Credit card issuer Advanta entered into a partnership with Kiva. The initiative is called KivaB4BProject and Advanta will match the loans made by business card holders with up to 200 US$ per card. Card holders simply select a business owner to sponsor through Kiva and make a grant using their Advanta Business Card. Advanta matches that grant, dollar for dollar, and Kiva distributes the total resulting funds.
The loans funded by this project can be seen on this Kiva lender page. Already contributed to more than 500 loans.
When the project was announced at Advanta's headquarters, Advanta flew in Kiva borrower Senerita Lilli a dressmaker from Samoa to share her story.
Zopa plans to launch a student loan feature in July. Students can already use peer-to-peer lending sites to apply for a personal loan. At Prosper.com, education loans account for less then 2% of its 135 million US$ in loans. (Sources: Smartmoney, WSJ)
Announced today Prosper.com has achieved nationwide lending (exceptions South Dakota and Texas) with an interest rate maximum of 36 percent. Previously maximum interest rates varied on a state by state basis depending by the licenses Prosper had acquired.
Prosper chose the same construct to go national as did Lendingclub in December – both partnered with WebBank, Utah.
All loans originated through the Prosper marketplace are made by WebBank, a Utah-chartered Industrial Bank. Prosper provides services to WebBank in connection with the origination of such loans and Prosper services loans made to Prosper borrowers on behalf of registered Prosper lenders who purchase such loans.
This step has good potential to multiply the monthly loan volume originated by Prosper, as chances for obtaining a loan were in the past harmed in some states by low state interest rate caps (especially for lower credit grades).
Fynanz.com, currently launching for borrowers in New York and Florida, offers peer to peer lending to students.
The service differs from other p2p lending service in many points.
The private student loans, also known as "alternative student loans", Fynanz offers have variable interest rates. Other p2p lending services so far operate only with fixed interest rates. At Fynanz interest rates are based on the LIBOR index, adjusted quarterly, plus a margin which is set by lenders. Suggested margins are 3 to 7.5% for a typical overall interest rate of 6 to 11% before fees. This is higher then federal student loans, but Fynanz still sees a large market, since federal student loans have borrowing limits and may not cover the entire costs of education.
Very long loan terms of 10 to 20 years. Again unsual, but lenders may offer to sell loans after one year at a discount to Fynanz. There also seems to be the option to transfer a loan to a different lender (allowing the sale to a different lender).
Students can select to defer interest payments while in school and for a 6 month grace period after leaving school.
Loan amounts range from 2,500 to 20,000 US$ per loans. Borrowers may take out up to four loans per year to a total maximum of 160,000 US$. That is an unprecedented amount in p2p lending.
The fees are pretty high in my opinion. Borrowers pay 2.9, 4.9 or 6.9% (depending on FACS) of the loan amount origination fee. Addionaly borrowers pay 1% guarantee fee into the guarantee fund until they have repaid 10% of the loan amount. Lenders pay a 1% servicing fee (not while loan is in deferment)
Guarantee for lenders. Not only in case of identity theft, but also in cases of defaults Fynanz protects 50 to 100% (depending on FACS grade) of the loan amount.
Fynanz applies it's own FACS grade (Fynanz Academic Credit Score) to rate borrowers. It not only relies on the credit history but also on academic charateristics.
Pledge bids allow lenders to bid without having funds in account. Lenders must transfer money within 5 days of bidding.
Fynanz has a "bid priority" that ranks four types of types of lenders in the following order: the highest priority lenders are friends and family of the borrower; then alumni of the borrower’s school; third are unaffiliated lenders; and fourth is Fynanz itself.
Hollowoak has some more interesting points from the lender agreement in his blog, which Chirag Chaman, Fynanz CEO commented on.
Prosper is America’s largest peer-to-peer marketplace with over 600,000 members,” stated Kirk Inglis, CFO of Prosper. “As credit markets experience unprecedented changes, institutional lenders, including hedge funds, are using Prosper to diversify portfolio returns without the lack of transparency and fees associated with structured consumer debt products.
Another recent Prosper related topic was the concern raised by lenders that in select states Prosper stops any collection activities on small loans, if the borrower sends a Cease-and-Desist letter (the example given is a 2,500 US$ loan in Texas). The author of the blog post argues that the risks for lenders rise, if this example really shows overall practise.
Moreover, they won't pursue legal action to recover small loans. So all small loans are now risky since the borrower has an easy method to halt payment, collections and legal proceedings. Prosper simply seems unwilling to go after small borrowers.
Finally, even for larger loans, it seems unsafe to lend, since Prosper will only sue in select states. I don't recall Prosper saying anything about selective enforcement in my many lender agreements, but before I put another penny into Prosper, you can be damn sure I will ask them what states they will take legal action in and what the minimum loan amount is for which they will sue.
