Loanio Files S-1 SEC registration

Loanio has filed a S-1 registration with the SEC. P2P lending service Loanio had been briefly active in October and November last year before voluntarily closing to new users in order to seek SEC registration approval.

In the new SEC filing Loanio wants approval for offering 50 million US$ in notes based on peer to peer loans via their website Loanio.com. The filing includes the outlook for a secondary market (loan trading platform via a broker) and the plan that Loanio might partner with a “national financial institution”. Should that be achieved, borrower loans could be originated through this lending institution and then sold and assigned to Loanio. This would allow Loanio to offer loans to borrowers in more than the 22 states it has individual state lending licenses for now, and would eliminate (some) state interest caps.

The filing also gives insights into the company structure and expenses since foundation. Founder Michael Solomon hold 97% of the company shares.

Under the requirement to file with the SEC, starting a peer-to-peer lending company in the US market takes an unusual long pre-launch phase compared to other internet based business models.

Lending Club already completed the SEC approval process, while IOU Central and Prosper currently undergo this process. Pertuity Direct operates under a p2p lending model with a different setup.

Loanio suspends operations

Asked to comment on the recent developments, Loanio CEO Michael Solomon told P2P-Banking.com:

In light of recent events beyond our control, Loanio, Inc. has suspended its business so that we may begin the process of registering our promissory notes with the appropriate securities authorities and agencies. As a direct result, please be advised that effective immediately Loanio will no longer be accepting registration from lenders or borrowers and/or any new bids on loans or loan requests until further notice.

This message will be posted on the Loanio platform today.

Loanio says it won’t face registration process in near future

Loanio logoAsked by Netbanker whether Loanio.com will face an SEC filing process and a quiet period like Prosper and Lending Club, Loanio CEO Michael Solomon answered:

“…from the perspective of (Prosper) going silent, it is actually great for us as I think we will quickly gain lots of lenders and hopefully we can wow them into sticking around. From a regulatory standpoint, we believe that at some point we will seek to introduce a secondary market platform, but we will focus the greater part of the next 12 month on building our platform and seeking out a national bank partner to cover the rest of the U.S. Our plans for a secondary market are too far ahead for me to contemplate at this time.”

Loanio launch II

Last week I titled ‘Loanio Launch‘. That was a little premature (I was not the only one fooled by the site apparently going live – see Tom’s blog). Well today Loanio.com is really live. And there are 5 listings at the moment (see screenshot). For a list of features see the previous loanio coverage.

Loanio listings

Netbanker has a list of states (with max. interest rates), open to Loanio borrowers. You are welcome to discuss your thoughts on Loanio in Wiseclerk’s Loanio Forum.

Loanio launch!

Updated: Just after I wrote this, access to the Loanio website has been restricted again.

Finally! After more than a year of anticipation and announcements Loanio has entered the p2p lending stage. When I looked there were no loan listings yet, so let’s have a look on the concept in the meantime.

Borrowers

US residents with a VantageScore (Experian) of 569 or with a Co-Borrower with a higher score can borrow at Loanio, provided Loanio is licensed in their state. Currently this is not the case everywhere (e.g. when I looked today, it was not available to California or Florida borrowers). The maximum loan amount is dependant on the state limits (e.g. 25.000 US$ in New York).
Terms are 36, 48 or 60 months. Borrowers can repay the loan early without penalties.
Borrowers pay a origination fee of 1 to 4% of the loan amount (dependant on credit grade). Borrowers can opt for platinum verification which costs 35-45 US$. If chosen, Loanio verifies photo identification, proof of income, bank account, employment, salary, postal address and homeownership.

Second loans are possible if the first loan has been paid at least 6 months on time.

The initial interest rate is set by the borrower. If the listing ends with less then 100% but more then 35% funding, the borrower can elect to accept a loan for the funded amount (partial funding).

Lenders

All US residents can lend. Lenders are charged a 1.25% annual servicing fee. Lenders bid at the interest rate they want, lowering the interest of fully funded loans in an auction based style.

Co-Borrowers

Co-Borrowers have so far not been used often in peer to peer lending.  To make loans to users with lower credit grades more secure for lenders Loanio introduced this feature, which might be used by close relatives or friends of the borrower.

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