Author: wiseclerk

Sobralaen brings p2p lending to Estonia

wiseclerk

Today Sobralaen.ee, the first Estonian p2p lending service, has launched.

Sõbralaen’s borrowers fill in a loan application for up to 15,000 EEK (approx. 1,200 US$), specify the loan length (up to 2 years), maximum interest rate and sign the loan application. This application will start an auction, during which Sõbralaen’s investors can bid for the right to invest in that loan. When making a bid, Sõbralaen’s investors specify how much they are willing to invest and how high interest rate they are looking to earn. The investment amount can be between 100 and 15,000 EEK. Before making the investment, the investors can see the borrower’s credit score, history of previous Sõbralaen transactions and also personal details. Investors also have the possibility to ask various questions from the borrower. In the end of the auction, the system will automatically pick the best bids and combine them into one loan. Sõbralaen’s system will thereafter manage the rest of the loan process from the payment of loan to debt collection.

Estonians are fast in adapting new internet technologies. This is reflected in the process of Sobralaen’s sign-up, too. Users identification is done at the moment of sign-up electronically. This is possible, because users can only sign up using a government issued ID-card (currently 80% of Estonians had an active ID card – but only 20% make use of its functionalities so far) and a smart card reader or Mobile-ID. Furthermore banking transactions and court documents are signed with digital signatures.

Sobralaen was founded by Pärtel Tomberg, Mikhel Tasa and Martin Rask.
I was invited to test-drive the platform in summer 2008 while it was still under development. The usability was good and I liked the detailed FAQs that explained everything to the point.

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Lubbus.com – p2p lending in Spain

wiseclerk 1 Comment

The Spanish translation of p2p lending is “Préstamos P2P”.  In 2008 Vicente de Luna (Economist and lawyer, expert on finance and taxation of companies) and Maria J. Bustamente (Lawyer specialized in collection and recovery) founded the company P2P Lending, S. L. The company operates the p2p lending site Lubbus.com. The site is online since January 1st, but not in operation yet. It is based on invitation only registration of users. For the  launch Lubbus awaits the go ahead of the Data Protection Authorities, which currently are reviewing the invitation system.

Users can be registered only through an invitation from a relative or friend, who benefits or suffers (in case of non-repayment) economically (0.10%) of any transaction the invited user makes. There is also a voting mechanism.

Lubbus.com charges a fee of 1% from lenders and 1.5% of the loan amount from borrowers. Lubbus offers the borrowers optional insurance which covers risks like unemployment (2.5% fee of the insured amount).

Lubbus has a secondary market (“mercado secundario“). The unusual feature about it is, that not only lenders can trade loans, but the secondary market also allows borrowers to repay early and let another borrower step in and continue to use the remaining loan. Lubbus charges a 1% fee on transactions. As a lender on an affected loan I would be wary of the exchange of the person I did lend to.

Credit scores used are supplied by Delta-R and Axesor.

Founder Vicente de Luna told P2P-Banking.com:

It is quite possible that in March [it] can function .. as the social platform. Community Projects will be effected through a foundation that works with local NGOs in various countries of the Third World. If all goes well, the business model is to develop in all Spanish speaking countries as possible (2010). Now it is possible for users [with an] domiciled bank account in Spain [to sign up]. We are the first Spanish company to invest in the p2p lending [market]. We hope to have over 3000 registered user in the first half of 2009.

Lend for Peace

wiseclerk 4 Comments

That’s the name of a microlending platform, where lenders can lend to palestinian entrepreneurs in the Palestinean territories. I have not used Lendforpeace.org, but from what I read, it works just like Kiva but targets a specific region. Lendforpeace launched 5 days ago. When I looked today there where 8 loan requests in various degrees of funding.

Lendforpeace is a US non-profit organisation founded by 2 Jews and 2 Palestinians: Sam Adelsberg, Andrew Dudum, David Fraga and Al Taj.

Our mission is to use micro-lending to promote economic opportunity and political stability in the Middle East.

At LendforPeace.org you can make a loan directly to a vetted micro-entrepreneur in the West Bank. We work with US government-approved microfinance institutions on the ground to deliver your capital along with training and guidance to low-income individuals who are interested in starting or expanding their own small businesses.

LendforPeace.org is supported by grants from the Clinton Global Initiative, Ashoka Youth Venture, Davis Projects for Peace.

For users with a specific interest in this region Lendforpeace may be an interesting supplement to using Kiva.

Need a loan at 2334 percent APR?

wiseclerk 6 Comments

No, that is not a typo in the headline. British Wonga.com offers small, short term loans online (short term= from 5 to 30 days).  The main advantage they advertise is, that the loan amount is transferred to the bank account of the borrower within minutes of the application, if approved. For that quick service Wonga charges 1% interest per day (!) plus 5.50 GBP transfer fee. According to the website that translates to an typical APR of 2334 percent.

British laws must be very liberal to allow this. In many other European countries interest rates like this would be illegal under consumer protection laws against usury. But Wonga does have a consumer credit licence from the Office of Fair Trading.

And naturally Wonga does not see itself as a loan shark. Read here, why they think their rates are appropriate. I do pity the borrowers that borrow at that interest rate.

EDIT: Interview in the Guardian with Wonga founder Errol Damelin states that Wonga had 50.000 customers during the testing phase.

EDIT Feb. 11th: See the comments for a discussion with John from Wonga.

(Photo credit: Demi-Brooke)