Countries

My First Myelen Microfinance Loan

wiseclerk

Myelen.com is a service allowing lenders to loan money to small entrepreneurs in developing countries. The portal is run by the Microfinance, a.s. company in Prague (Czech Republic).

Like at Kiva and MYC4 lenders can read profiles of borrowers. Currently Myelen has partnered with 4 MFIs in Mexico. In the Myelen concept the lender signs a contract with the MFI and the MFI takes the default risk of the individual borrowers.

The microfinance institution takes over the credit risks of individual borrowers and lowers them by geographical and sector diversification.

The lender carries the market risk that the MFI does not repay the loan. Furthermore at Myelen the MFI covers the currency risk – but for most lenders there is still a currency risk because the loan currency at Myelen is Czech Koruna (CZK).

The minimum loan amount is 5,000 CZK (approx. 260 US$). The loans are repaid annually (or quarterly for larger amounts). Lenders earn interst. The interest rate varies depending on the MFI and the amount loaned. Typical interest rates are 4 to6 percent (higher for large amounts).

My experience – my first loan via Myelen

I registered yesterday at Myelen.com. The interface ia available in English and Czech. There is also a button to choose German language but clicking that only changes the navigation elements – the text is not translated to German. The sign up form asks for IBAN and SWIFT routing codes for the repayments. Since IBAN account numbers are currently only in use in Europe this limits Myelen to lenders from Europe.

Signing up went smoothly, but I had to wait a few hours for my validation email. Today I selected my first loan to fund. First I was puzzled how to get to the loan selection. To get there the user needs to click on the “Support” link in the upper right. There I could then use drop down menues or browse the individual profiles (currently about 30). I decided to loan 5,000 CZK to Julia Ramos Palafox who has a fruit and vegetables stand in Mexico. The MFI – CrediComún listed a 5% interest rate. I was given the choice of selecting an annual or quartely repayment. One further option is to give an interest free loan (like at Kiva). The next step is to accept the loan contract. The loan contract is now sent via email to the MFI which signs it. Continue reading →

Peer to Peer Revolving Credit

Anders Brownworth 10 Comments

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. Continue reading →

News from Comunitae

wiseclerk 2 Comments

Spanish p2p lending service Comunitae.com has now been one months in beta phase.

So far 900 borrrowers have submitted loan applications and 260 lenders have communicated their intention to provide funding for the total of 110,000 EUR (approx. 80,000 US$). One factor named for the success of the beta phase is the high media attention. In recent weeks Comunitae was covered on CNN, Radio Nacional de España, Intereconomía, Onda Madrid Radio Canal Nou, 7RM, Media Capital, Europa Press, El Pais, El Mundo, Expansión, Liberty Digital, El Economista, Cincodías ABC, My Portfolio Investment, Capital, Politics economic reason, which, AVUI, Invertia, Soitu as well as over 50 blogs.

(Source: Comunitae newsletter)

Kickstarter – Pledge Money to Fund an Artist

wiseclerk 1 Comment
Kickstarter.com is a new crowdfunding platform where anybody can pledge money to support projects of artists, designers, filmmakers, inventors etc.

The artist describes his project and offers rewards based on the amount that is to be pledged. E.g. one example is the ‘Kicey to Iceland‘ project. Photographer Laura Kicey wants to make a 5 day trip to Iceland in June to take photographs in the northwestern fjords. She seeks sponsors for the amount of 350 US$. 15 backers have pledged money so far. They will be rewarded for their support by prints of the taken photographs.

Payment processing is handled by Amazon Payments. Other current projects include:

  • A quest to reunite the Kinks (a band)
  • Icons for IPhone
  • Designing and Producing a Plush Toy
  • A book on voting machines