Five Dollar Startups

Cross posted from Hack & Hustle

Until more P2P lending platforms launch, most investors and borrowers are running to the top two P2P players.

Here are some quick metrics on the top two industry giants:

1. Lending Club: San Francisco, CA (USA)

With over $3 billion in loans to borrowers Lending Club is the industry leader.

Check out the Lending Club blog HERE

2. Prosper: San Francisco, CA (USA)

Many investors have claimed to have seen better returns using Prosper over Lending Club, but they both have their perks. Many investors enjoy the automation of Prosper for their investments.

Check out Prospers blog HERE

Now that the P2P lending industry has been pioneered there is room for other companies to jump on board and help disrupt the formal/ancient bank loan industry.  

Cross posted from Hack & Hustle

Quick Scenario:

You’re about to go through a 12-week software programming school that costs $10,000.

For whatever reason, you don’t have the full tuition payment up front for your classes.

You want to get tuition paid and start doing what matters, learning. This is when P2P Lending comes into play. You can borrow a peer-to-peer loan with a fair interest rate and make payments without dealing with a bank.

My suggestion, borrow from a P2P platform.

Why?

Because in the new world of Peer-to-Peer lending, literally everyone wins.

The two main pieces to the Peer-to-Peer puzzle:

Borrowers (you) sign up by entering your credit information (to make sure you are capable of obtaining and paying off the loan.) After being verified to borrow, you can post your loan to a peer-to-peer platform of your choice.  (top two are Lending Club and Prosper in US)

Lenders (investors) go through P2P platforms and invest in the loans posted by borrowers based on the loans risk profile. Investors diversify their portfolio with different types of loans (Small business, Student loans, ect.) to reduce their level of risk and maximize their ROI. Different platforms use different metrics to show investors how likely a borrower is to default. (Defaulting is failing to pay a loan off) Common identifiers are AA and BB being the best lowest rick, to HR meaning high risk.

When you put these two pieces together you have a P2P Lending platform.

Borrowers have a monthly payment (with an interest rate) that is split up and sent to the investors that funded their posted loan. This monthly payment means that investors are making recurring revenue from their investments. This is why the industry will loan over $1 trillion by 2025. Investors are sprinting towards P2P Lending.

I like to think of P2P as investors crowdsourcing loans for borrowers.

Why/how does everyone win?

Investors make recurring revenue, and high returns from their low risk investments.

Borrowers receive their loans quicker and cheaper than any bank could provide. 

Now you just have to ask yourself, do you want to disrupt something as sideways as bank loans and invest or borrow on P2P lending platforms?

Cross posted from Hack & Hustle.

Peer-to-Peer lending, investing, and borrowing is the future.

Peer-to-peer lending is the practice of lending money to unrelated individuals, or “peers”, without going through a traditional financial intermediary such as a bank or other traditional financial institution

With the market being relatively new, with platforms like lending club andprosper lending over $100 million every month, peer-to-peer lending is disruption at its finest.

At the Lendit Conference in San Francisco this week Ron Suber (president of Prosper), said when they started originating loans at prosper, they were generating $9 million a month. Within their first year (365 days) they were generating over $100 million in loans per month. (Quick math, thats 10x growth)

This is crazy.

Why/how did Prosper grow so fast?

The fact is banks turn down 85% of people who try to get a loan. 

Where do those people go?

These people (borrowers) are now turning to peer-to-peer lending platforms like prosper and lending club to get “crowdsourced” loans from investors all over the world. Borrowers can make reasonable monthly payments on their loan, and know they are dealing with a group of PEOPLE on the other side, instead of a centralized bank.

Peer-to-Peer is disrupting banks, and formal loans that have been in place for decades.

Therefore, peer-to-peer lending is helping people that the banks wouldn’t. Why wouldn’t you be all for that?

As far as investors goes, they are trampling each other to jump into peer-to-peer lending because of the 10% returns some investors are now getting. Borrowers are paying the monthly fee that investors split, everyone wins.

I have met/talked to dozens of peer-to-peer investor and borrowers about various pain points that P2P lending solves.

Surprisingly, both investors and borrowers shared the same pain point, time.

Small businesses seeking for loans, don’t have time.

Recent college grads swamped with debt, that need to consolidate their student loans, don’t have time.

Investors, don’t have time.

Peer-to-Peer lending is the answer to this problem. Everyone involved wins. Period. 

Moral of the story: P2P lending is still an infant industry. However, It’s exploding now because it saves investors and borrowers the time and hassle of the banks.

Fact to back this; At the Lendit conference, Charles Moldow partner at Foundation Capital said “By 2025 this industry will originate $1 trillion in loans.”

That gives companies like LendLayer 10 years.

Go.

Hey Five Dollar Startup Fans!

Sign up for our new startup Slingbot and Grow your social following. Understand them using analytics and convert them to customers!

Thanks guys!