More than 2 years have passed, since P2P-Banking.com published the first overview table of p2p lending companies. At that time the focus was to create a comprehensive list and to get a perspective on the loan volumes.
Today I want to look at a smaller selection of p2p lending companies and do a rating on more factors than just loan volume. While I describe below what factors led to my rating, please note that the rating represents my personal opinion.
The table lists the companies in alphabetical order and gives:
New loan volume per month
This amount is in most cases retrieved from the last month(s) figures from the company websites (if they have statistic sections), and then converted into US$ at today’s currency exchange rates. In other cases it is a rough estimate by me based on volume figures published in media in the recent past. For CommunityLend I failed to find a per month figure (the total figure from launch to mid-February is here).
Extend and tone of press coverage in the past months. Since a large share of new users is introduced to p2p lending services via media, positive media coverage is extremely important. Continued positive media coverage has helped some companies to associate positive values to their brand.
This column especially rates if the new loan volume is growing continuously month after month. Furthermore it puts the absolute volume into perspective to the size of the market. It is obvious that absolute numbers in a country with a small population (e.g. Canada) will be much lower than those in a country with a large population (e.g. US). Furthermore it takes into account if the (online) marketing measures of the the company succeed in winning new borrowers and lenders (though in most markets lenders do not need to be actively acquired).
Sustainability rates a mix of several factors:
- ROIs for lenders / default rates
Most p2p lending companies that failed in the past, did so as a result of high default rates which led to negative lender ROIs and caused massive lender churn
- Ability of company to raise new funding
Most p2p lending companies still have to bridge a considerable time-span at their current growth rate before they become cash flow positive. The ability to raise more funding to finance continued operation is essential for their success
- Business model
This rates the publicly voiced user opinion. Major factor are the comments in forums. To a lesser degree I took the user experience published in blog articles into account. The problem with lender experiences published in blogs often is that the writer is casting a positive image, since he earns commissions for newly referred customers through the affiliate program of the p2p lending site. Also these review are often written at the start of the lending activity at which point the lender’s ROI is naturally unharmed by the experience of defaults.
Empty fields: I had not enough information to rate these. E.g. with some of the new UK p2p lending companies I felt I had too few indicators to reach an opinion on the sustainability.
Availability of information also influenced the selection of companies. Due to language barriers including more services (e.g. the Japanese p2p lending companies) was not feasible for me.