From alphaNOW:
The Promise Of Peer Finance
The year 2014 is seeing important milestones in peer finance. Lending Club has reached $5 billion in loans originated to date. Prosper Marketplace is now hitting its stride at approximately $102.8 million per month in originations and the rating agencies are inching closer to developing methodologies to create more traditional-style securitizations. It appears as though the industry has hit a point of inflection, and the groundwork laid by Lending Club and Prosper offers great potential for scaling this quantum leap in banking efficiency.
Peer finance is shaping up to be the next evolution of traditional banking into a more efficient method of capital formation and investment through the leveraging of technological innovation. Let’s explore the main benefits of peer finance and the prospects for the future growth of this promising new industry.
Peer finance — here to stay
Peer finance has been growing rapidly over the past five years, quickly becoming a major global investment class. The industry leader, Lending Club, is widely expected to go public in 2014 and is currently valued at $3.8 billion. Its investors include such prominent firms as BlackRock, Google Ventures, T. Rowe Price and Union Square Ventures. Prosper has ramped up its volume significantly and features its own list of impressive investors such as BlackRock and Sequoia Capital.
Peer finance is not only a U.S. phenomenon. In the U.K., Ratesetter and Zopa are approaching a decade of history and the government gave a strong endorsement to Funding Circle by investing £75 million in small business loans through the platform. Furthermore, the Funding Circle platform is now enjoying early success in the U.S. and will be issuing fractional loans to unaccredited investors shortly, which will further deepen the range of financing and investing options for U.S. businesses and investors.
Source: Lending Club, Prosper, Funding Circle, Ratesetter and Zopa.
Plain vanilla loans offered more efficiently
Peer financing offers a relatively easy application and approval process that is done completely online. Borrowers choose the type of loan they would like to receive and apply to the appropriate platform. The application process is quick and borrowers can receive a loan offer in a matter of minutes. Loans are then posted on an online marketplace where lenders can view detailed borrower information. Depending upon the platform, both accredited and unaccredited investors have access to peer finance (although some restrictions apply to unaccredited investors). Once a loan is approved and investor interest is beyond a certain threshold, the loan is funded and the financing portal collects payments and distributes them to lenders over time.
Source: Lendvious.com.
Peer finance advantages...
...MUCH MORE
