I have been aware of Trustbuddy for some time. They are (at least internationally) pretty unknown since they do not do much marketing. I have only once written about them before, in order not to give publicity to a company which charges interest loans for rates in a height, that I deem could be called usury (on moral grounds not on legal grounds).
According to their own published figures on the site the current ‘Effective annual interest’ for a one year loan varies between 219% and 852% (733% to 5102% for a one month loan).
While Trustbuddy calls itself a p2p lending service, their rates are somewhat closer to Wonga (see Need a loan at 2334 percent APR).
Why do I now write about Trustbuddy then?
Well ignoring them, won’t make business models like these disappear. And it seems to be profitable for the service as well for lenders as per the numbers that Trustbuddy supplied P2P-Banking.com.
But the main questions I ask lenders is: Do you feel it is ethical to earn the 12% p.a. interest rate given the costs the borrowers are charged? If you answer this with yes for yourself, then Trustbuddy may be a good choice for you.
Furthermore Trustbuddy is one of few companies in this business that have a drive for international expansion. Remember they bought Loanland operations earlier.
The following is information supplied by Trustbuddy:
TrustBuddy AB (2009), a Swedish P2P lending facilitation company. Using in-house developed and proprietary mobile-/web-based financing solutions, it facilitates smaller short-term loans between private consumers. The company does not lend out its own money; pooled loan-portfolio investors provide funding. TrustBuddy has already reached close to 40,000 registered members, of which more than 20,000 are active customers, in Norway and Sweden alone. This is done with virtually no marketing efforts, showing how popular the product is. The business model is to charge fees on the facilitation process, whereby charges occur throughout the application process, all through to repayment or debt collection, and through administration fees, collection fees and premium SMS revenues. TrustBuddy became cash flow positive after a few months of operations. It has given loan-portfolio investors a high return on the funding (currently more than 15% p.a.), with virtually no losses (bad debt figures of below 1%). Loans are considered somewhat expensive; 12% interest per loan plus charges, but they are fast and easy to get, if one is credit worthy. Lenders have diversified risks covering many loans with a low amount in each loan. All borrowers and lenders are identified through the failsafe ?BankID? identity system. Credit-worthiness is instantly certified (or denied) by online credit check companies in each targeted market, creating a low risk customer base. …
TrustBuddy is online in Sweden, Norway and Slovenia. …
TrustBuddy is applying to be listed on the NASDAQ First North in Stockholm (Sweden), through a reverse merger with 360 Holding AB (publ). Existing business in 360H is sold off.
Additional financial details:
— TrustBuddy’s business maintains its strong growth and profitability. In the first part of 2011, the company has seen a monthly growth in number of customers of 63.8% in Norway and approx. 60% in Sweden. The product is gaining popularity, and the company’s international expansion plan is on schedule. …
— The private placement held by TrustBuddy’s holding company was concluded in one week in the start of June 2011. The placement was oversubscribed by more than 50% (above the minimum limit), collecting SEK 4.5 million in new capital for the company. These funds are being transfered to TrustBuddy AB prior to the merger with 360 Holding AB (Publ).
— The audited accounts of TrustBuddy AB for 2010 show a profit of SEK 2.5 million.
(Photo credit: Demi-Brooke)