Countries

P2P Lending for Small Businesses Reaches France

eKwiti 1 Comment

Finally! We all long waited for a genuine P2P lending service in France.

FriendsClear launched on February the first a platform that enables small businesses to advertise their projects and ask for a loan up to 15,000 Euro.

Lenders can then apply for the loan for an amount between 1,000 and 3,000 Euro. If a project is validated, once it receives enough loans propositions.

The rates are fixed to 5% for the lender and 6.25% for the borrower. The spread finances the platform and their Bank partner: Crédit Agricole.

To ensure the seriousness of the projects, it costs 15 Euro to advertise a project. Most of the project information is only available to registered lenders.

To launch this service, FriendsClear organized a project contest. After the public vote (over 10000 votes), a jury will choose the best project between the five finalists. The winner will be rewarded by a prize of 10,000 Euro.

This enables serious business growth for the small startup FriendsClear. In order to support it, they recently raised new funds and it seems that they are looking for new co-workers on this project – but I couln’t find precise information on their recruitment needs.

This is very encouraging sign for finance 2.0 in France, and we believe that more will follow soon, from other actors but also from FriendsClear, which have many projects for the future (P2P for individuals, open a branch in another European country).

An interview of Friendsclear founder Jean-Christophe Capelli [in French]

Bigcarrots – P2C Lending in the UK

wiseclerk 1 Comment

Bigcarrots.com wants to bring business and lenders together. Peculiar name, isn’t it? Images from Bugs Bunny cartoons floated on my mind. Positive indeed – but not at all related to finance.

Bigcarrots applies the concept of peer to peer lending to funding companies. Lenders can lend in chunks of 25 GBP, and a company can apply for unsecured loans of up to 25,000 GBP for 3 to 36 months loan terms. Lenders even have the possibility to exit early by reselling portfolios on a reseller platform.

The level of information provided on the website is low, the FAQ is short. For example their is no description how the risk assessment of applying companies is done by Bigcarrots. The About section gives little information on the background of Bigcarrots. I used the contact form to ask for more information, but did not receive an answer.

Interview with Julia Kurnia, Director Zidisha.org

wiseclerk

Last week I published a short overview on the new p2p microfinance service Zidisha.org. Now Julia Kurnia, Director and Founder of Zidisha.org answers my questions.

P2P-Banking.com: What is Zidisha about?

Julia Kurnia: Zidisha uses internet and mobile phone technology to connect entrepreneurs in the world’s most isolated, impoverished areas with the international P2P lending market.  Zidisha supplies the key services needed to overcome the geographic barrier between lenders and borrowers – local credit history verification, low-cost electronic money transfers, independent tracking of borrower performance history – then gets out of the way and lets lenders and entrepreneurs interact directly.  Zidisha’s philosophy is similar to that of eBay, which really advanced the opportunities of small entrepreneurs in the US by supplying a regulated venue in which business growth is limited only by entrepreneurs’ own creativity and track record of responsible conduct.

P2P lending has vast untapped potential to open up better economic opportunities for motivated people in low-income countries.  Africa in particular is home to a growing class of entrepreneurs who, while economically disadvantaged, are computer-literate and have verifiable credit histories with local microfinance institutions – all of which can be tapped to supply many of the communication and record-keeping services traditionally performed by local banks and microfinance institutions.  Zidisha is designed to serve this type of borrower.  In this sense, it is complementary to services such as Kiva and MyC4, which allow more marginalized borrowers without computer access to fund loans via local intermediary microfinance organizations.

P2P-Banking.com: How do African Entrepreneurs react to the possibility of posting a loan application online and getting it funded by strangers?

Julia Kurnia: I think this is best answered by Ms. Ndeye Sarr, a lady in West Africa who single-handedly supports a family of five sewing clothing by hand.  She is raising a loan on Zidisha to buy an electronic sewing machine, which will allow her to meet client demand faster and grow her business to where she can support her household comfortably and keep her kids in school through college.  Last week Ms. Sarr stopped by a local cybercafé to check on the progress of her loan application and upload some photos of the traditional clothing she produces, and she posted the following comment:

“I have just visited the Zidisha website, and see that the lenders are still continuing to support me, so that I can really start up a proper business activity. I would like to thank all those who are helping to finance my enterprise. I’m so happy to see that people on the other side of the world are willing to lend a hand to those who do not have the resources to earn their own honest living.“  (translated from the original French) Continue reading →

Polish P2P Lending Site Monetto Goes Under

Michal Kisiel

In e-mail newsletter sent to its users on January 20th the operator of Polish peer-to-peer lending site Monetto.pl informed that the website will be accessible only until the end of February. Lenders are urged to update the loan contracts and to change the number of bank account set up for repayments. Monetto will no longer intermediate in processing repayments and loans should be repaid to lenders’ accounts directly.

