Review - Peer & Social Lending

Peer to Peer Lending Sites → 24 of the World’s Best

May 4, 2017 by John Carson 9 Comments

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Todays post is by Chris Grundy of Bitbond. Chris is a Bitcoin obsessive and avid p2p lending fan who has written for a variety of Online publications as well as regularly contributing to the Bitbond blog. You can follow him on Twitter, connect with him on LinkedIn or check out his Marketing blog. Any feedback is welcome and encouraged.

It is fair to say that the p2p lending industry is having a stellar year. As you will be aware, Lending Club reported an extremely successful Q2, breaking through $1.9 billion in originations in that quarter alone. During the same time period, Prosper issued a staggering $912.4 million in new loans, representing a 147% increase year-over-year!

The U.K. is equally as impressive with $792 million being lent over p2p platforms in Q2 according to the Peer-to-Peer Finance Association.

So how can you take part and profit from the p2p lending boom?

Well, the first thing you need to do is find the right peer to peer lending site for you in order to start investing and saying goodbye to the 2.5% interest offered by your bank. Below, I have listed my favourite peer to peer lending sites from around the world for you. Have a look and let me know in the comments if you think I have made any glaring oversights. Enjoy!

I will only focus on peer to peer lending sites and not Marketplace lenders. Thus, not included: Kabage, OnDeck, SoFi, Funding Circle

Global

Bitbond

Using bitcoin as a payment network, Bitbond gives investors access to higher interest rates from around the world at zero fees. Below is a table comparing fee structures across platforms.

Besides the minimal fees, Bitbond offers the AutoInvest tool (video) which allows larger investors to set clear investment parameters and then automate the investment process, saving time as well as money.

Potential bitcoin investors might also be won over by the weekly borrower interviews which are published on the company blog, and let lenders to read up on the people they might want to invest in.

The average interest rate on Bitbond currently stands at 25% and you can invest as little as $2.50. Check out Stu Lustman’s quarterly returns reports to see a comparison between fiat and bitcoin ROIs for lenders, and have a look at one of the most lucractive bitcoin affiliate programs around.

The U.S.

1. Lending Club

I think it is fair to say that Lending Club is the favourite among U.S. peer to peer lending sites. Industry heavies such as Simon Cunningham (Lending Memo), Peter Renton (Lend Academy) and Ryan Lichtenwald from this very blog (and Lend Academy), have all extolled on the platforms virtues and have recorded their impressive ROI’s, coming in at 13.3%, 11.30% and 10% respectively.

Average investors can expect to enjoy a healthy ROI of 6-8%, which might seem a little disappointing when compared to the professionals, but should nevertheless be considered very attractive.

Lending Club also let you invest $25 per investment which makes it possible to further diversify a smallish investment total, and have a very good credit scoring system in place.

2. Prosper

Prosper suffered a rocky start. Not controlling pricing in the early pre-crisis years really hurt their returns in the critical 2006-08 period. Prosper also fought the SEC on who should regulate the industry and paid greatly for it. Having put this behind them however, the peer to peer lending platform has enjoyed explosive growth in recent years.

This growth comes mainly from Prosper’s newly acquired reputation as being a very solid way of earning extra cash. Since 2006, they have paid more than $140 million to their investors, with average ROI ranging between 5-9%. Additionally, Prosper’s evaluation of borrowers and the subsequently high quality of loan requests has helped build their reputation as a safe haven for investors. Specifically, their average credit score for borrowers is an impressive 700.

3. Upstart

Upstart might not have the same loan volume of the two giant peer to peer lending sites in the U.S. but it has some interesting characteristics that may well make it intriguing for investors. One of the biggest bugbears p2p investors usually have at Lending Club and Prosper is that when a loan defaults it is the investors, not the platforms that take the hit.

With Upstart’s approach, if a loan defaults at any time over the course of the loan term, then Upstart will take the revenue they earned from the origination fees and refund the money to investors.

Upstart’s origination fees range between 1% and 6%, which may well prove an attractive remuneration for peer to peer lenders who have seen an investment go south.

A further feather in the p2p lending platforms cap, is the impressively low default rate which can be explained by extremely tough admissions process for borrowers

With this in mind, expected ROI for investors is significantly below the previous platforms, coming in at 4-8%.

4. Peer Form

Peer form is one of the oldest peer to peer lending sites on this list, despite only coming to prominence recently with another successful round of funding. Special features of Peer Form include their emphasis on accredited or institutional investors and their focus on three-year loan terms. Interest rates stand between 7-28% with over 14 different loan grades.

Borrowers must have a minimum FICO score of 600 in order to apply for a loan, and as of today, there are about 70 loans on the platform with a majority of these commanding 20%+ interest rates.

5. Kiva

Kiva came up with a really good social idea. It is an US non-profit organization with the mission to connect people through lending, with the main goal of alleviate poverty. Kiva was founded in 2005 and has up to 1.382 lenders in 83 different countries.

In just 5 years, Kiva has distributed over $240 million borrowed by more than 620,000 people around the world, contributing to the improvement of about 615,000 lives. Of that borrowed amount, only about 1.58% has not been fully paid back.
Kiva’s work is pretty interesting. It works with microfinance institutions all around the world - whom they call Field Partners. One of the reasons why this project is so successful is related to the fact that one can only donate as low as $25.

India

1 Faircent

Founded in 2011 by Rajat Ghandi, Faircent aims to provide credit on demand for all Indians. Having aced the lender acquisition in recent years, Ghandi now states “today our challenge is to provide credit-worthy borrowers to our over 2,500 lenders.”

It seems like Faircent is up to the challenge, raising $250,000 in a pre-Series-A funding in June, and recently raising an undisclosed fee from Mohandas Pai. Perhaps unsurprising considering that 78% of Indian population does not have access to personal loans from banks or NBFC.

Since it’s inception, Faircent has processed over 300million Indian Rupees, around USD4.6million and boasts average interest rates of over 20%.

2. i-lend.in

In India, asset classes are few and tightly managed from a risk/return perspective, and not many asset classes exist where high earnings can be made. The returns on peer to peer lending sites like i-lend represent a welcome change therefore, bringing in between 16% to 20,75% on average.

