P2P Lending has been in the mainstream media news a great deal lately. I decided to post a roundup of many of the recent news articles on Prosper.com, Lending Club, Zopa, GlobeFunder, and Virgin Money. It is unfortunate that Lending Club entered a quiet period just as they were gaining tremendous growth in loan volume.

CNBC February 5th, 2008: From Zero to Millions: Financing Your New Business:

Online Family Lending Use a lending network designed for inter-family loans, such as CircleLending.com. Tools at that site will help you and your relative come to terms on the length of the loan and the interest rate, and calculate the monthly payment amount. For $99, CircleLending issues a legally binding promissory note and a repayment schedule. For $9 per payment, the company will set up automatic repayments using electronic funds transfer.

Peer-to-peer Lending: Several websites now make it much easier to find an investor who will back your business. Check out prosper.com, lendingclub.com and zopa.com.

Lending Club’s founder financed his first company with personal loans and high-interest credit cards. He eventually sold the business to Oracle. That experience inspired his new company. Lending Club, which launched on Facebook in May 2007 and on its own site last September, uses technology to match borrowers to lenders willing to offer unsecured loans of $500 to $25,000 with three-year, fully amortizing terms.

The author, Laura Rowley, must have used some old notes because Read the rest of this entry »

I received a promotional email from GlobeFunder today. What amazes me is that they seem to be targeting hedge fund qualified investors, but the email says that they have only originated $100,000 loans since January 1st, 2008. That is a slow start in volume and one that is not likely to entice many major institutions to invest. It is not worth the paperwork to invest such small sums from a large portfolio — it simply will not move the ROI needle. Dwarfing that number Prosper has pushed out $117 million in loan volume. The same article mentions that January 2008 alone was $7.2 million in loans.

Edit 11/28/2008 : See the comments following this article in the comments by the Globfunder CEO.

Here is the text of the GlobeFunder email:

When the media is absorbed in (some would say paralyzed by) the global credit crisis and market downturn, it’s hard to bring attention to a global event closer to home: GlobeFunder is shaking-up the traditional lending world. But we’re being noticed by the likes of Forbes and others Read the rest of this entry »

Elaine Appleton Grant at the Boston Globe writes about P2P lending in her article “Lending to relatives? Read this.“ Elaine starts the article out with a catchy and sympathetic (at lest for lenders) story of a brother who did not bother to pay a sister $500 for a used car sold on credit. In short, the sister repossesses the car from her brother because he never pays. Elaine goes on to explain such services as Virgin Money, Prosper.com, Lending Club, Zopa and GlobeFunder.

The most surprising part of the article to me was that Virgin Money is providing secured P2P loans (backed by property) and loans with values up to $1 million dollars. Also, Virgin Money is providing reverse mortgages. This sounds like a great idea where the parent may be in need of cash and have equity in the home. Combine that situation with children who may not agree on money matters and this could explain to financially illiterate Johnny why his sister Jane, who supported mom for 10 years at $500 per month, receives more of mom’s home value upon mom’s death.   Of course, the major problem with that scenario is if nice Johnny visited mom everyday while Jane was off traveling the world. Oh, well, P2P lending through a bank cannot solve all family problems.

The article ends with a great quote about family loans:

John Napolitano… recommends lenders overcome the squeamishness of asking a relative to document a loan. “People don’t document loans, because they feel stupid saying ‘I want to have you sign this note,’ ” he says. “But even dumber is sitting there at Thanksgiving dinner with the guy who hasn’t paid you in a year.”

By the way,  Elaine Appleton Grant asked about family lending on LinkedIn before writing this article.