mortgage loan broker

Micro-Grants, in Person-to-Person fashion: DonorsChoose.org

2011-01-26T00:08:00.000-08:00

DonorsChoose.org facilitates privately-funded Micro-grants benefit students in the classroom. The non-profit was founded in 2000 by teachers in the South Bronx as a way to help support their classrooms.

The platform allows donors to choose the classroom and project that they would like to fund. From literacy and music programs, all the way down to “we need more pencils.” Donors can contribute any amount they want to support these classroom projects.

Prospective donors can sort by the urgency, geographic location, academic subject or even the poverty level of the school program they would like to support.

DonorsChoose has received a four-star rating from Charity Navigator, and 86% of their income directly supports programs. Also, their nearly $16,000,000 budget is entirely supported without government support—driven only by donors.

If a program is not fully funded by the date the funding is needed, the money is returned to the donor, who can reinvest it in another project.

Jessica Ward is a freelance writer and blogger in Seattle. She also blogs at http://www.pennywisefamily.blogspot.com/.

Kiva Adds Currency Risk Protection

2011-01-26T00:07:00.001-08:00

I recently read Banker to the Poor by Muhammad Yunus, and was surprised that one of the primary barriers to stability in the microfinance business is currency fluctuations between countries.

It makes sense that the countries most vulnerable and in need of microfinance are often the countries at the greatest risk for fluctuations.

That of course got me thinking about my own Kiva Account. Would my paltry $25 be there to re-loan when the loan was repaid?

It doesn’t surprise me to see that Kiva has already thought about that. In June, Kiva.org launched a currency risk protection tool to better protect Kiva Borrowers against fluctuations in their borrower’s native currency.

The tool works by limiting the foreign currency risk for field partners to a devaluation of 20%. Any amounts beyond that is shared by Kiva lenders, if the field partner organization has selected to use the currency protection tool.

Next time you fund a Kiva loan you can check on this by viewing “About the Loan.” In the section there is a label titled “Currency Risk” and there are three risk statuses.
1. Covered: If the field partner has not opted in to the risk sharing program.
2. Possible: if the field partner has opted in to risk sharing.
3. N/A: if the partner doesn’t need to take risk precautions as they disburse loans in US Dollars.

Jessica Ward is a freelance writer and blogger in the Seattle, WA area. She writes on family, money and business. You can learn more about her projects at www.jessicaward.me

Paying for college the peer to peer way

2011-01-26T00:07:00.000-08:00

With Fynanz exiting the US student loan market earlier this month there’s still room in the student loan market for a peer to peer player.

Lending Club requires a swift three-year repayment, and the interest is higher than some commercially-available student loans. Some students may want to turn to Greennote as a funding option. Greennote.com has a fixed interest rate of 6.8% and doesn’t require citizenship or a co-signer. (Prospective investors, take note.) Greennote is backed by Menlo Ventures and is based in Redwood City, CA. They launched in June 2008.

Another alternative for students is a mico-grant program found at CollegeDegreeFund.com. Students establish a profile and companies and individuals can provide a sponsorship of any amount towards his or her needs. Funders can contribute as little as $1.00. This is not an investment program, but a micro-grant program of essentially free money for college students. I’ve sent an e-mail off to the managing partners to see how many sponsorships have been funded so far as they reach the one-year mark of operation and I will update here when I hear back from them.

A Note on Note Trading

2011-01-26T00:06:00.000-08:00

Peer to Peer lending has been around via Prosper.com and LendingClub.com for a while now, but another option that is less prominent is after-market note trading on these sites.

There are many advantages to after-market note trading. For sellers, this means having some liquidity in your investment—being able to cash out before the loan fully matures—shortening a three year loan into one or two years or even less time.

For buyers, the advantage is being able to see some repayment history on the loan. If you’re unsure about jumping into peer to peer loans, this might be a good way to go.

Also, for prospective buyers on Prosper, a note is a loan that has already funded, so you don’t have to wait for an auction or funding period. Your note will be earning interest and expecting payment much faster.

Prosper.com uses Folio Investing as their note trading partner, and charges sellers a 1% transaction fee. LendingClub.com uses Foliofn and also charges a 1% seller fee.

Prospective note buyers should remember that they’re not circumnavigating the investor account maintenance fees at 1% at both Prosper and Lending Club—regardless of if you bought the loan at issuance or the note later in the after-market, if the money is owed to you, the maintenance fees are charged to you.

Also, at Prosper the note trading platform only applies to notes issued after July 13th of 2009. At Lending Club your notes can be a little older if you want to re-sell them. The Lending Club platform extends to notes issued back to October 12, 2008.

Overall, the note trading process is fairly smooth. You usually have to digitally “sign” an agreement with the trading platform but otherwise the sites are smoothly integrated. You don’t have to open another account or fund another account—your funds will move fairly seamlessly between your Prosper or Lending Club and the designated note trading platform account whether you’re buying or selling the notes.

If you've done any note trading, I'd love to hear your feedback and comments. I haven't tried this system myself yet, but may consider it in the future.

Jessica Ward is a freelance writer based in Seattle. She writes on family, business and money.

Mint Selling to Intuit for $170 Million

2011-01-26T00:05:00.002-08:00

Mint.com, the leader in online personal financial management has just signed an agreement to be purchased by Intuit (makers of Quicken, QuickBooks and TurboTax) for an amount disclosed as “approximately $170 Million” in an Intuit press release.

Intuit’s Quicken Online is a competing free service to Mint.com and users of both services may be wondering “will Quicken Online/Mint remain free?”

Josh Smith, of Wallet Pop cleared that up for everyone in a story released today, quoting Scott Gulbransen of Intuit who assures users that both services are expected to remain free.

Mint.com CEO and founder Aaron Patzer will be joining Intuit as the General Manager of the Personal Finance group where he will be responsible for “online, desktop and mobile consumer personal finance offerings” for the company.

Patzer reported on the Mint.com blog that the sale is good news for Mint users who will gain from Intuit’s size and status as a leader in financial software citing that “by joining Intuit, we can accelerate our ability to add more fantastic new product functionality into both Quicken and Mint."

The transaction is expected to close by the end of the year.

Since launching two years ago, Mint.com has garnered 1.5 million users and is tracking $200 billion in transactions according to an Intuit press release.

Intuit was founded in 1983 and had an annual revenue of $3.2 billion in FY 2009. They have 7,800 employees worldwide according to their press release.

Intuit Press Release

Mint.com blog Post

Jessica Ward is a freelance writer based in Seattle. She also blogs at The Penny-Wi$e Family and DebtKid.com

PEOPLE CAPITAL LAUNCHES HUMAN CAPITAL SCORE COLLEGE PLANNING TOOL

2011-01-26T00:05:00.001-08:00

The following is a press release from People Capital, posted exactly as sent to Prosper Lending Review.

New Web Tool Allows Student and College Planning Consultants to Compare College Options

NEW YORK – People Capital (http://people2capital.com/), a Web resource for college students to obtain student loans via an online lending exchange, has launched the Human Capital Score™ College Planning Tool (http://www.humancapitalscore.com/). The new Web tool is designed for students (and college planning consultants) who want to use the Human Capital Score to compare multiple projected income scenarios based on colleges they are considering attending.

The Human Capital Score College Planning Tool is a Web based college scenario planner that is targeted for students who are planning to go to college and need help measuring the economic value of various schools they are considering. Namely, the tool can help students decide whether it is worth the money spent to go to one school as compared to another, based on the income potential from the academic choices they make. The planning tool works when a user inputs key data about themselves (GPA, SAT scores, planned college major) and the various schools they are considering. The tool then calculates the data and presents a graph and chart documenting results of several scenarios (up to five maximum) of the user’s potential income 10 years after graduation, allowing the user to compare the results between colleges she is considering. This tool can also be used by college planning consultants and high school guidance counselors with a professional version available for their consulting needs.

The Human Capital Score College Planning Tool is predicated on the Human Capital Score, a Web calculator developed and launched earlier this year by People Capital. Built on research developed at The Wharton School of the University of Pennsylvania Insurance Department, the Human Capital Score helps students assess their student loan risk by using academic merit data such as GPA, standardized test scores, college and major, along with traditional demographics data and metrics, to give insight into their future earnings potential.

“Since launching the Human Capital Score earlier this year, we have received feedback from users who found the tool helpful and insightful, but thought that the ability to compare various college scenarios would be an added benefit,” said Thomas Shelton, founder and CEO of People Capital. “The Human Capital Score College Planning Tool now adds this level of functionality; as students can use it to create multiple scenarios to help them better evaluate their loan risk, future potential earning income and possibly the college or university they will spend the next several years at.”

The Human Capital Score College Planning Tool is available in three tiers of pricing:

· $19.95 – Compare and contrast up to two scenarios at a time, for one time use only

· $29.95 – Compare and contrast up to five scenarios at a time, for one time use only

· $199.95 – Compare and contrast up to five scenarios at a time for six months with unlimited usage

About People Capital

People Capital (http://www.people2capital.com) was founded by a team of world-class talent with backgrounds in student loans, consumer finance, credit ratings and new media in order to develop the next generation of credit risk management and funding for student loans. Its lending platform allows students to finance their college educations through improved access to private student loans. Its patent-pending Human Capital Score™ (http://www.humancapitalscore.com) measures students without credit history by using academic and credit data to model future individual income levels, and therefore their future ability to pay off the loan.

Some news from SmartHippo

2011-01-26T00:05:00.000-08:00

We covered SmartHippo back during Finovate Startup, but wanted to update our readers on some exciting developments at their firm. Please see the attached press releases for more info.

SmartHippo names former LendingTree GM Lori Collins CEO
Previously grew revenues from $7 million to half a billion over seven years
SAN FRANCISCO, CA AND MONTREAL, CANADA -- October 14, 2009 -- SmartHippo,
the first web site that let consumers use the power of the community to shop for
financial products, announced today it has named Lori Collins as its new CEO.
“Weʼre very excited by Loriʼs unique experience in both the web and finance sectors,”
said Founder George Favvas, who will continue his involvement in the company as VP
Corporate Strategy. “Iʼm confident that with Lori at the helm we are well positioned for
our next phase of revenue growth.”
As General Manager of the LendingTree Exchange, Collins was responsible for sales,
relationship management, and product management for the LendingTree lender
network. She was part of the executive team which increased revenues from $7 million
to $476 million over seven years.
“SmartHippo has a very compelling business model,” Collins said. “Community-driven
product comparisons have become the norm in other industries, and Iʼm excited to be a
part of the company that is bringing these innovations to the financial space.”
Unlike intermediary web sites which match consumers with lenders based on business
relationships, SmartHippo is an open, transparent marketplace where consumers help
each other find the best financial products. They can ask questions, compare rates and
share reviews and experiences with other consumers and make a more informed
decision. Lenders and brokers participate by answering questions and posting rates,
and consumer feedback keeps them in check.
In another announcement today, SmartHippo announced it is expanding into the
Spanish market with the launch of HipoListo.es in partnership with Financialred
Network.

About SmartHippo
SmartHippo.com is the first-ever website that uses the power of community to help
consumers find the best mortgage rates and save money. SmartHippo allows any
individual to post information and feedback on the rate they received, and to compare
rates with other members of the community with similar profiles. Members of
SmartHippo can see real rates reported by real consumers, and sort through banks
based on feedback posted by other members of the community. The company is
privately held with offices in San Francisco and Montreal. www.smarthippo.com
Contact:
George Favvas
Founder and VP Corporate Strategy
george (at) smarthippo.com
(514) 242-5730
Media advisory: Lori Collins will be delivering the closing keynote at Startup Camp
Montreal tomorrow, October 15th. The event takes place at the Society for Arts and
Technology, 1195 Saint-Laurent boulevard, Montreal from 6pm to 11pm. Admission is
free. For info see: http://www.startupcampmontreal5.wikidot.com

************

SmartHippo expands into Spain with launch of HipoListo.es
Joint venture with Financialred Networks poised to become leading player in market
SAN FRANCISCO, CA and MADRID, SPAIN -- October 14, 2009 -- SmartHippo, the
first web site that let consumers use the power of the community to shop for financial
products, announced today a strategic partnership with Financialred Networks which will
see the launch of HipoListo.es in the Spanish market.
Under the terms of the agreement, Financialred has acquired an exclusive license to
market the SmartHippo brand and technology platform in Spain.
“The web finance space is in its infancy in Spain and we believe we have an opportunity
to rapidly establish HipoListo as the dominant player in a market of 50 million
consumers” said Jesus Perez, Chief Strategy Officer of FinancialRed. “By leveraging
the SmartHippo platform we were able to significantly reduce our time to market.”
As part of the partnership, SmartHippo will manage the software platform while
Financialred focuses on localization and sales and marketing. As of todayʼs launch,
HipoListo.es mortgage vertical, with other verticals planned for early 2010, he added.
“Weʼre thrilled to be a partner in bringing the first social financial comparison shopping
engine to Spain,” said Lori Collins, CEO of SmartHippo. “Our partnership with
Financialred signifies our commitment to work with and drive profitability to media
companies with existing user bases.”
Separately today, SmartHippo announced that Collins, formerly GM at LendingTree, has
joined the company as its new CEO, taking over from George Favvas, who will remain
onboard as Founder and VP Corporate Strategy.

About SmartHippo
SmartHippo.com is the first-ever website that uses the power of community to help
consumers find the best mortgage rates and save money. SmartHippo allows any
individual to post information and feedback on the rate they received, and to compare
rates with other members of the community with similar profiles. Members of
SmartHippo can see real rates reported by real consumers, and sort through banks
based on feedback posted by other members of the community. The company is
privately held with offices in San Francisco and Montreal. www.smarthippo.com

Financial Start-ups Form ‘Coalition for New Credit Models’

2011-01-26T00:04:00.000-08:00

Washington, D.C. – October 20, 2009 – Amid historic regulatory reforms being considered by the new administration and lawmakers on Capitol Hill, the Coalition for New Credit Models announced its formal launch today as its representatives descended upon Washington. The Coalition is made up of non-profit, for-profit, and social enterprises using new technologies, products and business models to provide credit and information to millions of consumers and small and midsized businesses. These models serve as innovative alternatives to existing banking and financial institutions and are backed by venture and social capital to stimulate the economy, shore up financial markets, and enhance local communities. They have a special focus on bringing transparency, fairness, durability, and accountability to consumers and to our credit markets.

Chris Larsen, Chief Executive Officer and Co-founder of Prosper, America’s largest peer-to-peer lending marketplace, said, “This country has been in an energy crisis for years and we are now in a financial crisis. America’s economic future depends on new and alternative credit models being embraced in the same way green technologies are being nurtured by policy leaders to help solve the energy crisis. We are at risk of being suffocated by rigid regulations that threaten rather than embrace new technologies and models.”

The current regulatory environment has stifled many entrepreneurs in this nascent industry, and it is clearly time for new policies and fresh thinking from lawmakers and regulators. At a time when the credit crisis and recession have adversely affected consumers, families, small and mid-market businesses, Coalition members have created alternatives and innovations that will make the country less dependent on any single point of failure, or institutions that are too big or too interconnected to fail.

James Gutierrez, Chief Executive Officer of Progreso Financiero, said, "Without new innovators providing better options, millions of Americans will be left out, far away from the American Dream and stuck with predatory choices, simply because they lack established credit history. We believe government can do more to provide greater access and financial inclusion to all consumers, especially the underbanked, and help cultivate new models that do so on responsible terms."

Nicolas Perkin, President of The Receivables Exchange, said, “Now more than ever, America’s businesses should have unfettered access to alternative and reliable sources of capital to meet their business financing needs. As the economy regains momentum and technology continues to accelerate the pace at which business is conducted around the world, only innovation and an uncompromised focus on transparency and responsible financing models will drive sustainable growth and prevent businesses from being reliant on a single source of funding, and thereby exposed to unnecessary risk.”

The Coalition for New Credit Models recommends that Congress and the administration:

1. Adopt legislation classifying person-to-person lending as a consumer banking service, not a securities offering.

2. Create a liquidity fund to provide capital for companies making small consumer loans to underbanked individuals.

3. Establish a federal backstop for small and mid-sized businesses to provide access to working capital through electronic marketplaces.

4. Enable the emergence of a robust U.S.-based private company stock market to provide the exit path necessary to attract investment capital back to this country, bolstering domestic small businesses, innovation and job growth.

5. Create a Start Up Liaison at Treasury Department or within banking regulators to guide and fast-track the development of new financial products by start-up companies and organizations seeking to innovate the way consumers and businesses raise and access capital.

Background on Coalition Members:

Credit Karma (San Francisco, CA) is the consumer’s advocate for demystifying credit, is the only Web site that provides consumers free access to their credit score, and has a range of tools and information resources to help them monitor and manage the credit aspect of their financial health. Credit Karma’s goal is to help consumers easily digest the contents of their credit report and understand what makes up their credit score. Credit Karma works with a range of partners, including mortgage lenders, credit card providers, banks, and wireless providers.

Loanio, Inc. (Nanuet, NY) is an Internet-based peer-to-peer lending platform where individuals can request personal loans that are funded by other individual (or corporate) investors. Interest rates on loans are set by auction, where lenders/investors bid on loan requests that they find attractive. Through patent pending features such as Platinum Verification and Co-borrowing, Loanio’s goal is to provide access to a significantly underserved borrower market and stronger security for its lenders/investors. Loanio, Inc. suspended its business activities in November 2008 and is currently registering its securities with the SEC.
ProFounder (Palo Alto, CA) is a platform where entrepreneurs raise seed funding from their social network and affiliates through a legally compliant and dynamic process; and individuals invest small amounts of money in companies in exchange for ownership. ProFounder is co-founded by Jessica Jackley, Evan Reas, and Dana Mauriello. Jackley is Co-Founder and former Chief Marketing Officer of Kiva.org, the world's first peer-to-peer microloan website which has made almost $100M in loans since its inception at the end of 2005.
Progreso Financiero (Mountain View, CA) is the leading provider of consumer friendly loans to underbanked Hispanic families in America. Progreso has developed a proprietary credit score based on over 25,000 initial loans, and in turn, can lend money at fair rates and lower losses to families who lack FICO scores and traditional banking relationships. Progreso's mission is to help its customers build a credit history and fully realize the American Dream, and to provide ground floor innovation that helps move the underbanked up the financial services ladder. With over 100 employees and $26 million in venture capital, Progreso is rapidly expanding throughout the Southwest, and aims to serve over 1 million underbanked families with credit, debit, savings and other mainstream products by 2012.

Prosper (San Francisco, CA) is America’s largest peer-to-peer lending marketplace. Since its launch in February 2006, over 850,000 Americans have joined the community and $180 million in loans have been facilitated. Prosper is an auction-based platform, where borrowers set the maximum rate they’re willing to pay, and individual and institution investors bid at or below the rate set by the borrower. In October 2008, Prosper halted its marketplace and entered a quiet period as part of the process of registering with the SEC. Nine months later, in July 2009, Prosper’s registration statement with the SEC was declared effective. Notes offered by Prospectus.

The Receivables Exchange (New Orleans, LA) is a real-time, online competitive marketplace for accounts receivable that gives small and medium-sized businesses the ability to generate cash flow quickly and as competitively as possible. The Receivables Exchange allows businesses to sell their receivables to a global network of institutional investors and access working capital in as little as 24 hours. When you consider the typical remittance term of 48 days, or as much as 180 days, The Receivables Exchange is a welcome financial tool for small and mid-sized businesses.
SecondMarket (New York, NY) is the largest centralized marketplace for illiquid assets, including auction-rate securities, bankruptcy claims, collateralized debt obligations, limited partnership interests, private company stock, residential and commercial mortgage-backed securities, warrants/restricted securities in public companies, and whole loans. SecondMarket’s online trading platform has more than 4,000 participants, including global financial institutions, hedge funds, private equity firms, mutual funds, corporations and other institutional and accredited investors that collectively manage over $1 trillion in assets available for investment.

Analyzing Prosper data

2011-01-26T00:03:00.001-08:00

Prosper has created a set of 3rd party tools that allow developers real time access to lending data on Prosper. This has allowed enthusiasts and academics to create all kinds of different ways of looking at the data. The most popular 3rd party site, LendingStats, allows you to view anyone's profile, get breakdowns of loans by state, credit grades, and group statistics. Other sites like Eric's Credit Community allow you to be notified when a lender places a bid so you can decide if you want to copy someone's movements, and lets you track "What if" profiles. Some websites have tried to quantify and graph exactly what the risk is associated with number of credit lines, number of inquiries, DTI, monthly income, and home ownership.

The fun part, for those of us who like databases, is that anyone can put all the data into a database and analyze it and graph it anyway they like. Right now only 18 months of data exist because Prosper has only been around for about 18 months. As time goes on, this data will become more detailed and much more accurate.

Theoretically, once the risk factors have been quantified for each item in a credit report, it should be possible, with a diversified portfolio, to calculate an approximate rate of return after accounting for expected defaults. Right now on the different websites you will see things like estimated ROI, Experian ROI, and EricCC ROI. Everyone uses different methods to estimate the expected return, and right now these can vary quite a bit. As more data becomes available these estimates should improve.

The current consensus based on analysis done to date is that on average HR loans return a negative rate of return after accounting for defaults. E's are slightly positive, and loans in the remaining credit grades average between 5-12% after defaults. Some people still go after the lower credit grades and try and cherry pick the better loans out of group with the hope that if they avoid too many defaults they will end up with a high rate of return.

I prefer to stick to higher credit grades with the knowledge that 5-12% is better than I can get in a CD or a savings account, and it is much more fun than buying a CD. It is a feel good investment knowing that there is a person on the other side of the loan that is being helped out by having access to needed money.

An introduction - lending through Prosper

2011-01-26T00:03:00.000-08:00

Grameen Bank and its founder, Muhammad Yunus, won the Nobel Peace Prize in 2006 for their work making small loans to poor people with big dreams. Prosper is a website that tries to extend the microcredit idea via the web to all people, including but not just limited to the very poor. It's been called the eBay of Loans by Forbes Magazine, the #1 website of the year by Time Magazine and has received plenty of other rave reviews. Prosper describes their service here:

The way Prosper works is intuitive to people who have used eBay. Instead of listing and bidding on items, people list and bid on loans using Prosper's online auction platform. People who want to lend set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select. People who lend can easily diversify using "standing orders", which automatically make many small loans to different borrowers.

Although it may seem somewhat risky, Prosper takes many more steps than eBay to prevent fraud. Everyone's identity is verified. Credit scores are checked. Those borrowing money basically go through the same rigid process required by any normal lender. Monthly payments are made by automatic withdraw from the borrowers savings account. So far Prosper has been very successful with over $67,000,000 in loans. It provides loans to people who need it at a lower interest rate than they would be able to get through a bank or credit card and provides lenders (you) a higher interest rate than they might get through a savings account, certificate of deposit, or other investment.

