Dano34, an international student attending Queens College in New York, may soon become the first person to obtain a peer to peer student loan through Fynanz. Fynanz opened their doors to borrowers and lenders one month ago.
In this initial launch phase, borrowing is restricted to students with a primary residence in New York or Florida but Fynanz will gradually open to more states. Although the borrower's primary residence must be New York or Florida, the school borrowers attend can be in any state.
Fynanz purposely launched during a student loan "off season" to ensure they have the technology right and all their systems are tested. "We expect the momentum to pick up in early May and grow steadily through August and September," founder Chirag Chaman said.
So far there is only one open loan request. Dano34 is requesting $2,750 to help pay tuition and purchase a used laptop. His brother, Maverick, is co-signing the loan and has put $150 of his own money into the loan. So far, 14 lenders have funded 54% of the loan.
Fynanz has the difficult challenge of attracting sufficient critical mass to make their loan platform viable - lenders won't sign up if there are no borrowers and borrowers won't sign up if there are no lenders.
In addition, Fynanz has the challenge of explaining their new platform to skeptical students and administrators. Ana Bak, a student and opinion editor for Texas Christian University's newspaper the TCU Daily Skiff recently called p2p lending sites "less credible." Here's an excerpt from her editorial, Person-to-Person lending practices risky.
"...there are faults within the P2P program. The assistant director of scholarships and financial aid said taking a loan with this system would be risky as it is untested.
.... First, the lenders may be giving out loans with less information about the recipients. Second, these type of programs, because they are new, may not be as trustworthy as more established lending companies.
It makes the lending system seem weak and, ultimately, less credible."
Ana Bak does not mention any specific peer to peer loan company. Prosper, the oldest online p2p marketplace, has been around for over two years and made over $133 million in loans. If that is too new for Texas Christian University then Fynanz has a huge uphill battle.