Pertuity Direct launch

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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.

P2P lending trends to expect in 2009

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As last year I’ll again attempt some predictions on what trends and developments can be expected in peer-to-peer lending 2009.

More competition and entering more national markets (probability 100%)
In many markets multiple p2p lending services will compete for the attention of lenders and borrowers. In other markets, where there is no national p2p lending service active yet (e.g. Canada, New Zealand), p2p lending will be introduced by the launch of a service. Possible candidates include Communitylend and Nexx.
It is hard to predict when the dormant US players (e.g. Prosper, Loanio) will overcome the regulatory hurdles and if that step is lasting.
The British market which has (compared to other markets) rather low regulatory barriers so far is dominated by a single player -  Zopa. I wonder if we’ll see the launch of a competitor there.

Boom of social lending services/p2p microfinance (probability 100%)
2008 saw the launch of Babyloan, Veecus and Wokai. Kiva funded more the 1 million US$ new loans in a single week in the end of December. The steep growth of Kiva, MyC4 and other services will continue and new p2p microfinance platforms will launch.

First Banks experiment with own p2p lending applications (probability 50%)
While p2p lending volumes are far from being a business threat to banks – banks do watch the developments. Possibly in 2009 a bank will launch its own p2p lending application. The principal aim will not be to generate revenue, but rather to collect experience and to gauge acceptance by the bank’s customers. It will be interesting to see banks testing the water on their path to implement a p2p lending concept that supplements their core business.

Continue reading →

More on Smava Poland launch

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Following up on the interview (see ‘Smava expands p2p lending to Poland‘) I just took a look at Smava.pl, which has now launched. I don’t speak Polish but the layout of the site is very similar to the Smava Germany site, so navigation was no problem.

As expected interest rate levels in the Polish market are considerately higher then on Smava.de. At the moment there are 4 active listings with (nominal) interest rates ranging from 15.9 to 23.5% (maximum interest that can be entered in the application form for a loan is 26%). Loan terms are short. Borrowers can select from 3 months (minimum) to 36 months (maximum) with 9 possible durations.

Smava did keep the groups feature, which puzzles me  as groups have not gained any use on the German version in the nearly 2 years since launch.

One of the partners of Smava in Poland is Money.pl, a finance website with 2.6 million users per month. This is a good marketing move to gain visibility for the concept and to close up on the 3 competitors that launched earlier.

The management team consists of PrzemysÅ‚aw MoÅ›cicki, dr Marcin Klinowski and Arkadiusz Hajduk. Hajduk is a ‘veteran’ in p2p lending. He co-funded Fairrates (in Denmark) and later was product manager on the IOU central team (Canada).

Fynanz halts p2p lending

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Prosper Lending Review examined how Fynanz, a p2p lending site for student loans,  quietly halted operations recently. In the article Tom points out that Fynanz attempts to market itself as a whitelabel service to credit unions and other financial institutions.

Fynanz CEO Chirag Chaman is cited that the reason for no longer accepting new lenders and borrowers are market conditions with sinking interest rates. Chaman outlines the plans to cooperate with financial intstitutions/banks to finance student loans.

Exclusive Interview: Smava expands p2p lending to Poland

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Starting Jan. 7th, the German p2p lending service Smava will launch it’s p2p lending platform in Poland. I interviewed Smava CEO Alexander Artopé.

The following interview was originally conducted in German language. Possible translation errors are mine.

P2P-Blanking.com: Mr. Artopé, why has Smava chosen Poland as target market for the international expansion?

Smava: For several reasons. Poland is a fast growing economy with approx. 40 million residents. In Poland the span between deposit rate and base rate is very high – approx. 15 percent. Therefore the smava marketplace will be very attractive for polish customers right from the beginning. And regulation in Poland does not require a bank for the p2p lending model. This keeps transaction costs very low.

P2P-Banking.com: There are already 3 p2p lending services established in Poland. How does  Smava plan to win market share as newcomer?

Smava: Compared to the active services smava is much more secure. Like in Germany it is a central product feature, that the risk for the lenders is transparently evaluated and can be factored into the calculation . To achieve this we cooperate with the polish credit rating agency (BIK).

P2P-Banking.com: How did you organize the operations? Does Smava have a branch or a subsidiary in Poland? Or do you operate from Berlin?

Smava: We have a subsidiary in Wroclaw, Poland, with a polish management team.

P2P-Banking.com: Where are the biggest challenges in international expansion: technical, legal/regulatory, marketing or recruiting team members?

Smava: On all fields, in the following order: legal/regulatory, recruiting and then marketing.

P2P-Banking.com: Which differences does the polish version of Smava have compared to the german Smava version?

Smava: Firstly we will start in Poland without the ‘Anleger-Pools’ (P2P-Banking: an insurance feature), because p2p loans are mostly short term there. Secondly all loan contracts will be directly between lenders and borrowers  – not like in Germany with the biw bank as intermediary.

P2P-Banking.com: What will be the maximum loan amount that can be borrowed at Smava Poland?

Smava: A polish borrower can use smava.pl for loans up to 100,000 Zloty. Each lender can invest up to a maximum of 200,000 Zloty. (P2P-Banking.com: 100,000 Zloty equal approx.  34,000 US$)

P2P-Banking.com: Which credit rating information will Smava.pl supply for the lenders?

Smava: Like in Germany smava will supply a credit score (BIK) as well as a debt/income ratio.

P2P-Banking.com: Which fee structure does Smava.pl have?

Smava: Lenders can invest fee-free, borrowers pay 1%  of the loan amount. Continue reading →