With this in mind it is important to note, that peer to peer lending is still unregulated in India, meaning that lenders have much less protection here than in other regions covered on this list.

Additionally, fees for lenders on i-lend are 1.5% of the invested amount and there can be numerous factors to consider before investing as explained here on p2p-banking.com:

A typical P2P transaction involves multiple lenders lending to one borrower. In case the lender changes his mind about lending or there are delays in collecting cheques (lenders can be based anywhere in the country), the borrower may not get their money on time – this can be weeks, sometime months.”

That being said, p2p lending clearly has a huge amount of potential in India.

Europe

1. Bondora

Bondora is one of the most exciting peer to peer lending sites out there today. This is because of its documented high yield returns for the 9,000+ investors who have signed up.

Perhaps the most prominent among these is Claus Lehmann, (wiseclerk) author of p2p-banking.com, who has documented his returns from the European p2p lending platform. Below is a screenshot of his returns in which he showcases his average of 26% ROI on Bondora to date.

Bondora has issued over €45 million in loans since 2009 and serviced over 100,000 borrowers across 3 countries.

Crowdester

Crowdfunding Investment Platform - You can invest in business, real estate and energy projects from 100 EUR.

Debitum Network

Debitum Network is a P2B platform which allows anyone to invest in business loans from as little as €50 and earn interest from 9 to 11 %. All investments carry an additional guarantee for all investments. Loans are assessed by independent 3rd party risk assessors. There are 0% fees on the platform for investors. All investments are accepted instantaneously. Debitum Network allows depositing of EUR and GBP, as well as cryptocurrencies of ETH and DEB tokens.

Viainvest

VIAINVEST is a peer-to-peer lending platform offering private lenders/individuals and legal entities an opportunity to invest into short-term consumer loans originated across Europe. VIAINVEST provides investors an access to non-bank lending sector by creating a safe and transparent investment environment where investors are able to earn up to 12.2% p.a. on their capital. To maximize the investing experience VIAINVEST has developed several important features, such as a Buyback Guarantee and auto-invest option to make the investment process reliable, simple and seamless.

2. Prêt d’union

Prêt d’union, founded in 2009, has become the largest peer to peer lending site in France, having granted €228 million in personal loans so far, and paid out over €9 million in interest to investors.

Having grabbed $34 million from Eurazeo, Pierre Kosciusko-Morizet as well as existing investors in July of 2015, Pret d’Union is perfectly placed to expand into the rest of Europe and become the continents dominant force.

Interestingly, the French peer to peer lending platform offers lenders 4 types of investments which are:

Conservative & short duration
Conservative & long duration
Balanced & short duration
Balanced & long duration

Yields for lenders are superior to those offered by banks, but mild in the p2p lending climate at 4-7.5%. For more information check out this interview with CEO Charles Egly.

3. AuxMoney

Aux Money is currently Germany’s biggest peer to peer lending site, which has reportedly financed over 32,000 loans totalling a volume of more than €180 million, since its inception in 2007.

Despite the relatively low loan volume, when compared to it’s US counterparts, Aux Money is perhaps the most dominant regional p2p lending platform in the world, with a study (untertaken by Händlerbund) suggesting that the German lending giant commanded 2/3 of the domestic market.

Investors can expect to pay 1% of their invested amount as a fee to Aux Money, while borrowers pay €2.50 a month plus a one-time fee, 2.95% of the total borrowed amount.

Returns for lenders average 6.7% per annum, with investments usually ranging between €3,500-€4,500. Interestingly Aux Money has an acceptance rate for borrowers of 20% meaning that only 400 of the 2000 daily applicants are accepted and are allowed to publish a loan.

Good news for the roughly 13,000 active investors.

4. Lendico

Lendico is a Berlin-based peer to peer lending site which was founded in 2013 by the ubiquitous German incubator Rocket Internet. Having expanded to Spain, Poland, Austria, South Africa and the Netherlands, you could argue that Lendico is the first multinational p2p lending platform.

Loans on the platform are SME or personal loans and fall somewhere between €1,000-€150,000 in Germany. As on many other platforms, the perceived creditworthiness of the borrower determines the interest rate he has to pay, and the subsequent ROI investors can expect.

At present interest rates can be considered mild in the current climate, starting at 2% and climbing to 8.8% for the highest risk borrowers.

6. Zencap

Zencap is another great example of the rude health of the European peer to peer lending industry, having raised €230 million in investments from Victory Park Capital in June of 2015.

Flush with cash, Zencap now aims to provide small and medium sized business located in Germany, Spain and Netherlands with €5,000 to €250,000.

Intriguingly, Zencap is another Rocket Internet company, meaning it is in direct competition in the p2p lending space with its sister Lendico. For investors, loan terms range from 3 months up to 5 years, with the latter being the backbone of the business.

Experiences on the platform seem to be mixed, as German investor Martin R. explains in a guest post for p2p-banking.com. With yields of around 5.7% Zencap will have difficulty competing with alternatives such as Bondora, Aux Money. Below you can see a screenshot of his portfolio diversification across credit ratings.

Martin, despite his diversification, like most other investors on Zencap, did no experience any defaults on his investments. With a relatively week ROI however, this might be expected.

7. Cashare

Cashare is the leading platform in the expanding Swiss p2p lending space, which grew by a respectable 36% in 2014.

Interest rates on the platform usually lie between 7.7% and 9.9% with 58 loan requests currently available for investment. Additionally, Cashare supplies loans to applicants with varying purposes, whether to finance their education, pay their medical bills or hire a nanny, meaning that lenders can find higher interest rates if they wish to up the risk.

8. Smava

Having raised close to $30 million in several funding rounds, Smava is the up and coming peer to peer lending site in Germany, despite being a presence in the space since 2007.

Since then the German p2p platform has facilitated over €150 million in loans, with an annual ROI for investors of around 6.7%. Smava has a couple of cool features which make it interesting for investors such as the “bidbot” (Bietmaschine) which can be set to invest your money automatically along parameters you choose.

Unfortunately, Smava has the highest fees for investors I have seen in Europe. 1.35% of the total invested amount is taken off as a fee. Borrowers can expect to pay 2.5-3% as a fee.

