The fledgling industry of peer-to-peer lending has grown dramatically in the last couple of years. Companies like Prosper, Lending Club and others have gained national exposure and the amount of loans that these peer-to-peer lending companies are originating are growing by tens of millions of dollars each month.
Here’s a run-down of the peer-to-peer lending sites that are operating in the United States:
Prosper Marketplace – Prosper.com was the first of the peer-to-peer lending companies in the U.S. to gain exposure and to originate a significant amount of loans. Prosper has originated more than $184 million in loans and are currently originating about $2 million per months in loans. The company faced some legal issues with the SEC in 2008, but has worked those issues out and is now legally operating again.
Lending Club – Lending Club is the fastest growing of the peer-to-peer lending companies in the United States, originating about $6 million in loans each month. This peer-to-peer lending site started out as a Facebook application in 2007, but quickly moved to its own web-portal. Lending Club has originated a total of $69 million in loans since the company began.
Lending Club has been popular with investors because the company has done a better job of collections and has generally provided better rates of return than Prosper. Borrowers tend to like lending club’s peer to peer lending site because the company tells the borrower what interest rate they will be paying on the loan before going through the funding process.
Fynanz – Fynanz is a peer-to-peer lending website that focuses on peer-to-peer student loans. Students can use their loan money to purchase textbooks, room and board, tuition and other education related expenses.
Fynanz offers lending terms of 5, 7 and 10 years, which is longer than what Lending Club and Prosper.com offer. Fynanz also offers the ability for students to defer interest while they are in college.
Green Note – Green Note also focuses on peer-to-peer student loans. This peer-to-peer lending company launched in 2009 and provides loans to students at a flat rate of 6.8% over a period of 10 years. Students can also defer payment while in college and Green Note does not require a cosigner from the borrower.
Kiva – Kiva is also frequently paired with Lending Club, Prosper and other peer-to-peer lending sites, but its operational model is much different than its for-profit contemporaries. Kiva provides micro-finance loans to small businesses around the world in hopes of spurring economic growth and empowering small businesses in situations around the world where funding would otherwise be unavailable.
The Dead Pool
There are a few peer-to-peer lending sites that didn’t make it. Pertuity Direct went defunct earlier in the year and liquidated its mutual fund and returned invested funds to their investors. Zopa, a major peer-to-peer lending site in Europe, ceased their US operations as well. Virgin Money also appears to have exited the U.S. market after removing most of their services from their website.
