I get a ton of questions from readers who are new to peer to peer lending. There really hasn’t been an up to date and independent resource available where people can find out about the basics of peer to peer lending. Well, now there is.
I have just finished writing a new ebook titled, Understanding Peer to Peer Lending. It is not really the encyclopedic volume suggested by the graphic, it is just 13 pages long, so it is a quick read.
The ebook is completely up to date with statistics that are current through the end of March. There is a lot of new content including sections about the history of p2p lending, why it is becoming so popular, and guides for borrowers and investors.
I intend to be updating this ebook every quarter so there is always an up to date resource for the many new people who want to find out more about peer to peer lending.
If you subscribe to the Social Lending Network via email you should have already received notice about the publication of this book. If you would like a copy then you can just fill out the email box at the top of this page. This will also subscribe you to the regular blog updates via email. Alternatively, you can just fill out the form below with your email address.
Thank you Peter. I find great value in this site, and look forward to reading your e-book.
Thanks Evan. Your company doesn’t get a mention I am afraid but hope you find it valuable.
Interesting e-book. I did notice something strange though. In your book it says that Lending Club requires that, as an investor, that I have an annual gross income of over $70,000. I do not make anything near that much money, but Lending Club accepted me anyway. Has there been a change in policy? I joined LC in Dec ’10 so it wasn’t that long ago. And I assure you, when I joined, I did not fudge any numbers anywhere.
Peter – No worries. We are actually making good progress with http://www.money360.com. We are flying under the radar for now and closing real estate loans on a fairly regular basis. Grass roots efforts are driving both lenders and borrowers to our site. Private lenders are enjoying 10-11% returns on lower-risk real estate loans typically below 60% LTV….and borrowers are getting loans they cannot get elsewhere. Once we are ready to blow it up, we will reduce the investment requirement and get back in the public eye. I sincerely appreciate the great work you are doing on this site….I find it to be extremely helpful.
@Aaron, this is the official line from Lending Club (I think as per regulatory requirements) but it doesn’t look like it is enforced at all. Here is the page: https://www.lendingclub.com/kb/index.php?View=entry&EntryID=113
I never saw it mentioned when I opened accounts, and to be honest I didn’t even know about it until I was researching the ebook. So I wouldn’t worry about it.
@Evan, Great to see you guys are doing well. You have a unique business model that I could really see catching on. Keep me posted. And thanks for your kind words.
@Peter……….It is a regulatory requirement to notify investors that the investment may be potentially unsuitable for them………. due to the fact that it’s classified as a high risk investment. In that regard it’s not that different from investments like real estate partnerships, junk bonds, etc that also have suitability guidelines. I don’t believe that it’s a matter of enforcement but rather a matter of notification. And then there’s the section that allows for investments of $2500 or under regardless of whether one meets any of the requirements,
@Dan, You bring up an interesting point. Because the prospectus for both companies don’t word this as a warning, more of a requirement. But if a requirement is never enforced, then can we assume that it is just a warning? From LC’s prospectus:
In states other than California or Kentucky, investors must either:
• have an annual gross income of at least $70,000 and a net worth (exclusive of home, home furnishings and automobile) of
at least $70,000; or
• have a net worth (determined with the same exclusions) of at least $250,000
In Prosper’s prospectus the above limits are requirements only for investors in ID, NH, OR, VA and WA. Other states (except CA) appear to have no restrictions on Prosper. Curious.
BTW, the $2,500 limit seems to be just for California residents. And here again Prosper and Lending Club have different wording. As you say, this is probably all for the benefit of the SEC and like many things, is not enforced at all (or even mentioned).
Money360.com is something that I follow with interest as I live in California & am curious to see how they evolve. It’s clear that at this time they’re setting the entry bar rather high. I think it’s safe to say that $25 free accounts are NOT going to be part of their future plans to induce investors!
Money360 is a great idea conceptually, and if the legal wranglings can be overcome I could see it being a big part of the future of p2p lending. But yes, it will likely never be for the very small investor. Even if they end up with a $10K minimum investment I see a lot of interest generated from secured p2p loans.
I agree, after all 10-11% on a 1-3 year secured note is pretty damn solid in all scenarios short of a high inflation one.
Hey Peter – Thanks for participating in our first #YakChat. I’m writing a post review of what we learned. Care to e-mail me some points for inclusion? Can you shoot over your P2P e-book too?
thx man,
Sam
@Financial Samurai, I had a good time on the #yakchat. I will send you an email and the latest version of the ebook tomorrow.
Dear Peter,
I owned a mortgage company for many years in OR and Washington and made many personal loans to builders by taking a first position on the property so I am very familiar
to that concept , I have not read your book yet and intend to I believe the concept is
a good idea specially if you are registered as a bank and charge a point to the lender
and a point to the borrower, one more point I would not take on lenders with less then
a 100.000 in cash assets.
Regards Leon