TuitionU.com, a wholly owned subsidiary of Cology Inc., today announced the acquisition of GreenNote (see earlier description), a p2p lending service for student loans. The agreement enables TuitionU.com to add peer-to-peer lending technology to its student loan options. TuitionU says not-for-profit credit unions that are currently featured will be joined in the future by foundations, charities, corporations and other community lenders to further enhance the network.
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.
Initially while browsing the PertuityDirect.com and the related NationalRetailFund.com site I was a bit puzzled where the peer to peer lending aspect is to be found? I learned:
Lenders buy shares
Borrowers credit information details are never shared. Only Pertuity Direct knows them
There is no auction
Interest rates are set by Pertuity Direct
Then I read the National Retail Fund II prospectus and learned that the Fund is allowed to do other investments then funding loans of Pertuity Direct borrowers. It may:
buy T-Bills, money market funds and other cash equivalents
buy bundled consumer note securities, even if part of them is deliquent
The NationalRetailFund website explains:
How is this related to Pertuity Direct?
Pertuity Direct is a separate entity and is one of the fund’s service providers and acts in an administrative role. They underwrite and originate borrower loans. Those loans are an investment option for this fund.
On the same FAQ page I then found what this all has to do with p2p lending:
Where is the ‘Social’ aspect in all of this?
If you choose, you have the option to engage in the social lending network associated with the borrowers within the funds. By selecting the option, you will be able to see the various borrowers in the funds, get to read their stories and track their progress over time. You will also have the ability to engage directly with any borrower or group of borrowers that you find compelling and help them accomplish their goals with a rewards program.
Lenders can use so called Pertuity Bucks, which they receive free upon sign up, to reward borrowers whose stories they find compelling. The balance of the borrower is reduced by the amount of Pertuity Bucks the borrower receives.
My review summary of the p2p lending aspect of Pertuity Direct
While it may be a smart construct in respect to overcoming regulation hurdles it offers much less direct peer to peer interaction between lender and borrower.
Pertuity Direct decides which loans get approved
Pertuity Direct sets the interest rates
The fund decides on the investment strategy in detail
Interaction takes place only through the Pertuity Bucks community feature
But let’s see how the concept develops and what borrowers and lenders think about it.
The new p2p lending service PertuityDirect.com is now online. The concept Pertuity Direct uses is new. Lenders pay into the “National Retail Fund” which is a “social lending mutual fund”.
If I understand the concept correctly, you do not choose individual borrowers you want to lend to, but rather a group of borrowers with similar parameters by buying share of a fund – but if you want to, there is the option for individual selection (similar to Lending Club). Have not grasped yet how the individual selection is supposed to work when you by shares of the fund? The initial minimum investment amount is 1,000 US$ per lender.
A so far unheard feature is that it Pertuity Direct allows early withdrawel of funds by lenders (2% withdrawal fee for withdrawals in first year of investment). Another new feature I found while reading the multiple page fund prospectus, is that lenders can set up an automatic investment plan, making monthly or quarterly investments.
Interest rates of the loans are set in the range from 8.9% to 17.9%. Pertuity Direct accepts only borrowers with a FICO credit score of 660 or higher. Update: In fact the prospectus of the National Retail Fund II states that Pertuity will invest over 80% of the money in loans whose borrower’s have a credit score of at least 720.
One advantage for borrowers is that – if approved – they get the loan faster than on other p2p lending sites, since there is no bidding or auction just the evaluation and approval process. Pertuity claims that typically borrowers will receive the money within 2 – 3 business days.
Borrower Fees
1-2% closing fee (depending on credit score) $15 failed payment fee $15 late payment fee (on average, may be slightly lower/higher in some states) 1% Electronic Funds Transfer discount
Lender Fees
Currently, the first year expense estimate is 3.17%, or $32 a year for every $1,000 invested. Fees are estimated based on the aggregate size of the fund.
This estimate assumes a monthly average fund size of $12 million during the first year.
While I browse the site for more information, in the meantime check out CEO Kim Muhato’s post on the blog. Excerpt:
Pertuity Direct’s Social Lending Network is different from anything else in the market. The social lending networks we are building will expand to specific affinity groups borrowing from and lending to each other; for example, professional associations like doctors and firefighters, small business owners in specific geographic regions, and university alumni groups etc. We call it Mutually Responsible Banking. Learn more about Pertuity Direct’s Social Lending Network here.
Our team is comprised of executives that have collectively worked in the U.S. financial services arena for a few decades with companies like Capital One, E*TRADE and PNC. We have executives who have experience building innovative and scalable web-based financial products, executives who have managed consumer credit and multi-million dollar loan portfolios, as well as brilliant engineers and systems architects. Our team is dedicated to changing the consumer finance landscape and loves to be on the cutting edge of financial innovation.
