Peerform Making a Comeback With a New Underwriting Model


I first wrote about Peerform over three years ago. They had just launched and were looking to be the number three platform in the industry. But they failed to gain much traction and never established themselves as a viable platform.

But CEO and co-founder Mikael Rapaport clearly does not give up easily. Even though he never attracted the equity funding needed, he never closed his operation. And every few months he would contact me to reassure me that Peerform was still operational and one day they would get some momentum again.

Apparently that day has now arrived. Last month they closed on a new $1 million angel round and they now have a new Chairman, Gregg Schoenberg. I talked with both Rapaport and Schoenberg last month about the reborn Peerform.

Allowing Borrowers Down to a 600 FICO Score

This is the really interesting thing about Peerform now. They have created a new underwriting model that assesses risk in very different ways to Lending Club and Prosper. They call this approach the Peerform Loan Analyzer.

According to Rapaport their underwriting model will take a more holistic approach to assessing risk. Rather than having a strict 660 FICO score cutoff they believe that there are creditworthy borrowers all the way down to a 600 score.

“A borrower with a 620 FICO score does not necessarily mean they are riskier than someone with a 660 FICO,” said Rapaport when I spoke with him recently. “FICO score is not the best measurement for risk anymore.”

Two Products for Accredited Investors

Peerform is open to accredited investors in all 50 states and they have two product offerings just like Lending Club and Prosper: whole loans and fractional loans. Whole loan investors have a minimum investment of $250K, although if you are investing in loans with a $10,000 average (as stated by Rapaport) then most investors will want to put in more than $250K I imagine in order to create a diversified portfolio.

A couple of weeks ago Peerform announced that Looking Glass Investments will be investing in their whole loan platform. Given the supply constraints at Lending Club and Prosper I imagine they will not be the last institutional investor to participate on Peerform’s platform.

Issuing Three-Year Loans

Peerform will be focused on one product for borrowers: three-year loans. The interest rates will range from 7% up to 28% with 16 different loan grades. They are available for borrowers in 23 states with a few more states coming on board soon.

They have entered into a partnership with Cross River Bank, a New Jersey-based bank that is starting to make some inroads in the p2p lending industry. Cross River Bank will issue the loan and then immediately assign it to Peerform in a similar way that WebBank works with Lending Club and Prosper.

Series A Funding is Coming Later This Year

Peerform will need to raise more than $1 million in angel financing if they are to become a serious competitor in this space. And they do plan to complete a more substantial Series A round before the end of the year.

As Schoenberg put it, “We are not cursed by having an overabundance of resources.” That is certainly true but Rapaport also pointed out that unlike other platforms looking to get going they are well positioned to do more with limited resources. They have their entire infrastructure in place; nothing really needs to be added.

With this limited funding Rapaport expects to originate around $5 million in new loans by the end of the year. Once they close their Series A, the loan volume will increase.

Will Peerform Rise from the Ashes?

At this early stage it is difficult to tell whether Peerform will become a strong alternative to Lending Club and Prosper. But their timing is far better now. They will find it much easier raising institutional capital today than in 2011 when they first launched. And the VC firms are very interested in the space right now, more so now than ever before.

Having said that, it will not be easy. But Rapaport has shown tremendous persistence thus far. This persistence will serve him well as he moves Peerform into their second act. I wish the new Peerform team well, I hope they can continue to execute their plan and become a strong player in this industry.

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May. 14, 2014 8:40 am

I read this and wonder if Peerform will try to establish their niche in attracting the higher risk (lower FICO score) borrowers? However interest rates ranging from 7% – 28% does not necessarily suggest that.

I was wondering what had been going on with Peerform. Thanks for the update! Happy to hear they are chugging along.