My brother Matt has been lending money on Prosper for nearly a year. He's careful about who he lends money to. Mostly he loans money to people with AA credit ratings. So far he's earning more than an 11% return on his money. None of his borrowers have been late with a payment. This is his lending profile.

Some people choose to lend money to people with poor and high risk ratings. Although the average interest rates can be as high as 26%, the default rates are also quite high for E and HR. Prosper reports defaults to the credit agencies and hires a collection agency, just like a normal bank or credit card company would.

With a careful investment strategy, it looks like Prosper may provide good returns with managable risk. Here are some of Matt's lessons learned from his months of studying and investing on Prosper. He has posted these on the Prosper Forums:

Its up to the lenders to read the text. I don't rely on that for the loan though. I look at verified stats, and things that the group leader can vet. Something in the listing could encourage me not to lend, but I don't think anything written in the listing could get me to fund a listing that I wouldn't fund based on the verified stats alone. I am happy with Prosper overall. (forum post - Would you stop lending if...)

No lates for me yet, but I enjoy reading these threads to see what to avoid. So far I am learning to avoid:

New business Ventures
People with high number of inquiries
Nurses who can't spell Nurse
Real Estate Ventures
All HRs and Es
People going through divorces
Georgia
Autofunding loans listed for a short time period
People who should be able to get more traditional financing (for something like a car purchase)
Anyone who has an abnormally low interest rate just because of a really nice looking photo

Anything I am missing on my list? I am sure some loans will still default for me, but just trying to learn from the collective experience out there. (forum post - The official 1 month late loan club...)

Shameless plug here. Prosper just announced a new referral program where they give $25 to both parties when you invite a friend to the program. If you decide to start up you should use this referral link to sign up so that you start of with an extra $25 in your account. Of course, I don't mind the $25 either. :) Details about the referral program.

This referral program reminds me of PayPal. They had amazing growth when they offered a free $5 to both parties when you refered a friend. That's when I signed up. It will be interesting to see how Prosper grows with this new referral program.

Green Sherpa Flexes For Competition With Mint/Quicken

2009-09-21T09:53:00.000-07:00

A few days ago I had the opportunity to talk with Erin Lozano, the COO and founder of Green Sherpa about how the company has changed since the launch a year ago.

Green Sherpa ended its Beta program in August and launched its full subscription services. They now support more than 10,000 financial institutions and in addition to those already serviced by Yodlee, also can manually establish connections to their customers’ banks—a service the competition isn’t offering. They’ve also added more cash-flow planning tools and goal-tracking tools for users and are getting ready to debut a few more new tools in the next 60 days (though I don’t get to report on those...yet.).

Green Sherpa is one of the only hybrid aggregating services as they can combine automated aggregation as well as set up individual connections. Green Sherpa worked to establish additional layers of security beyond what is offered by their aggregation provider. They’re also one of just a handful of software-as-a-service (SaaS) or “cloud” software providers that is charging a fee for an online-only product in the personal financial management field.

The company is lean and mean, with six employees and a ridiculously low breakeven point of only 5,000 subscribers, but their personal touch and low price (US $7.95 a month or $5.95 for pre-paying a year) sets them apart from other companies who provide software. Greens Sherpa is striving to provide its customers with an intimate snapshot of their own financial progress and future, not data on a dashboard.

Green Sherpa eliminates the manual data of Excel and Quicken, but also allows customers to download their own data to save, archive and manipulate, even if they choose to cancel the service.

The company also has an active advisory team including former leadership from Commission Junction.

Green Sherpa rolled out an affiliate program this month, which is fully operated on their site, not served through an ad company.

I asked Lozano about how the marketplace has changed since we spoke last in March. She explained that Mint and Quicken have released features that are becoming more forward-looking, and hence now more competing in the same space. Following the recent announcement that Mint would be moving under the Intuit brand, Lozano surprisingly said this is good news to her. “We think that this validates the web based personal financial management space which will be good for all remaining players in the market, including Green Sherpa” she said via email in a follow up conversation.

One thing that hasn’t changed is Green Sherpa’s commitment to a valuable forward-looking product, zero conflict of interest (not advertising/selling to subscribers) and complete privacy to users.

Green Sherpa has changed in one way—temporarily suspending subscriptions, giving users a 90 day free trial period to use the service. Existing subscribers will receive an additional 90 days free. The official company announcement to subscribers is expected out this week.

Jessica Ward is a freelance writer in Seattle, writing on family and personal finance. You can also find her online at www.jessicaward.me or www.thepennywisefamily.com

Lending Club Reaches Another Milestone

2009-09-01T18:58:00.000-07:00

Lending Club began issuing loans in September 2007, and has just reached the $50 million loaned mark. Loan demand has surpassed $500 million (yes, folks, that’s half a billion—we’re almost talking government sized dollars here!).

Underwriting has kept Lending Club to issuing just the $50 million in loans, and investors have received a 9.64% net annualized returns (that’s doing the math after fees and bad loans are taken out).

This does make Lending Club the “biggest fish” in the P2P sea right now.

So far in August, Lending Club has issued $3.1 million in loans.

Author's note: This post replaces a post from yesterday which included a factual error. Apologies for the duplication.

Many Changes at Mint.Com

2009-08-28T12:35:00.000-07:00

Earlier this month Mint.com received another $14 million in series C funding. This round was led by DAG Ventures, and includes Founders Fund. Already investing in Mint are Benchmark Capital, Shasta Ventures, First Round Capital, and Sherpalo Ventures.

Mint.com doesn’t disclose it’s revenues, but Aaron Patzer, CEO told TechCrunch earlier this month that revenue is up over eight times year over year.

Mint has 1.4 Million registered users, tracking $175 billion in transactions and $47 billion in assets.

Also this month, Mint has offered a new improved Web site to its users. Improvements include better graphing and trending tools as well as the ability to budget for income as well as expenses—which will better help users to project cash flow. Mint now has sixteen graphs that can show you the way around your personal finances.

The budgeting tools have also improved to include an “everything else” category (showing your spending in non-budgeted categories). Also, amounts can be rolled over in Mint from one month to the next. Refreshing indeed!

I’m especially enjoying the new traffic-signal type alert system that shows my budget categories as “All Good,” “Slow Down” and “Over Budget,” in the appropriate red, yellow or green, but responses on the Mint Blog are showing that many readers want the old “bar system” graphic returned (yes, it is helpful, so I can’t blame them).

The iPhone app came out a while ago, but there isn’t one yet for us Blackberry users, I’m hoping that will come soon.

Also, Mint is wisely beginning to utilize some of the vast amounts of consumer data that is available. Since membership is anonymous Mint users like myself don’t have to feel outraged, but companies can study consumerism trends from the data accumulated by Mint. This use will likely help to keep Mint free to users, and profitable, the elusive golden egg that seems to prove so troublesome for so many of these internet finance startups.

Jessica Ward is a freelance writer based in Seattle, Wash. She writes on money, family and life at The Pennywise Family and DebtKid.

Spoke too soon?

2009-08-27T16:01:00.000-07:00

I've had several corrections today about my earlier post today regarding Loanio.

I took their recent S-1 Amendment showing that they'd sold the code for cash as an exit strategy but some readers think that this is a reasonable strategy to maintain operations during a quiet period. Fair enough, I just can't understand what would happen when the quiet period ends, and they don't have the original code. Then what? Perhaps they've got a coder would could write a new one? Perhaps sell the entire operations? There are more opportunities than I'd initally estimated, and thanks for filling me in.

That said, that's my problem, and not Loanio's, and I don't want to lead anyone astray, so I'll retract my suspicions that they may be gone. Sadly, the quiet period leaves them unable to let us know what really is going on, so we'll just have to wait and keep watching.

My apologies for the hype/suspicions, and thanks to all the dedicated readers who took the time to set me straight either in comments or via email.

--Jessica

Another One Bites The Dust. Loanio Has Sold Code for Cash.

2009-08-27T10:05:00.000-07:00

American peer-to-peer lending platform Loanio appears to be vanishing as well.

The company, which originally launched in October 2008 has only issued seven loans, one if which is now thirty days past due.

The latest amendment to their S-1 filing (August 14) discloses that they’ve permanently licensed their source code to an unnamed corporation. The code was sold for $375,000, of which $100,000 was the down payment, and the remainder will be paid over 18 months. The blog p2plendingnews.com notes that the Loanio engineering team has shrunk from five full time engineers to three part timers since their last filing with the SEC.

Jessica Ward is a freelance writer and blogger from Seattle. She blogs on family and frugality at The Pennywise Family and DebtKid.

Review Those Statements! The CARD Act Is In Effect Now

2009-08-26T15:10:00.000-07:00

Just a friendly reminder to our readers to check your credit card statements. Many Americans are discovering that in the month of July their credit card providers snuck up on them and slipped in fees, higher interest rates or other charges in advance of the enactment of the CARD Act, which will further regulate issuers of credit cards.

Here’s a breakdown of the phases and what they include.

First phase: August 2009
Consumers will now receive statements 21 days in advance of their payment due date. The industry standard before was just 14 days.

Card issuers must also give consumers 45 days of notice prior to an interest rate change.

Second phase: February 2010
Card issuers can only raise rates on existing balances if the consumer is A: 60 days or more past due, B: A promotional rate expired, or C: A consumer doesn’t complete the workout plan or D: A variable rate increase because of movement in an index.

The CARD act will also restrict access to credit cards for borrowers under the age of 21 without a co-signer. I expect that P2P lending will be a place to turn for these borrowers—and potentially as part of a long term trend, as these borrowers won’t be “hooked young” by credit in it’s plastic form.

Already credit card borrowers are turning towards peer to peer lending as a replacement/payoff strategy to their credit cards. Blogger Matt Jabs, of DebtFreeAdventure is conducting a “DIY Consolidation” with Lending Club after his credit card company hiked his rate up. I considered it myself after a credit card I no longer use increased its annual fee, but I decided instead to close the account, as interest on my remaining card is still low.

In sum, don’t forget to take a look at your latest statements to make sure that your credit card company didn’t sneak in adjustments to your agreement before the CARD Act took effect this month.

Say it Ain’t So! Could Pertuity Direct Be Gone?

2009-08-26T09:50:00.000-07:00

I received a tip in my email box that a special meeting of shareholders occurred on August 21st for the board of Trustees at the National Retail Fund III. The purpose of the meeting was “to approve the liquidation and distribution of all shares of the fund.” Oh snap!

Say it ain’t so? Could Pertuity Direct really be leaving us? They’ve been pretty quiet in recent months, not issuing a press release since March, and no blog posts since May. A couple of months ago their Commission Junction account deactivated without warning to advertisers (I was very surprised by this as I’d been running their ads for some time on my Pennywise Family blog). Keep in mind, the company only went "live" in January of 2009.

A few prominent PD figures have recently vanished from the Twitterscape.

Today I tried to call, but the telephone numbers have all vanished from the Web site. I found a number for Gemini Fund Management, the “transfer agent” for National Retail Fund III. I don’t remember them being part of the picture when I interviewed the PD team back in March, but that is the sort of detail I may have forgotten.

I asked for a telephone for PD and found the number disconnected and forwarded, to CEO Kim Muhota’s cell phone. When I spoke to them in the Winter, I seem to remember there being a staff of eight, so this seemed like an unlikely transfer.

I’m still trying to figure out what’s going on, but for now this is where it stands—it looks like Pertuity Direct may be gone. I’ll post an update to verify when/if I’m able to learn more.

Jessica Ward is a freelance blogger and writer based in Seattle. She blogs on frugal living, and family life at www.thepennywisefamily.com.

Another Peer To Peer Lender in Spain: Lubbus

2009-08-18T09:46:00.000-07:00

Lubbus is another Peer to Peer lender in Spain that I just learned a little about today. They’ve been in business since 2008, but the site launched on April 19th, being the first P2P lender in Spain. Another interesting thing is that Lubbus offers a secondary market like Prosper does.

I ran across an interview with the CEO online and at the time (sadly the article was undated) the hold up in licensing was data-authority security regulation (i.e. Web site security). Unsure if that has been resolved or not, but the site does appear to be functional.

Unfortunately, Lubbus.com is very graphics-intense, so computer translators don’t translate it well. If you read Spanish—would you take a look and see if you can tell what’s going on? I’d sure appreciate any help on that.

Comnitae offers P2P Loans in Spain

2009-08-17T09:15:00.000-07:00

Comunitae.com has begun offering peer to peer (P2P loans in Spain).

According to Comunitae funded ten loans during June—their first full month of Activity. Comunitae is a bid-based peer to peer platform, similar to prosper. There are 5,000 registered users on the Web site, but only 645 are active investors and 780 are borrowers.

In the Comunitae system, borrowers are ranked by risk as “A,” “B” or “C” and interest rates range after bidding from 7-12%.

Jessica Ward is a freelance writer based in the Seattle area. She writes on personal finance, family and adoption. Her Web site is www.jessicaward.me.

Zopa to Re-Launch In Italy

2009-08-15T12:55:00.000-07:00

After being closed down for peer to peer loans since July, Zopa has reached an agreement to re-open in Italy in September. Loans already issued were being serviced but no new ones were made.

What makes this interesting is what caused the shut down. It wasn’t the peer-to-peer platform, or unregulated securities as in many other places—but the holding accounts where funds were held between being deposited and being applied to the fully-funded loan.

Because these “transit lender accounts” were aggregated they resulted in a sum warranting regulation by the Italian government.

Now Zopa will establish separate accounts for each lender, and re-developing their system to accommodate. They expect to be back online at the beginning of September.

Jessica Ward is a freelance writer from Seattle. You can also read her posts on www.debtkid.com and www.pennywisefamily.blogspot.com.

Lending Club Raises Rates, Prosper Responds by Hearlding Auction

2009-08-13T11:53:00.000-07:00

Beginning July 30th, Lending Club has raised average rates charged to borrowers by 0.5% in response to increased interest rates charged by mainstream lenders.

Investors will be seeing increased rates, and already the current net annualized return of all Lending Club investors was over 9.5%.

Lending Club has continued to see increasing number of loan requests from prime borrowers and believes that the higher rate remains competitive. The very best, grade A loans, according to a company press release have actually been lowered by 0.46% to further attract the best borrowers.

Prosper.com has responded by further emphasizing its’ auction model, driving interest rates as low as its investors are willing to fund based on risk.

Jessica Ward is a freelance writer from Seattle. You can also read her work at www.debtkid.com and www.pennywisefamily.blogspot.com.

Back to School with Peer To Peer Loans

2009-08-11T11:08:00.000-07:00

TuitionU is now offering two funding methods for college students seeking supplemental tuition funding.

They’ve partnered with GreenNote to offer peer to peer student loans at 6.8% plus a 2% origination fee. Lenders will get a 5.8% return on their investment with a $100 minimum investment. These student loans are disbursed to the institutions instead of the student, so you can feel good about not funding a keg party on Friday night with your investment. Not only can students solicit student loans online but they can also invite friends, families and social networks to contribute towards their loan. Prospective investors can search which loans to fund based on school affiliation, major, sports or even Greek societies.

Additionally, TuitionU is partnering with National Lending Associates to allow tuition loans to be stretched from the usual ten months to over ten years.

TuitionU is a division of Cology and makes its money by charging loan origination fees on the loans it issues. In 2008, 15 lenders offered $125 Million in private loans to students. This year, more than 100 Lenders are prepared to offer $400 million in loans.

The TuitionU alliances come at an excellent time, as Fynanz left the US market back in January as a provider of peer to peer student loans.

Jessica Ward is a freelance writer based in Seattle, WA. She writes on personal finance, family and frugal living. You can follow her on twitter as @jessc098 or visit her online at www.pennywisefamily.blogspot.com

DebtGoal Adds Aggregating Features

2009-07-23T09:51:00.000-07:00

We’ve written a lot about DebtGoal (here and here)in the past here at PLR, so it seems like a good idea to point out some new features they’ve recently launched.

DebtGoal now has aggregating capabilities now! This will make the data-entry a lot simpler. Previously it required you to enter your statement, interest rate, new purchases and all payments made. I sometimes make several payments in a month, depending on how business is going, so I was spending a lot of time on the DebtGoal site punching in numbers.

DebtGol continues to improve the usefulness of their charts and graphs as relevant to the user interactive experience, however the “on track” features are still a little wonky. The sum of my minimum monthly payments is just $26. DebtGoal is “pushing” me to go to $91. Following this plan, I’ll be debt free sometime in 2045. Yay for me! Actually, we’re planning to be free and clear by the end of this year following a far more aggressive plan) DebtGoal’s slider will only go as far as $91, so I’ll play with it more and fudge my minimum payments a bit higher to see if that makes it work right for me.

What I’d really love to see DebtGoal do, is to add a calculator like CNN’s.The CNN calculator allows you to either choose what you can pledge towards your goal and get a date from that; or choose a date and get a dollar goal. So far, I haven’t found a way to change my DebtGoal “debt free date” to 12/31/09.

I see the value in most of the tools on the site, but my favorite parts are the blog and message boards, which are a wealth of information—especially for math nerds like myself who enjoy seeing compound interest reversed and reduced.

And yes, while DebtGoal is aggregating now, I’m passing on that feature and continue to manually-enter my data. I begged for an aggregating feature, but I’m still concerned about their ability to scale, and after my previous adventure—receiving someone else’s statement—I want to give them a little more time to work out any kinks that might arise before I air any more of my financial laundry than necessary.

Jessica Ward is a freelance writer and blogger from Seattle. She writes on family, money and business. For frugal family tips you can also see her blog at www.pennywisefamily.blogspot.com.

Where You Can Borrow and Lend With Prosper.com

2009-07-22T17:34:00.000-07:00

Prosper.com is back in business with the blessing of the SEC. Not all of the states are on board, however, and Prosper is working to gain approval in the rest of the states. Here's a quick and easy list of where Prosper has gained licensees so far (updated late July, 2009).

Borrowers	Lenders
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Kentucky Louisiana maryland Massaschusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming	California Colorado Delaware Georgia Hawaii Illinois Minnesota Montana Nevada New York South Carolina South Dakota Utah Washington Wisconsin Wyoming

Borrowers

Lenders

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Kentucky
Louisiana
maryland
Massaschusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming

California
Colorado
Delaware
Georgia
Hawaii
Illinois
Minnesota
Montana
Nevada
New York
South Carolina
South Dakota
Utah
Washington
Wisconsin
Wyoming

Source: Prosper.com/help

Jessica Ward is a freelance writer based in the Seattle area. She writes on finances, business and family.

Review of SimpliFi: Virtual Financial Advisor

2009-07-22T16:13:00.000-07:00

We wrote in the Winter about SimpliFi—a winner of the “best of show” award at Finovate Startup. SimpliFi is in private Beta right now and available to test drive so I took it for a spin this afternoon.

SimpliFi is a financial health assessment tool and bills itself as a “virtual investment advisor.” SimpliFi is even registered with the SEC as a Registered Investment Advisor.

The Web site is well organized, easy to use and clear. It doesn’t confuse the reader with mumbo-jumbo and I think would be accessible for individuals with any level of financial knowledge.

“Sophie,” the “virtual advisor” gives you the impression of a consultation, rather than working with a calculator, but ultimately to me, the results felt far more like a calculator.

After entering annual incomes for each member of our family and annual retirement account amounts, I was surprised to see that “Sophie” calculated the take-home-pay and taxes, and then returned a monthly take-home amount which was way off base. The system assumes that our retirement accounts are 401Ks with a monthly amount contributed. That is true for one job which has two retirement accounts drawn from it (there was only an option to show one), but for my retirement account, I write a check for $5,000 at the end of the year to fully-fund my IRA. I’ll have to fudge the numbers on this by saying I don’t have a retirement account, but instead have a short-term savings account depositing $416/mo, but I’m not sure how to record interest or growth except for to log in and empty the virtual “savings account” and manually adjust-up the 401K account.

Sophie doesn’t know we claim two children as deductions (you can enter this, but it’s not in the location you would expect to find it, nor is there a prompt to ask the question).

It took me a little monkeying around to discover I’d made a data-entry error in my account set up that made my monthly mortgage payment greater than the outstanding balance of my mortgage. I could tell that something was wrong (who has an annual budget shortfall of over $400,000…besides Congress?). I’d love to see a balance sheet that would allow me to check my data-entry work. Instead I flipped through every screen to try to tell where I’d made the mistake. Additionally, the automatic conversion from my annual data entry to the monthly result was confusing to me, because it didn’t tell me that it was going to do that.

The confusion continues when I see that SimpliFi promises to never sell me anything, but then provides free service by advertising products I might need. Maybe it’s the copywriter in me, but those two messages shouldn’t appear in the same collateral for any product.

Finally, I’m no professional, and I’m not registered with the SEC, but I respectfully disagree with Sophie’s investment advice. I’ve worked with several investment planners and they all scream bloody murder when they see how much life insurance I carry (about 4x the recommended amount). What they don’t know is that I have a special needs child, and want to ensure she has care if anything happens to my husband and I. Sophie didn’t bat an eye—or send a digital protest that I was over-insured (seeing as how eye-batting is a digital impossibility in her domain).

Also, Sophie recommended a massive reallocation of investments, including moving 32% of our investments to bonds. Are you kidding me? A two-income household with both adults under the age of 30, not planning to retire until 72, and we should have a third of our investments in bonds? I’ve certainly never heard *that* one from either of my planners.

Sophie also suggested I increase my monthly payment on my credit card to roughly 2/3 of my monthly income. Since Sophie doesn’t have to eat or feed children, perhaps that would be a reality for her, but my budget can only tolerate a payment of 1/6 of that. Sophie’s recommend “emergency fund” would keep our household operational for just six weeks. Perhaps she doesn’t live in the Pacific Northwest, where the economy comes and goes with volcanoes, earthquakes and tides?

All of this aside, Sophie gives me a B+ in my “Goal Point Average” for my 20 minutes of effort. I’m afraid I’ve got to give Sophie a D-, mostly for cool graphics and ease of use. The investment advice just isn’t my style. That said, I guess her plan is better than none at all, and I can see many potential improvements that could make this system very useful (for instance, I’d love to see it integrated with my actual balance sheet in Mint (then Sophie might know what it costs to feed my kids…).

Jessica Ward is a full-time freelance writer in the Seattle area. She writes on family and personal finance. You can follow her on Twitter as @jessc098 or read more about her family’s penny-pinching adventures at www.pennywisefamily.blogspot.com.

People2Capital.com: Poised to Issue P2P Student Loans This Fall

2009-07-16T08:44:00.000-07:00

I had the opportunity to hold an email interview with Alan Samuels, Chief Product Officer at People Capita l this past week regarding their new P2P student loan platform.