Monetto was one of the early entrants to Polish social lending market. The company was financially backed by venture capital fund IIF. From the beginning the market was plagued by the influx of unfair borrowers, partly due to the insufficient verification procedures. Lukasz Banach, CEO of Prender Ltd. – the company behind Monetto project, reflected in the interview for finnovation.pl in September 2009, that what attracted crooks might be higher (than on other P2P lending markets in Poland) initial limit of loan amount. He also said: “In USA, UK (also Germany) there are central, accessible and trustworthy databases of credit history. As long as there is no such thing in Poland, I don’t believe that social lending will be successful here. When this barrier is removed, the percentage of bad debts on P2P markets will fall down significantly. ”

Things started to get worse in the end of 2008, when VC investor decided to stop financing the project. Since January of 2009 Monetto was in “coma” – there were no new loan listings, repayments were forwarded to lenders infrequently and there were significant problems with customer service. The investors made an effort to sell the service (although it was never announced officially) but no interested buyer was found.

The announcement is viewed by many as the last act of the drama which lasted far too long. In few articles that were published in press, the negative consequences for the credibility of social lending model in Poland are stressed. In other opinions there is a little bit of optimistic tone – failure of Monetto shows that market weeds out the weaker and less secure players.

Zidisha – P2P Microfinance Directly to the Entrepreneur

wiseclerk 3 Comments

Based on her experience in founding SEM Fund, Kiva’s oldest filed partner in Senegal, Julia Kurnia believes there is a vast untapped potential for p2p lending in microfinance.

To tap it she launched Zidisha.org, a non-profit that makes two changes in the process. First: There are no intermediaries. Lenders lend directly to computer literate entrepreneurs in Africa (currently Senegal and Kenya). Second: Only entrepreneurs with a credit history that have in the past paid back a loan by a bank or a financial institution successfully are eligible (this is verified).

Julia Kurnia told P2P-Banking.com:

Lending through local intermediary microfinance organizations creates high costs for borrowers (Kiva borrowers pay an average of 35.25% in interest to Kiva field partners, according to the Kiva website statistics).  Outsourcing loan management to local intermediaries also puts P2P platforms at risk of pyramid schemes, in which unscrupulous partners use funds disbursed for new loans to mask embezzlement of repayments due to lenders.  Kiva and MyC4 did very well when they operated at small scale, but as time passed and they added large numbers of partners, the cost of controlling intermediary fraud ballooned and may make their models unsustainable at a large scale.

Lenders at Zidisha upload money via Paypal (fees apply) and then can browse listings, written by the entrepreneurs themselves. Lenders do get paid interest, whoever “the principal purpose of Zidisha’s lenders in funding loans is to help finance these entrepreneurs, and not to make a profitable investment.” according to the FAQ. During bidding lenders can underbid each other with the result of the entrepreneur profiting from a sinking interest rate.

I am looking forward to use Zidisha. I plan to publish an interview with Julia Kurnia next week. If you have a question you want asked you are invited to email it to me or post it as comment below.

CommunityLend Launch – P2P Lending in Ontario

wiseclerk 5 Comments

Today CommunityLend launched it’s peer-to-peer lending service in Canada. The service currently is available to residents of Ontario. Borrowers can use CommunityLend as an alternative loan source to bank loans or credit cards with the ability to set the desired interest rate themselves (CommunityLend sets minimum rates). Loan amounts range from 1,000 to 25,000 CAN$ for a loan duration of 36 months. CommunityLend is open for borrowers with a good credit rating (AA to C), which encompasses about 70% of the population.

The borrower has the option to define whether there will be an auction (competitive bidding) once the loan amount is funded, possibly getting him the advantage that the interest rate will be lowered during the auction time with lenders underbidding each other.

Due to regulation restrictions only lenders qualifying as “accredited investors” are allowed to participate as lenders. The minimum investment is 100 CAN$. Bids can be in multiples of 100 CAN$.

CommunityLend provides lenders information about borrowers to help them make decisions about lending, including; the credit categorization of the borrowers on the site (credit rating) , their assessed debt burden ( affordability rating), their assessed stability (stability rating).

CommunityLend actively steers lenders towards diversification with the rule that a lender can only bid a maximum of 10% of the amount of an individual loan and the bid maybe not more than 10% of his total overall investment.

Registration to the service is free. Borrowers pay closing fees of 1 to 2.5% percent of the loan amount depending on credit grade (minimum 75 CAN$) upon payout of the loan. Lenders pay 1% p.a. fee on the outstanding loan principal.

CommunityLend uses credit bureau data and bank account data to verify borrower identity.

The following video gives an introduction to CommunityLend:

I like the cheerful style of the website. All information is presented in an easy to navigate and easy to understand way.