peer lending developments in 2008

As the end of 2008 approaches here is a look back on the highlights of peer to peer lending news in 2008:

Loanio suspends operations

Asked to comment on the recent developments, Loanio CEO Michael Solomon told P2P-Banking.com:

In light of recent events beyond our control, Loanio, Inc. has suspended its business so that we may begin the process of registering our promissory notes with the appropriate securities authorities and agencies. As a direct result, please be advised that effective immediately Loanio will no longer be accepting registration from lenders or borrowers and/or any new bids on loans or loan requests until further notice.

This message will be posted on the Loanio platform today.

Loanio says it won’t face registration process in near future

Loanio logoAsked by Netbanker whether Loanio.com will face an SEC filing process and a quiet period like Prosper and Lending Club, Loanio CEO Michael Solomon answered:

“…from the perspective of (Prosper) going silent, it is actually great for us as I think we will quickly gain lots of lenders and hopefully we can wow them into sticking around. From a regulatory standpoint, we believe that at some point we will seek to introduce a secondary market platform, but we will focus the greater part of the next 12 month on building our platform and seeking out a national bank partner to cover the rest of the U.S. Our plans for a secondary market are too far ahead for me to contemplate at this time.”