People Capital will be launching this fall—first to institutional accredited investors under a private placement memorandum, and later they’ll be filling a S-1 to open their platform to all prospective peer to peer lenders.

People Capital will be providing legally-compliant “private student loans” which are not bankrupt-able, unlike other P2P loans. Mr. Samuels cites a potential $113 Billion gap in federal college funding limits and the actual costs of college attendance in the USA as a growing market for these private student loans. Also, many lenders are shying away from investing in student loans due to college students' lack of established credit history and the difficulty of measuring risk without a credit score.

Samuels explained to me how People Capital can navigate this marketplace better than any of the competition due to their patent-pending “Human Capital Score” which is a proprietary underwriting tool. The Human Capital Score will include the students’ field of study, test scores, and GPA to determine the student’s creditworthiness.

Loans will be available on a long term or short term basis, and a requirement of being a legally-compliant private student loan, enrollment verification is mandated. Like other P2P loans funding isn’t guaranteed, and depends on how attractive the borrower’s request is to prospective lenders, and how large the pool of lenders is.

People Capital is in Series B funding, and has just received an additional $500,000 from The Serious Change Fund, helmed by investor Josh Mailman. (Source: WealthReview News)

Jessica Ward is a freelance writer in the Seattle area and writes on family and finances. You can follow her on Twitter as @Jessc098

P2P Lending Co. NanoFin opens in India

2009-07-15T09:17:00.000-07:00

NanoFin Enterprises, opened this month in Chennai, India to provide peer-to-peer lending using the Internet, similar to Prosper Marketplace and Lending Club.

According to a company press release, the venture is an attempt to consolidate the unorganized credit market and bring the borrower and lender under one roof for transacting business.

The initiative will facilitate direct interaction between lenders and borrowers in the same local area (matching lenders and borrowers via geography vs. risk like American firms). Loans will be available for education, personal, auto, business, home and equipment ranging from Rs 5,000 to Rs 2 lakh. (The smallest loans will be about $100 USD).

Nonofin will offer lenders and borrowers the opportunity to agree together on the amount of the loan, interest rates and the terms and conditions of the loan. In the NanoFin model, lenders must pay a fee of Rs 1,000 (about $20 USD) to become a member of NanoFin’s community.

I can’t help but wonder how they’ll manage the geographical matching of borrowers—what if a loan goes bad? Will there be a concern about neighbors taking enforcement of the loan into their own hands?

The Web site is available in English at www.nanofin.net.

Jessica Ward is a freelance writer based in the Seattle area. She writes on family, money and more. You can read more at www.jessicaward.me or www.pennywisefamily.blogspot.com

Looks Like Prosper.com is On Its Way Back!

2009-07-13T07:06:00.000-07:00

I recieved an email this morning from Investar of the SEC Prosper and Investing Forums (The "quiet diary") about a possible re-launch of Prosper.com today.

I checked out Prosper, and sure enough, another one of those ominous "down for maintenance" pages like we saw the day before the Finovate Conference.

Paraphrasing Investar's email he says that the US SEC approved Prosper's new securitized note trading platform at 3:30 PM on Friday, and that they pulled the site down over the weekend through Monday.

Looks like we might get (another) launch tomorrow from Prosper.com. Really looking forward to seeing them back into the P2P world.

Thanks Investar for sharing the info, we really do appreciate it.

SacBee article about Peer to Peer Lending

2009-06-30T07:35:00.000-07:00

I was interviewed last week on the subject of peer to peer lending. My comments aren't quite in context, but this is a nice intro/overview to peer to peer lending in the Sacramento Bee.

The points that I shared with the reporter are:
1. Lenders will have to see good management of receivables by their selected P2P companies to make P2P lending a long term "sticky" trend.
2. Borrowers will have to get a better interest rate than they can with traditional banking. If credit markets loosen up again when the economy calms down, I'd like to see P2P lending hold on, but if interest rates go down for borrowers, they're not getting better for lenders--how will P2P companies respond to hold on to lenders? My hope is that they'll lower their administrative fees and they'll be able to based on economies of scale. That said, I don't know how much administrative cost there is to running a P2P company, and I don't have a sense for how much the industry can benefit from scale.

I think Lending Club's IRA product is a very good way of hanging on to lenders longer-term.

This all presumes of course (my presumption) that credit will become less expensive in the consumer market. Consumer debt interest rates and credit availability cycle up and down, and my assumption here is that the current market will eventually relax.

Jessica Ward is a freelance writer and blogger from Seattle. She also blogs at www.pennywisefamily.blogspot.com and is guest bloging at www.debtkid.com.

Loanio Files S-1 With The SEC

2009-06-23T17:19:00.000-07:00

Loanio.com of Nanuet, NY, has filed an S-1 with the Securities Exchange Commission as of June 22, 2009.

This is the first major step in resuming US peer-to-peer loan operations. Loanio opened in October of 2008, but put loans on hold shortly thereafter to come into compliance with the securities regulation.

The S-1 is filed, but not yet effective, so Loanio's P2P platform isn't available yet to borrowers or lenders. We'll keep you updated as we hear more about a launch date, or specific information about the states that Loanio will be approved to operate in.

Jessica Ward is a freelance writer based in the Seattle area. She also writes about adoption at http://www.jessc098.blogspot.com/. You can follow her on twitter at www.twitter.com/jessc098

Kiva.org Lends in America: How Do They Do It?

2009-06-22T19:06:00.000-07:00

I was heartened to see Kiva.org’s new domestic program. The loans are slightly larger than most of their overseas lending opportunities, but still relatively small for traditional business lending. However, I couldn't help but wonder how they're able to do this when so many other P2P platforms have failed to lend domestically due to heavy SEC regulation.

What I’ve learned is that Kiva loans don’t pay interest to lenders, and aren’t securities, so as such, they don’t fall under the SEC umbrella. Additionally, as a micro lender, Kiva is a 501(c)3 nonprofit organization, the government with oversight authority is the Internal Revenue Service (IRS).

This means that interest-bearing Kiva accounts are still likely to be a long way off (if ever), but that the program should be sticking around for a while for borrowers, which is great news for micro lending enthusiasts.

The initial domestic roll-out happened in early June and included 45 American entrepreneurs seeking loans from $1,025 to $10,000.

Kiva’s field partners are Accion USA and OpportunityFund.org.

According to an online article in OnPhilanthropy.com, Kiva has provided $76 Million in loans to help small businesses worldwide

Jessica Ward is a freelance writer based in the Seattle area. She writes on peer to peer finance, family and more. Her freelance portfolio is available online at www.jessicaward.me.

Dating Web Site Seeks P2P Loans Via Virgin Money USA

2009-06-22T18:43:00.000-07:00

New York-based dating Web site GetSteady.com is seeking peer to peer loans for growth of its US business operations.

I interviewed its’ founder and President Michael Zuyus via email this week to learn more about the company’s plans for growth and how they are applying peer-to-peer lending to their business plan.

GetSteady.com is a dating web site which caters to the gay, lesbian, bisexual, and transsexual (GLBT) community. The company is seeking loan proposals via Virgin Money’s “Business Builder” product, which is a promissory-note negotiated between the lender and the borrower, and then enforced and managed by Virgin Money USA. GetSteady.com promises interest rates better than traditional investments including savings accounts, CDs and blue-chip stocks.

Mr. Zuyus prefers not to disclose the amount of capital he hopes that this effort will raise, but is seeking minimum loans of $1,000. He has also declined to comment as to if anyone has elected to fund one of these loans.

The company makes an interesting differentiation between peer-to-peer loans as investments. I asked Mr. Zuyus if investors are guaranteed in any way to receive repayment, and he replied “I would like to stress that we do not have investors. If a bank granted my company a loan, they would not be an investor, it’s simply a business loan. In this case, it is a peer business loan.” I found this an interesting re-branding of peer-to-peer loans after hearing the term “investment” thrown around so frequently in reference to peer lending. (I can’t help but wonder if we’ll see this nomenclature adopted more broadly across the industry as a result of regulation?)

I questioned Zuyus about the decision to use peer-to-peer loans in lieu of traditional banking and he cited the recent decline of credibility in the banking community, later saying “Peer to peer lending has become a trusted and viable alternative [to traditional lending], furthering economic growth until banks begin to lend more freely to small business again."

A company press release from June 8, 2009 quotes Zuyus as saying “Using these funds, we aim to expand our marketing and advertising efforts responsibly, quickly capitalizing on the current online dating boom.”

Getsteady.com was founded in 2009 to provide low-cost connections within the GLBT community. The company focuses on serious-minded friendships and relationships based on trust. Members must be verified including their profile photos (Zuyus cites ongoing troubles with users on dating sites supplying false photos).

Jessica Ward is a freelance writer based in the Seattle area. She writes on peer to peer finance, family and more. She also blogs at www.pennywisefamily.blogspot.com.

Movie Review: Maxed Out

2009-06-18T00:17:00.000-07:00

If you enjoy banking, finance and lending, I'm recommending that you rent the film Maxed Out.

"Maxed Out" was released in the summer of 2007 as a documentary and shows inside stories and behind the scenes tales of the credit industry, collections and bankruptcy--and left me a bigger believer in peer-to-peer lending than ever.

The film is unrated and covers some pretty heavy topics. Language includes a couple of "F-Bombs" and some discussion of suicide, but it wasn't so offensive that I felt bad about letting my tween daughter watch the film for financial literacy.

The bonus features are also very good including a 1940's educational film about credit (a fun one to watch) and an interview with Dave Ramsey.

Maxed Out also shows debt from the view of the consumer, the investor, the collector and many other steps along the way. It also shares diverse perspectives from Dave Ramsey who doesn't believe in debt, to a Real Estate agent who sees debt as a tool and a way of life to Robin Leach of Lifestyles of the Rich and Famous. I was surprised at how well the movie showed such varied perspectives without feeling fragmented or disjointed.

The subject matter movie is a downer for sure, but the movie is eye-opening in so many ways. It has a perky soundtrack and comedic interludes (not kidding). I think will motivate you to humanize your finances more. If you've seen it--please comment and let us know what you thought.

IOUSOS.Com offers to "Cure Your Debt" With Medical Providers

2009-06-17T23:29:00.000-07:00

I've just completed a post at Pennywise Family about medical bills. While planning that project, I was contacted by IOUSOS.com about their company. You might remember that IOUSOS.com was a presenter at FINOVATE, which we followed closely here at PLR, though since the company isn't a P2P or micro finance company we didn't profile them specifically at that time.

IOUSOS is a new venture of Brian Mullally from GlobeFunder, and while licensed as a collections agency, is more like an accounts receivable interface for medical providers and patients.

For medical providers, billing can be especially collections-intensive as the invoices aren't always understood by the patient, and there is sometimes miscommunication between insurance and the patient. Additionally the sheer volume of invoices overburdens many medical providers with administrative follow up. Finally, there is a growing number of people who simply cannot pay.

A Kaiser Health tracking Poll was referenced in IOUSOS materials, shows that one in five Americans have found themselves forced into serious financial straits due to medical bills. Those materials also report that health care providers are owed an estimated $100 to $200 Billion in unpaid bills.

IOUSOS aims to help medical providers speed up their AR turnaround and help get patients a bargain.

Patients or providers can initiate contact with IOUSOS. I like to test-drive everything I write about here, so I plunked in one of my daughter's medical bills for $500 worth of blood work from earlier this month (the bill has arrived, but is not yet due). They ask for the amount owed, account numbers and name and birth date (here I couldn't tell if that meant me, my daughter or my husband who is the insurance subscriber, so I guessed). After that information is put in the system, you make an offer. I offered $300.

I'm willing to pay the entire thing, and I will, but I'm going to pay it cash in 15 days. I'd just like to see how they treat it. Currently, my hospital isn't using their system, but IOUSOS will send a message to the hospital saying I've offered that payment to be made through their Web site, and ask if they will accept that as payment in full. (Don't worry, their web site says that it doesn't get reported to credit bureaus as a "charged off bad debt" I checked!).

The hospital can counteroffer, or offer a payment plan, or decline to work with IOUSOS and send me another invoice in a month, which is their normal practice.

While just a start up, IOUSOS has already registered 17,000 patient users and has $25 Million in transactions. Sixty percent of these were referred before the collections process began.

Medical providers can turn over their invoices immediately to IOUSOS, or at an aging point at which they want to stop pursuing them for collections. Friendly letters with the user's access codes are sent to patients who owe on a bill in the system, and patients can make an offer, pay by credit card, or establish a monthly payment plan at no charge--the medical providers provide all of the fees, and the fees are success-based, so IOUSOS keeps the collections moving.

I'll update with a comment when I hear back from the hospital about my daughter's bill. This could be a really convenient way to pay medical bills, especially the big ones for those who are under-insured or have serious medical conditions. It might even be a helpful tool for cheap people like me.

Overall, it's a well-designed site, and an idea a long time coming. The interface is friendly and easy to use and doesn't have a "collections" feel at all. It has the feel of an uninterested third party. In-reality they only get paid if the patient pays up, but this may be the critical breaking point between IOUSOS and a traditional collections agency (which usually buys the bad debt and then tries to collect more than they purchased it for). IOUSOS has to treat you well in order to get paid. I like that, and I hope more companies adopt this sort of an interface!

(More on collections soon--I saw a great film on the subject. Perhaps a post for tomorrow?)

Jessica Ward is a freelance writer in the Seattle area. She writes on personal finance, business and family.

Zensah fuels growth with Lending Club loan

2009-06-16T15:33:00.000-07:00

PLR has decided to profile Peer to Peer users on a regular basis. Our first such profile is the athletic-wear company Zensah, which was founded in January 2004 in Tel-Aviv, Israel.

Zensah is a privately held company which develops high-end performance clothing for runners, cyclists, tri-athletes and other serious athletes. They count among their customers MLB and NBA professionals. Their designs feature seamless technology. The name itself comes from the Italian word sensa meaning “without seams” to symbolize athletes without limits.

Zensah took out a loan for $12,250 at 10.59% with Lending Club to fund some growth. They were able to repay the money within six months, despite having been turned down for a conventional business loan by banks.

Ryan Oliver from Zensah says they learned about P2P lending from reading an article about the process, and found Lending Club very easy, and even says his loan was funded within a week. At the time of their Lending Club loan, they had also considered using Prosper.com, but he described the process as “too bureaucratic” and did not proceed with Prosper. He also says he would definitely recommend P2P borrowing for other companies looking to grow—he even says he wishes larger business loans were available—in the $100-$250,000 range.

I asked Ryan if P2P borrowing was part of a larger social media plan, and he replied that it isn’t now, but if they had a dedicated social media plan, it could be a component.

Jessica Ward is a freelance writer based in the Seattle area. Her work can also be seen at www.jessicaward.me

Lending Club: How do you compare?

2009-06-09T13:10:00.000-07:00

Back in May, Lending Club announced a tool in development which would allow lenders to view their performance and compare it to other members. Over the weekend they rolled the feature out for all members. Here are some screen shots:

The Net Annualized Return measure used by Lending Club is calculated daily as a weighted average return on invested capital and is based on actual payments received to date.

I rank in the bottom 13% of all investors, primarily because I am very risk adverse, but my performance is still a respectable 7.39%. How do you compare?

Prosper.com, The Only P2P Player on the Beltway?

2009-05-27T12:31:00.000-07:00

If anyone has dealt with the brunt of regulation on the P2P lending space, it’s Prosper. They’ve been through all kinds of regulatory hurdles, and as mentioned earlier, are once again in a quiet period after a brief re-launch last month.

I was surprised to come across a lobbying report filed by their firm, Podesta Group, a major player in the Beltway scene showing a $60,000 expenditure on lobbying for first quarter of 2009.

What surprised me most is the figure--$60,000 over three months—not an outrageous figure, but remarkable, as they appear to be the only P2P lender that has any lobbyist presence in DC. Why so much when nobody else in the business seems to think it's a worthwhile expense?

As a former lobbyist myself (on the state and local level), I would have actually expected all of these firms to be lobbying, but when I checked in with Lending Club and Pertuity Direct, I was told, respectively “no comment” and “We are currently not supporting any active lobbying on behalf of the P2P space. Not sure what Prosper is doing.”

Most companies seeking changes to improve their business’ regulatory environment have a presence in DC somehow. Often this is through a trade association or contracted firm such as Podesta. The lobbyists for the agency would be working with the agencies and officials that would be regulating their business space, in this case, the Commerce Department, SEC, and any Congressional committees that deal with banking and finance.

However, as I read through the Podesta Group’s report (publicly available at http://www.opensecrets.org/), I see that Prosper hasn’t been lobbying the expected committees and agencies alone, but also lobbying the Exec. Director to the Congressional Black Caucus, and the DOL Employment Standards Administration , the Secretary of Labor’s office, and in the House of Representatives, the Budget, Appropriations and Oversight committees. An interesting combination for sure.

Why Appropriations, Budget and Labor? I can’t help but wonder if Prosper is working on a new initiative? As Prosper is still in a quiet period, so they aren’t answering questions yet, but once they’ve re-launched, I for one will be excited to hear what they’ve got in the works.

Jessica Ward is a freelance writer and blogger based in Seattle. She writes about finance, business and family. You can follow her on Twitter as @jessc098 or visit her Web sites at www.jessicaward.me or www.pennywisefamily.blogspot.com.

Financial Services and Web 2.0: Having your Cake and Eating it Too

2009-05-22T14:51:00.000-07:00

I love my bank. I’ve been with them since I was sixteen and opened my first checking account.

The same banker added my husband to that same account the day before we got married (I was practical, I wanted him to be able to pay for dinner on our honeymoon).

As I’ve moved around, I’ve gotten to know people in the branches in the three different counties that I’ve lived in, with a 100 mile spread. My local branch cheered me on as I boldly opened my business account in the depths of recession. They’ve met my kids, they know my name.

They call occasionally to tell me I’ve made a math error on a deposit slip or something, but generally, they’re a nice, standoffish, reliable bank (exactly what I want in a bank I think).

Recently, I wrote about choosing to refinance my mortgage from our 30 year fixed rate to a 15 year mortgage. I wrote about Smart Hippo, and immediately got a follow from three SmartHippo twitter Accounts (@smarthippo if you want to follow their "tweets").

I shopped the amazing deals on SmartHippo and came away armed with the security of having a really, really good idea of what’s going on in the market, and I called my bank and asked them to make me a deal I couldn’t refuse. They did.

A few weeks later, I was surprised to hear from Smart Hippo again (via Twitter) saying “how’s that re-fi going?”

Whoa!! Step back a minute! This is a FREE service, and they have no need to work hard to retain me as a customer—how often does someone refinance? This is something new and different… a relationship with a financial services provider online…..

Yesterday we closed on our loan with Columbia Bank at 4.6%. Today, as I stepped out my door with the kids to walk them to school, a woman arrived carrying a box. Inside was this cake from Smart Hippo congratulating us on our refinance.

Well, we’re “tickled pink” by the prospects of owning our home outright 20 years sooner, but it’s cool to know someone else is excited about it too, and the kids…. Well, let’s just say, the cake has been the topic of the day and they keep asking when they can eat dinner so they can bust into the cake.

The poor delivery woman seemed confused though. She looked at me blankly and said “Let me get this straight. You refinance your house and a pink hippo sends you a cake?”

My oldest daughter said “Yes, I think that’s about it.”

The cake lady shrugged and left laughing.

Thanks @SmartHippo for managing relationships with your clients and showing the power of social media to spread the message. How often is it that we find a company or product that we’re so happy about that you want to broadcast it? I do this frequently on Twitter and have many Twitter followers within the companies. I’ve asked for web site and tech support help, and posted product requests (for instance “hey, Mint, I really want to see my assets in my account so it doesn’t look like a black hole) and Smarty Pig has helped me with several questions all via Twitter or Facebook.

In the spirit of #FollowFriday here’s my list to check out—companies that I’m super-happy with (as a customer) and would without hesitation (and with no need or expectation of baked-goods in return) recommend to others. @SmartHippo, @SmartyPig, @RobGarciasJ (from Lending Club) @Lisa_Pertuity (form Pertuity Direct) and @Mintdotcom. You can follow this blog @prosperlending.

Got an opinion? Tweet me at @jessc098 and tell me all about it (but I’m afraid my startup budget doesn’t include baked goods), so you'll have to settle for a prompt reply.

Jessica Ward is a freelance writer in Seattle Washington. She blogs about motherhood, adoption, personal finance and business. You can read more about her at http://www.jessicaward.me.

IOU Central Launching in USA

2009-05-19T09:02:00.000-07:00

Note: IOU Central was not available for comment, due to the SEC’s “quiet period” though they have been contacted for comment.

Look out Lending Club, Pertuity Direct and Prosper, Canada’s IOU Central is on its way to America.

IOU Central filed a registration statement with the SEC on May 13th in which they seek to “register the offer and sale of up to $225,000,000 in aggregate principal amount of Borrower Payment Dependent Notes.” The notes are to be offered on a continuous basis following the effective date of the registration statement.

According to the company’s press release notes “will be issued in series and the proceeds from the sale of each series of notes will be designated by the registered lenders who purchased the series of notes to fund an unsecured consumer loan originated through the IOU Central loan marketplace to a registered borrower.”

IOU Central first made news by becoming the first p2p lending company in Canada in February 2008. They were only open a couple of weeks before they halted operations to 'resolve a regulatory matter'. We are still waiting for the first p2p lending company to open in Canada. Right now the most likely contender is CommunityLend.

IOU Central purchased a P2P lending startup from Denmark called Fairrates. Fairrates was built in 10 months by Arkadiusz Hajduk and opened in April 2007. They had lenders willing to invest but had a problem finding and vetting good borrowers. In Denmark there is no access to credit history and Fairrates was hit with a couple fraud cases.

After little success in Canada, IOU Central will try its luck in the United States. Prospective borrowers and lenders registering on the site receive the following email:

Thank you for your interest in IOU Central!

We are getting ready to release an online marketplace that will revolutionize peer-to-peer lending. Our platform will give borrowers the benefit of a true marketplace that allows for better interest rates. The platform will also give lenders freedom in lending with our real-time bidding system. We will keep you notified of our progress as we register with the Securities and Exchange Commission (SEC).

Thanks for being a part of the IOU Central revolution!

See you soon!
The entire IOU Central team

We love hearing from you, so if you ever have any comments,
questions, feedback, ideas, etc. please don't hesitate to email us at
feedback@ioucentral.com. We have a lot in the works, so visit ioucentral.com
often..

From company news and press releases it appears that IOU Central will have a slightly higher credit score requirement than Pertuity Direct and Lending Club—according to an article on wiseclerk.com, a Equifax score of 670 will be required. Lenders will pay a 1% servicing fee (the same as Lending Club). Borrowers will pay a 2% loan origination fee, and borrowers can request loans of up to $25,000 in two separate loans.

