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Student lender CommonBond (profiled here last year) has created a first in the p2p lending industry: an adjustable rate loan. Adapting the popular adjustable rate mortgage loan from the real estate industry their new 10-year loan product has both a fixed and a variable component.

The CommonBond Hybrid Loan

CommonBond is calling it a “Hybrid Loan” because for the first five years the loan has a fixed interest rate and for the second five years it is variable. I caught up with CEO and Co-Founder David Klein earlier this week to discuss this new product and more.

“The new ‘Hybrid Loan’ was designed to provide borrowers with more options to help them better match their student loan payment goals with their personal financial situation,” said Klein. “It was created based on borrower feedback”.

The lowest interest rate on a 10-year fixed interest rate loan at CommonBond is 4.74%. On the hybrid loan the lowest fixed interest rate is 4.14% but that rate only remains fixed for the first five years. After that time the loan’s rate is pegged to the one-month London interbank offered rate (LIBOR). The interest rate could rise to as high as 10.99% over the last five years of the loan.

So the borrower is certainly taking a risk here given that it is highly likely in five years time that interest rates will be higher than they are now. When I asked Klein about this risk to the borrowers he pointed out that the typical borrower at CommonBond pays off their loan in six to seven years.

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Orchard building out the online lending ecosystem

When I profiled Orchard back in February, the company was just a few months old and fresh off a $2.7 million funding round. But that wasn’t your typical seed round—Orchard attracted the likes of Vikram Pandit, the former CEO of Citigroup and Tom Glocer, the former CEO of Reuters as investors in that round.

While that was impressive, today they have announced a $12 million funding round from a group of A-list players in our industry. These are people with deep histories and intimate knowledge of the inner workings of p2p lending. But before I get to that, a quick primer for those of you who don’t know Orchard.

Orchard Platform traces its roots back to the LendIt Conference in 2013 where co-founders Matt Burton and Angela Ceresnie presented on some of the challenges facing p2p investors. This led them to create the first company devoted to providing the infrastructure that connects institutional investors with loan originators. They started with Lending Club and Prosper and now connect multiple platforms to their growing investor client base. They provide institutional investors with real-time trading and reporting, investment strategy, data analysis as well as access to loan supply.

I caught up with Orchard CEO Matt Burton earlier today to discuss this new funding round and the names that participated.

“We went out trying to get one or two big names into this round,” said Burton. “We had more interest than we expected and we ended up with many big names.”

Who are These New Investors in Orchard?

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Lending Club Reserving Shares in their IPO for Retail Investors

October 20, 2014

Today, Lending Club released an updated S-1 filing for its upcoming IPO. In this document is the long awaited confirmation that Lending Club will be reserving shares in their IPO for retail investors. This is something that has been hinted about before and when I interviewed Lending Club CEO Renaud Laplanche recently on the Lend [...]

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Peer to Peer Lending News Roundup – October 18, 2014

October 18, 2014

During the week I share the latest p2p lending news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here. Short Term Small Business Lending: The Sweet Spot for Investors? from AltFi – I love small business and I also think [...]

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SolarCity Launches SolarBonds Offering Investors a 4% Return

October 16, 2014

SolarCity is the largest installer of solar panels for residential homes. According to their press release yesterday they provide one out of every three solar systems installed in the U.S. To date they have installed around $5 billion worth of solar panels in 15 states and the money for this has been raised from large [...]

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Update on LendIt Europe in London

October 14, 2014

We are now just over a month away from the LendIt Europe conference in London on November 17 and I want to give everyone an update. This is our first European event that builds on the success of the first two LendIt conferences in New York and San Francisco. Registrations are continuing to come in strong. We [...]

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Peer to Peer Lending News Roundup – October 11, 2014

October 11, 2014

During the week I share the latest p2p lending news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here. Wall Street’s siren song lures P2P lenders into treacherous seas from the Financial Times – This journalist thinks that p2p lending [...]

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SoFi Tops $1 Billion, Expands into Home Mortgages and Announces an IPO

October 8, 2014

This week SoFi announced they have crossed $1 billion in total loans issued, a milestone they achieved in just over two years after issuing their first loan. This makes SoFi the fastest marketplace lending platform to achieve that milestone. While that is a significant achievement, what is more impressive is the fact they have done [...]

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LAP25: Jared Hecht and Brayden McCarthy of Fundera on the Small Business Lending Problem

October 7, 2014

Jared Hecht and Brayden McCarthy are two of the smartest young minds in our industry. They are both executives at Fundera; Jared is the CEO and Co-Founder and Brayden is the Head of Strategy and Policy. Fundera is a platform that helps small business owners evaluate different loan options by providing easy access to these options [...]

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Peer to Peer Lending News Roundup – October 4, 2014

October 4, 2014

During the week I share the latest p2p lending news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here. Lenders Disrupt U.K. Finance Funding Borrowers Banks Snub from Bloomberg – Excellent in-depth article on Funding Circle and the changing face [...]

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