May. 14, 2014 9:22 am

Thank you for your question. We believe that lower FICO scores do not always correlate to higher risk. With our Loan Analyzer, we are finding great borrowers who may have lower FICO scores but are worthy of getting their loans funded.
The Peerform Team

May. 16, 2014 5:37 am
Reply to  PeerformTeam

What does that even mean? I’m only beginning to learn how to build credit score cards and the related models, so forgive my ignorance. Are you either suggesting that FICO scores don’t correctly weight the variables OR are you suggesting that when combined with additional information not contained in the credit report, the risk ranking differs from just a straight FICO risk ranking? I’ve always seen evidence to suggest FICO is pretty good at POD (probability of default).

May. 14, 2014 10:55 am


Do you think that Peerform is hurting themselves with the $100k Minimum investment for individual investors (I believe it was $50k a few years ago, but they increased it)?

I was about to invest with them, when they emailed me and asked how much I planned to start with, and I replied, “the same amount I start at every new P2P site—$500, and if I like it, I might bring it up to $100k”. I can’t image too many investors investing $100k at a new site (or at least unproven).

Just my 2 cents worth.


Dan B
Dan B
May. 14, 2014 10:56 am

It’s pretty sad when the non native English speaker ends up being the one to point out that regardless of whether Peerform succeeds or not, it is not making a “comeback”……………since comebacks can only occur in scenarios which have had previous success or at the very least, notoriety. No offense to Peerform is intended by my comments.
Just trying to encourage Peter to maintain some semblance of journalistic “standards” around here, or I should say non investigative journalistic standards around here. 🙂

Gregg S
May. 14, 2014 3:51 pm

Dear Dan,

We think Peter’s journalistic standards are high and word choice is perfectly appropriate. Having recently returned from Lendit, we are excited by the reception we received for our newly reinvigorated efforts to carve out a niche for ourselves in the marketplace lending universe. Initial indications of our progress are very encouraging as we are signing-up thoughtful lenders and great borrowers on a regular basis. We are indeed open for business and looking forward to getting a second look by some folks who checked us out a few years ago.

Kind regards,
Gregg on behalf of the Peerform Team

Dan B
Dan B
May. 15, 2014 12:43 pm
Reply to  Gregg S

My apologies, I wasn’t aware that your company had previously achieved great success. LC has originated billions in its history & Prosper has recently crossed $1 billion. Tell me, how many billions in loans has your company originated prior to this “comeback”??

But hey, thanks. Encouraged by your example I decided on a a “comeback” of my own in tennis. My previous record from 20 years ago was 3-12. I’m also very excited by the reception I received from several people who I spoke to & initial indications of my progress are very encouraging. There’s even a high probability that I might be able to locate my tennis rackets shortly. Stay tuned!

May. 15, 2014 2:53 am

“We believe that lower FICO scores do not always correlate to higher risk. With our Loan Analyzer, we are finding great borrowers who may have lower FICO scores… ”

Where is the evidence?

What are you going to do to give us confidence that there is anything behind the above statement beyond hot air? Investors play with real hard-earned money, so just saying that you have developed a better gizmo is likely not enough. You need to show your cards.

May. 16, 2014 5:38 am
Reply to  Fred93

Wish I would’ve seen this comment before posting mine above ha ha

May. 15, 2014 8:39 am

Dear Fred93,

We fully agree that investors should be careful about how they invest their real hard-earned money. We also think that the flaws of FICO are well documented.

If you are interested in becoming an investor on our platform, we would be more than happy to discuss our approach in greater detail.

Kind regards,

The Peerform Team

Jun. 5, 2014 7:03 am

Do you have any insight as to how loans are being funded on this platform (how many funded vs non-funded, average amount of time to funding, etc)? From the little I know and have seen, there doesn’t seem to be much movement or momentum on Peerform. Perhaps that will change with the recent capital injection.

Jun. 11, 2014 7:19 am
Reply to  JC


We have funded about 60 loans in the past 2 months.
Target is to do a couple of hundred thousand of funding per month to get to $1M per month by Q2 2015.
Our underwriting team is verifying 100% of loans, including income verification. In consequence, the funding ratio is about 60% – This will increase as we on-board more lenders to the platform.

As of today, there are about 70 loans on the platform with a majority of 20%+ interest rates.