IOU Central is a peer-to-peer lending company. The company’s internet-based loan marketplace enables borrowers to post loan requests and purchase notes from lenders. IOU Central launched in Canada’s Peer to Peer lending space in February 2008, but stopped shortly thereafter due to regulatory conditions. IOU Central is headquartered in Kennesaw, Georgia in the United States.

Jessica Ward is a freelance writer and editor, based in Seattle, WA and writes in the personal finance and microfinance space. You can check out her other work at www.jessicaward.me.

President Obama Nominates ACCION Executive to U.S. Department of State

2009-05-18T14:23:00.000-07:00

President Obama has nominated Maria Otero, the Chief Executive of ACCION International to be the undersecretary of global affairs at the US Department of State. She has announced via ACCION press release that she intends to accept the nomination, provided that her appointment is confirmed by the Senate’s Foreign Relations Committee.

Ms. Otero is a native of La Paz Bolivia and has been part of ACCION since 1986 and CEO since 2000. She was honored in 2005 in Newsweek’s special report “How Women Lead” and was regarded as one of the 20 most influential women in the United States. She received Hispanic Magazine’s “Latina Excellence Award” and has also been featured in the magazine.

Since 1997 Ms. Otero has been an adjunct professor at the Johns Hopkins School for Advanced International Studies (source: Leigh Bureau speakers bureau).

The position of Undersecretary of Global Affairs in the U.S. Department of State is responsible for U.S. foreign relations on a variety of issues including democracy, human rights, environment, health, population, trafficking in persons, influenza and women’s issues among other things.

Catherine Quense, the Chief Deputy at ACCION will assume Ms. Otero’s duties immediately while the board conducts a global search for a successor.

ACCION is an international private non profit organization with the mission of giving the poor the financial tools that they need to work out of poverty. They provide microloans, business training and other financial tools. ACCION has disbursed more than 28.5 million loans in the last ten years, which total $23.5 billion USD (Source, PR Newswire).

Jessica Ward is a freelance writer and blogger who covers frugality and the financial sectors. She is based in Seattle. For more information, visit her Web site at www.jessicaward.me or follow her on Twitter as @jessc098.

New York Times: Brother Can You Spare a Loan?

2009-05-17T06:05:00.000-07:00

The New York Times has an article about p2p lending this morning. Here's an excerpt:

The debt supply was abundant back in 2005, when Renaud Laplanche dreamed up Lending Club, now one of the best known of a batch of companies that have added Web-enabled “peer to peer” lending to the ways that individuals can borrow money. Like many online innovations, it adds scale to an old idea. In this case the old idea is borrowing money from your social network — “social network” having morphed from the people you have a personal connection to into its contemporary iteration of people connected by computer screens and servers. While starting up another company, Laplanche found it financially advantageous to borrow from friends, and he wondered whether an Internet version of this idea could be created for people without flush contacts.

...Certainly the credit crunch that started last year has made a lot more people interested in new forms of borrowing. “To some extent, we got lucky,” Laplanche admits. A little more than half of the requests involve restructuring current debt with better terms. These really took off recently, as credit-card companies jacked up rates on some balances. Meanwhile, someone has borrowed $25,000 to finish a recycling plant in Uganda; others are paying off college loans or covering medical bills. And some requests seem surprisingly dissonant with the downturn: home-renovation projects, somebody asking to borrow a few grand to take the family to Disney World, a triathlete who wants a new bike. “There’s a guy buying a pony,” Laplanche adds.

Open an account with Lending Club here.

Contest Announcement

2009-05-16T08:47:00.000-07:00

Hello PLR Readers, Jessica here. The editors here at PLR have kindly allowed me to share a contest from my "regular" blog with you all here.

For those who didn't know, my PenywiseFamily blog is all about a family learning to live on less and doing more with it. (That would be the family of yours truly). We've recently launched a contest for others who want to join us in chopping up those credit cards and going debt-free.

A $100 prize (either a SmartyPig gift card or a Kiva Gift Certificate--winner's choice) will go to the person who submits the most creative photo of a recycled credit card by June 15th. You can email entries to me at jessc098@gmail.com or follow along the contest at www.pennywisefamily.blogspot.com.

Prosper closes again - open less than two weeks

2009-05-09T03:52:00.000-07:00

Last week Prosper re-opened to borrowers in all 50 states and lenders in California after a six-month quiet period. Prosper did not facilitate any loan activity or communicate with members while they registered their platform with the SEC. Now, after being open for less than two weeks, Prosper is closed again. Here's the announcement on the website:

Prosper is Currently in a Quiet Period

We have been overwhelmed by the outcry from potential investors around the country who want to participate in peer-to-peer lending. Thank you for your support and your letters to us.

After much consideration we have decided to voluntarily shut down our operation in order to complete our SEC approval for a nationwide peer-to-peer lending platform. As a result, due to regulatory concerns, and in the interest of working toward getting our registration statement effective as soon as possible, we are discontinuing our California intrastate offering at this time.

If you're an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you'll be able to track and monitor your loans; and you'll be able to withdraw funds from your Prosper account.

If you are a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process.

We want to assure you that Prosper is looking forward to being able to offer a transparent, durable and participatory lending institution very soon.

As a result of this decision, we will not be accepting new lender or borrower registrations or loans, or new commitments from existing lenders effective immediately. Until this process is complete, we are required to be in a quiet period and will be unable to respond to press, blogger or other inquiries related to our SEC registration process, even though we would like to.

We sincerely apologize to the Prosper community members for this inconvenience or disappointment our decision may have caused. We want to thank those of you who demonstrated your support through your active participation whether by investing with us again or referring friends to our site.

Thank you in advance for your understanding, support and patience once more. We look forward to serving the needs of the community in the hopefully not too distant future.

While Prosper is closed, Lending Club has the full blessing of the SEC and has facilitated nearly $40 million in loans.

A look at Lending Club's LendingMatch

2009-05-08T07:42:00.000-07:00

Brandon Hansen has captured minor fame for his in-depth analysis of everything from how to beat traffic mathematically to putting gas prices in perspective. Now he takes a look at the LendingMatch algorithm as he decides to diversify his investments with Lending Club. Read the whole article here:

Projections Using Lending Club's LendingMatch Slider

DebtGoal Responds to Security Breach

2009-05-07T19:23:00.000-07:00

I want to clarify, I got this email a few days ago but I haven't been well and haven't posted DebtGoal's reply to my questions due to illness. I requested a more complete reply from DebtGoal about the nature of the problem and how they'd like to respond. I actually received the response on Sunday, and I'm attaching that below.

Here's a response that you can post on the blog. LMK if you think I could be more effective. We really do care about this stuff and work hard to make a great product. We missed something on this one and we learn from it and move on.

********************

Jessica

Thanks for your ongoing coverage of DebtGoal.com. You've been a great supporter and have given us a lot of valuable feedback that has truly helped us create a better service.

As you pointed out in your recent blog post, we did experience a bug last Friday where we sent out a limited number of monthly progress report emails with inaccurate statement data. We traced the issue to a memory buffer error that failed at high volumes to clear after each email was generated. We have implemented a fix for this bug and resent corrected monthly reports a few hours after the issue was identified.

We apologize for the error, as we know that you and our other users put your trust in us to help you manage your finances. As a result of this issue, we are revising our Quality Assurance practices to better detect these issues through automated validation and live error detection. It's never possible to eliminate all possibility of errors, but the changes we are implementing will lead to much more robust releases.

Above all, I want to communicate that we do take quality and security seriously. We will continue to proactively improve our processes and quality. As we're in Alpha release, some of this QA work is done by our users and we remain very appreciative for the suggestions and feedback that we get on a daily basis and thankful for their understanding when things don't go exactly according to plan. Thanks again for your support and feedback.

Scott Crawford
CEO, DebtGoal.com

DebtGoal: How big can a 'glitch' be and still be a 'glitch?'

2009-05-01T16:54:00.000-07:00

Today I was shocked to learn that in the past month I've made zero progress towards paying off the balance on my Target Visa card, which sits at a whopping 20% interest rate.

Mostly, I was surprised because I've never had a Target card. I've also never had a credit card with a 20% interest rate. I'm sure you can imagine my shock!

That said, I'm sure someone else was even more surprised when they opened their DebtGoal statement and discovered that they owe USAA the cost of roughly one month in Africa plus airfare for three. (Sometimes I still surprise myself).

As it turns out, a "glitch" occurred in DebtGoal's system that mistakenly sent someone else's statements to "a limited number of users."

Thankfully, DebtGoal doesn't actually collect account numbers, and I didn't receive any identifying information about the person whose statement I received. I communicated with DebtGoal and was told it was an error, which affected only some of their users, and a few hours later received an accurate statement.

It did get me reconsidering though. I leave all of my organizing to the Web. I'm responsible for little file storage or organization of actual "paper" some free Web service is out there for everything. My digital photos are all stored online (presuming this to be FAR more reliable than my hard drive or a DVD my kids are likely to turn into a school construction project).

According to an article from TechCrunch in April, Facebook, Twitter and Google Documents have all recently had similar breaches. I myself have experienced mis-directed Twitter tweets, and even some people have complained of trying to view my profile and getting someone elses' (usually SPAM-intense or otherwise offensive) profile.

Just how much faith should we have in the cloud? What can our providers do to ensure that we won't have our personal information or bank account balances eventually being tied to our google profiles because of some security "glitch."

Which brings me to my last point...someone must distinguish the lines between a security "anomaly," "glitch," "error," "leak," and an all-out "hemorrhage."

Don't be mistaken, I'm not unhappy with DebtGoal, they didn't release sensitive information to me, mostly just confusing. I don't think they even store sensitive data (their structure wouldn't require it). That said, other sites I use regularly do. Sometimes I use a favorite site like Amazon, Paypal or other to see what my credit card number actually is--as I shredded it a few months ago. If they're the only ones that still know my credit card number, I really want to make sure its safe. Exactly how much should we be trusting "the cloud?"

Update: DebtGoal responds to security breach

Jessica Ward is a freelance writer from Seattle. She writes on personal finance, technology and family. To learn more, visit www.jessicaward.me or follow her on Twitter at @jessc098

Prosper among best of show at FinovateStartup09

2009-04-29T02:30:00.000-07:00

Netbanker just announced the winners of the best of show awards at FinovateStartup09 and they are Prosper, BillShrink (our review), Silver Tail Systems and SimpliFi. The winners were selected by ballots from conference attendees.

After a six-month quiet period to register their platform with the SEC, Prosper re-opened yesterday at Finovate. They are currently serving borrowers in all 50 states and lenders in California.

Final presenters announced at Finovate

2009-04-28T15:20:00.000-07:00

During FinovateStartup09 today, conference attendees voted on the companies they would like to see during the final session of presentations. The companies selected were - HomeATM, Green Sherpa, Silver Tail Systems, SimpliFi, SmartHippo, DebtGoal.com, Rudder, Prosper and Credit Karma. We have previously reviewed several of these companies in prepartion for Finovate.

Green Sherpa review
Smart Hippo review
DebtGoal.com review and site makeover (Update: DebtGoal accidentally releases personal information)
Prosper launched today after 6-month SEC mandated quiet period
Credit Karma review (and save 10% of Lending Club fees through Credit Karma)

Just in Time for FINOVATE: Many Companies Launching New Features

2009-04-28T12:09:00.000-07:00

Just in time for FINOVATE many new features are being launched by participant companies, some of which we've profiled here before.

I'm following the conference online today via webcast, though wishing I could be in beautiful San Fransisco, which is lovely this time of year.

I'm starting this list with items I've already made notes of, but may update later during the day as I follow along the FINOVATE presentations today.

Mint (see previous my review) has added CD and Brokerage shopping options. I wish they had this when I choose my brokerage two months ago, but I'm glad they have it now, and I'm glad to see I chose well. They've also added the ability to change dates on transactions which is great for those checks that clear late and things like that, so you can keep your budget on track.

Lending Club is offering new lender features which Tom posted about earlier today.

Prosper is live now!

Wesabe has a tagging system now, which will be a great asset to users.

Debtgoal (my review) has a brand-new interface which is far more useful and intuitive.

SmartHippo (my review) has a new questions and answers page at www.smarthippo.com/answers.

UPDATE: It's 3:00 and I just got an email from GreenSherpa that their beta system is now available.

UPDATE: it's 4:30 and Rudder just launched an iPhone app. You can get it in the app store. Now word about what's out there for blackberry users.

SmartyPig continues to respond to customers in real-time, and has added a "lower this" to reduce your monthly savings if friends and family members' contributions to your savings goal has enabled you to choose between meeting your goal sooner, or reducing your monthly contribution. It suggests the difference for you too, so you don't have to do the math.

Jessica Ward is a professional writer and blogger based in Seattle, WA. She also blogs at www.pennywisefamily.blogspot.com, to learn more about her visit www.jessicaward.me

Pay it forward and win a Kindle from Pertuity Direct

2009-04-28T11:53:00.000-07:00

Coinciding with the Finovate Conference in San Francisco this week, is a contest from Pertuity Direct, which they're calling Pay it Forward, Pay it Down. Pertuity Direct is looking for people to vote for a $2,500 loan forgiveness. All "voters" will be rewarded with the opportunity to win a Kindle2.

You can find out more about the contest online here, or skip straight to voting here.

Voting closes on May 14th.

Lending Club previews new lender feature at FinovateStartup09

2009-04-28T09:55:00.000-07:00

Today at FinovateStartup 2009, Lending Club previewed a new feature which shows lenders how their returns stack up against other lenders. Currently, the average lender makes 9.05% after fees and defaults according to Lending Club. This feature will show you, via a nice graphical interface, how you compare against others. See the screen shot below:

Lending Club also emphasized the success of their secondary loan platform which launched six months ago. Since then over $2,000,000 in loans have been traded and the time to liquidity is two days. In addition to providing liquidity to new lenders, this platform provides new investment opportunities. There are 1800 loans on secondary loan platform right now.

FinovateStartup09 kicks off today

2009-04-28T07:56:00.000-07:00

FinovateStartup09 kicks off in a few minutes in San Francisco. We will be blogging and reviewing the financial technology startups here throughout the day.

FINOVATE Startup is billed as the "largest group of financial technology startups ever assembled in one place" with 57 companies in the lineup. All the major p2p lending players will be there including Lending Club, Pertuity Direct, and Prosper. Prosper has already announced the re-launch of their platform timed with the conference.

This year, for the first time, FINOVATE offers a real-time webcast. There is still time to purchase access to the webcast for $495.

Here is a complete list of companies featured today as well as links to our previous reviews:

Acculynk
AlphaClone
Aradiom
Bay Area Software
BillShrink (our review)
BudgetPulse
BudgetTracker
CalendarBudget (our review)
Centrro
CircleUp
Cooler Inc.
CreditArray
Credit Karma (our reviews - 1,2)
DebtGoal (our review and new features launched)
Expensify
GoalSpring
Green Sherpa (our review)
Home-Account
HomeATM
iBearSoft
IOUSOS
iThryv
Jwaala
kaChing
Kapitall
Lending Club (new lender feature announced)
LendingKarma (our review)
Looniesdesk.com
LowerMyAssessment.com
Micronotes
Mint (our review)
MoBank
Moneta
Mozo
NCore
OurCashFlow
Pennyminder
People Capital (our review)
Pertuity Direct (our review)
Portfolio Monkey
Prosper (just re-launched today)
Rudder
SecondMarket
SeerGate
Silver Tail Systems
SimpliFi
SmartHippo (our review)
Strands
Syphr
Tempo Payments
The Receivables Exchange
ThreatMetrix
Transparent Financial Services
Valuecruncher
Victrio
Wesabe
WeSeed
ZimpleMoney (our interview with founder)

Prosper launches to borrowers in 50 states; lenders in California

2009-04-28T03:34:00.000-07:00

After a six-month quiet period to register their platform with the SEC, Prosper has re-opened to borrowers in all 50 states and lenders in California. They have simultaneously launched FixTheCreditCrisis.org which is a campaign to reach out to elected officials to allow peer lending in all 50 states.

Currently, Lending Club and Pertuity Direct are the only two p2p lending platforms available to most investors throughout the United States. Prosper's model is different because, among other things, loan rates are determined by an auction among lenders.

Here is an open letter from Prosper's CEO Chris Larsen about the new launch and an appeal to regulators to allow lenders to lend from all fifty states:

We are pleased to announce that Prosper is now open for business once again after a six month hiatus. At this time we are launching to borrowers nationwide and to individual and institutional lenders in California. We hope to be fully national soon.

First we would like to thank the Prosper community for your incredible patience and support. We’re especially thankful to the overwhelming number of lenders who have kept their funds in their Prosper trust accounts, eagerly awaiting our re-launch.

We also want to thank Governor Schwarzenegger’s team, particularly Preston DuFauchard of the Department of Corporations, for embracing peer-to-peer lending as a promising new technology and alternative credit system for getting credit flowing to consumers and small businesses at the very time they need it most. California regulators have always been known as innovation leaders and they just proved it again.

We remain hopeful that the SEC, which until now has effectively hamstrung the growth of the peer-to-peer and micro-lending industries in the U.S. will start applying the same common sense approach as California’s regulators. California has recognized that Internet auctions, just like the Google IPO, are the most efficient means of price discovery; that loan level transparency is better than the opaque loan pooling that brought the financial system to its knees; and that requiring regulatory filings every other day of web site transactions that are already visible in real time, is redundant and cost prohibitive.

We want our users to know that while we have been in a quiet period, we have been innovating. Most significantly, we are launching our Open Market initiative, which for the first time will allow other financial institutions, such as auto lenders, small business lenders and community development lenders, to place their already funded loans on our site for auction. This is both exciting news for lenders on Prosper as well as a much needed solution to the credit crisis.

As we all know, America is in the midst of the greatest financial meltdown since the Great Depression. Creditworthy consumers and small businesses can’t get loans. The government is scrambling to get money on the street by pumping hundreds of billions into our banking system. Yet, the banks are still pulling back and consumer loan securitizations, which make up nearly half of the lending market, are still frozen. We all know the causes of the crisis - lack of transparency, over-complexity and reliance on single points of failure.

The crisis is painful but is also a once in a lifetime opportunity to rewire finance in a way that is fundamentally more transparent, more participatory and more durable.

Prosper and our Open Market initiatives were built on these fundamental values.

Prosper’s Open market model could be the securitization market of the future. Rather than pooling loans, using rating agencies, and creating artificial tranches that are too complex, and opaque, Prosper now allows each loan to be sold separately, priced by the originator and auctioned in a fair and transparent Dutch auction. It uniquely provides a direct line of sight from the money invested to the loan itself.

In addition, Open Market brings the same social lending possibilities to securitization that we have always seen in the Prosper Loans Marketplace. For example, auto loans listed on the Open Market will show in which auto plant and city the car was made. That way fellow Americans who put a value on American jobs might make loans to cars made in Ohio, for example, at a better rate than loans to cars made in Germany. This could never be done with traditional securitizations because investors never had that level of transparency.

Obviously some areas of our financial system need more regulation and more limitations on what can be done. Understandably many in Washington now equate innovation with the toxic Wall Street concoctions like the Credit Default Swaps or CDO-squared monsters that nearly wrecked our economy. While these exotic instruments need to be reigned in, a sweeping ban on all innovation would be a grave error with lasting negative consequences. What we need is a common sense approach to innovation that is judged on its merits. For instance, shouldn’t innovations that result in more transparency, fairness and accessibility be embraced?

We can draw a parallel to how America is dealing with the on-going energy crisis. We know that we can’t depend solely on an oil based economy. The solution is not to just “drill baby, drill”, but to concurrently develop new energy systems that are cleaner, more sustainable, and fundamentally more diverse and durable. The same idea should apply to fixing our financial meltdown. If all we do is clean up the toxic mess while propping up the too-big-to-fail institutions, we will be engaging in a “drill baby, drill” mentality and will have missed a tremendous opportunity to rewire our financial system. As in the energy crisis, we need to encourage new alternative sources of credit by embracing innovation and entrepreneurs. This is at the heart of what makes the American economy continue to thrive.

But we need the help of our political and regulatory leaders. That’s why we are so grateful for California’s leadership in embracing peer-to-peer lending. And it’s why we’re asking for your help in encouraging other regulators and leaders across the country to take a similar view.

You can help us get this message to Washington and other leaders. We invite you to call or email your State’s elected officials using the tools we’ve provided for you at FixTheCreditCrisis.org. By reaching out directly to your state’s elected officials, we’ll ensure that our collective voices are heard.

Best regards,
Chris

Update: Prosper closes again after less than two weeks

BillShrink touts money saving features on cell phone plans, credit cards and gas

2009-04-27T01:03:00.000-07:00

BillShrink is a free service to help consumers save money when making complex purchase decisions such as with credit cards and cell phone plans. The service is a media darling and has received numerous mentions in the business press and media including Forbes, CNN, The New York Times, Business Week, and The Wall Street Journal. They have a very effective public relations strategy. This review is based on reading over three dozen of these news articles, watching several TV spots, and using the service.

BillShrink has a slick, easy-to-use interface. The site currently offers three services – cell phone plans, credit cards and gas prices.

With credit cards you provide answers to about 6 questions. This allows the system to determine the best credit card for your usage habits. If you pay your credit card off each month the interest rate is of less importance than rewards, for example. Other considerations are credit score, how much you spend and what type of items you purchase. Based on your answers to these questions, the system will recommend a credit card and tell you how much money you can save by making the switch. According to BillShrink, the average user saves $1,000 on their credit card. With over $1 trillion dollars of credit card debt in the United States, the potential for savings is significant.

BillShrink says 85% of people pay more than they need to for their cell phone. Using the cell phone tool, you answer about 6 questions such as monthly minutes used and data and text preferences. For more accurate results, you can upload your recent cell phone bills. The best cell phone plan for you is calculated using a ‘ShrinkScore’ which includes savings and signal strength in your specified area. The available cell phone plans are ranked by ShrinkScore. These results can be further refined by the user according to categories such as service provider, plan type and phone compatibility.

The most recent service released is gas prices. While there are tools which help you find the best gas prices, BillShrink goes a step further and helps calculate the best gas station based on the type of car you drive and the roads you drive. The distance to the gas station incurs a cost, and the least expensive gas station may not be the one with the lowest prices when the total cost of obtaining the gas is considered. Like the other services, you can modify the results based on your preferences such as station operating hours and amenities.

BillShrink makes money by referring customers to cell phone plans, credit cards and other services. This provides a potential conflict of interest. The company may have a financial interest in showing a plan which optimizes their own revenue instead of customer savings. While there is no evidence this bias has influenced results, users must be wary of the potential.

