Globefunder opens doors to borrowers

We have been eagerly waiting for GlobeFunder for several months. They have finally opened their door for borrowers and institutional lenders. Opportunities for individual lenders are still "coming soon."

Today Columbus Business First published an article with even more information that GlobeFunder's own FAQ. GlobeFunder promises to be less social than other social lending sites and focus instead on borrower's financial profiles. Here's an excerpt from the article:

"Interest rates for borrowers on GlobeFunder range from 8 percent to 20 percent. GlobeFunder makes its money by charging a onetime 1.75 percent fee to borrowers on their loans, and charging lenders 50 to 100 basis points of their investment over the 24- to 60-month loan term, Decio said.

A basis point is one-100th of a percent.

GlobeFunder is responsible for servicing, collecting and, if necessary, selling nonperforming loans to debt collection firms, Decio said.

The risk for lenders is that they are out of their investments if borrowers don't repay the loans, but they will receive the proceeds from a sale of the debt to another company, Decio said. That's why lenders, who must pledge a minimum of $500 per loan, are encouraged to fund portions of several loans, rather than putting all their money into one borrower, Decio said.

'It's not brain surgery - I wouldn't buy three loans at $8,000 each,' he said.

Loans on GlobeFunder will range from $2,500 to $25,000.

For borrowers, the site may prove attractive because it will set interest rates based on a credit profile, unlike credit card companies, which give few rate breaks for good credit, Decio said.

GlobeFunder requires a minimum credit score of 640 for borrowers.

'We've got over 90 million people out there that don't have risk-adjusted rates,' he said. 'Either they're lazy or they don't recognize there's a way to consolidate and save money.'

GlobeFunder's approach differs from other person-to-person lending sites.

Its interest rate ranges are based on borrowers' financial profiles, and the site eschews photographs and personal stories from borrowers about why they're looking for money - a tactic other companies have used, Decio said.

'You're not going to see pictures and big stories about people's lives,' he said. 'We're not going to do that because it's not scalable.'

Decio said GlobeFunder's approach, coupled with a more systematic way for setting rates and arranging loans, could allow the company to attract institutional investors that will lend on a large scale.

Other sites have taken more of a social networking approach."

GlobeFunder's homepage currently lists several sample loans using a globe rating that corresponds to credit scores (Experian ScorexPLUS). The highest rating, five globes, goes to borrowers with 780 or better while those with scores from 640-659 get one globe.

While GlobeFunder is not yet accepting individual investors, they are inviting institutional lenders. On their institutional investor page they provide the following information:

"From time to time, GlobeFunder Ventures, Inc. ("GlobeFunder") may make information available to pre-qualified individuals or entities regarding certain private investment opportunities. GlobeFunder will not act as a broker, dealer, or placement agent, or be paid a transaction based fee with respect to any such opportunity. Access to information regarding privately offered investments is limited to individuals or entities that qualify as accredited investors, and which meet other qualifying standards. All private investments will meet the conditions of Regulation D under the U.S. Securities Act of 1933, as amended. If you would like more information, please complete the Registration Form and Accredited Investor Questionnaire. We will review the form and questionnaire and contact you within 30 days."

GlobeFunder is led by Brian Mullally and Benjamin Decio. Their strategic partners include Computer Science Corporation, Brooks Fl Solutions, eDominate, and Articus Ltd.