9. Mintos

Mintos is perhaps one of the most exciting peer to peer lending platforms in Europe today. With over 14,574 registered investors and boasting an average ROI of 12.86%, Mintos is definitely seem to be making all the right moves.

What makes Mintos special, is its use of collateral. As investor Marco Schwartz wrote in his guest post, every loan is attached to collateral, meaning that if a borrower should fail to repay, whatever item he or she placed as collateral will be taken to reimburse the investors.

Interestingly, Mintos also offers to buy certain bad loans back from their investors. Thus, if you invest in one of the specified loans, and the borrower defaults, Mintos will buy back the bad debt at a reduced price, but leaving you a little less out of pocket.

10. Smartika

Smartika is a p2p platform that was founded in Italy in 2008. Back then the p2p lending system was not well understood and well seen by banks and institutions in general. It took Smartika four years to get the right regulation and finally at 2012 it was a fully licensed Payment Intermediary, authorized by the Bank of Italy to operate in the p2p field.

The italian platform is now doing quite well: they just exceeded 20 million loans, with an average rate of return of 6% and about 5,791 active lenders. In an interview, Maurizio Sella, CEO of Smartika, talked about his beliefs on the exponentially growth potential of the italian p2p market.

11. Prestiamoci

Prestiamoci is another italian p2p platform, founded in 2014 and also authorized by the Bank of Italy to operate in the p2p field. The platform has already funded about 175 thousand euros, with the average revenue margin of 4%. For now, Prestiamoci has more than 450 lenders and disbursed 360 loans so far.
The startup is supported by Digital Magics, an italian business incubator. Responsible for investing on Prestiamoci and for providing strategic support to it, the incubator has accomplished a gain of 300% on the transaction.

U.K

1. Zopa

Zopa will always be the first peer to peer lending platform! A pioneer in the field, the UK-based website has seen losses increase in 2014 however, despite a sharp rise in revenue. Still, Zopa’s importance for the UK p2p lending ecosystem can not be overstated. They processed $408 million worth of loans in 2014, which makes their European counterparts pale in comparison.

With current monthly returns for investors of 0.7% to 0.8%, Zapo is still a little away from the 9% ROI their CEO aspires to.

2. Rate Setter

RateSetter has had a stellar 2014 and is now the largest peer to peer lending platform in the UK, processing over €400 million in 2014 alone. Backed by the star fund manager Neil Woodford, RateSetter has doubled its revenues in the space of a year.

Boasting an annual return of 6.1% to investors, it might be a little difficult at first to see how the platform has enjoyed such explosive growth. If you keep digging however, you quickly realise that the low interest rates are indicative of the safety (low default rates) experienced by lenders throughout the 6 year loan terms.

With the long loan terms in mind, we may well see a upward correction in default rates on RateSetter, as loans mature and default probabilities rise. Until then, RateSetter will stay a force to be reckoned with in the UK peer to peer industry.

3. Assetz Capital

Assetz Capital is one of the UKs leading peer to peer lending sites, with over 10,228 registered investors on the platforms. Having just exceeded its fundraising target of €2.5million in May of this year, and recording 300% year on year growth, Assetz Capital looks to have a bright future ahead.

What makes Assetz Capital special, is its focus on providing loans to SMEs and property developers in the UK. Consequently, the p2p lending site focuses on larger loans averaging around 400k.

For investors, attractive interest rates hovering between the 8-15% mark, promise healthy ROIs. Additionally their “underwriting team always takes security so that if there was a default, the assets takes as security should comfortably cover the value of the loan.”

4. Thincarts

Thincats is a p2p lending platform that operates throughout the UK. As many other platforms in this list, they also consider themselves as a good alternative to high street banks. Thincats was founded in 2011 by Kevin Caley, Peter Brown and Paul Meier, as sort as a response to the banking crisis that began in 2008.

The british platform has already raised up to 146 million pounds in loans. Borrowers can get loans from £100,000 to £3,000,000, and terms from 6 months to 60 months; and lenders must invest at least 1,000 pounds in a loan - and there is no maximum investment amount - with an average interest of 9%, meaning they should receive an attractive return on their investment.
Although having an elite public, Thincats seems to be trustworthy with high quality control.

Latin America

1 Fairplace

On the one hand, we should remember that back in 2010, Fairplace arrived with a bombshell in Brazil. It was the first p2p lending service in the country and it has processed around 2.5 million Reais, offering good interest rates and several tax benefits when compared to Brazilian banks.

Nevertheless, the platform faced an investigation by the Federal Police, who claimed that Fairplace had violated a brazilian law which prohibits companies that are not financial institutions to operate in financial markets.
Its founder Eldes Matiuzzo explained that his company did not provid loans, but instead offered a platform to connect borrowers and lenders.

2. Biva

Following in Fairplace’s footsteps, Biva is the second major brazilian p2p platform, founded in 2015. It connects companies who need working capital with people willing to invest in them. The platform facilitates loans from R$2,000 up to R$50,000 for 6, 12, 18 or 24 months. For borrowers, the monthly fees are between 1.5% to 4%; and lenders can enjoy an annual return of up to 25%.

The co-founder, Paulo David, has publicly stated how difficult it is for small business owners to get loans for their companies. Therefore, his company’s mission statement is to operate in regions traditionally under-served by banks and the banking system. So far, the platform is doing really well and has already reached up to 2 millions Reais from loans.

3 Afluenta

The Afluenta startup was founded at September 2012. The platform is a bit different from others listed here, due to its need of having a bank account. Besides from that, to ask for your loan or to invest your money, Afluenta requests that you are older than 18, born in the operational countries and have both a mobile phone and an email.

They are the first authorized p2p marketplace at Argentina and they are planning to also operate around Latin America. They have recently started operating in Peru and the next countries should be Mexico, Colombia, Chile, Uruguay and Brazil. The minimal investment you can make at Afluenta is of $5,000 and the estimated annual return is 45.3%. As a borrower, your loan can be as high as $70,000 and your returning deadlines can be from 12 up to 48 months

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Viventor review | Make smart passive income

October 17, 2016 by Chris Leave a Comment

Disclaimer: Viventor provided €50 to start investing and try out the platform. This has not coloured the authors opinion of the platform or influenced this review.