BillShrink launched in April 2008 and has been gradually rolling out new features. They have received 9 million dollars in venture capital. BillShrink has augmented their service with a popular money saving blog.

BillShrink is up against Lending Club and Mint for a 2009 Webby in the financial services category.

Speculating on a possible Prosper Re-Launch

2009-04-26T16:18:00.000-07:00

I’ve been spinning through the list of FINOVATE participant companies watching for changes and upgrades that are coming out just in time for FINOVATE and I’m excited to see some really cool things coming up. However, this one certainly took me by surprise.

After months of “quiet period” the Prosper.com web site is down for maintenance.

Now, I’m gonna go out on a limb here and project that prosper.com will launch Monday or Tuesday, in time for Finovate. It makes sense. When you compare the Lending Club S-1 documents to the Prosper documents, the timeliness match nicely.

I’m not the only one speculating about the possibility of a Prosper re-launch. Investar on the “Prosper Quiet Diary” forum notes the difference between the normal notice and the current notice and that Prosper’s normal blackouts are just a few hours, not two days. They also normally include the term “routine maintenance” which this notice certainly does not.

Another post from “Investar” says that one of his “notes” has been charged off, when usually the language says “loans.” Semantics or quiet hints?

I guess, in a few days, we shall know. Most of us expected Prosper to resurface after their April 14th filing, but if the SEC required further communication (and note that the SEC recommended “accelerated” communication) another 10-15 days would be a great window.

Also, they’re a registered FINOVATE company. Why bother promoting themselves when there’s nothing to promote? Re-launching for FINOVATE just makes sense.

Jessica Ward is a freelance writer and blogger based in Seattle, Wash. She also blogs about frugal family living at www.pennywisefamily.blogspot.com

Uncrunch America Contest for $5,000 0% APR Loan

2009-04-26T12:51:00.000-07:00

Uncrunch America is a consortium of peer to peer lending companies including Lending Club for personal loans, Virgin Money for mortgage loans and On Deck Capital for small business loans. Credit Karma and Geezeo are also part of the “Uncrunch” team because of their money management tools.

Uncrunch America formed in January 2009 because of the tightening credit market to educate people about social lending opportunity and available alternative capital sources. This month’s prize is a $5,000 interest-free loan. Participants submit an essay about how they would like to “Uncrunch America” through access to credit.

Participants can enter by submitting a story online and encouraging others to vote for it. Uncrunch America’s stated goal is to “help resolve the credit crunch and rebuild the economy by delivering consumers secure, trustworthy tolls and infrastructure to finance necessary expenses and make critical investments.

About the organization:

Lending Club is a social lending network where members borrow and invest money. Qualifying borrowers can obtain a personal loan of up to $25,000 at fixed interest rates for 3 years with no penalty for early payment. Read more here.

Virgin Money is a financial services pioneer dedicated to improving your overall mortgage experience. Read more here.

On Deck Capital is a direct lender for small businesses unable to obtain traditional funding or that need faster access to capital for unexpected business opportunities.

Credit Karma is a provider of free credit scores and credit improvement resources and tools.

Geezeo is a suite of online personal finance tools with tasks like budgeting.

You can read Tom's earlier post about the launch of the Uncrunch America campaign online here.

Jessica Ward is a freelance writer and blogger from Seattle. She also blogs at http://www.pennywisefamily.blogspot.com/.

Pertuity Direct clarifies underwriting philosophy; discloses loss assumptions

2009-04-25T12:13:00.000-07:00

Peer to Peer lenders have a little more information readily available now from P2P Mutual Fund Pertuity Direct. This month, Pertuity Direct has updated it's online credit policy and disclosed loss assumptions.

As you may know, mutual funds are prohibited from projecting potential returns. A savvy investor now has a little more information available from Pertuity's updated credit policy. PD has added loss assumptions by FICO band, which makes an interesting read for people who like to crunch numbers. Default predictions range from 2.7% to 6% based on credit grade. PD has maintained the requirement for a minimum FICO score of 660 and no more than 40% debt-to-income ratio.

Here is the complete, newly published underwriting philosophy:

Our Underwriting Philosophy

At Pertuity Direct, we evaluate an applicant's eligibility for a loan and determine the interest rate of that loan based on the following criteria:

we do not overextend a borrower with new debt
approved borrowers are offered low market interest rates
lenders in the community preserve their investment capital and earn a competitive return

These goals can be met by ensuring that each borrower's financial situation is reviewed with regards to their willingness and capacity to pay and an appropriate decision rendered.

In recent times, some financial institutions have suffered because their credit policies began to ignore key components to underwriting a healthy loan portfolio. Pertuity Direct does not solely rely on a credit score or whether the loan is secured against home equity. What we do is use a mix of human review, statistical decision making, and verifications to make sure that we deliver the right product to the customer. In some cases, that may mean that we are not able to approve a borrower due to the fact that we do not charge usurious interest rates to compensate for high risk, nor will we lend to a borrower who we feel we may endanger with over-indebtedness.

An additional strategy to ensure the health of the portfolio involves making conservative assumptions regarding the default risk of the underlying assets. Both eligibility decisions and interest rate assignment are driven from the estimated risk of new bookings, and Pertuity Direct has taken a conservative approach. For example, for the prime and super-prime segment that we are targeting (average approved borrower FICO to date is about 740), our pricing policy has built in the following expectations for default risk (based on a $12,000 loan):

660 – 700: 6.0%*
701 – 750: 3.8%*
751 – 850: 2.7%*

*default risk is annualized in the form of balances defaulted over balances outstanding

We believe that transparency is important so our borrowers can understand what affects loan eligibility and investors can understand how we generate the assets in the loan portfolio. To that end, below are some of the criteria used in our underwriting. We welcome any feedback from borrowers or investors which can be sent to underwriting@pertuitydirect.com.

Underwriting Criteria

A debt-to-income ratio generally below 40%
We often require proof of income in the form of documents, especially for larger loan sizes
A minimum credit score (FICO) as reported by the Experian credit bureau of 660 or higher
No bankruptcies within the past ten years and no more than one public record in the past ten years
An established credit history at least two years long with five total accounts
No current delinquencies on any trades

In addition to these criteria, Pertuity Direct also looks at factors such as number of recent inquiries, loan size in relation to income, amount of recent debt opened, number and type of mortgages held, and credit card balances as a ratio to available card lines.

Jessica Ward is a freelance writer based in Seattle. She also blogs at www.pennywisefamily.blogspot.com.

NeatlySaid targets Financial Hobbyists with Mircoblogging

2009-04-24T14:45:00.000-07:00

I was surprised this week to receive an invitation to join “NeatlySaid” because I’m a financial blogger. I’m not in to following stocks, commodities, etc at this point, but I took a spin through microblogging because I’ve seen some really cool mircoblogging applications lately.

For Twitter users, this is a little bit better than Twitter because you can rate the credibility of the user’s prediction. If someone is clearly blowing smoke, their rating will show that way.

Another thing that makes it a little better than Twitter is that you can’t post your lunch menu or your cat’s latest (however adorable) antics. Every post needs to be tagged to a ticker or subject. I personally, couldn’t think of anything relevant to post, so I haven’t yet. However, you should see what my cat is doing right now…

If you’re a stock, commodities or currencies nerd, you’ll have fun with Neatly Said, and I encourage you to give it a try.

Jessica Ward is a freelance writer and blogger and also blogs at www.pennywisefamily.blogspot.com

FinovateStartup: Stock Market Resources

2009-04-24T12:16:00.000-07:00

FINOVATESTARTUP 2009 opens next week in California and we’re still researching all of the amazing participant companies.

Here are quick profiles of several applications that might be of interest to prospective stock market investors.

First up is WeSeed.com:
WeSeed’s basic principle is that everyone should be able to use the stock market. It uses a gaming-type platform to match your interests with stocks you might like to follow, and then gives you a virtual investment to create a virtual portfolio. While the money and the trades are imagined, the data is all real, allowing users to get their feet in the sandbox without the risk of loosing their hard-earned-savings. It also opens stock trading fun up to those of us who don’t have spare change to sink into the market.

Next is KaChing, previously the Facebook app FSX) KaChing allows you to follow 1500 users who generated positive returns in 2008 (perhaps the only investors who generated positive returns in 08?). It proves free open-source access to previously unavailable financial data for those who are serious about breaking down the stock market. KaChing allows users to track real or virtual portfolio and build, test and populate investing algorithms. This isn’t the sandbox folks, this is the nitty-gritty.

Kapitall.com is next. They’ve recently registered with the SEC as an investment advisor. They allow for real or virtual portfolios. The novelty here is that all trades are completely transparent and public to all users. Pretty interesting stuff!

Finally, PortfolioMonkey.com is an application which shows potential diversification options for your portfolio. It’s free to use and again can be used with your real or your virtual portfolio.

Within this list there’s something for everyone at every level of stock-market-knowledge. Good luck and happy trading!

Jessica Ward is a personal finance blogger and freelance writer based in Seattle. She also blogs at www.pennywisefamily.blogspot.com

Finovate Profile: CalendarBudget

2009-04-20T13:06:00.000-07:00

CalendarBudget is going to be a participant at the 2009 Finovate conference later this month.

The company, which was founded by husband and wife team Eric and Robin Poulin in Toronto is planning to exit beta mode just in time for the start of FinovateStartup on April 28th. (Hint: if you want to take advantage of their lower fees for beta users--sign up now!)

CalendarBudget is a unique method for planning your family's budget and expenses, showing it in a visual format. No more spreadsheets. The CalendarBudget system plots your transactions on a calendar. You tag your in-and-out transactions with a category (cable, debt, auto, mortgage for example) and you can see when your monthly ups and downs in income are. It also plots your daily bank balance across the top of the calendar (see example).

For right now, CalendarBudget is free, but upon exiting the beta testing period, there will be a monthly charge of about $5 for beta-testers and $8 for new users. There are also six-month and annual plans. A 30-day free trial period is also available.

Another interesting feature is that CalendarBudget is available for banks and corporate users in an unbranded system, where the client can add their own branded "skin." This could be an excellent value-added-service for banks, credit unions and other financial service providers to offer their customers with their accounts.

CalendarBudget does not aggregate your information, but allows you to import it from several accounts. They are considering offering a free version that would allow users to try the system with one account for free with reduced functionality.

CalendarBudget has been in testing for 18 months with 1200 users worldwide. The platform is intuitive (similar to Outlook) and support is available through their forums.

Jessica Ward is a Freelance Writer in the Seattle area. She also blogs at www.pennywisefamily.blogspot.com. She covers personal finance and family.

See 57 financial technology startups in one day

2009-04-17T05:24:00.000-07:00

At Prosper Lending Review we are not only interested in p2p lending - all financial technology startups capture our attention. For this reason, we are quite excited about FINVOATE Startup 2009 which will be held in San Francisco on April 28, 2009.

The regular ticket prices for FinovateStartup09 will expire today (April 17th) at midnight. Register before the end of today and save $100 off the last-minute ticket prices. Use offer code fan109 to save an additional $100 on the ticket price.

FINOVATE Startup is billed as the "largest group of financial technology startups ever assembled in one place" with 57 companies in the lineup. All the major p2p lending players will be there including Lending Club, Pertuity Direct, and Prosper.

Here is a complete list of companies:

Acculynk
AlphaClone
Aradiom
Bay Area Software
BillShrink (our review)
BudgetPulse
BudgetTracker
CalendarBudget (our review)
Centrro
CircleUp
Cooler Inc.
CreditArray
Credit Karma (our reviews - 1,2)
DebtGoal (our review and new features launched)
Expensify
GoalSpring
Green Sherpa (our review)
Home-Account
HomeATM
iBearSoft
IOUSOS
iThryv
Jwaala
kaChing
Kapitall
Lending Club (Update: new lender feature announced at Finovate)
LendingKarma (our review)
Looniesdesk.com
LowerMyAssessment.com
Micronotes
Mint (our review)
MoBank
Moneta
Mozo
NCore
OurCashFlow
Pennyminder
People Capital (our review)
Pertuity Direct (our review)
Portfolio Monkey
Prosper (Update: re-launched at Finovate)
Rudder
SecondMarket
SeerGate
Silver Tail Systems
SimpliFi
SmartHippo (our review)
Strands
Syphr
Tempo Payments
The Receivables Exchange
ThreatMetrix
Transparent Financial Services
Valuecruncher
Victrio
Wesabe
WeSeed
ZimpleMoney (our interview with founder)

Makeover at DebtGoal.com

2009-04-16T20:44:00.000-07:00

I posted earlier this month about DebtGoal.com, one of the many up-and-coming financial services companies that will be participating in FINOVATE later this month.

I wanted to let Prosper Lending Review readers that the site has gotten a dramatic face-lift today and is far easier to use and navigate. Data-entry is simpler and the results more useful.

The interface has a much better "Web 2.0 feel" and the charts and tables are relevant and well-placed. Overall, it is intuitive and comfortable.

They are not yet aggregating but that is in the works. I've also suggested a couple of ideas that would be helpful--for instance, flagging recurring transactions. I'm really encouraged by how quickly this company is jumping to implementing user recommendations.

If you haven't checked out DebtGoal.com yet, or if you have and didn't like what you saw, I encourage you to give it another try.

At Finovate 2009 Budget Solutions Abound

2009-04-15T15:38:00.000-07:00

Holy budgets Batman! Finovate 2009 is showcasing no less than ten (count them 10!) budget solutions for personal finances. I explored some of these on my blog this past week as I wrote all about budgeting for a week, but there’s a lot out there and I couldn't do them justice there.

For the sake of the reader, I’m going to make some categories here to differentiate what might be right for your style as a prospective user or curious reader. Some of these will overlap due to the nature of the features. All are free to use unless otherwise noted. The denotation ($) means fee-based and (*$) means free during Beta trials, or some features are subscriber-based.

I included a “social media” category here—because two of these are very similar to common social applications. Wesabe is a lot like Facebook in that people can recommend or comment and share information. Geezeo has a lot of Twitter-like features and their “confession booth” even integrates with Twitter (not to mention, it's outrageously addictive).

Rudder is in a bit of a class of its own. It appears to include bill-pay features (note to self to play with this one a bit more).

There are essentially two "classes" of personal finance application in my view. Those that require data-entry of transactions, and those that don't. Otherwise, the items below appear in no particular order and none of these are paid placements.

Aggregator
Green Sherpa ($)
Mint
Wesabe
Geezeo

Quicken (*$)
Rudder

Data-Entry

iBearSoft (mobile only) ($)

LooniesDesk (*$)

BudgetPulse

CalendarBudget (*$)

Social Media Features

Wesabe

Geezeo

Mobile Apps
Mint
Green Sherpa ($)

Wesabe
Ibearsoft (*$)
LooniesDesk(*$)

Peer to Peer (p2p) Lending in Japan

2009-04-14T11:58:00.000-07:00

Several companies are entering the market in Japan to offer p2p lending services.

Japan has securities regulation that is similar to the US, which provides a substantial barrier to entry into the marketplace.

Two providers of p2p services have made it through the hurdles and two more are online to launch soon.

Maneo, which launched in October 2008, offers unsecured peer-to-peer loans. The guaranteed loan “G-Loan” product is providing lenders with a guaranteed 1.5% interest rate, substantially greater than the average .25% savings account interest. Other loans are fixed at 7, 8, 9.5, 11 and 12%.

Another option for lenders who know one another is Aqush Tomo, which provides loan documentation and servicing, but doesn’t actually do the banking parts of the transaction. These loan documentation and payment reminder services are available similar to Lending Karma.

Two other well-known p2p players, Prosper and Zopa are planning expansion into Japan, but are not yet online.

Jessica Ward is a freelance writer and blogger who writes on personal finance among other things. She also blogs at www.pennywisefamily.blogspot.com.

Ever wonder how microcredit works under Islamic law?

2009-04-13T11:12:00.001-07:00

How does finance work when falling Islamic law (Shariah)?

A longstanding problem in the adoption of microfinance in the Arab world is adapting the programs to work for followers of Islam. Muslim Law (also called Shariah) has several tenets that contradict traditional financial systems including:

Payment of zakat (charity)
No riba (interest) paid or earned
Socially-responsible investing/saving (Gharar)

In order for microloans (or any loan product) to be Shariah-compliant, it is generally structured through a trust-sale known as a murabaha—a negotiation of profit margin, rather than interest—into the final price. It’s sort of like paying your mortgage in all points, without annual interest. This sort of loan is called a Qard al-Hassan, or benevolent loan.

Naturally, this format is difficult to translate into microfinance, but many organizations and banks which cater to Muslim borrowers are springing up. Currently there are 265 banks operating in 40 countries with assets in excess of $262 billion USD. Even commercial giants such as CitiGroup are adapting to reach this growing population.

Similar to debt, interests are also structured to be socially-conscious and non-interest bearing, looking more like leases of capital.

I hope you’ve enjoyed learning this different financial paradigm. It sure has been an education for me.

Jessica Ward is a freelance writer and blogger in Seattle. She also writes at www.pennywisefamily.blogspot.com.

Pertuity Direct Sees Rapid Growth

2009-04-13T11:12:00.000-07:00

In an email to members, Pertuity Direct's management team said thousands of people have joined the p2p lending platform and their membership has grown by 300% from February to March. Here are some additional statistics about current PD borrowers:

$15 Million in loan demand in the first few months
Average Credit Score: 737 ("Super Prime")
Average Interest Rate: 13.6% (range is 8.9-17.9%)
Average Loan Amount: $14,600 (range is $1,000 - $25,000)

The average loan amount is up significantly from $9,800 reported last month while the average credit score has remained steady. Pertuity Direct launched in January and is one of two p2p lending companies registered by the SEC to operate in the US.

Our previous coverage of Pertuity Direct:

March 2009: Pertuity Direct reaches $500,000
March 2009: CEO Kim Muhota explains the unique lending model
February 2009: Jessica's interview with CEO Kim Muhota - Social lending meets mutual funds
January 23, 2009: Pertuity Direct removes beta label; launches officially
January 2009: Jessica's Pertuity Direct Review
December 2008: Pertuity Direct to launch 'immediately after the New Year'

Finovate 2009: DebtGoal.com Review

2009-04-08T01:00:00.000-07:00

In case you’ve forgotten, Finovate 2009 begins on April 28th. In advance of the conference, we’re profiling a lot of the presenting companies. One of these companies is GoalSpring’s DebtGoal.com product.

DebtGoal.com is a free tool intended to help users get out of debt. I’ve had a few conversations with the DebtGoal team (I’m an alpha-tester) and they really are passionate about helping people get out of debt, and stay out. While DebtGoal is currently a little rough around the edges, I’m excited to see what’s coming up next—as I know they’re working on some new projects.

Right now with DebtGoal you enter your debts, payments and interest rates (no account numbers or other scary things), aggregation is “in the hopper” in the next phase rollout, but at this point everything is manual data-entry. I’m hoping that they’ll allow an “enter manually” option for technophobes who are nervous about the aggregating systems. I personally love them, but I can understand those who don’t.

Using your outstanding debts and interest rates, DebtGoal produces a payoff plan for you and suggests paying off in the order of highest interest to lowest interest, and based on the minimum payment requirements, it sets payment schedule for you, based on your budget and priorities for these debts. I personally adhere to the “snowball method” of paying the smallest balance first, closing the account and then moving on to the others. I’ve requested that DebtGoal provide both options. Not sure if they’ll be able to incorporate that feature, but it seems like both methods are sound.

Why use a system like DebtGoal? I think it can help if you’re juggling multiple credit accounts and overwhelmed by deciding what to pay on what account. Perhaps you find yourself paying minimums only because you can’t decide or don’t know what to do about the next one. Then you’ll just make a big payment with the “extra” at the end of the month, right? DebtGoal encourages you to make a goal and stick with it. It can also help you plan your monthly budget so you know how much to set aside for each bill.

Another nice feature is that it shows you how long it will take you to get out of debt if you pay only minimum balances. I set a goal to be debt free by the end of this year, and adjusted my Mint.com budget accordingly. You can chose either a desired debt-free date, or tell DebtGoal your desired combined monthly debt-payment budget, and they will show you the smartest way to allocate, and provide you with a debt-free date based on that plan.

One feature that I really like, and haven’t seen other places, is that it shows new spending separately, by basically showing you that you have to pay A: your regular debt-busting budget amount and B: your new spending to keep up on your goal.

I’ll attach a screenshot here, but for my pride’s sake, I’ve removed my account balances. Rest assured, this will be paid off by year’s end. I’m on track!

If you have debt and you’d like a nice graphical way to tackle that, I’d encourage you to give DebtGoal.com a try!

LendingKarma poised to launch at Finovate

2009-04-07T07:00:00.000-07:00

**Disclosure: This post has been edited. Since it's original posting, we have been contacted by Lending Karma founders with new information and have adjusted the post accordingly. Changes in bold.

Sometimes I just can’t get enough Karma.

Here’s another “Karma” company that will also be presenting at Finovate 2009 later this month. LendingKarma.com isn’t officially launched yet, but I used Google’s handy cache system to investigate further to see what they’re all about. They appear to be a re-branding of the San Francisco-based company LoanBack.com, which provides a system for generating promissory notes. (LendingKarma.com went live on 4/7/09). LendingKarma is not affiliated wtih Loanback.com, except that LendingKarma's founder was once a founder of LoanBack, but left the company a few years ago. Lending Karma is a compeitor but plans to add additional services in the near future.

I’ve investigated LendingKarma with the SEC and was unable to find a record of them, so I’m presuming the business model remains the same: To provide a system for creating a mutually-agreeable peer-to-peer loan. They offer services to “invite” someone to lend to you, based on the agreement you write up with the assistance of their system. They also provide email reminders to the borrower about payment. Both companies are based in San Francisco.

According to cached LendingKarma.com pages, rates for services vary from $29.95 to $59.95 per year.

In my house, I’ve recently had occasion to write up a simple promissory note for my ten-year-old daughter. I’m happy to loan her a little bit of money (I think the balance owed is $10.00) but I can see that later on in life, I would like to be able to loan her money in greater sums, with understanding the payment expectations. If I were to loan a teen or young adult money for a car or home downpayment, this might be just the product I need.

LendingKarma doesn’t appear to handle the collections but does remind borrowers of a balance owed, and tracks the amount outstanding, which could help manage both parties’ recordkeeping. It also provides a legally-enforceable promissory note. As the old adage goes, “good fences, make good neighbors.” This written agreement is tailored to be specific to the circumstances and may reflect a secured, or unsecured loan. Also, being enforceable could settle a financial dispute without damaging an existing relationship.

Jessica Ward is a freelance writer and blogger based in Seattle, WA. She also blogs at http://www.pennywisefamily.blogspot.com/.

