P2P Lending Year-End Review 2010

As the end of 2010 approaches here is a selection of main peer-to-peer-lending news and developments covered by P2P-Banking.com:

(Photo by paul (dex))

CommunityLend Starts FinanceIt – Offers Sales Financing Solutions for Businesses

Canadian P2P Lending company CommunityLend has launched new site: FinanceIt. FinanceIt allows Canadian businesses to provide their own in-house financing directly to their customers. Initially FinanceIt targets home improvement vendors, a line of business in which FinanceIt says Canadians finance 51 cents on every dollar spent.

Features of FinanceIt include:

  • A complete lending platform, including ID verification, credit review, EFT, and collections
  • Instant approvals that are valid for 90 days
  • Automated legal documentation
  • Works on iPad and other mobile devices
  • Funds are deposited into our partner’s bank account
  • No fees of any kind

This is a highly relevant development for p2p lending. If successful, CommunityLend will achieve four goals:

  1. Increase loan demand while at the same time cutting marketing expenses/efforts to reach potential borrowers
    The promotion of the loan offers will be in fact done for free by the business that offers the financing for its goods
  2. Build strong business relationships to vendors, which can be broadened should CommunityLend develop more p2p banking products aimed at businesses in the future
  3. Identify borrowers in person (at the store)
    While I cannot judge how crucial this is in the Canadian market, it would be very useful in some other markets for p2p lending services to have
  4. Validate the purpose the loan is taken out for
    Usually in p2p lending unsecured loans can be used for any purpose the borrower wants. While some sites ask the borrower to describe the loan purpose in the listing this is never tracked or validated for it would be time-consuming and costly – just not worth the effort.
    In a financing solution it is obvious what the loan will be used for. How is this information valuable? Communitylend will have very good data on how default rates differ depending on the loan purpose allowing them in mid-term to improve the pricing of the credit risk into the offered interest rate.

I believe this is a major step for p2p lending coming out of a single product niche (unsecured loans) into a broader p2p banking approach. And banks should watch out. Offering financing solutions to businesses is a core product for some banks.

P2P lending marketplaces in other countries should explore if offering loan financing to businesses is a viable route for them to grow too. In fact I know one p2p lending company that already has similar plans in the working and will start financing in 2011. Continue reading

P2P Lending Site CommunityLend Adds Car Loan Cooperation

Communitylend has partnered with Canada’s largest used car site AutoTrader.ca, now offering a car financing option through Communitylend for every listed car.

The option is limited to private listings in Ontario for cars with a sales price of up to 25,000 CAN$.

This is a good partnership for Communitylend as it will profit from increased exposure to potential borrowers.

(Source)

Related Article: P2P Lending With Cars as Collateral

CommunityLend Taps Broker Market

Canadian p2p lending service CommunityLend announces:

MorWEB partners with CommunityLend Inc. to provide direct access to
unsecured lending options for the Canadian Mortgage Broker market

Marlborough Stirling Canada (MSC) is pleased to announce that direct access to CommunityLend, Canada’s only online Peer-to-Peer lending service, will now be available to the broker market using MorWEB.

MorWEB brokers will now be able to seamlessly refer clients directly to CommunityLend to arrange unsecured loans from private investors.  This will provide another value added service to customers of mortgage brokers using MorWEB.  Phase one of this novel integration is now available on the MorWEB platform with a more comprehensive integration scheduled for later this year.

CommunityLend, , launched earlier this year and is exploring a number of different marketing options to spread the word about its services and to recruit good quality borrowers looking for more competitive rates for small unsecured loans.

”We are excited by the opportunity to work with one of Canada’s leading software providers to the Mortgage industry,” noted Michael Garrity, CEO of CommunityLend.  “We understand the important role of Mortgage Brokers in helping their clients to find the best rates on loans to meet their needs. …”

Since CommunityLend is restricted to accredited investors* by regulation, this marketing move uses an existing multiplier to reach potential lenders. It continues the earlier reported trend of existing financial institutions partnering with new p2p lending players.

(Source: CommunityLend blog)

*corrected an earlier version of the article wrongly stated “institutional lenders” – see comment below

CommunityLend Announces $1 Million Investment by Stone & Co

CommunityLend Holdings Inc., the parent company of Canadian p2p lending service CommunityLend Inc., announced a 1 million CAN$ investment through a convertible debenture from from Stone & Co. Limited Flagship Stock Fund Canada (“Stone”). As part of their investment, Mr. Richard Stone, Founder and CEO of Stone, will join CommunityLend’s Board in an observer role.

Michael Garrity, Co-Founder and CEO of CommunityLend Inc, said:

… When CommunityLend launches in the next few weeks, we intend to remove these obstacles through the introduction of Canada’s only peer-to-peer lending system, a new lending model which removes the middleman in lending transactions by allowing borrowers the ability to connect directly with lenders through a safe and secure online lending system. …

CommunityLend Approaching Launch in Canada?

Microlending.ca reports that CommunityLend may be ready to launch soon as it cleared another registration hurdle. A legal document published at the Ontario Securities Commission site gives lots of details on CommunityLend’s p2p lending plans.

It also reveals that p2p lending in Canada will (at least initially) be restricted to accredited investors (high wealth individuals).

See Dan’s articleat Microlending.ca for a review of the document.

Canadian CommunityLend receives $2.5M VC funding

CommunitylendCommunityLend.com, which strives to be the first peer to peer lending service launching in Canada, has secured 2.5 million dollar venture capital. Furthermore CommunityLend announced winning Barry Campbell, former MP and Secretary to the Minister of Finance and Jim Jones, CEO of GMAC Residential Capital as additional directors.

In an email Co-Founder and CTO Colin Henderson told P2P-Banking.com: "… We have relaunched our site, as we move towards launch in early 08.  The key aspects of this milestone for us, is securing our funding, appointment of our management team, and appointing our Board of Directors. From here we will move towards launch in early 08. "

Quoted from the CommunityLend website:

Share in the Rewards of Investing in People

The unsecured consumer loan marketplace in Canada exceeds $100 Billion in volume every year and generates interest payments on those loans exceeding $15 Billion annually. By definition, “unsecured” loans are often small loans used for purposes like funding a wedding or paying off high interest credit card debt and for which the lender has not taken security to support the loan.

Today in Canada, this very profitable industry is also a very closed industry, with only a handful of major companies involved. This means that a very small list of banks and credit cards companies are literally today the sole beneficiaries of one of this country’s most profitable industries.

CommunityLend intends to democratize lending in Canada by opening up this billion dollar industry to other Lenders interested in participating. Share the wealth, we like to say!