When Nansee Parker needed a loan to start a motorcycle shop with her mechanic husband, she didn’t have time to wait for banks. Instead, she sought peer-to-peer financing through Lending Club.
"In the olden days, small banks loaned to mom-and-pop shops; this is the modern-day small bank,” she told KGO San Francisco.
Peer-to-peer financing is a way for entrepreneurs to find investors on a grander scale. Individual lenders can invest as little as $25 and as much as $30,000. They reportedly stand to make higher returns than traditional investments provide; however, the risk is also higher – they could lose it all.
Parker was able to apply online and get approved within a few days. "I wrote an essay of why I needed the loan, kind of some background on the business," Parker told the news station. Then 13 days later, Parker had raised $20,000 from 225 anonymous investors from Hawaii to Rhode Island.
"In the last year the business as a whole is up about 125 percent year over year," Lending Club CMO Scott Sanborn says, adding the average investor can get returns of about 9 percent.
Since March, Prosper and Lending Club have made 63,000 loans totaling about $475 million. To check it out, visit the organization's website at www.lendingclub.com.
Posted by Holly Wagner