CreditKarma: Never Pay for Your Credit Score Again!

2009-04-06T11:27:00.000-07:00

I feel like a moron. Just two weeks ago I paid $14.95 for three-month access to my credit score. Let me tell you a little story about how this began:

My neighbor, four doors down, has the same name as me, with the minor difference of a different middle initial. Her middle initial, happens to be that of my maiden name. Because I hyphenated my last names for the first few years after I was married, I have a registered “credit alias” that is exactly the same as her name, and a mailing address just a few digits off.

That really isn’t too much of a problem, except that because our addresses our so similar, and she doesn’t pay her bills, her collections accounts arrive on my credit score routinely.

Four more of these recently appeared on my credit report and were discovered by my mortgage bank during my refinance. I shot off another letter to TransUnion last week hoping to intervene before my rate-lock was threatened.

I’ve got to say, I’m pretty tired of paying for my own credit score. Yes, you can get a credit report free annually, (just one) but it’s far more helpful in a situation like mine to check it more frequently than that.

Finovate 2009 presenter, CreditKarma may be the solution people like me are looking for. It provides constant, free access to your credit score as well as some other features.

You can see how your credit score stacks up to those in your age range, state, or even email domain. You can also use their calculator system to see how adjustments in your financial situation would affect your score in theory. Would it help or hurt you to close a high-interest account, extend your credit limit, or even file for bankruptcy? I was surprised to know that paying off my credit card balance entirely will actually hurt my score, and that optimally I should be carrying some credit card debt. (Thanks anyway, but I’ll still be going debt-free). There’s a screen to view your long-term credit score over time, which will be very helpful for tracking identity fraud or excessive credit inquiries (which cost you points).

The site is free because of sponsorship (think Mint), but I found the sponsorship to be rather oppressive and cluttering. However, not so much that I won’t be using CreditKarma. Also, be reassured, that they fund the site through ad partnership only, not through selling your personal info.

There are some features that I especially like including a credit card debt calculator which allows you to either enter your projected monthly payment and calculate a payoff date, or enter a date and it will show you your estimated monthly payments. Adding a little extra value to this calculation is their friendly nudge that shows you how much you can cut your payoff time by paying just a little bit more.

At this time, CreditKarma is only showing credit scores from TransUnion, and not Experian and Equifax, but in my experience, TransUnion’s scores have always been the lowest (They’ve also been the only ones routinely confusing my neighbor’s accounts with mine).

Because CreditKarma is requesting your score on your behalf rather than for a lender, your credit score won’t be affected by the inquiry.

Jessica Ward is a freelance writer and blogger located in Seattle, WA. She blogs on finance, credit, family and food at http://www.pennywisefamily.blogspot.com/.

Microfinance: By Children, For Children

2009-04-04T11:26:00.000-07:00

My only travels in the developing world thus far are limited to the month I spent in Ethiopia last year. I marveled at the ingenuity of the children—many of whom fended for themselves. When I visited orphanages, I carried with me more than 5,000 “twisting balloons” to make balloon hats and animals for the kids. The rough terrain, rowdy behavior and stray voltage common there was hard on the balloons, and they popped almost instantly.

What surprised me was that the children collected up every last scrap of broken balloon and put them to use. Some made jewelry, some built sling-shots, others took the ends and made hair elastics from them for braids. A balloon micro currency erupted in each building that I visited over the two weeks that my balloon supply held out.

Another thing that I’ve learned from families who have since visited is that the balloon currency still exists in some of the buildings—months later! Children have stashed and preserved balloons (some still intact and un-inflated) for another day.

My mind came back to this scenario when I saw a story today on the Children’s Development Bank (CDB). CDB is a bank run by and for children in India, Afghanistan, Bangladesh and Nepal.

CDB serves the street children of these countries. These kids use their entrepreneurial skills as workers for hire. Because street children are so vulnerable to theft, they rarely amass enough money to make an entrepreneurial move in building their business or education. Instead, they spend what they need to meet their day-to-day needs and spend the rest of their money on small luxuries (Pepsi and chewing gum were the favorites among the street children in Ethiopia).

CDB is solving this problem by providing interest-bearing deposit accounts to children as well as low interest microloans. The novelty of this plan is that the entire business is operated by children. A board of children determine who will receive loans—and they evaluate the credibility and creditworthiness of the child who wants the loan, as well as their intentions. The children on the advisory board also determine membership, eligibility and the size of the loan available as well as interest paid on savings for members of the bank.

Children are encouraged (and do) invest in the bank their daily earnings. They also take loans to improve their education or business services. They can borrow for items such as inventory (many children in Ethiopia had toilet-paper sales businesses) or shoe-shine supplies or any number of other tools to provide their services.

While the process is facilitated by adults with knowledge of finance, recordkeeping and banking, children are the decision-makers.

You can read more about the Children’s Development Bank by visiting their Web site at http://www.childrensdevelopmentbank.org/new.htm.

IMAGE CREDIT: CDB Web Site www.childrensdevelopmentbank.org

Jessica Ward is a freelance writer, blogger and mother of two children. She blogs at www.pennywisefamily.blogspot.com.

Micro Health Insurance the Grameen Way

2009-04-01T23:48:00.000-07:00

Did you know that in America, the leading cause of bankruptcy is medical bills? Indeed, even with a pretty cushy health care plan in my household, medical bills certainly get our attention. For many families, this is the last straw. For the very poorest in the world, medical care can be financially out of reach entirely.

Grameen Bank hopes to fill that gap and has formed another division, “Grameen Health” which will be a provider of Micro-Health Insurance.

Grameen Bank is leveraging it’s reputation and infrastructure in rural and impoverished places in Africa. Grameen Health has been operating in India and Banlgadesh for some time, but with a $100 Million Euro investment from the Dutch government, Grameen is beginning a pilot program in four sub-Saharan African nations.

This will pose initially education and credibility challenges for Grameen—how to convince families to pay $1.75 per year for a family of six, up front before an illness, when alternatively the family could save up for an illness or may not be sick at all.

In nations where the average annual wage is less than $3,000 per USD, that $1.75 premium will not go unnoticed.

I read in a brief article from the knowledge bank at INSEAD that several organizations are branching in to micro health insurance including Africa’s largest HMO, AAR, but few are finding wild success.

All seem to agree that experimentation and developing a consistent supply of medical support is critical before micro insurance can be successful. “The one day that the medication isn’t available…they are never going to buy insurance again. Then you’ve lost them. That’s why it’s so different from micro finance” said Johanna Mair, a former doctoral student at INSEAD, who is now an associate professor of strategic management there.

I’ve mentioned before about my brief travels in Africa last fall, and I certainly saw the need for medical care there. (I had to be treated in a hospital there for a dog bite—that was an experience in and of itself!) I could see how families had to go out and buy their loved one’s wound dressings and surgery supplies and medications at the pharmacy. While it wasn’t wildly expensive by my standards, I don’t believe that many people would seek preventative care, based on how expensive it could be, and competing financial priorities.

The potential here is fascinating, should this catch on, that the poor worldwide might have access to preventative health care for themselves and their children. This would mean there are more people studying medical coding and billing to work for the expanding health care industries.

I’ve looked around for more articles on the subject but most seem to be theoretical and scholarly, if you see any articles about micro health insurance reaching the masses—please let us know.

Lending Club Introduces IRA Product

2009-03-25T12:03:00.000-07:00

Lending Club CEO and Founder Renaud Laplanche announced today that Lending Club has introduced the first IRA product that allows for peer to peer investments.

Laplanche told Prosper Lending Review today by e-mail, “now investors have more choice for their retirement accounts beyond traditional asset classes. Lending Club is delighted to provide this new alternative to investors. We look forward to offering more innovation and value for financial consumers in the future.”

Potential Lending Club IRA investors should remember that they need to enroll (the application goes by old-fashioned mail) and fund their account by 4/15/09 if you want to enroll for the 2008 tax year. EntrustCAMA, part of the Entrust Group, serves as the administer for these accounts.

Enrollment information is located online at https://www.lendingclub.com/sdIRA/registerIRA.action.

Lending Club has been nominated for the “Top 100 Innovators” by The Industry Standard. It was also recognized recently as one of the 20 “Breakthrough Ideas for 2009” by Harvard Business Review.

Jessica Ward is a freelance writer based in Seattle. She follows personal finance and family life. She also blogs at The Pennywise Family.

Mint adds Lending Club functionality; registers millionth user

2009-03-20T15:43:00.000-07:00

Mint just reached it's one-millionth user! You can read about Tammi K from Oregon on Mint's blog. What I love is that to reward her, and to celebrate having one-million happy users--Mint.com paid off Tammi's credit card, and her mother-in-law's card since she is the one who referred her to Mint. That's an awesome surprise!

A couple of other interesting notes on Mint.com--SmartyPig and Lending Club accounts now work in Mint. Also, if you have assets, you can show them in Mint (home equity, concert posters, cars, etc.).

Lots of exciting development going on in recent weeks with Mint, so I thought it would be worth mentioning.

Green Sherpa Review: Personal Cash Flow Management

2009-03-20T12:04:00.000-07:00

Ok, I admit it, I choose financial companies to profile based on my level of curiosity from the company’s name. Yes, a classic case of judging a book by its cover.

Unfortunately, with the Green Sherpa book, I’ve not had an opportunity to get past the cover, so will have to write this review solely based on the company’s press kit. A less-than-desirable level of transparency for this blogger, but you might want to know what this funny-named company does too, so I'll share what I've learned so far and fill you in later as I learn more.

I reviewed Green Sherpa’s materials and then tried to log in for the 30-day free trial. I was greeted by the following message:

Thank you for your interest in Green Sherpa and for signing up for our private beta!
We have been overwhelmed by the positive response and are slowly letting users in during our beta phase. Watch out for an e-mail with an activation link over the next few weeks as we activate your account.
The Green Sherpa Team

Well, I’m glad they’re overwhelmed, I guess, but considering how overwhelmed they are, you’d think there would be a little more buzz about them. Here’s what I know (again, almost exclusively from their PR efforts).

Green Sherpa is a fee-based personal cash-flow software. Their target is the serious DIY money-manager age 30 to 55 who currently uses software from a box on a shelf. They believe their continuous improvement cloud-computing model will show the consumer how easy it is to work online vs. downloading and installing software you’ve got to update and upgrade all of the time. Their theory is that this pitch will also help users to shell out their $7.95 monthly subscription fee.

Not updating and buying new software all of the time would sell me if I were in the market for such software. When will Microsoft get the hint and start doing this with Office? I digress….

Green Sherpa offers a few novel approaches that you don’t find in the free web apps like Wasabe and Mint. You can develop goals, and Green Sherpa shows you progress toward your goals. It also shows you cash-flow projections—the month’s “where you’re going” versus the “where you’ve been” information that most of us get from our personal finance reports.

The dashboard is spreadsheet based so should keep happy all of the spreadsheet devotees. Another distinct advantage is that you can share your information “real time” with your financial team (CPA, broker or attorney) without burning reports to disk, or emailing/printing cumbersome PDF reports. It seems like it would also be nice for baby-boomers who're managing their elderly parents' finances, especially if from a long distance.

Green Sherpa debuted September of 2008. It is currently in beta-release. As mentioned before, it is based on monthly subscriber fees of less than $10 per month. A 30 day free trial is offered, but they’re not accepting new subscribers at this time. I’m not sure if this is a capacity issue or an indicator of institutional health. Overall, it’s a great idea, and if it’s as good as advertised, I could see the potential that it may pay for itself in terms of subscriber fees to the user. I’d love to give this a test-drive and hope that we’ll hear more from these guys before the Finovate conference next month.

Jessica Ward is a freelance writer and blogger. She blogs on personal finance, real estate and families living frugally.

Lending Club raises $12 million

2009-03-19T06:47:00.000-07:00

Lending Club just announced they raised an additional $12 million in funding and hired a new marketing officer. Previous funding includes $10 million in late 2007 and an additional $4 million in September 2008. From the press release:

SUNNYVALE, Calif.--(BUSINESS WIRE)--LendingClub.com, the peer lending network that brings together investors and creditworthy borrowers, announced today that it has closed a $12 million Series B round of funding. Morgenthaler Ventures led the round and is joined by existing investors, Norwest Venture Partners and Canaan Partners. Rebecca Lynn, a Morgenthaler Principal, is joining Lending Club’s board of directors.

Lending Club also announced today that it has added Pamela Kramer as Chief Marketing Officer. Ms. Kramer is an established marketing veteran with more than 17 years of experience. She was most recently Chief Marketing Officer of MarketTools, Inc and, before that, spent 9 years in leadership roles with E*TRADE Financial helping to shape the development of online investing in various capacities, including most recently as Chief Marketing Officer.

“This additional capital will allow us to continue to expand our capabilities and accelerate the growth of our customer base. Lending Club is proud to be building a network where individuals come together to provide financial value to each other beyond what traditional banks can provide. We are equally proud to have great investment partners in Morgenthaler, Norwest and Canaan Partners,” said Renaud Laplanche, Lending Club’s CEO and Founder.

“We were attracted to Lending Club because it offers a compelling proposition in any market, but especially in today’s environment,” said Rebecca Lynn, Principal at Morgenthaler Ventures, “Borrower members find much-needed relief in a tight credit environment, and lender members have earned an average annual return of 9.05% over the last 20 months, which is better than most investment alternatives.”

Pertuity Direct Reaches $500K In Two Months

2009-03-18T11:56:00.000-07:00

Just two months after launch, Pertuity Direct's mutual-fund P2P lending platform now has $500,000 to lend from members. Pertuity's statistics show that 70% of members on it's web site are taking the next step and opening an account. That is an excellent adoption rate for an online technology.

Pertuity Direct continues to focus on prime borrowers with an average FICO score of 740. The average loan is $9,800. CEO Kim Muhota credits PD's success with the tightening of the consumer credit markets, particularly in credit cards according to a company press release issued today.

I asked Pertuity Direct what the average investor puts into the fund but they're not releasing that info right now, but will be in the near future, so they'll let me know later on.

Our previous coverage of Pertuity Direct:
March 2009: CEO Kim Muhota posts a video explaining the PD lending model
February 2009: Jessica's interview with CEO Kim Muhota - Social lending meets mutual funds
January 23, 2009: Pertuity Direct removes beta label; launches officially
January 2009: Jessica's Pertuity Direct Review
December 2008: Pertuity Direct to launch 'immediately after the New Year'

Jessica Ward is a mommy, freelance writer and blogger. She also blogs on raising a frugal family at http://www.pennywisefamily.blogspot.com/ and on frugal cooking at http://www.3rdworldfood.blogspot.com/.

Pertuity Direct CEO Kim Muhota explains lending platform

2009-03-16T19:40:00.000-07:00

CEO and Founder Kim Muhota introduces Pertuity Direct to potential lenders and borrowers through the following 3-minute YouTube video.

Among other things, he explains his motivation for starting Pertuity Direct. "As a former executive at one of the largest banks in the country, I became well aware through the years of the complaints customers have with respect to their banking relationship and quickly realized that their was a unique opportunity to build a company that was truly focused on the customer first."

Our previous coverage of Pertuity Direct:
February 2009: Jessica's interview with CEO Kim Muhota - Social lending meets mutual funds
January 23, 2009: Pertuity Direct removes beta label; launches officially
January 2009: Jessica's Pertuity Direct Review
December 2008: Pertuity Direct to launch 'immediately after the New Year'

Mortgage and Refi Solution: SmartHippo.com

2009-03-13T12:27:00.000-07:00

Another participant at the Finovate 2009 conference in April is the Montreal-based SmartHippo.

Smart Hippo is a smart idea indeed. It is an innovative combination of social network and search engine, specific to mortgage lending. SmartHippo does for mortgage shopping, what Travelocity does for vacation planning.

A SmartHippo user can search mortgage rates that came from banks, from web bots that crawl for additional rates, and even from customers who post the rates that they’ve received. Users (called “hippos”) can also post comments about the service they’ve received from lenders or how their closing process went.

One of the greatest benefits that I’ve observed is that you can “window shop” for rates before supplying identifying information about yourself. If you went “shopping” for a loan with a mortgage broker, your FICO score would show an inquiry made, and it would cost you points on your score.

SmartHippo allows you to “look before you leap” so to speak. Also, the SmartHippo search engine shows you the available ranges for closing costs as well as interest rates, so you have a clearer idea of what you’re getting into. You won’t be lured by low rates only to be surprised with astronomical closing costs.

SmartHippo began operations in September of 2007, but only really began marketing in October of 2008. Marketing consists of viral and Internet efforts. Blogging, contests and Twitter (you can follow @SmartHippo along with me). Right now the South By South West conference is running, and they’re holding a “Hide the Hippo” contest via Twitter, encouraging participants to locate the hippo around Austin, TX.

Jessica Ward is a freelance writer and resident of not-so-sunny Seattle. She also blogs about frugality and family at The Pennywise Family. You can follow her on Twitter at @Jessc098.

Information solutions for the microcredit industry

2009-03-05T03:31:00.000-08:00

Microcredit is supposed to describe loans offered with no collateral to support income-generating businesses aimed at lifting the poor out of poverty. Yet today there are many organizations that call themselves “microcredit” programs that offer loans to people who are not poor, that require collateral, and that are used primarily for consumption rather than income generation. There are even “microcredit” programs that are generating enormous profits for investors by charging interest rates as high as 100 percent or even higher!

Under the circumstances, we really don’t know what we are talking about when we talk about microcredit. I think it is time we classify microcredit programs according to clear, consistent categories. - Muhammad Yunus in Creating a World Without Poverty

Last month Muhammad Yunus spoke at George Washington University. He talked about creating social businesses and microcredit. His speech was well timed - It just so happens I'm currently a graduate student at GW and am working with a small team to build a Microfinance Resource System for lenders.

With over 3,000 microcredit organizations, investors face a bewildering variety of options. A lender may want to focus his efforts on a specific country, concentrate on female borrowers, or loan to only the most destitute. He may want his contribution to be tax-deductible or may require his capital be repaid over time with interest while avoiding usurious organizations who exploit borrowers under a ruse of generosity. We hope to solve these problems and the challenges raised by Dr. Yunus in his book.

We recently submitted this project to Dell's Social Innovation Competition. Voting ends today at 5PM CST. We were ranked as high as #4 out of 500+ projects but have slipped due to a flurry of last minute voting. We need to get back in the top 25 to advance to the next round. Please read our 250-word project description, register (takes 1 minute), and vote now.

Microfinance Lending Resource System

Update: Thanks LazyMan for helping to promote the project.

Virgin Money joins the Uncrunch America Campaign

2009-02-25T07:08:00.000-08:00

Uncrunch America originally attracted attention when it amassed thousands of votes and was a top 10 idea in change.org's campaign to find the top ideas for change in America. The idea gained additional momentum this week as Virgin Money joined competitor Lending Club to help raise awareness about the availability of alternative sources of credit.

Virgin Money facilitates loans through family and friends which is different than Lending Club's model. While loans between people who know each other can be made through Lending Club most of Lending Club's loans are made between people who do not know each other.

In addition to social loans, Virgin Money just entered the traditional mortgage loan market. Virgin Money is approved in 35 US states for both conventional and FHA loans and they expect to be fully licensed by the end of 2009. More than 150 mortgage brokers have joined their network.

Here are the three options presented to visitors at Uncrunch America:

Personal loans - If you have good credit you can now get a personal loan of up to $25,000 funded by fellow members at a fair interest rate through Lending Club. Free membership and easy online application.

Small business loans - If you are a small business and need more than $25,000, On Deck Capital has been actively lending to small, healthy, store front businesses throughout the credit crunch.

Home loans - Traditional Mortgages or Social Mortgages, Virgin Money has creditworthy borrowers covered. Check out our traditional mortgage for fair rates and a fast closing or consider our social mortgage for a great deal if you're borrowing from family.

Microplace offers 5% interest rate to investors

2009-02-23T16:31:00.000-08:00

With our 401Ks hemorrhaging and the stock market falling, many are looking for a more stable savings/investment opportunity (see my earlier posts on SmartyPig and Pertuity Direct).

Microlending, which has been available for many years, is responding. Microlending organizations are now offering interest-bearing products. Microplace, a division of Ebay (NASDAQ: EBAY) has been offering interest-bearing microloan investment opportunities for some time, however they’ve just recently partnered with MicroCredit Enterprises to begin offering a 5% yield “Global Investment Note,” which benefits the working poor in more than 20 countries on four continents.

Jonathan C. Lewis, CEO of MicroCredit Enterprises, said in a company press release “investors realize that the greatest return in the world is the chance to lift someone out of poverty. Earning a fair financial return is just a bonus.” MicroCredit Enterprises is a private sector, anti-poverty program that leverages the private capital of high net worth individuals to provide small business loans to impoverished entrepreneurs in developing countries. This partnership with MicroPlace will make their investment opportunities available to investors who have as little as $20 to invest.

The term on these notes is 24 months (two years) and the fund focuses on women entrepreneurs, with women making up 89% of borrowers. The MicroCredit Enterprises portfolio reaches 505,000 poor worldwide. The global average interest rate charged to borrowers is about 31%. But this is much lower than predatory lenders and loan sharks who are often the only options for the working poor. Also, the repayment rates on microloans historically average 97%.

Like John F. Kennedy said, “A rising tide, raises all boats.” Most of our 401Ks and investments are sinking like Titanic. In the meantime, non-profit organizations are folding like card-houses, and Americans are cutting back their charitable contributions. Some may want to consider an alternative investment and charitable contribution combo (without the tax advantages of course). Why not consider raising some boats anyway?

Some things to remember with this kind of investment. While registered with the Securities Exchange Commission, it is not FDIC or SIPC-insured.

For more information about the 5% note, you can see the prospectus online here.

Here's some additional info from a Q&A session with MicroPlace:

How is Microplace able to offer such a high interest rate? what kind of interest rates are the Okicredit borrowers paying?

MicroCredit Enterprises is the security issuer of the 5% investment, which is called the Global Poverty Alleviation Note. MicroPlace does not determine the interest rate because MicroPlace is not the security issuer - MicroCredit Enterprises is.

The interest rates that borrowers pay is determined by the microfinance institutions (MFIs) in each country, so they vary depending on the institution and the borrowers. Oikocredit and other security issuers do not determine that rate.

The global average interest rate charged to borrowers is about 31%. But this is much lower than predatory lenders and loan sharks who are often the only options for the working poor. Also, the repayment rates on microloans historically average 97%.

Is Microplace at all afraid that the 5% note will cannabalize the other, lower-interest, investment opportunities?

Not at all. There is a very wide range of investment opportunities on MicroPlace, each offering different features, e.g.: interest rates, locations, issue-focused like women and fair trade, level of poverty, etc.