Viventor opened its doors to lenders almost a year ago. Founded by Prestamos Prima CEO Andris Rozenbahs, the Riga-based platform offered loans secured by mortgages, and a buyback guarantee for all investments. Since then, mortgage-backed loans have broadly made way for short-term consumer loans, which now make up a vast majority of listings. These still come with the buyback guarantee and are 100% pre-funded.

Both the buyback guarantee and the pre-funding of loans show Viventor’s safe approach to lending. It runs as an ethos throughout the platform and allays any fears investors might have about investing.

With safety so high on the platform’s list of priorities, it unsurprising that expected returns for investors are slightly lower than on most competing platforms. Mr. Rozenbahs said when the platform launched: “Keeping in mind that these investments generate a fixed annual return of 6% and above - I’d say it is a solid deal.” With cumulative investments breaking through the €6 million mark, and over €45,000 in earned interest, many investors seem to agree.

These numbers now serve as the driving engine of Viventor’s success, along side the low entry-barrier to investing. This stipulates a €50 minimum deposit and €10 minimum investment.

Before we delve into the features, let’s briefly discuss if you are eligible to invest.

You must be at least 18 years of age
You must have a bank account in the SEPA region
You must have a valid passport, utility bill and tax certificate

Viventor review | features

Peer to peer lending platforms define themselves by the quality of their features. Nothing is more frustrating than a laggy AutoInvest, or an illiquid secondary market. On the other hand, a smooth user experience, slick navigation and easy investments are the hallmarks of this verticals top performers.

Viventor offers three main features: the Primary market, the Secondary market and AutoInvest.

1 - The Primary market

The platform boasts an excellent Primary market with over 1,000 loans currently listed. These are primarily from Spain and Sweden and originated by third parties like Twinero. Loan terms range from 1 to 72 months, with shorter loan terms significantly outnumbering longer ones. As a result, investors can enjoy a high liquidity as repayments come flowing back at the beginning of every month.

Understandably, loan amounts vary by loan term, with shorter terms often coming in at under €500, while longer terms go all the way up to €150,000. As with all peer to peer lending platforms, the watchword here is diversification I try to avoid larger single investments anyway.

To help martial and segment the vast number of listings, Viventor has provided a pretty cool filter. This allows you to set your desired interest rate, loan term and loan status. The loan status refers to whether a loan is being paid, late or defaulted. As of today (06/10/2016), there is not a single late or defaulted loan listed on the platform.

On the top right of the screenshot, you can see the option to filter for LTV, which refers to the loan-to-value percentage of the listing. A high LTV means that the loan amount represents a high proportion of the borrowers asset value. Setting the filter high, will provide you with a list of larger loans, mostly backed by a mortgage. Below is a good example.

2 - The Secondary market

Viventor’s secondary market is one of the coolest features on the platform. Essentially, it allows investors to exit an investment before it has reached maturity. This particularly handy should you need your money back to pay for bills, or unforeseen expenses.

You can take advantage of this feature by listing your stake in a loan on the secondary market. Other investors then have the opportunity to purchase your stake in order to grow their portfolio. In order to speed up the sale, you can sell them at a discount or even add a premium. With ~791 stakes listed, investors are sure to pick up some great deals.

3 - AutoInvest

As expected from any major peer to peer lending platform, Viventor brings its own AutoInvest feature to the table. If you’ve never heard of AutoInvest, you should know that it allows you to create an automated investment portfolio based on your chosen criteria. Essentially, it filters the available loans through your predefined filters and automatically invests your desired bid amount. This is fantastic for anyone looking to save time and ensure easy diversification.

What’s great about Viventor’s AutoInvest feature in particular, is its ease-of-use. You can set your preferred parameters and turn on AutoInvest in just a few minutes and straight away your investments are made. This makes a nice contrast to many similar features which take weeks or even months to place bids. Viventor’s advantage here is the ample supply of loans on the primary market.

Additionally, I should mention that using AutoInvest comes at no extra cost to you, and you can still place bids manually should you so choose.

Viventor review | My experiences

No review is complete without personal experience and this Viventor review is no different. As mentioned above, I received €50 to play with on the platform. I quickly set up my account and began to use the AutoInvest feature. I set the parameters to fund high interest, and short term loans, which the tool promptly did. As a result, most of my investments look like this:

I invested €10 each across 5 loans and waited for the due dates to arrive. You can find the borrowers repayment schedule by heading to the listing and clicking on “Payment Schedule”.

While waiting, I came across the Viventor fellows facebook group, which is an excellent place to find fellow investors and ask questions.

This is what I loved

Viventor is doubtlessly one of the best European peer to peer lending platforms. The slick interface and smooth usability make it incredibly easy to earn interest. The buyback guarantee coupled with the high loan quality make Viventor the definitive safe option for European investors. With a minimum deposit of €50 and minimum investment of €10, investors new to peer to peer lending can dip a cautious toe into the water before committing. Additionally, your dashboard is filled with helpful tips and explanations, making the investment process even easier.

For more sophisticated investors, the AutoInvest feature is easy to set up and boasts 7-13% per annum ROI.

This needs work

Every review needs an honest appraisal of potential weak spots, and there are a few things that struck me while getting to know the platform. Perhaps the most important weakness of the platform is how impersonal it is. No doubt many investors will prefer it like this, but I really enjoy investing in people and not just ID numbers. I think Viventor could make investing even more fun by including some information about the borrower and allow for some interaction.

My second bugbear is the slight lack of information in the dashboard.

Above you can see a screenshot from my dashboard as of October 6th. Beside this breakdown I can see a small summary of my activity, including the percentage interest earned and other core kpis. On platforms like Bondora and Mintos users are provided with a more granular breakdown of their portfolio performance as well as an indication of performance in relation to other users. I find these particularly helpful as they help sign-post my success as an investor.

Viventor review | Conclusion

Overall, Viventor is a hugely enjoyable platform to invest on. The user experience is excellent and the buyback guarantee offers peace of mind. It takes no time at all to set up an account, and the Auto Invest feature makes it easy to spread your bids, ensuring diversification and (hopefully) maximizing revenue.

