Kickstarter.com is a new crowdfunding platform where anybody can pledge money to support projects of artists, designers, filmmakers, inventors etc.
The artist describes his project and offers rewards based on the amount that is to be pledged. E.g. one example is the ‘Kicey to Iceland‘ project. Photographer Laura Kicey wants to make a 5 day trip to Iceland in June to take photographs in the northwestern fjords. She seeks sponsors for the amount of 350 US$. 15 backers have pledged money so far. They will be rewarded for their support by prints of the taken photographs.
Payment processing is handled by Amazon Payments. Other current projects include:
Barry Coleman, VP Marketing at IOU Central, told P2P-Banking.com earlier this year:
… we are getting ready to release an online marketplace that will revolutionize peer-to-peer lending. Our platform will give borrowers the benefit of a true marketplace that allows for better interest rates. The platform will also give lenders freedom in lending with our real-time bidding system. We have taken a lot of the good from the original IOU Central platform and added features that make it much better for both borrowers and lenders.
The registration filing shows the minimum requirements IOU Central will apply to borrowers (Equifax Vantage score of at least 670 and others) and the validation process (most borrower income, employment and occupation information will be self-reported and not verified). The interest rate is set by the IOU Central loan marketplace based on several borrower related criteria. There will be auction bidding by lenders (like at Prosper) and an auto-fund option. Furthermore lenders can set auto-bidding parameters.
IOU Central will charge lenders a servicing fee of 1% of the remaining principal balance. Borrowers pay a 2% loan origination fee.
The website currently displays the following message:
Prosper is Currently in a Quiet Period
We have been overwhelmed by the outcry from potential investors around the country who want to participate in peer-to-peer lending. Thank you for your support and your letters to us.
After much consideration we have decided to voluntarily shut down our operation in order to complete our SEC approval for a nationwide peer-to-peer lending platform. As a result, due to regulatory concerns, and in the interest of working toward getting our registration statement effective as soon as possible, we are discontinuing our California intrastate offering at this time.
If you’re an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you’ll be able to track and monitor your loans; and you’ll be able to withdraw funds from your Prosper account.
If you are a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process.
We want to assure you that Prosper is looking forward to being able to offer a transparent, durable and participatory lending institution very soon.
As a result of this decision, we will not be accepting new lender or borrower registrations or loans, or new commitments from existing lenders effective immediately. Until this process is complete, we are required to be in a quiet period and will be unable to respond to press, blogger or other inquiries related to our SEC registration process, even though we would like to.
We sincerely apologize to the Prosper community members for this inconvenience or disappointment our decision may have caused. We want to thank those of you who demonstrated your support through your active participation whether by investing with us again or referring friends to our site.
Thank you in advance for your understanding, support and patience once more. We look forward to serving the needs of the community in the hopefully not too distant future.
They tested the following hypothesises for statistical evidence:
Borrowers within groups are able to borrow at lower credit spreads.
The recommendation of a credit listing by the group leader leads to lower credit spreads.
A group leader’s bidding serves as a credible signal for the quality of the credit listing and results in lower credit spreads.
A group leader’s bidding on a credit listing signals information quality and has a stronger impact on credit spreads than a recommendation by the group leader.
A higher group rating leads to lower credit spreads.
Increasing group size leads to lower credit spreads.
They found that the group leader as intermediary played a very important role on the ability of the borrower to obtain a loan and to obtain this loan at a lower then average interest rate.
Since most of the bids on group affiliated loans came from lenders that were not members of the group, the authors conclude that the group leader has an important signaling function.
Some of the empirical results:
The results … confirm our fundamental hypothesis H1: the use of an interme- diary in the electronic marketplace significantly lowers borrowers’ loan spread. Group affiliation ceteris paribus lowers the credit spread by 25 basis points. (page 15)
Does the choice of the intermediary matter? Should borrowers make demands on paid intermediary services? In order to be able to compare the net impact of unpaid and paid groups, we analyze Bor- rower Rate Net … and find that intermediation significantly lowers borrower’s cost of credit overall. However, we document a dif- ference in the net impact of group membership of 42 basis points: An unpaid intermediary reduces borrower’s credit spread by 107 basis points, a paid intermediary by 65 basis points. It follows that the group fee can turn the case for a paid intermedi- ary borderline. The average group fee of 110 basis points … will more than counter the net reduction in credit spread. Taken together, inter- mediation has a positive net impact but the choice of intermediary matters. We hereby do not com- ment on the overall impact of paid groups, since this analysis does not incorporate the intermediary’s role in overall access to credit or the long-run performance of the loan thus originated. (page 15ff)
the group leader’s bid for the borrower’s credit listing exerts a significant stronger impact on borrowers’ credit conditions than a recommendation. Moreover, Certification is only significant at the 10-percent level. We can confirm Hypothesis H3b: the regression coefficient of Group Leader Bid exceeds Certification. (page 18)
The study delivers strong evidence that Prosper borrowers benefited financially from joining Prosper groups.
US based non-profit Vittana.org wants to use the power of p2p lending to bring student loans to the developing world.
It works like Kiva. For as little as 25 US$ a lender can hellp to fund a loan. Vittana partners with local MFIs who evaluate students for past academic achievement, commitment to success, and ability to repay.
All 3 listed loans in Paraguay are already fully funded, but I intend to fund loans as soon as new loan applications are listed.