These are tough economic times, and many would be investors are looking for a little more liquidity in their assets. Would MicroPlace consider offering something like Pertuity Direct's mutal funds, only invested in microloans? This would give investors the security that they could get their money if they needed it, without waiting for a maturity date.

Funny you should ask! MicroPlace just started offering a liquid investment, which you can review here.

Are Okiocredit and MicroCredit Enterprises the same?

No, they are different security issuers. Here's how it works:

MicroPlace is the platform that allows investment transactions to take place, they are not actually the security issuers (where people purchase their investments). MicroPlace partners with issuers, like MicroCredit Enterprises, Okiocredit and Calvert Foundation who do the issuing. MicroPlace has partnered with them because they have decades of experience in the socially responsible investing space and deep roots across the globe in these communities.

Jessica Ward is a freelance writer based in Seattle. You can follow her musing on Twitter @jessc098.

SmartyPig - Real savings for the rest of us!

2009-02-20T11:15:00.000-08:00

A presenter at the FINOVATE conference in April will be SmartyPig.com. We at PLR thought you might like to know about this Iowa-based firm before that, so here’s a little primer on the company.

First, SmartyPig is not a bank. It’s an “independent online transaction solution.” A fancy name for an automatic withdrawal system that works with your bank and an FDIC-insured Savings Bank. Their banking partner is the 115-year-old publicly traded West Bank (NASDAQ: WTBA).

Put simply, it’s an automatic savings solution. You can really “pay yourself first” and mean it. When you set up an account, it is for a specific savings goal, and a dollar value $2,000 for a flat screen TV or $8,000 for a honeymoon cruise for example. You’ll also have to say when you want to accomplish your savings goal. TV for Superbowl next year? SmartyPig will calculate how much to automatically withdraw from the account specified to make achieving your goal as painless as possible.

Additionally, SmartyPig has a major social media component. Once you log in you can share your savings goal with friends and family. This would be great for families saving for their new baby, or newlyweds saving for a house, or even your little one’s college savings accounts.

Grandma and Grandpa can easily make deposits to the Smarty Pig account via your Facebook page or blog.

SmartyPig offers high interest rates (right now at 3.25%) but with minimum balances of just $25. How so high? They say the overhead is low, and they so far they don’t need to run an advertising campaign, further suppressing costs.

Oh, and did I mention there’s more? Once you’ve met your savings goal, you cash out with a gift card, AHC deposit or check. But if you were saving up for a specific purchase, request your payment in the form gift card, and get a boost of up to 6% with one of their Best in Class Retailers. They have partnerships with Zales, Best Buy, Sandals Resort, Amazon.com and many other leading retailers. Talk about value!

Each SmartyPig customer can have as many savings goals as they want, and the SmartyPig service is free.

They don’t disclose how many accounts there are, but they do say that the average account goal is $8,500, four years in duration and that the most frequent goal is vacation savings.

SmartyPig launched in March of 2008 and is a privately held company. Just before Christmas of ‘08 they also launched in Australia and New Zeland with their partner Australia New Zealand Bank (ANZ).

In an email interview with Jon Gaskell, co-founder of SmartyPig, he told me that because of SmartyPig’s structure as a “transaction engine,” SmartyPig can be up and running in any country, any language and any currency in 60-90 days. Watch for growth from SmartyPig for sure. When I questioned about expanding to other savings accounts Gaskell responded “We want to continue trying to perfect the social side of saving all over the world.” Lookout world—SmartyPig is on the move! I can’t help but wonder if in pursuit of global savings domination if they’ll have to adjust their corporate image to enter some markets? I don’t see the SmartyPig brand being universally accepted in all cultures, but I’ll be watching their growth for sure. It should be very interesting.

I also pushed Gaskell on the issue of savings. How can you really “sell” savings in a country that culturally just isn’t used to it? Americans are charging literally Trillions of dollars every year on plastic. I questioned as to if this is Field of Dreams scenario where if they build it we will come, or if he foresees a savings trend. He notes that while American Savings rates have been in the negative for years, they are starting to swing into positive numbers. He notes that SmartyPig isn’t innovative other than bells and whistles. It’s simply implementing the age-old tradition of save first, buy later. Timeless and wise financial advice that transcends all cultures.

If you would like to know more about how my experience was in setting up my SmartyPig Account visit my blog at for my review from a customer's perspective.

Jessica Ward is a freelance writer based in Seattle and enjoys writing personal finance, corporate profiles and non-profit profiles. Disclosure: she also happens to be a very happy SmartyPig customer.

Virgin Money Enters US Mortgage Market

2009-02-17T14:56:00.000-08:00

Some might call Sir Richard Branson crazy. Others call him crazy successful. In his latest US financial adventure, he may be both.

At a time when all the banks are leaving the mortgage market like rats from a sinking ship, Virgin Money USA is jumping in the water. Last year, the UK based Virgin Corporation acquired Lendia, a US mortgage originator and processor and is now offering wholesale mortgages to broker in the USA.

With sales slogans like “Kiss Me I’m Loan-y” and “Loan Brokers Do It Better,” it’s certainly the first mortgage wholesaler I’ve ever noticed. Further proof marketing works I guess, even Virgin’s shocking brand of marketing. Only Virgin can try to make a mortgage sexy.

That said, they shouldn’t need it at all. This is a company that on all levels is famed for customer service and for championing its customers. They’ve actually entered this market due to the lack of service-oriented wholesalers. Asheesh Adveri told the media in a company press release that “Virgin Money sees a growing service gap in the mortgage industry which we plan to close and own.”

They’re offering some innovative features including real time status updates, rate quotes, paperless underwriting, and the ability to import loan applications directly via the broker’s loan origination system—novel and efficient characteristics in this industry that is traditionally slow to innovate.

Virgin Money is already approved in 35 US states for both conventional and FHA loans and they expect to be fully licensed by the end of 2009. More than 150 mortgage brokers have joined their network. For more info see www.virginmoneyus.com.

Jessica Ward is a freelance writer based in Seattle who enjoys writing on business and finance topics as well as humanitarian topics.

Kiva passes $60 million in loans

2009-02-17T08:12:00.000-08:00

Kiva just surpassed the $60 million mark in loans through their microcredit platform. Kiva's target for 2009 is to lend another 60 million dollars matching what they did the first three years.

Here is a look at their current stats:

Total value of all loans made through Kiva:	$60,226,510
Number of Kiva Lenders:	446,097
Number of loans that have been funded through Kiva:	85,996
Percentage of Kiva loans which have been made to women entrepreneurs:	77.94%
Number of Kiva Field Partners (microfinance institutions Kiva partners with):	95
Number of countries Kiva Field Partners are located in:	44
Current repayment rate (all partners):	97.74%
Current default rate (all partners):	2.26%
Average loan size (This is the average amount loaned to an individual Kiva Entrepreneur. Some loans - group loans - are divided between a group of borrowers.):	$429.83
Average total amount loaned per Kiva Lender (includes reloaned funds):	$134.90
Average number of loans per Kiva Lender:	3.69

Are you on Kiva? Join our Kiva team.

Nuwire's Cost-Cutting Tips for Businesses: #1 Peer to peer lending

2009-02-17T07:55:00.000-08:00

NuWire Investor just published an article titled Ten Cost-Cutters for Businesses. Here is their first tip:

Capital: Free money almost always comes with strings attached. But if you really need capital, here are some ways to get cash, for a limited time or a small fee:

Peer-to-peer (P2P) lending is a way to find private lenders who will lend money in exchange for equity or some other security. Prosper.com is one source.
Microlending groups offer business loans at very low rates. These are not exactly free, but they come close.

I agree that peer to peer lending is an attractive source of capital for some small businesses. I am not, however, aware of any peer to peer platform which requires an exchange of equity or some other security. Prosper, Pertuity Direct, and Lending Club only provide unsecured loans.

Although the article does not mention it, Prosper is actually closed right now while they register with the SEC.

Microlending typically refers to very small loans. With Grameen America, for example, the average loan size is $2,000. These are generally targeted to poor entrepreneurs, typically women, who do not have access to traditional credit markets. The upper limit on loans through most peer to peer lending site like Lending Club is $25,000.

While I'm pleased to see NuWire mention peer to peer lending, the information presented is a little inaccurate.

People Capital prepares for 2009 launch

2009-02-12T19:52:00.000-08:00

People Capital announced they received funding from the Radcliff Group in an effort to prepare their student loan peer to peer lending site for the 2009 academic year. An excerpt from the press release is reprinted below.

Fynanz, the first peer to peer site to focus on student loans, recently suspended accepting new borrowers and lenders due to "market conditions."

People Capital, developer of an innovative peer-to-peer student loan platform, announced today that it had secured a second financing round from Radcliff Group Inc., a New York based private equity firm. The funding will be used to enhance People Capital's Human Capital Score™, a model that provides a true measure of the creditworthiness of a student, and to develop its next-generation peer-to-peer (p2p) lending platform to provide improved access to private student loans.

Warren Serenbetz, Jr., CEO and President of Radcliff Group, stated that, "People Capital offers a truly unique approach to education financing, combining traditional and innovative approaches that produce an attractive yet safe lending scenario for students and the individuals and institutions that invest in their educations." "Our peer-to-peer lending platform brings a unique solution for students to finance their college educations. It leverages our cutting-edge research into developing a credit risk assessment methodology based upon students' potential, rather than merely their credit payment history," said People Capital Founder and CEO Thomas Shelton.

"Our unique Human Capital Score means that we can underwrite students without credit history by being able to project individual income levels and ability to pay. Traditional methods ignore a student's potential. Based on research coming out of The Wharton School Insurance Department, we incorporate merit data such as GPA, standardized test scores, college and major to provide a true and unbiased, data-driven measure of the economic value of an education. Our credit assessments will allow lenders to make credit risk decisions based on the true potential of the borrower."

Poised for funding the 2009 academic year, People Capital has formed a world-class team of professionals including veterans of the student lending, consumer finance, credit ratings and new media industries. A more detailed business plan is available to qualified investors and institutional partners.

Javelin reviews investing with Lending Club

2009-02-12T06:54:00.000-08:00

Javelin Strategy & Research just released a 12-page whitepaper analyzing investments through Lending Club between June 2007 and December 2008. They found the overall investment return averaged 9.05%, with a median return of 10.48%.

Compared to other investments, Javelin reported:

"If an individual had invested $10,000 in June 2007, a typical (median) loan portfolio through Lending Club would have grown to $11,594 by November 2008. That return would have outpaced other common investments or indexes such as the Standard & Poor’s 500 Index and the tech‐stock heavy Nasdaq Composite Index, which suffered staggering losses that would have left the investor with $6,289 and $6,604, respectively. Meanwhile, the same investment in government‐insured 1‐year CDs and rock‐solid 6‐month Treasury bills would have grown to $10,678 and $10,501, respectively. (This comparison factors in Lending Club’s 1% service charge but does not include fees and other transaction costs for the other investments.)"

Read the whitepaper. Open a Lending Club account.

Pertuity Direct--Social Lending Meets Mutual Funds

2009-02-10T09:32:00.000-08:00

Following my review of Pertuity Direct and Tom’s announcement of the official launch, PLR was contacted by the PR team at Pertuity Direct for an interview, and I was fortunate enough to talk with their management team including CEO Kim Muhota and Charlie Schliebs who is an independent board member for the National Retail Fund, which holds Pertuity’s funds. Also on the call was Lisa Lough, SVP of marketing for Pertuity, Inc.

As we mentioned before, this team has experience and credentials to spare, but their energy for their business model is also extraordinarily contagious. My prediction is that the combination of this energy, the security of their mutual fund-style of social lending and the precipitous failing of traditional lending is going to serve Pertuity well in the near future.

We’ve recently covered them, so I’ll keep this post short and focus on the new items that I’ve learned and a brief futuring discussion that I had with Kim and Charlie who indulged my interest in their version of what the future of social banking may hold.

For Lenders: Pertuity Direct is “social lending interval fund,” where lenders buy into a risk-classed pool of borrowers. Two pools are available now via the National Retail Fund for, but others are planned for the future. An advantage to the mutual fund approach is liquidity in your assets. You don’t have to wait a 3 year loan term to get your money back. One disadvantage is slightly higher maintenance fees, right now at about 3.17%. (I’m not sure how this offsets with the default rates in traditional P2P loans, so if anyone has thoughts on this, I’d love to hear them). Pertuity Direct requires a minimum investment of $250 USD, and you’ll experience a small fee if you withdraw before one year in the fund.

For borrowers there are several advantages. First, you don’t have to spill your financial guts or upload a glamour shot to get funded. Nobody will take your spelling into account in funding your loan (I’m guilty of this with my Lending Club account). Borrowing on Pertuity Direct doesn’t feel like running for Prom Queen in high school. You will know what interest rate and terms you’ll be offered and you can take it or leave it. Your loan will be approved or not, and funded within three days, just like a bank. The process is simple, familiar and respectful of your privacy.

Muhota has had a long time to stew on this plan. He first formed his idea seven years ago and has followed the trends. Plans for launch went on hold as they decided how best to comply with SEC regulations to ensure a secure product and legal compliance on all sides, and they launched PertuityDirect.com on January 22, 2009.

When I asked Kim Muhota and Charlie Schliebs about the prospects for long-term social finance, their energy level became even higher. They agreed that many people are loosing faith in traditional banking, and expecting more from their money. When I asked what the near future may hold for Pertuity, Muhota explained that they’re looking into shorter and longer term products for borrowers. I pressed further and asked if that might include “social” mortgages and revolving lines like credit cards. He replied “absolutely” elaborating that consumers and lenders alike are going to be drawn increasingly to the low overhead, lack of what he called “legacy costs” and the growing uncertainty of traditional banking.

I’d have to agree. Why have your money buying some Bank MBA’s Bentley when you could have it working for you in a high yield, responsibly managed product that comes equipped with all of the institutional rigors of a traditional banking product?

Special thanks to Pertuity Direct’s team for spending some time with me this week.

Jessica Ward is a freelance writer based in the Seattle area.

Insider: Mortgage loan modification advice

2009-02-09T09:28:00.000-08:00

This post was contributed anonymously to Prosper Lending Review in an effort to warn homeowners of the unethical behavior of some mortgage loan modification companies. The author has stopped assisting with loan modifications pending more information from the office of the Attorney General.

I own a small notary signing service. I’m frequently called upon by out-of-state banks to be their witness to their clients signing loans or financial documents. Likewise, I witness signatures on powers of attorney, wills and other legal documents. In recent weeks, almost all of my work has been on loan modifications.

First things first: What is a loan modification? A loan modification is an agreement between lender and borrower to adjust the terms of a mortgage. This is generally only done on primary residences for borrowers who are considered to be at risk of foreclosure. A loan modification is not a refinance. It is a not a new loan—it is modified terms to the original loan—generally at a loss to the lender. The lender’s two opportunities are to cut you a deal, or to take the house and risk the already flooded market with the home.

Second: Who provides loan modification services? Practically anyone. This is the latest craze in the financial and real estate world, and a service called “loan modification assistance” is being provided by practically any kind of real estate or financial organization for a fee. However, in the purest and truest form of the matter, a loan modification is only performed between the borrower and lender.

Loan modifications can be performed by individuals, working direct with their lenders or a non profit debt relief agency or a government lending or housing agency (such as HUD, Fannie May or Freddy Mac or Indy Mac).

Several major mortgage providers including CitiGroup, JP Morgan Chase, Countrywide, Nationwide and Bank of America have launched “homeowner retention” programs on their Web sites.

Attorneys and firms calling themselves “legal services” or “real estate services” (which in my experience are sometimes neither) may offer to do this service for a fee ranging from $100 to $5000, and often the fee is collected up-front without a guarantee of services to be provided. Their only guarantee is that they will contact the lender on behalf of the borrower, and they will not guarantee the result.

Whether you choose to pursue a mortgage loan modification yourself, or use a fee-based service, you should know in advance that there are likely to be some requirements:

You must be in arrears and unable to pay your debt but showing good faith effort to do so.
You must be able to demonstrate a hardship. Owning a home in excess of your ability to pay isn’t a hardship. Sudden disability or loss of employment or a serious illness is a hardship.
You’re going to have to show that you will be able to meet the financial obligation in the future.
You’re going to have to show your cards. And your budget, the good the bad and the ugly. They’ll want to see your bank statements too. If you bought Superbowl tickets or just took a cruise—you don’t have a hardship—you’ve got a bad case of confused financial priorities.

If you find yourself in a position where you fear the loss of your home, I encourage you to work directly with your lender first—or with a government program like HUD. A good second step may be to have an experienced mortgage attorney look at your existing loan documents to see what opportunities you have. If, for instance, you did not receive truth in lending documents or the notice of right to cancel you may have some grounds to get a better term from your lender.

If you feel like you need to use professionals, you should contact your state attorney general’s office to see if the provider you would like to use is licensed in your state or if any complaints have been made against them. Likewise, check with the Better Business Bureau at www.bbb.org. Licensing rules for these modification companies ranges wildly from state to state, so the Attorney General’s office will be able to tell you if there are actions pending on the issue and or what agency in your state regulates this practice.

Several states, including Washington and California have issued warnings about fraudulent practices in the loan modification business. The Federal Trade Commission has published a warning about foreclosure rescue scams. As with any other service, be a smart consumer and know your provider.

Microcredit pioneer: Economic crisis is good

2009-02-09T09:09:00.000-08:00

Last week at The George Washington University, microcredit pioneer Dr. Muhammad Yunus spoke about the financial crisis and creating a new normalcy that benefits the poor. I just came across this YouTube clip from the World Economic Forum at Davos. Here Dr. Yusus echoes many of the same ideas.

Yunus calls the current economic crisis "good" and "exciting" because it gives us an opportunity to create a "new normalcy." He says we should redesign the whole financial system so it is inclusive for all people. We should also create new types of business to change the world - social businesses. Through this, he believes, we can create a world without poverty, hunger and disease.

Personal finance in a "refreshing" new light

2009-02-07T12:04:00.000-08:00

Like mission control for your money, Mint finally puts all of your financial information in one place. And did I mention it’s free?

In less than an hour I was able to link with my sixteen cash, investment and loan accounts to Mint. In just a couple of hours I had classified my previous 90 days of transactions into spending and budget categories.

After that initial investment of time, Mint.com has proved again and again to be well worth the effort. I spend about ten minutes a week classifying the receipts when I put them in the checkbook ledger, and I’ve been able to stick with it.

Once all of my spending was coded into categories, I was able to set up a budget. I could even compare to similar mint.com users (anonymously) with others in my geographic area. Now when I approach my budget cap I receive a (optional) text message to my mobile phone and an email warning.

Three months later, I’ve twice slashed my food budget in half without making a conscious effort to do so. Just knowing what we’re spending helps control costs. Thinking of ordering desert? If you’re an iPhone user, you can take a look at your ‘dining out’ budget on the spot and see if you’re in a place for that splurge.

Mint also continues to get better all the time. Thanks Mint, for adding asset trackers this past week. For those of us whose assets are tied up in real estate equity, cars or concert posters, it’s nice to open Mint.com and see a positive number at the bottom of the sidebar under “net worth.”

Mint.com also offers a feature for those of us that may need to reevaluate our financial choices. The free software is free for a reason. There’s some sponsorship to Mint.com. It’s nicely confined to an extra tab and not forced on you via popups or offensive emails. It looks at your spending and savings habits and suggests products that may be a better fit. Some of these I’m even considering switching to.

Mint's interface is so easy to understand and easy to read that yesterday, when my fourth grader came home and said she'd learned about "good and bad kinds of interest" in math class we opened up Mint for clearer examples of interest at work for and against our family's budget.

If Mint.com is reading, I do have a few suggestions for improvement. However they are so minor that I hesitate to mention here for fear anyone may be discouraged from trying Mint.com for themselves.

In the “spend space” I would like to see an “all spending” category added. I want to see historically how I’ve reduced my spending month-to-month since joining Mint. I know I have, but the charts are psychologically rewarding.

I’d love to see an application that downloaded the value of the stack of savings bonds I have stashed in a safe deposit box. I know that the treasury offers an app online to valuate class EE bonds with the serial numbers. It would be great to be able to store my bond info there too. But don’t bother if I’m the only person who still has bonds.

Who wouldn't love to see an online bill paying option come to Mint one day? I go to mint to see when my credit card bill is due and how much I should pay towards it. It would be really nice to pay it from there.

I recommend Mint.com without reservation, especially for those like me who’ve struggled with maintaining their household budget or tracking their spending. We all know we should—-but it’s easier said than done. Give it a shot—you have nothing to loose. I’m feeling Minty. Are you?

Note: Mint isn't the only player in this business. Wesabe is similar. My review of Wesabe will be on its way to Prosper Lending Review shortly.

Jessica Ward is a freelance writer based in the Seattle area.

Muhammad Yunus speaks at George Washington University (transcript)

2009-02-05T08:16:00.000-08:00

Last night Muhammad Yunus spoke to a sold-out crowd of 1400 at George Washington University. Earlier in the day he visited visited with the Federal Reserve Chairman Ben Bernanke and the International Monetary Fund. He spoke about those visits as well as his recent trip to the World Economic Forum at Davos.

Yunus spoke for about 30 minutes then took questions from the audience. The event was hosted by the university and Hooks Books. Yunus' newest book, Creating a World Without Poverty: Social Business and the Future of Capitalism, was just republished in paperback with new material and he stayed to sign copies.

The following are my notes from his speech and the question and answer period which followed. It is not an exact transcript. I paraphrased some and couldn't hear everything, but this should give you a pretty good idea of the tone and content of his message.

Good evening.

I didn’t think there would be such a big audience here.

I thought everyone in this town was busy doing the bailout package. (laughter)

They wouldn’t have time to come here.

I had a good day today. I spent the whole day today here starting out with a meeting with Fed Chairman Bernake. I did that to update him about the work we have been doing in this country.

This is my second visit with him. I met him in October 2007 and at that time I was trying to explain the importance of microcredit to him in the USA. He knew all about microcredit. I thought we should start a microcredit program in this country – a prototype which could be expanded later. And he gave all his support. Go right ahead. Any support you need from us we will give it to you. We talked about creating a legal home so that we can use that legal home to create an organization. It is important that we have the legal ability to take deposits. If we can take deposits then it becomes easy to raise money.

We created a program in Queens last January. [see Jessica's recent report about Grameen America] At the inauguration of the program there were lots of journalists. One journalist asked why we chose New York City instead of the villages like in Bangladesh. My answer was we deliberately choose New York City because it is the capital of world banking. New York City does not, however, bank with its neighbors. The people that live there do not have access to financial services. It is important to have a small example to break fear. We follow the same principles – five women forming a group, weekly meetings. The average loan size is $2200. Repayment is 99.3%. This provides an interesting contrast. The women in New York take loans, without collateral, without any lawyers and they pay back every week. For one year they have been doing it.

