Thursday, January 22, 2009

New p2p lending company Swap-A-Debt launches

A couple weeks ago we discovered a new p2p lending company seeking regulatory approval from the SEC. Apparently Swap-A-Debt received approval. Without a press release or formal announcement, the site is now live.

The quiet launch may be intentional - the community link does not work and there is a noticeable lack of legal documents and agreements which typically accompany financial sites. There are six borrower listings but all appear to be test listings. I attempted to register as a lender but did not receive a confirmation email. I was also unable to find a customer service phone number or way to contact the company through the site.

Here is their pitch to borrowers:

If you need a personal loan, a wedding loan, a small business loan, a debt consolidation loan or a school loan, Swap-A-Debt is your answer. Our Lender network makes the process very painless and very simple, while offering rates that are far lower than bank rates.

And the pitch to lenders:

On one hand, your bank pays you 2% interest on Your money; on the other hand, the same bank lends YOUR money to others at 8% to 18% interest rate. It seems a bit unfair. Don't you think? Swap-A-Debt makes the lending process simple and gives you the power to make well-informed decisions about whom to lend, so you can act as your own virtual bank! Use any Compound Interest Calculator, and you will see that in a 5-year period you can get 600% more on your money when you join Swap-a-Debt's Lender network.

The site touts five main features:
  • Lend and Borrow Money on a peer-to-peer basis - this p2p lending action appears to be much like Prosper's auction style format. I was unable to find any mention of fees. Borrower's credit profile information is visible to all visitors unlike Prosper which only shows this information to registered lenders.
  • Credit Rating - According to Swap-A-Debt, their credit rating system is "one of the quickest, most advanced, easy-to-use credit access systems in the industry." You can access information credit report information from all three major credit bureaus.
  • Credit Doctor - This service is advertised to be able to settle collections and judgments for pennies on the dollar, remove inaccurate items from your credit report, increase your credit score and improve your credit. This service is "guaranteed" to improve your credit. The fee arrangement for the credit doctor service can be found here.
  • Send Money - This service appears to be similar to PayPal.
  • Payday Loan - This service may be outside of the p2p lending arrangement.
Although Swap-A-Debt is now live, it appears much of the functionality will probably be rolled out in the next few days and weeks. It certainly has a "beta" feel.

Swap-A-Debt's filings with the SEC occurred on the same day this month and within days of each other last month. If Swap-A-Debt received regulatory approval perhaps Prosper is not far behind.

Swap-A-Debt is a publicly traded company and trades under SWPD.PK. Marco Garibaldi is the CEO and Edward DeFeudis is the President.

Swap-A-Debt becomes the third p2p lending site to register operations with the SEC ahead of Prosper. Lending Club is the largest and most prominent. Pertuity Direct launched earlier this month.


JessicaW said...

Great info Tom! Will you follow up with us if you get your confirmation email from them? I'd love to know when they're up and running. Thanks

Tom said...

I'm going to follow them closely. It is a pretty amazing accomplishment to get past the SEC hurdle. It closed more established companies like Prosper, Fynanz and Loanio. Given the magnitude of the SEC hurdle I'm a little disappointed in the site right now. Hopefully it will improve quickly over the coming days and weeks.

Tom said...

What states does swapadebt operate in?

I found this buried in the terms of use:

"Loans may only be made to residents of states where licensing requirements are fulfilled or state and federal laws do not require any such licensing. No activity hereunder should be deemed as an attempt to make loans outside of authorized states or country by participating in and offering of products on the Website. Swap-a-Debt and Lenders expressly reserve the right to limit, discontinue, suspend or terminate the offering of any loan product in any specific state through the Websites at any time, without prior notice."

Although you may only use swapadebt in "states where licensing requirements are fulfilled" I cannot find a listing of such states.

Tom said...

I just noticed a small change on the homepage. The pitch to borrowers and lenders has changed. Current pitch:

Need money?

Some pills take your headache away. Swap a Debt takes awkwardness away... the awkwardness of asking, a family member or a friend, for money.

You set the terms, we do the rest.

Got money

We know it's awkward when a friend or family member asks for a loan. But, being a good human is to help others in need. Swap a Debt provides the essentials to facilitate the loan: credit checks, automatic payments, promissory notes, etc. We are with you ever step of the way.

The good news is that they are actively working on their website. Hopefully we will see even more changes soon.