After only a month on the platform, there is still plenty to learn but Im looking forward to the journey ahead. Here is my account balance so far, roughly a month after I started investing on Viventor.

Being such a new platform, there are clearly still aspects worthy of improvement. The relative lack of granular data is perhaps the most glaring in this regard, but it does little to detract from the overall quality and enjoyment of the platform.

Thank you for reading this Viventor review.

Twino Review | BuyBack & Auto Invest

August 25, 2016 by Chris 1 Comment

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Twino Review - Mentioning Twino to most European investors induces little more than a shrug of the shoulders and a muffled “never heard of them”. Not an unsurprising response, given the platform only launched in 2015, and has kept a relatively low profile compared to competitors like Bondora, Mintos and Bitbond.

A strong gut feeling suggests however, that Twino will soon emerge from the backwaters of European p2p lending, and take its place among the market leaders. Why do I think so? Let’s take a look!

Twino Review | Covering the Basics

Launched by the Finabay Group in 2015, Twino offers investors from across Europe the chance to earn healthy returns by investing in unsecured p2p loans. These are consumer loans from Poland, Georgia, Latvia, Czech Republic, Russia and Denmark, commanding interest rates between 10-40% per annum. Loan terms vary between 1-24 months, giving investors more flexibility in the short term, but potentially lower returns in the long term.

Returns seem to be healthy however, and investors have reportedly earned €600,000 in interest. Not bad in 11 months.

One of the reasons Twino’s growth has been so rapid, is its accessibility to investors from the Euro-zone AND Great Britain due to a partnership with Swedbank. As a result, investments can be made in euro (EUR) or British Pound (GBP), with the minimum being €/‎£10 .

This was doubtlessly a shrewd move by CEO (and former Bondora CMO) Jevgenijs Kazanins, because it opens the platform up to the more mature British Peer-to-peer lending market.

Another reason the Latvian marketplace lender is doing so well, is its highly popular “BuyBack Guarantee”, which promises to repay the investor principal plus interest, if a borrower is 30 days overdue on a payment. Most loans on Twino come with this guarantee and are sign-posted with ().

(Click)

This feature is proving particularly attractive to German investors who are typically risk-averse and make up a majority of the platforms’ investors.

But how can Twino sustain a BuyBack guarantee like this? Especially in the face of zero fees for investors?

Well, the answer is Twino’s business model, which relies on a large gap between the returns that investors make, and the interest rates borrowers pay. As highlighted by the excellent Money is Your Friend, most loans on Twino are payday loans with likely interest rates of 100% or higher.

Interest rates offered to investors, as already mentioned, only range from 10-40%. The resulting margin is what Twino relies on to keep the BuyBack Guarantee viable and the business afloat.

For investors, this means BuyBack is unlikely to disappear anytime soon, as Twino’s business model depends on it. Additionally, the marketplace lender needs the feature to onboard new investors. With over 15% of all loans “delayed”, the platform would otherwise have a hard time turning a profit for its users.

The feature doubtlessly offers investors a greater level of security, but still depends on the profitability of the originators, which back the loans.

Twino’s Auto Invest Feature

You can easily automate your investments along strict parameters with Twino’s Auto Invest feature. A particularly welcome part of the investing experience, as it allows to easily diversify funds across a large number of loans, spreading risk in the process.

Luckily, Auto Invest is very easy to use and key parameters are:

Total investment
Maximum investment per single loan
Minimum balance
Reinvesting
Interest rates
Loan terms
Countries

The huge number of loans on the platform, ensure that no matter which parameters you pick, the Auto Invest tool will be able to diversify aptly.

Once you have automated your investments, head over to the “My Investments” tab to see it in action.

Although the feature usually does its job well, be sure to log back into your account after a few days to ensure it is working correctly. 😉

Benefits for Investors

Twino simply offers a great experience for investors. The security of the BuyBack Guarantee, coupled with an easy to use AutoInvest feature, and slick interface combine to create a winning experience for anyone looking for easy passive income.

There are hundreds of loan listings to choose from and the low, €10 minimum investment, ensures that everyone can start investing.

Uk investors will also be delighted at the prospect of finding an eastern European marketplace, which allows lending in British Pound. This is sure to give Twino the edge over similar competitors lacking in this department.

With returns averaging around 12% p.a. for most, and almost 15% for some, Twino is proving its worth to investors around Europe.

Negatives for Investors

There are only two aspects of Twino I’m not 100% on board with. The first, is the nature of the loans, and the exorbitant interest rates charged to borrowers. I prefer to invest in working capital loans, with reasonable (max 40% p.a.) interest rates for borrowers. On Twino, we are dealing with Payday loans with interest rates going much higher than that.

The second aspect is the lack of personability on the site. Twino might as well be a bank, rather than a Peer-to-peer marketplace, because investors get little-to-no information about the borrower.

I understand that this is not a problem for most investors, but my personal preference is to feel like I’m helping people, not just making a profit.

Those are my only two bug-bears and they do little to diminish the enjoyment of the platform.

Conclusion | Twino Review

Twino is clearly a platform on the rise. The 30 days BuyBack Guarantee along with the sleek Auto Invest feature, provide a high level of security which is hugely appreciated by investors.

The impersonal style of the listings however, takes some of the humanity out of the platform and makes p2p investing a little less fun than on other platforms.

Thanks for reading.

PS. Have you tried out Twino? Let me know what you think of the Twino review in the comments below!

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Prosper Review: Guide for Investors and Borrowers

December 28, 2015 by John Carson Leave a Comment

Prosper is one of the largest peer to peer lending platforms in the US. Loans of up to $35,000 are available which can be used for many purposes. Investors are able to achieve good returns which are dependent on the credit grade of the borrower.

They can also diversify their investments across credit grades to achieve a balanced portfolio. In this Prosper review we look at the fundamentals of the company and compare it briefly with similar peer to peer lending platforms Lending Club and Zopa, and with Bitbond, a peer to peer bitcoin lending platform.

