US #

LendingClub #

LendingClub Corporation

• Peer-to-peer lending.

  • LendingClub enabled borrowers to create unsecured personal loans between $1,000 and $40,000.
  • The standard loan period was three years; a five-year period was available at a higher interest rate and additional fees.
  • Investors were able to search and browse the loan listings on LendingClub website and select loans that they wanted to invest in based on the information supplied about the borrower, amount of loan, loan grade, and loan purpose.
  • Investors made money from the interest on these loans.
  • LendingClub made money by charging borrowers an origination fee and investors a service fee.
  • LendingClub enabled borrowers to create loan listings on its website by supplying details about themselves and the loans that they would like to request.
  • On the basis of the borrower’s credit score, credit history, desired loan amount and the borrower’s debt-to-income ratio, LendingClub determined whether the borrower was creditworthy and assigned to its approved loans a credit grade that determined the payable interest rate and fees.
  • The loans can be repaid at any time without penalty.

• LendingClub also makes traditional direct to consumer loans, including automobile refinance transactions, through WebBank, an FDIC-insured, state-chartered industrial bank that is headquartered in Salt Lake City Utah.

• The loans are not funded by investors but are assigned to other financial institutions.

• End of P2P platform, 2019-2020

  • In 2020, Lending Club acquired Radius Bank and announced that it would be shutting down its peer-to-peer lending platform.
  • In April 2020, the company announced it would lay off around one third of its employees in anticipation of the economic downturn resulting from the COVID-19 pandemic.
  • In August 2020, the company discontinued its secondary trading platform, hosted by Folio, reducing liquidity for existing peer-to-peer investors.
  • In October 2020, the company ceased all new loan accounts on their website as part of restructuring into a neobank after the acquisition of Radius Bank.
  • As of December 31, 2020, Lending Club will no longer operate as a peer-to-peer lender.

• Credit risk

  • To reduce default risk, LendingClub focuses on high-credit-worthy borrowers, declining approximately 90% of the loan applications it received as of 2012 and assigning higher interest rates to riskier borrowers within its credit criteria.
  • Only borrowers with FICO score of 660 or higher can be approved for loans.

Peerform #

• Peerform is a peer-to-peer lending company, which matches prime and near-prime qualified borrowers in the United States to accredited high net worth and institutional investors on its online platform.

• Peerform is an affiliate company of Versara Lending who acquired Peerform on November 7, 2016.

• P2P Lending platform

  • The Peerform lending platform does not incur the overhead costs associated with formal brick-and-mortar lending institutions.
    • These savings can be passed on to borrowing and lending clients in a transparent way.
  • Peerform provides an online personal loan platform which acts as a marketplace between potential borrowers and investors who lend money.
  • Peerform only accepts accredited investors under SEC Reg D Rule 506(c) or institutional investors to lend money on its platform.
  • Borrowers are screened on a variety of factors so as to ascertain “creditworthiness”.
  • Peerform accepts near-prime (see Subprime lending) and prime borrowers with Credit Scores as low as 600 (and above).
  • Each borrower is presented a fixed APR (and fixed interest rate) with an equal repayment scheme that allows them to pay back the loan in automatic bank debits spread out over 3 years.
  • Investors choose between funding a whole loan or a fraction of a loan.
    • A “whole loan” is where a single borrower receives money from a single investor, whereas with a “fractional loan”, a loan is syndicated among multiple investors.
  • Loans range from a minimum of $1,000 to a maximum of $25,000.

• Peerform Loan Analyzer

  • The Peerform Loan Analyzer is the algorithm used to determine if a person can qualify for a Peerform personal loan.
  • FICO is one of many factors used in determining this qualification as well as in setting the borrower’s interest rate, but other factors, such as a borrower’s total current debt-to-income ratio and the number of recent credit inquiries into the borrower’s credit history, are taken into account among other things.
  • The Peerform Loan Analyzer also uses empirical methods instead of standard filters in determining a borrower’s APR rate, which the company believes will better calculate consumer credit risk.

StreetShares #

StreetShares

• StreetShares, Inc. is a financial technology company and small business funding marketplace.

• In 2016, StreetShares received approval from the United States Securities and Exchange Commission for America’s first public social impact investment product for veterans.

• In June 2019, StreetShares launched the StreetShares Platform to help community banks and credit unions make loans to small businesses..

• Model

  • StreetShares offers a white-labeled service on behalf of banks and credit unions so that banks can offer offers 3 to 36-month term business loans.
  • Borrower applicants must be U.S. citizens or permanent residents, in business for at least one year, earning revenue, incorporated or LLC, and have a business guarantor.
  • StreetShares charges a pre-disclosed one-time origination fee based on term length, risk and loan amount.
  • Banks and credit unions pay a subscription fee for the technology.
  • Funding for the loans can come from StreetShares own balance sheet or from the banks and credit unions directly.
  • Because StreetShares has its own lending balance sheet, the technology may also be used by non-finance companies.
  • StreetShares investments are available to qualified investor members with an established StreetShares account.

Prosper Marketplace #

Prosper Marketplace, Inc.

• Prosper Funding LLC, one of its subsidiaries, operates Prosper.com, a website where individuals can either invest in personal loans or request to borrow money.

• Prosper Marketplace is a peer-to-peer lending marketplace.

  • Borrowers request personal loans on Prosper
  • Investors (individual or institutional) can fund anywhere from $2,000 to $40,000 per loan request.
  • Investors can consider borrowers’ credit scores, ratings, and histories and the category of the loan.
  • Prosper handles the servicing of the loan and collects and distributes borrower payments and interest back to the loan investors.
  • Prosper verifies borrowers’ identities and select personal data before funding loans and manages all stages of loan servicing.
  • Prosper’s unsecured personal loans are fully amortized over a period of three or five years, with no pre-payment penalties.

