Author: wiseclerk

Kiva Enacts Currency Risk Changes

wiseclerk

Kiva has now enacted changes in how currency risks are accounted for. The model was first proposed in March.
Now MFIs can choose “currency risk protection” for their new loans. If this option is selected lenders will have to cover any losses that arise from a devaluation of the local currency exceeding 20% (for the part that is over the 20%).

On listed loans at Kiva there will be a new information status on the “about the Loan” Section under “Currency Exchange Loss”. The status will either be:

  • “Covered”: Meaning the MFI covers any losses (like it has been in the past)
  • “Possible”: The MFI has opted for the new rule – the lender covers currency losses above 20%

I browsed some new loan listings today – most are still offered under the “covered” rule, one example of a loan under the new “possible” rule is this Tajikistan loan. Continue reading →

Loanio Files S-1 SEC registration

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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.

Unithrive – P2P loans for Harvard students

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Unithrive is a non-profits that allows alumni to help students by granting interest-free loans. Currently only alumni and students of Harvard can sign up, but Unithrive plans to expand to other schools in fall 2009.

Students can borrow between 500 and 2,000 US$ per semester. Repayment begins after they graduate.

The founders Joshua Kushner, Nimay Metha and Tanuj Parikh recently graduated from Harvard. For more on Unithrive read this recent New York Times article.

Boober Failure Hurts Lenders

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As reported earlier Dutch site Boober.nl failed. Richard van den Toorn, speaking for the association of lenders PIVN, estimates that about 1,200 lenders are affected. While part of the total loan volume of 1.65 million Euro had been repayed over the loan term before the failure, overall borrower’s willingness to pay dwindled after the failure. Still PIVN hopes to recover 50-80% of the outstanding amounts on behalf of the lenders.

(Source: ANP via Nu.nl)