Ryan has documented his excellent experiences on the platform already, and I urge you to check it out. Below, you will find an updated Prosper review, giving both borrowers and investors some more insights into the mechanics of p2p marketplaces.

A Brief History

When Prosper was launched in 2006 it was a very different market place than it is today. The first peer-to-peer lending site based in the US, from it modest beginnings it has grown almost exponentially, and in July 2015 it passed the landmark of having originated a total of $4 billion in loans.

Given that in its early days the peer to peer lending model represented relatively unchartered waters, it isn’t surprising that it wasn’t all plain sailing, and that the business did make a few errors on the way.

In the early days Prosper used a kind of Dutch auction system where investors would bid on the interest rates they required to finance loans. These left investors vulnerable to defaults as the tendency was for investors to under-price risk, and many early investors lost money; of course the timing was unfortunate given that this coincided with one of the biggest global economic downturns in history.

Even so, many Prosper reviews in the press were highly critical and the overall effect, was to damage the reputation of peer to peer lending generally.

In 2010 Prosper changed their business model. Rather than the interest rates being determined by lenders and borrowers, the business itself set the interest rates based on their assessment of the credit risk of individual loan applicants.

The credit risk is based on the applicant’s credit rating with the rating agencies along with other financial information and any previous borrowing history on the site. Lenders simply choose whether or not to lend at the stated interest rate after reviewing information on the loan applicant.

Investing in Prosper

According to Prosper’s own review on its website, “Prosper provides investors direct, low cost access to high-yield consumer loans from creditworthy borrowers.” What makes prosper different from conventional investment vehicles is that investors can choose their own projected returns based on the risk that they are willing to accept.

As described below, each borrower is assigned a Prosper credit rating, and this is used to determine the interest rate they will be charged. While a borrower with the highest credit grade will be charged an APR of around 6% to 8.7%, a borrower with an average credit rating will be charged around 13% to 15.8%, and a borrower who is considered to be high risk will be charged up to 36%. Interest rates also depend on the loan term and on whether the borrower has any previous history of Prosper loans.

After allowing for defaults, typical returns on a low risk investment are around 5.5%, on an average risk around 11.1%, and on a high risk 10.8%. As we show below, risks to investors reduce as they spread their investments across multiple loans and credit grades. Typical returns made by such investors are between 10.5% to 12%.

Credit rating of borrowers

All new borrowers on Prosper must have a minimum FICO credit rating of 640. Prosper reviews the credit rating and other financial information for the applicant and then calculates the Prosper Rating. Prosper Ratings are broken down into seven categories, with each category being associated with estimates of default rates which are stated as the annual loss rate for that category.

For instance, a Prosper AA rating, the highest possible, has an estimated annual loss rate (EALR) of 1.99% or lower, while a Prosper HR rating (high risk) has an EALR of 15% or higher. The ratings in between these are A, B, C, D, and E.

Fees

Prosper’s revenue is derived from the transaction fees it charges its borrowers and investors. Borrowers are charged a one-off fee of between 1% and 5% of the value of the loan, and investors are charged a service fee of 1% of annual transactions.

Transparency

Along with similar peer to peer lenders Prosper operates a highly transparent system. Investors have a full view of borrowers’ credit data enabling them to develop their own risk adjusted projected return model.

The data includes items such as the credit score, the Prosper Rating, employment status, homeowner status, loan repayment history, occupation, income, credit card utilisation, and more; Prosper reviews at least sixteen levels of credit data. The status of every loan taken out on the site is available to every investor.

Risk

While good returns are available through Prosper, investing in the platform carries a higher degree or risk than investing in a traditional savings account. While there are likely to be some defaults on loans, these are balanced by the higher returns and with a diversified portfolio overall risks of default can be managed.

The chances of failing to make a positive return decrease with increasing diversity. According to Prosper, investors with 400 notes have just a 1.1% chance of making returns of less than 1.1%. This represents a minimum investment of $10,000.

The other risk is that Prosper enters into bankruptcy. Given its level of capital, it isn’t likely, but it remains a possibility. Should it happen then investors receive a degree of protection. All loans and notes are owned by Prosper Funding LLC; a subsidiary of Prosper Marketplace Inc. Prosper Funding LLC is a legal entity that has been approved by the SEC to continue servicing existing loans should the Prosper platform enter bankruptcy.

In other words, the loans are quite separate from the platform. Prosper Marketplace Inc. owns just the IP and the technology, which in the case of bankruptcy would be sold off; the loans would not be involved. However, it would not be possible to issue any new loans. The protection applies equally to individual and corporate investors.

Alternatives to Prosper

There are now many competitive peer to per lending platforms. The best known in the US is Lending Club which recently became a public owned company following its IPO in December 2014. Loans of up to $35,000 are available with a minimum APR of 5.99%. As with Prosper, to invest and borrow you must be resident in the US.

Funding Circle operates in both the UK and US. Specialising in loans to small businesses, it has facilitated over £1 billion of loans in the UK alone. Loans are available from £5,000 up to £1 million. Typical returns for investors are around 70%. Funding Circle only accepts borrowers that are already established and credit worthy; depending on their credit rating interests rates vary from around 6% to 18%.

Zopa was the first peer to peer lending platform which launched in 2004. It is available to investors and borrowers in the UK. Loans are available from between £1,000 and £25,000 with interest rates starting at just 3.9%. Investors can choose average projected returns of between 3.8% and 5.0% after defaults.

Bitbond is a different kind of peer to peer lending platform in that it deals in bitcoins rather than currencies, however the value of its bitcoin loans and investments are tied to the dollar. The use of bitcoins means that loans are completely independent of banks and are not restricted to specific countries or states. Fees are cheaper than Prosper - lenders pay no fees at all compared to Prosper lender fees of 1%, borrowers pay just 0.5% to 3% compared to the 1.1 to 5% charged by Prosper.

Prosper review conclusion

Peer to peer lending has changed the way in which we are able to borrow money and is providing an exciting new opportunity for investors. In this Prosper review we have glimpsed at the history of the company from its origins to the present time and the advantages that if offers both lenders and borrowers have been highlighted.