• Prosper generates revenue by collecting a one-time fee on funded loans from borrowers and assessing an annual loan servicing fee to investors.

  • Prosper has a transaction-based business model, in which the company collects revenue by taking a fee on its customers’ transactions.
  • Borrowers who receive a loan, pay an origination fee of 1.00% to 5.00%, depending on the borrower’s Prosper Rating, and investors pay a 1% annual servicing fee.

• Prosper use pre-set rates determined solely by Prosper based on a formula evaluating each prospective borrower’s credit risk.

• Lenders choose whether or not to invest at the rate which Prosper’s loan pricing algorithm assigns to the loan after it analyzes the borrower’s credit report and financial information.

• All transactions are in US dollars; lenders and borrowers must be US residents.

• Evaluation of credit risk

  • Prosper provided a proprietary “Prosper Rating” for prospective borrowers based on the company’s estimation of that borrower’s “estimated loss rate”.
  • According to the company, that figure is “determined by two scores:
    • (1) the credit score, obtained from an official credit reporting agency,
    • (2) the Prosper Score, figured in-house.

• Prosper publishes performance statistics on its website and all market data is available to the public for analysis.

  • Prosper maintains a full public database of all loans issued through its marketplace on its website.
  • This database and all market statistics can be accessed and queried for analysis of loan performance over time.

• Prosper is backed by BlackRock, Sequoia Capital, Accel Partners, Agilus Ventures, Benchmark Capital, CrossLink Capital, DAG Ventures, Draper Fisher Jurvetson, Fidelity Ventures, Omidyar Network (an investment vehicle of eBay founder Pierre Omidyar), Meritech Capital Partners, TomorrowVentures (an investment vehicle of Google Executive Chairman Eric Schmidt), and QED Investors (an investment vehicle of CapitalOne co-founder Nigel Morris).

UK #

Unbolted #

Unbolted

• Unbolted is a UK based online personal asset-based peer-to-peer lending platform, where individuals can borrow from other individuals by using high value personal assets such as luxury watches, cars, fine arts, antiques, jewellery and commodities such as gold.

• Unbolted offers short-term loans of various types:

  • ‘Buy now, pay later’ loans which allow auction participants at various partner sites (such as Forum Auctions) to bid on items without having the upfront cash.
  • Sale advance loans, which allow vendors to receive up to half of their auction reserve before the auction takes place.
  • Personal asset bridge loans and working capital loans offered to watch dealers.

Rebuildingsociety.com #

Rebuildingsociety.com

• Rebuildingsociety.com is a peer-to-peer lending platform.

• It facilitate the online arranging of finance between lenders and small and medium-sized enterprises.

• The Rebuildingsociety.com website operates as a lending platform by allowing approved businesses to publish a loan application.

• Investors can subscribe to parts of the loan after assessing the business’s information, committing an amount of their choice, with an interest rate of their choice.

• Because investors choose which businesses and at what rate they lend, returns can vary considerably.

• Regulation

  • The Financial Conduct Authority undertook to regulate the peer-to-peer lending industry from April 2014.
  • As of 22 February 2017, Rebuilding Society transitioned from interim permission to full FCA authorisation, with the following permissions:
    • Operating an electronic system in relation to lending
    • Client money
  • Since early 2021 Rebuilding Society has been subject of FCA investigations and some of its activities have been suspended.
    • https://register.fca.org.uk/s/firm?id=001b000000h3VbpAAE

• Rebuildingsociety.com also offers a licensed version of its technology to other businesses looking to break into the peer-to-peer lending industry through White Label Crowdfunding.

• The firm is a member of:

  • European Crowdfunding Network
  • UKCFA
  • Federation of Small Businesses

LendingCrowd #

LendingCrowd

• LendingCrowd is an online peer-to-peer lending company.
• LendingCrowd enables investors to support small and medium-sized businesses by lending personal capital through small loans whilst earning a monthly interest payment.
• Launched in 2014, LendingCrowd is the trading name of Edinburgh Alternative Finance Ltd.
• Regulation
  • LendingCrowd is authorised and regulated by the Financial Conduct Authority (FCA).(UK)

Other Regions #

SocietyOne #

SocietyOne

Lendico #

Lendico Global Services

• a peer-to-peer lending platform that directly connects investors and private and business borrowers.

• Lendico operates completely online.

• Lendico Brazil is an independent company from Lendico Global Services.

• The loans are personal loans or SME loans and range between €1,000 - €150,000 in Germany.

• The interest fee is calculated on the basis of the borrower’s credit score, credit history, desired loan amount and the borrower’s debt-to-income ratio.

• The loan period can range between 1 and 5 years and be repaid at any time.

RangDe #

Rang De

• Rang De is India’s first peer-to-peer online micro-lending platform.

• It connects individual social investors to a community of curated entrepreneurs and students from low-income households across the country, enabling them to invest in the livelihoods and education needs of this community.

• Smita Ramakrishna and Ramakrishna NK founded Rang De in 2008 as a not-for-profit organisation to serve the credit needs of the under-served communities and low income households.

• Rang De connect social investors with under-served communities of borrowers, enabling the low income households to get financial help.

• Social investors can begin by lending as low as INR 100 through the Rang De platform.

• It partners with non-governmental organisations and micro-lending institutions to screen borrowers at the grassroots level.

• The platform keeps track of disbursements and returns, which the investor can withdraw or reinvest.