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Move Over Banks: Peer lending is on the Rise
Move Over Banks: Peer lending is on the Rise
Entrepreneurs are finding that they don’t have to go to a bank to raise money: They are going on-line.
Forget about asking your family to bail you out when the bank won’t give you a loan for your business. The Internet has found a new way for entrepreneurs to access new sources of cash: individual lenders. This just proves that when there is a gap in the marketplace, even in the financial markets, someone always fills the hole!
Although the on-line peer-to-peer lending industry is a relatively new concept, more and more major players are entering the market. Some include:
n The United Kingdom’s www.Zopa.com, which launched its U.S. operations in partnership with six brick-and- mortar credit unions last December;
n California-based www.LendingClub.com, which debuted on social networking giant www.Facebook.com in May;
n Billionaire Richard Branson (Virgin Airlines) backed www.Virgin Money.com which launched in the USA in October;
n And www. Prosper.com.
While each on-line site operates differently, they are providing a fascinating on-line variation on the informal peer lending models that have historically helped small enterprises. Now you don’t have to ask family and friends.
Jim Wyss’s fascinating story in the Miami Herald tells how one business owner raised $25,000 from 300 absolute strangers on www. Prosper.com. (http://www.miamiherald.com/business/technology/story/396733.html)
Prosper.com has played matchmaker for cash-strapped entrepreneurs and individual lenders since 2006. It has facilitated $110 million in loans from 550,000 users, and claims an amassing overall default rate of 1.37 percent.
Need money? Got money and want to make loans to small businesses?
Google P2P Lending and check out the sites!
You will be amazed.
(P.S. they also make personal loans.)
©Charlotte Taylor, 2008.
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