There are many alternatives to Prosper; we have mentioned just a few of them, in particular Lending Club which is the other main platform in the US, Funding Circle which operates in both the UK and US, Zopa which is based in the UK, and Bitbond which provides an alternative peer to peer cross-border lending model based on cryptocurrency. This article is for your information only, and should not be considered as investment advice.

Bitcoin Lending Report On Bitbond - December

December 4, 2015 by John Carson Leave a Comment

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Welcome to part 4 of our cryptocurrency adventure. This month’s bitcoin lending report should be short and sweet and will cover my new investments, as well as my first returns. If this is your first monthly report, follow the links to find out about my investment strategy on Bitbond and why I am using a bitcoin lending platform to begin with.

Without further ado, let’s have a look at my new investments for December:

Loan Listings	Investments (BTC/USD)
https://www.bitbond.com/listings/2QFZDR4Y7Z	0.02/7.21
https://www.bitbond.com/listings/2QKTTR4YE9	0.10/36.06
https://www.bitbond.com/listings/2QNGJ04YHQ	0.04/14.42
https://www.bitbond.com/listings/2QQ5WX4YP0	0.02/7.21
https://www.bitbond.com/listings/2PPSB84X1R	0.09/32.45
December Total =	0.27/97.36
All Time Total =	0.96/377

The first thing I should comment on, is the sum of bitcoins I have invested in two of these loans. In previous months I have tried to avoid lending more than 0.02 BTC to any single loan, in order to invest in as many projects as possible and subsequently spread risk. This has the advantage of mitigating the harmful effects of any defaulted loans. The two listings mentioned here were very well suited to my investment strategy however, which is why I decided to break with my normal investment pattern. These two borrowers fit perfectly into my strategy for the following reasons:

Both are eBay power sellers. One with over 1k and the other with 4k positive feedback
Both wrote a detailed loan description, explaining that the loan was to be used to grow their eBay business
Both have satisfactory income, meaning that their businesses are already doing well
Both are USD denominated loans

There are plenty of other smaller signals which made me lend to these borrowers, but these 4 points are the ones that swayed me.

With this in mind, here is my up-to-date investment portfolio:

As you can see, my portfolio now includes 16 loans, spread nicely across currencies and medium-to-high risk credit ratings. My expected internal rate of return (IRR) for bitcoin denominated loans is 27.77% while US dollar denominated loans have an expected IRR of just over 19%. I believe that the IRR on Bitbond is calculated independently of probable defaults, so it is fair to assume that a few of these borrowers will fall through, bringing my IRR down in the process. That being said, if I end up making a close-to or above double-digit return I will be very happy.

I should also mention that 4 of these loans are still in funding, meaning that they might fail to receive the 60% necessary for the pay out and fall through. In that case I will receive my bitcoins back and re-invest them on the platform. The 4 bitcoin loans categorised as “current” have been fully funded and 3 of which have begun to repay. Here you can see my dashboard:

The fourth loan is currently in a grace period and I am hopeful that he will repay in the coming days. Looking at the loan, we can see that he otherwise has a solid repayment history, which is why I am confident he will repay in time.

Stupidly, I invested around 0.15 BTC in this bitcoin loan which is way above the threshold I set myself at the beginning. Interestingly, the three borrowers who repaid on time, all have significant eBay accounts connected, whereas the late borrower does not. This is a good portent for the vast majority of my bitcoin investments on Bitbond, as they validate my lending strategy, highlighting the importance of high-quality eBay accounts.

Ending December’s report on a high note, the bitcoin interest I received is significantly more than I could have hoped for when I placed the investment. This is due to the meteoric increase in bitcoin’s price since I placed the bids. Specifically, the value of my bitcoin investments in october, when I placed the bids for which I am now receiving interest, was 0.45 BTC or around $117.90. On the 1st of December, when I received my repayment, the value of 0.45 BTC had grown to $162.26, bringing up the value of my received interest significantly.

Now, I completely understand that the price of bitcoin is volatile and a price crash might see the value of my bitcoin returns come back down, but that is why I have diversified my Bitbond lending portfolio to include a healthy mixture of currencies.

Bitcoin Lending Report - Conclusion

I have to say that in total I am very happy with my experience on Bitbond so far. Receiving my first interest is reassuring and I am now confident that I can make significant earnings if I stick to my investment strategy. Connected and high quality ebay accounts seem to be a good indication of a borrowers ability to repay, as shown by the interest I have received already. Further, I need to remember to keep my investments in individual loans around the 0.02 BTC mark, and only lend more if the borrowers show themselves to be the perfect fit, as two did this month.

Overall, I am excited to see what the future holds for my bitcoin investments. Let me know what your thoughts on bitcoin lending are, and merry Christmas.

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Bitbond Review: My Bitcoin Lending Test

September 3, 2015 by John Carson 7 Comments

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Bitbond Company Demo

Please note that this article should not be considered as investment advice.

Q1 and Q2 of 2015 have been respectable for p2p investors. Prosper reported crossing $4 billion in total loans issued, and an average ROI of 6.87% for loans originated by September 2014. Lending Club announced successfully breaking through $1.9 billion in originations in Q2, while providing the average investor with an ROI of 6-8%.

Source: https://www.lendingclub.com/info/statistics-performance.action

Ryan Lichtenwald, of Lend Academy and this blog, has been reporting healthy returns on Lending Club and Prosper of around 10%. Peter Renton of Lend Academy fame, reported an overall p2p lending return of 11.30% in Q2, while Simon Cunningham of Lending Memo has managed a massive 13.3% ROI on the two p2p lending giants.

As you can see from the graph above, Simon, Peter and Ryan represent the 90th percentile. The rest of us can expect significantly less from our investments on p2p lending sites.

So the question arises: Is there a p2p lending site out there that can bring 13% APR to the average investor and significantly more to the experts?

That is when I stumbled across Stu Lustman’s p2plendingexpert blog. Stu has been investing in p2p bitcoin lending platforms since March 2013, and is an expert in his field. Through him I have learnt that bitcoin investors have 3 main advantages over their established counterparts:

the ability to diversify investments globally
access to higher interest rates
lower or no service fees

Below, I have pasted in a screenshot of Stu’s earnings report for May, which shows his monthly ROI’s across all investment hubs.

