Today is the official launch of CircleBack Lending who are looking to compete with Lending Club and Prosper in the p2p lending industry. I first wrote about them back in February as they were putting their platform together.
Borrowers in Georgia and New Mexico can now apply for loans on their platform. However, all the initial loans will be funded internally by CircleBack, they are not open for investors just yet. Having said that, I spoke with Michael Solomon, their CEO and Co-Founder, today and he said they will be open to a small group of accredited investors for beta testing once they get through this initial testing period. Some time in the fall they expect to open their investing platform.
Here is a quote from their press release:
“We are launching at a perfect time,” says CEO and Co-Founder Michael Solomon. “Our market needs a new source of high-quality consumer loans to meet skyrocketing demand from professional investors.”
CircleBack have no plans to file an S-1 registration which means they intend to target only accredited investors. Regardless, with loans disappearing from Lending Club and Prosper in record time another option for any kind of investor is welcome news. It will be interesting to see how this company develops.
I like the looks of this site, but I am not convinced that they’ll have any competitive advantage over my Lending Club investments. Does anyone else see something in particular that should tempt me (beyond diversification)?
I have been seeing a trend toward accredited investors throughout the P2P network in general. Maybe working on a state-by-state basis to get approval for unaccredited investors is just legally too expensive. I’ve noticed this on Mosaic, too (www.joinmosaic.com). Although everything they put up for unaccredited investors in California and New York sells out, they are also putting up investments open only to accredited investors. The one up right now looks great if you think LIBOR will spike down the road – it’s a secured debt lending opportunity for a solar installation on military housing at Fort Dix. Looks great to me.
-Frugal J.
As I said in the article what I think Circleback can bring to the table is increased supply. There is a severe shortage of borrowers today and the more places investors can go the better. It remains to be seen what competitive advantages Circleback has over Lending Club and Prosper.
As for your accredited investors comment the trouble is that offering investments to the general public requires expensive legal and regulatory filings. It is just not cost efficient for most companies.
Thanks, Peter! Good perspective.