Exciting Week for German P2P Lending Services

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Positive TV coverage (see video here) on nationwide German TV on Monday during primetime caused traffic spikes at the German p2p lending services Smava and Auxmoney. The websites were partially down during Monday and Tuesday or so slow they were practicably not useable. Auxmoney reacted by temporary deactivating non-vital functions like sorting. Meanwhile stability of the web applications has been restored.

The surge in user demand led to a 20% increase in active lenders at Auxmoney and most ever parallel open loan listings (currently 332). At Smava nearly all reasonable loan listings are funded within a few days or even hours at the moment.

To encourage more loan listings Smava has upped the bonus for inviting new borrowers to 150-200 EUR (approx 200 to 275 US$) for each referral of a borrower that is success fully funded (up from 100 Euro before).

Kiva Enacts Currency Risk Changes

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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.