As you can see, the monthly ROI on his bitcoin loans are significantly higher than on his Prosper and Lending Club investments.

Armed with this fresh piece of information I began to do some research into p2p bitcoin lending and tried to identify the key players. The three biggest p2p bitcoin lending sites are Bitbond, BTCJam and BitlendingClub.

Why I’m writing this Bitbond review

I did a little digging to find out which platform offered the best service, and decided to go with Bitbond, after I noticed they had been featured in Lend Academy. They specialise in bitcoin loans for small businesses. This is a p2p lending sector that is growing fast and one that I find particularly attractive. Other bitcoin lending platforms focus on payday and personal loans which tend to have higher default rates and which are more risky.

In order to find out more about the sector and Bitbond specifically, I decided to write this first Bitbond review.

A loan listing on Bitbond

Since the borrowers on Bitbond are primarily small ecommerce businesses, their borrowers are entrepreneurs who have connected several social media and eCommerce accounts.

I particularly like that I can check out the eBay shops of borrowers, as I tend to trust large amounts of positive customer feedback more than the number of friends on facebook, or Twitter followers a borrower might have. At the same time this is information that you can not find on any of the conventional p2p lending platforms as far as I know.

In the screenshot shown above, you can see that this borrower from Kentucky, has 2315 positive reviews on eBay. For me, that is a signal that this person represents a good investment. It also instilled some confidence in me that I could find reputable borrowers on Bitbond, and would get my investment back, together with an attractive +10% ROI.

So what do you need to know about Bitbond

The first thing you notice when you sign up for Bitbond is the slick and easy to navigate interface. All the information you need is presented in a clean, easily digestible way. Below, I have included a screenshot of their loan listings page.

Here you can see the amount requested by the borrower, the country of residence, the interest rates, the credit rating, the terms and denomination of the loans.

This last point is worth explaining in a little more detail here. The denomination of the request determines the base currency of the loan. If the loan is denominated in dollars (green dollar sign in the CCY column) all values are calculated in USD. Thus, if the price of bitcoin should fluctuate, the repayment value and the returns investors make will remain unaffected.

The top three loan listings are coloured beige, and I have no idea why. The terms of the loan can range from 6 weeks to 5 years.

Coupled with higher interest rates commanded by borrowers from around the world, this provides some pretty attractive prospective returns for me as an investor, but more on that later in this Bitbond review.

Another feature I found helpful was the ability of investors and borrowers to communicate via the comments section of the loan listings pages.

This feature allows you to gauge your prospective investment before lending him/her your bitcoin. For me, getting to know the people I invest in is a crucial part of my investment strategy.

Availability of downloadable historical data

Another reason I decided to write this Bitbond review, was the availability of their historical loan data. This is an option that many of us know and value from platforms like LendingClub and Prosper. Bitbond is the only bitcoin lending platform that offers the same kind of data transparency as what we are used to from the traditional platforms. I could download this for free and easily as a CSV file on their statistics page.

Access to the data is important because it allows me and other investors to create a winning investment strategy. The public availability of this data also suggests to me that they know their business model is working.

Since the company is only 2 years old, the data is not yet as extensive as with the p2p lending giants, but it is enough for a start. With this information in hand, I could start to create a coherent investment strategy. I am a young, single man, so have relatively little to lose and therefore invest quite aggressively.

This is how you get started with bitcoin lending

Besides signing up, the only thing you need to get started is to buy some bitcoin. There are multiple platforms where you can do this. One that I find super easy to use is Coinbase. Once you have purchased your first bitcoins, you can send them to Bitbond.

The deposit gets credited in roughly 30 minutes which highlights one of the many advantages of bitcoin as a payment network. Transactions are quick and at the same incur negligible fees. That’s all you need to do and you’re ready to make your first investment in a bitcoin loan.

Getting to know the borrowers

The first thing I did after registering (took less than 2 minutes) was check out the borrowers I might be interested in. I particularly liked the layout of the individual loan listings pages. Below I have provided a screenshot of one of them.

Here I can check the accounts the borrower has connected, where he is located, the size of his salary, and what the purpose of the loan is.

In this case, the borrower is a man from Quebec who earns a significant wage, has impressive eBay seller feedback and a solid loan history. Thus, I decided to invest. Not much at first of course, but just a little bit to test the waters.

Here’s a short video explaining how to invest in a Bitbond loan:

Diversification and the AutoInvest tool

As with all investments, diversification is key in p2p bitcoin lending. What is different about Bitbond in this regard however, is the size of the bids investors are allowed to make: as little as 0.01BTC, or around $2 US dollars at today’s price. This allows me to diversify massively, across people, continents, and credit ratings, thus minimising risk.

This brings me on to the AutoInvest tool, which I am excited about but haven’t had the chance to use yet. I found this pretty intriguing video of their CEO Radoslav Albrecht explaining it:

Where Bitbond needs to improve

Besides the still shallow historical loan data, the number of key performance indicators available is the second weak spot worth mentioning here. Compared to Lending Club and Prosper, Bitbond does not provide a significant number of KPI’s, and has no graphic or visual display of any of its data.

That being said, the CSV file available for public consumption, definitely benefitted me and helped me create my (hopefully) winning investment strategy (more on that at the end of month).

Conclusion

Bitbond offers a high yield alternative to p2p lending sites. As Stu has shown in his monthly reports, bitcoin loans have the potential to outstrip the ROI of p2p loans. As investors, we should focus on the ROI as the key KPI to keep in mind.

This is by no means a call to abandon Lending Club and Prosper. They have shown that they can produce healthy returns on our investments. However, in 2015 bitcoin lending should be part of any healthy portfolio which aims to diversify and minimise risk.

Thus, the 13% average APR advertised by Bitbond should be considered attractive. The sleek interface and good user experience, coupled with the ability of small and large investors to yield high rewards, make Bitbond and p2p bitcoin lending an attractive proposition.

Finally, I should add that this Bitbond review was just a start. I will be writing monthly updates on my returns on Bitbond, giving you an insight into my p2p bitcoin lending experiment.

Thanks for reading.

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