Then the big banks. (laughter)

I remember my first encounter in 1976 with the bank manager. He kept trying to convince me the bank couldn’t loan money to the poor because they were not credit worthy. Now I think it is a good time to ask the question – who is credit worthy? (applause)

And then I went to IMF [after visiting with Ben Bernake today]. I also recently went to [the World Economic Forum] at Davos…I took the same message to IMF. The deep [economic] crisis is also exciting. It is an exciting opportunity to create a new normalcy. When we get out of this crisis what kind of normalcy will we have – the old normalcy or something new? Please make sure, today, right now, that we create a new normalcy. People wonder what this new normalcy will be. The financial system will be built in such a way that in this country there will be no payday loans. (applause) People can go to the bank and borrow money without paying 500%, 700%, 1000% interest. It is such a disgrace to see payday loans all over the cities in the United States. What a gaping hole the banking system has left behind.

The new normalcy will be that everyone in this country will have the right to open a bank account. There are millions of people without a banking account. To get a check cashed you have to go to a checking company which takes a large percentage of the check…nobody should be denied service.

There will no longer be a financial apartheid where people are denied service. You cannot say anymore that it cannot be done. Why not create a financial system that works for everyone?

We deliberately created a system that is focused on the beggars. [More on the Grameen beggar program.] We have 100,000 beggars in the program. It is not complicated. All we do is go to the beggars, talk to them, and see how they make their livelihood. We suggest to them –as you go from house to house will you carry some merchandise with you? Some food, candy or toys for the kids. Give people options – let them buy from you. We make it sound very easy – you are going there anyway. They immediately see the point. And we started giving money to them. We started four years ago. In those 4 years more than 11,000 have stopped begging. (applause) They are now successful door-to-door salesman. Some are personal shoppers…the other 90,000 are part-time beggars mixing begging and sales. They are very smart. When you talk to them they explain which houses are good for selling and which are good for begging. They never went to business school but they understand market segmentation. (laughter and applause)

Everyone has an ability. It doesn’t matter if you are a beggar or a big businessman – everyone has an ability. The one who starts at the bottom struggles and cannot move up. Some do not even know they have ability. Everyone carries such wonderful gifts inside of them – gift of creativity, gift of innovation, gift of entrepreneurship…

I talk about this when I see the differences in the families of Grameen members. We give them loans to continue with higher education. We have students in medical and engineering schools. Students whose parents never went to school…

Who creates poverty? The poor do not create poverty. Poverty is created by the system. The system we designed. The system we work with. That’s what creates poverty. It is not nature. It is the exact opposite. It is artificial. People have unlimited potential but we don’t go that way. All these policies and concepts that we promote [create poverty].

Why should financial institutions make up their mind they cannot do business with you? It doesn’t make sense. Let us now decide who is creditworthy.

One concept I try to explain in the book is the concept of business. One interpretation of business is profit maximization. We interpret human beings in such a narrow way, as if human beings are money making robots. Human beings are so much more than that. There is selfishness in us but we also have selflessness.

…Why cannot we create another kind of business? A social business. A business where our goal is to change the world, not to make money. If we give money to charity the money goes and never comes back. With a social business the money recycles and with each iteration produces more benefit at every turn.

We have created several social businesses. We created a plan to create yogurt – a social business. We put the nutrients children need in the yogurt and make it very cheap so everyone can buy it. Experts say if a child eats two cups of yogurt each week for 8-9 months a malnourished child will become a healthy child. In a profit making yogurt company, the CEO would ask how much money we made this year and how we can make more money next year. In a social business the CEO will ask how many children got out of malnutrition this year and how many more children can get out of malnutrition next year.

Another social business [we created is] a water company. Bangladesh has a serious water problem. Almost half the water is poison. We created a company to create safe bottled water. It costs one penny for four liters so everyone can afford it and everyone has safe water. The social objective is to bring safe water to the people.

We recently had a discussion with a major shoe company about how to create a social business. You create a motto. And you believe in it. That motto is that nobody in the world should go without shoes. And make it happen. Yes, you can make shoes for the poorest at a low price. Keep the cost under a dollar with your brand name. That would send a big message. And continue to go down [in price] and never come up again. And make it a green shoe so that no material in the shoe will make any kind of pollution problem.

And another company [that came to us] is a car company. They want to do a social business. We gave them a challenge – why don’t you make a very cheap car. And not only that – base it on a green engine. It will be a multi-purpose engine. You can take it off and use it for irrigation or to generate electricity or to use for a boat. They are working with designers and engineers to see if they can do that.

Health is a big problem – not only in this country but in every country. The bottom half do not have access to health care – private or public. Medical science can be applied to help people have good health. A health care social business could be created to give everyone access to health care.

So, if you change your concepts there is no reason people should be poor. If we block that road it cannot come. Then, no poor.

Poverty does not belong in human society. Poverty belongs in a museum. And that is where we should put it and it will stay there. (applause)

Questions:

Is it harder to implement microcredit in the United States than in Bangladesh?

It is harder in the United States due to the legal structure. Welfare laws require the poor to report each dollar they earn so it can be deducted from their check. It does not make sense. If you make a dollar the government should match you with a dollar.

How do you approach poor women who are reluctant to become involved in microcredit because they do not believe they have the skills or potential to become entrepreneurs?

The real trick is to create an example. You cannot change their mind right away. If you can create one example to break the fear then the others see that. Then everyone becomes curious – how did she do it? I can do better than her.

What advice would you give to a group of George Washington students here who are trying to create a social business?

Young people like you can start a business. If you cannot start one, then design one. Look at the problems and decide which one you want to solve. For example, set a goal to bring 100 people out of welfare. And design a solution to the problem. At first it may seem impossible but you can do it. Microcredit seemed impossible but now it looks easy. If you can get 100 people out of poverty then you can get millions out of poverty by planting that seed.

What abuses do you see in the microfinance system?

You can say microfinance and not do microfinance. Some require collateral. Some due not target the poor. Some microfinance organizations charge exorbitant interest rates – rates similar to loan sharks. Loans should be for income generating activity. Some give loans for consumer goods such as refrigerators and televisions. This is not microfinance.

In your book you propose a rating system to determine which ones help the poor and which ones don’t. In the year since you wrote the book has anyone come up with such a system? [note: this is my question]

Oh yes. A big organization is coming up with that very system. It will tell you exactly what interest rate is charged, conditional fees and so on. Yes, we will start seeing the results of that from this organization.

What is the best way right now to determine the best organizations to contribute money? [my follow-up question]

One way would be to contact that organization to choose which one you want and they will give you the results and then you decide which ones you want to give your money to.

I run a microfinance organization here in DC. It seems the lack of transparency is one of the biggest challenges in our financial industry and particularity in microfinance. I understand Grameen has a very high repayment rate. How does Grameen calculate repayment rate?

If you do not pay back your loan in the period in which it is due then you are overdue. This is all explained on our website. The definition which we use to define overdue is explained there.

What are the edges between commerce and the ecosystem?

We need to figure out how much of our resources are for our generation and how much is for future generations. We need to spread our resources over as many generations as possible.
The real objective is to make the world safer than we found it. And the next generation will make it safer.

Grameen Dannon is a small company. The total investment is less than $500,000. We designed it as a social business. When we started I asked what kind of container we would be using. They showed me. It was plastic. I told them we did not want plastic in a social business. They were surprised. They told me they use plastic all over the world. I told them we want a biodegradable material. They said they did not have a biodegradable material. I told them they better find it. (laughter and applause)

So, about three months later they came back. They were very happy they found a biodegradable material to use in the cups. I asked what it was. They said it was cornstarch and they found it in China. It looks beautiful. I asked if I could eat it. They said why would you want to eat it? I said because poor people are spending money on it. They don’t want to waste money. Why can’t you make edible cups? And put nutrition in it? People will eat the yogurt and then eat the cup. And they could not figure out how that could be. I told them when I get ice cream I get an ice cream cone. I eat the cone. They said this is not ice cream. I told them the scientists need to work on it. They told me it will take a year. I told them they have six months. So, they are working on it.

You have to raise the question. The scientists in Paris are very happy to have the challenge.

Additional coverage: The GW Hatchet

Classifying microcredit programs

2009-02-04T14:16:00.000-08:00

In Creating a World Without Poverty: Social Business and the Future of Capitalism, Muhammad Yunus laments the return of moneylenders who have ignored the original intent of microcredit – to help the poor.

Here is an excerpt from the book where he describes the problem:

Microcredit is supposed to describe loans offered with no collateral to support income-generating businesses aimed at lifting the poor out of poverty. Yet today there are many organizations that call themselves “microcredit” programs that offer loans to people who are not poor, that require collateral, and that are used primarily for consumption rather than income generation. There are even “microcredit” programs that are generating enormous profits for investors by charging interest rates as high as 100 percent or even higher!

Under the circumstances, we really don’t know what we are talking about when we talk about microcredit. I think it is time we classify microcredit programs according to clear, consistent categories. Here are the categories I would propose:

Type 1: Poverty-Focused Microcredit Programs
These are poverty-focused, collateral-free, low-interest microcredit programs. Grameen Bank was created to provide this type of microcredit. Type 1 programs charge interest rates that fit into one of two zones: the Green Zone, which equals the cost of funds at the market rate plus up to 10 percent, and the Yellow Zone, which equals the cost of funds at the market rate plus 10 to 15 percent.

Type 2: Profit-Maximizing Microcredit Programs
These are programs that charge an interest rate higher than the Yellow Zone. They operate in the Red Zone, which is moneylenders’ territory. Because of the high interest they charge, these programs cannot be viewed as poverty-focused but rather are commercial enterprises whose main objective appears to be earning large profits for shareholders or other investors.

This classification may be adjusted for special situations, such as when high salary costs make operating expenses unusually heavy. And these principles will not apply where the microcredit organization is owned by the borrowers.

However, I think the secretariat for the Microcredit Summit Campaign, which maintains the database of all microcredit programs, should classify programs according to a system like the one I propose. What’s more, I believe that the Microcredit Summit Campaign should include only Type 1 programs, since only these contribute to the campaign’s goal of using microcredit to help eliminate global poverty.

Yunus' book was published more than one year ago. I have not been able to find a rating system such as the one proposed for microcredit organizations. If the Microcredit Summit Campaign has made such information available, I cannot find it. Another organization, mftransparency.org, claims to be the "venue for the Microfinance industry to publicly demonstrate its commitment to pricing transparency, integrity and poverty alleviation." They launched in the summer of 2008 but it does not appear they have any publicly available data.

Does anyone know if the rating information requested by Muhammed Yunus is available on the web in a transparent manner yet? If I get the chance, I'll ask him tonight when he speaks at George Washington University.

Kiva launches API for developers

2009-02-04T11:23:00.000-08:00

Kiva just launched an API for "builders, mashers, and other creative types looking to make a difference in the world through loans to the working poor." From their announcement:

We’re brimming over with excitement here at Kiva Headquarters because today we get to introduce you to the Kiva API. We’ve been working hard over the past 4 months, crafting this interface so that anyone with a bit of software savvy can help us create new applications, tools, and features for the Kiva lending community. All you need to get started is a bit of instruction – the Kiva API is completely open and no developer registration is required to use it.

The Kiva API begins as a set of RESTful web services, focused primarily on the tasks of fetching public data from Kiva. For example, here’s are some of the things you can request through the API:

all of the loans at Kiva currently raising funds
all of the entrepreneurs from Uganda and Peru which have fully repaid their loans
the latest lending activity on Kiva
financial nitty-gritty for any of our loans
the list of loans made by any one of Kiva’s lenders with a public lender page

All of this data is delivered with well-formed computer-friendly markup (e.g. JSON or XML) making it easy to integrate into applications. And, this list is just a start. Keep up with us here at build.kiva.org as we post news about new API methods and tools for development. Eventually, we intend to make it possible to recreate the entire lending experience on top of the API!

So what will you build? If you’re at a loss for ideas we’ve started a running list of many of the great ideas we’ve heard about so far. Here are a few:

an application for iPhone or Blackberry that let’s you keep up with Kiva on the go
a service where lenders can register for alerts on new entrepreneurs they want to fund
integration into a social network where friends can engage around each others’ activity and loan updates on Kiva
a map that simulates the realtime transfer of funds across the globe

Read the rest of the post here.

Prosper has an API that developers have used to create a variety of applications.

Philanthrocapitalism: do well by doing good

2009-02-04T08:32:00.000-08:00

Tonight I'm going to see Dr. Muhammad Yunus, microcredit pioneer, speak at George Washington University. [Update: Transcipt of speech] Over the past few days Yunus was at the World Economic Forum and has spoken with numerous journalists. Here are a few of the news articles mentioning Yunus over the past few days.

More than 100 Million of World’s Poorest Benefit from Microcredit (Microcredit Summit Campaign) - "More than 106 million of the world’s poorest families received a microloan in 2007, surpassing a goal set ten years earlier, according to a report released today by the Microcredit Summit Campaign. Microloans are used to help people living in extreme poverty start or expand a range of tiny businesses such as husking rice, selling tortillas, and delivering cell phone services to remote villages. 'This is a tremendous achievement that many people thought was far too difficult to reach,' said Nobel Peace Prize laureate and Grameen Bank founder Muhammad Yunus who was present for the announcement. 'What makes it even more remarkable is that loans to more than 100 million very poor families now touch the lives of more than half a billion family members around the world. That is half of the world’s poorest people.'”

Dr. Yunus' lone voice at Davos reverberates (The Daily Star, Bangladesh) -"His remarks, made against the backdrop of the on-going global recession, drive the point home that for all the bailouts that governments have been planning for global corporate business not much can be expected if the plight of the poor is ignored."

Philanthrocapitalism: Yes We Can (Huffington Post) - "What cause, what movement brings together Tony Blair and Jet Li, Bill Clinton and Bill Gates, Muhammad Yunus and Sir Richard Branson? In a word (albeit a hard-to-pronounce word), it is philanthrocapitalism....philanthrocapitalism is about doing well by doing good. Both Yunus and Branson enthused about how businesses should embrace social causes as a profit-making strategy, because the money earned by harnessing the profit motive can help achieve change faster, and more sustainably than old-fashioned charity alone."

The rich can save the world: we should let them (Times Online) - "Social entrepreneurs such as Dr Yunus tend to find that their bright ideas get nowhere inside state bureaucracies, whereas they can flourish with the support of business and philanthropy."

Microlending: Macro solution? (Cincinnati.com) - "...investment remains healthy in at least one area, a place where you might least expect it - microcredit banks making small, short-term loans to very poor people to help them start small, money-making enterprises and lift themselves out of poverty. It also might be a part of the solution for middle-class America. ...in a conference call Monday with journalists, Yunus and other officials of the Microcredit Summit Campaign announced that they have reached 106 million poor families worldwide. About 97 percent of loans have been to women."

Grameen Bank: Giving Credit Where Credit Is Due (CNBC) - "The problem with capitalism, Yunus tells Fast Money, is its distinction between companies pursuing profit and charities pursuing good. His bank model operates with corporate efficiency, but pumps profits back into social objectives."

World Economic Forum concludes on a sombre note (SwissInfo) - "'It's not just disappointment and frustrations,' said Nobel Peace Prize winner Muhammad Yunus said of the meeting's atmosphere. 'This is the greatest moment we have because things need to be changed, it's as simple as that. We don't want to go back to the same normalcy that we're coming from. We will create a new normalcy which will stay and keep on moving and change the world.'"

Dr. Muhammad Yunus to speak on microcredit at George Washington University

2009-02-02T09:38:00.000-08:00

Dr. Muhammad Yunus, founder of the Grameen Bank and a pioneer of microcredit, will speak at George Washington University in Washington DC on Wednesday. I have a ticket and a bunch of questions I'd love to ask if I get a chance. What would you ask?

Hooks Book Events presents Dr. Muhammad Yunus
2006 Nobel Peace Prize Winner

The winner of the Nobel Peace Prize outlines his vision for a new business model that combines the power of free markets with the quest for a more humane world—and tells the inspiring stories of companies that are doing this work today.

In the last two decades, free markets have swept the globe, bringing with them enormous potential for positive change. But traditional capitalism cannot solve problems like inequality and poverty, because it is hampered by a narrow view of human nature in which people are one-dimensional beings concerned only with profit.

In fact, human beings have many other drives and passions, including the spiritual, the social, and the altruistic. Welcome to the world of social business, where the creative vision of the entrepreneur is applied to today's most serious problems: feeding the poor, housing the homeless, healing the sick, and protecting the planet.

Creating a World Without Poverty tells the stories of some of the earliest examples of social businesses, including Yunus's own Grameen Bank. It reveals the next phase in a hopeful economic and social revolution that is already under way—and in the worldwide effort to eliminate poverty by unleashing the productive energy of every human being.

Muhammad Yunus, a native of Bangladesh, was educated at Dhaka University and was awarded a Fulbright scholarship to study economics at Vanderbilt University. In 1972 he became head of the economics department at Chittagong University. He is the founder and managing director of Grameen Bank, a pioneer of microcredit, an economic movement that has helped lift millions of families around the world out of poverty. Yunus and Grameen Bank are winners of the 2006 Nobel Peace Prize.

Update: Transcipt of speech

Harvard Business Review: P2P Lending is 'breakthrough idea' for 2009

2009-01-30T12:12:00.000-08:00

Harvard Business Review has named P2P lending as one of the top 20 breakthrough ideas for 2009. John Sviokla, vice chairman and director of innovation and research at Diamond Management and Technology Consultants, predicts p2p lending will be one of the "most important financial-services innovations in the coming decade."

Here is an excerpt from the Harvard Business Review:

...peer-to-peer lending is cheaper than consumer credit. Lending Club’s rate for the best credit risks is 7.88%, whereas the bank rate for personal loans, on average, is over 13%. A credit-worthy borrower gets the money faster and for 5% less.

Why now? First, the internet and social networks enable peer-to-peer interaction on an unprecedented scale. Second, electronic mechanisms for assessing potential customers are emerging. Lending Club starts with traditional credit scoring and adds a proprietary assessment of customers’ reputations within their social networks. You may think of Facebook as fun and games, but important underwriting information is hidden in there for those who know how to look.

So what? A profound secondary effect of the down market will be an increase in the availability of peer-to-peer finance and its convergence with traditional lending. My bet is that mainstream investors and banks will cherry-pick the best investors in Lending Club and other systems – reducing risk by tapping their superior credit-assessment capabilities – and fund them to grant more and bigger loans. Moreover, within five years every major bank will probably have its own peer-to-peer lending network.

If innovative legislation were drafted to allow peer-to-peer risk coverage, similar transactions might begin to flourish in the insurance market. Precise knowledge of local conditions would allow individuals to band together in order to underwrite the cost of insuring properties in safe neighborhoods or to make insurance more widely available in higher-risk neighborhoods.

The current economic constraints will only accelerate the growth of these new entities. I predict that they will be among the most important financial-services innovations in the coming decade.

To borrow or lend through Lending Club click here.

More on Swap-A-Debt: Sometimes lenders can't find cash either.

2009-01-29T20:36:00.000-08:00

This week, on behalf of Prosper Lending Review, I contacted Edward DeFeudis, Chairman of Swap-A-Debt (OTCBB: SWPD) in hopes of scheduling an interview with Mr. Defeudis or Marco Geribaldi, the company’s President.

I can verify that Tom’s suspicion about Swap-A-Debt being some time off from a real launch is correct.

When I contacted the company’s office, I was met with a confused “Hello” followed immediately by “How did you get this number?” As it turns out, I’d reached the company’s chairman himself. I reminded Mr. DeFeudis that the officers of publicly traded companies are supposed to be public record as a matter of SEC regulation and I was very impressed that he answered his own phone. It wasn’t long before I began to suspect his might be the only phone in the operation. (Company president Marco Geribaldi’s phone rings only to a busy signal).

After explaining my purpose was to obtain an interview for Prosper Lending Review about the Swap-a-Debt Web site that we discovered and announced a few days ago, a very pleasant Mr. DeFeudis told me that “nobody knows about us, and we’d like to keep it that way for a little while.”

I pressed further asking about the recent launch and how many loans have been offered on the site thus far. Mr. DeFeudis informed me that the site “works” but that no loans have been offered at this time and that they’re not exactly open for business as they’re in the middle of a Web site redesign and working out some “legal things” which he didn’t seem to want to explain.

Clearly, Mr. Defeudis isn’t ready to promote Swap-A-Debt, even though we’re all excited to hear about it. I sent him my card and told him to call me when he’s ready for some publicity because all of our readers want to know the scoop.

In the meantime, my curiosity piqued, I’ve decided to read through the last couple of SEC fillings via EdgarOnline. Here I’ve learned some fascinating stuff.

Interesting excerpt from the balance sheet revision (October 31 un-audited to January 16, Audited)
BALANCE SHEET DATA: As of October 31, As of January 31,
2008
(Audited)
2008
(Unaudited)

Current assets $ 199,287 $ 384,360

Total assets $ 305,660 $ 494,398

Total liabilities $ 355,178 $ 1,661,583

Stockholders’ equity (deficit) $ (49,518) $ (1,167,185)

Under “liquidity and capital resources” the company’s report states:
Our auditor had determined that based on our financial condition there is substantial doubt as to whether we can continue to operate as a going concern.
The report also says: “In addition, we may not be able to raise additional funds on favorable terms, if at all.”

Swap-A-Debt Stocks are trading on the penny stocks board at an all-time low of $0.11, making this two-man operation worth an impressive $5Million. Not too shabby considering after opening nearly a year ago, they have yet to commence operation.

We’re waiting to see what Swap-a-Debt has to offer us when they are ready to launch for real this time.

For your reading enjoyment, here are my sources:
http://idea.sec.gov/Archives/edgar/data/846377/000121390009000105/fs1a4_swapadebt.htm

A very interesting article about Swap-A-Debt company President Marco Geribaldi’s eclectic and impressive work history, from advising members of the Presley family about Graceland operations to IBM and Helicopter companies. http://www.aviationtoday.com/rw/pressreleases_rw/25639.html

The SEC’s Warning about Microcap Stocks: http://www.sec.gov/investor/pubs/microcapstock.htm

Last week in review, and what to watch for this week.

2009-01-26T12:56:00.000-08:00

1/21/09: Pertuity Direct Launches

1/22/09: Swap-A-Debt Launches
1/23/09: Liberia gets its first microfinance bank

1/23/09: Peer to peer loans make the Wall Street Journal

1/24/09: Some complain about Pertuity Direct using a “hard pull” on a borrower’s credit history.

What to watch for this week:
More information on Swap-a-Debt’s launch.
Exciting news from Microplace!