Wednesday, October 21, 2009

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

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.

Wednesday, October 14, 2009

Some news from SmartHippo

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

Tuesday, October 6, 2009

PEOPLE CAPITAL LAUNCHES HUMAN CAPITAL SCORE COLLEGE PLANNING TOOL

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.

Monday, September 21, 2009

Green Sherpa Flexes For Competition With Mint/Quicken


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

Tuesday, September 15, 2009

A Note on Note Trading

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.

Monday, September 14, 2009

Mint Selling to Intuit for $170 Million


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

Tuesday, September 1, 2009

Lending Club Reaches Another Milestone

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.

Friday, August 28, 2009

Many Changes at Mint.Com


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.

Thursday, August 27, 2009

Spoke too soon?

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.


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.


Wednesday, August 26, 2009

Review Those Statements! The CARD Act Is In Effect Now

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?

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.

Tuesday, August 18, 2009

Another Peer To Peer Lender in Spain: Lubbus


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.

Monday, August 17, 2009

Comnitae offers P2P Loans in Spain


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.

Saturday, August 15, 2009

Zopa to Re-Launch In Italy

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.

Thursday, August 13, 2009

Lending Club Raises Rates, Prosper Responds by Hearlding Auction

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.

Tuesday, August 11, 2009

Back to School with Peer To Peer Loans

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

Thursday, July 23, 2009

DebtGoal Adds Aggregating Features

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.

Wednesday, July 22, 2009

Where You Can Borrow and Lend With Prosper.com

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


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




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.

Friday, July 17, 2009

Kiva Adds Currency Risk Protection

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

Thursday, July 16, 2009

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


I had the opportunity to hold an email interview with Alan Samuels, Chief Product Officer at People Capital 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

Wednesday, July 15, 2009

P2P Lending Co. NanoFin opens in India

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

Monday, July 13, 2009

Looks Like Prosper.com is On Its Way Back!

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.

Tuesday, June 30, 2009

SacBee article about Peer to Peer Lending

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.

Tuesday, June 23, 2009

Loanio Files S-1 With The SEC



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

Monday, June 22, 2009

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

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

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.

Thursday, June 18, 2009

Movie Review: Maxed Out



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.

Wednesday, June 17, 2009

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


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.

Tuesday, June 16, 2009

Zensah fuels growth with Lending Club loan


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

Tuesday, June 9, 2009

Lending Club: How do you compare?

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?

Wednesday, May 27, 2009

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

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.

Friday, May 22, 2009

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

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.