Loanora is a very interesting new entrant in p2p lending. They are doing something completely new, at least in this country, and that is focusing on secured commercial rest estate loans funded by individuals. They are taking a narrow niche within commercial real estate – established franchises looking to secure funding to develop or refinance their property.
The loans are expected to be the $250,000 to $1,000,000 range with a term typically of three to five years. The interest rates on these loans will vary from 7-12% depending on the size and term of the loan as well as the credit profile of the borrower.
Loanora was founded by former Wall Street investment banker, David Elder, who has been involved in small business lending for more than 20 years. When I chatted with Elder last week he explained that there is a huge glut of commercial real estate loans coming due in the next year or so and many small to mid-size companies will struggle to refinance these loans. His company hopes to take a small slice of this pie.
Loanora will take between 50 and 100 basis points of each loan with expected investor returns to be in the 9% – 10% range. But unlike existing p2p lending he expects default rates to be very low. He will only lend to established franchisees that have multiple properties already. There is a minimum investment requirement of $5,000 per investor and when they open for business some time in the second quarter only California investors will be eligible. They expect to roll out nationwide eventually, but right now they have licensing in place just for California.
They are certainly a company to watch. They have a strong management team with a lot of experience in commercial lending. With expected investor returns of 9%, backed by property, they could become a viable alternative for p2p lenders looking for a more secure investment.
There is a new kid on the p2p lending block for student loans, InvestinMyEducation.com. It is the brainchild of college student, James Worboys, who saw the real gap in college financing brought on by the credit crisis on his campus. He thought there was an opportunity to help his fellow students obtain financing for their education through the peer to peer lending model.
James has partnered with web developer, Marc Schäffner-Gurney, a recent graduate of Rochester Institute of Technology with a degree in New Media Interactive Development. Together they have created the site, which is getting ready to accept student loans for the fall semester.
How it Will Work
Students must sign up for loans on their site with an adult cosigner and the loan will only be approved for listing if the cosigner has a decent credit history.
Students must provide a complete school history so investors can some idea as to the character of the student.
There is a 2.5% origination fee paid by the student and a 0.25% loan servicing fee, also paid by the student.
Interest rates will be capped at 9% and will be the same for borrower and investor.
Money will be paid directly to the school, not the student.
Investors have a minimum investment amount of $500 per loan.
There is a maximum four-year moratorium on collecting payments from borrowers to allow the student time to graduate.
The focus of InvestinMyEducation.com will be on the college alumni community. They will be allowing and encouraging a lender-student relationship if both parties are open to it. They see it as a way to allow wealthier graduates, rather than just donating money, to directly help the students at their alma mater.
It probably won’t have much interest for the wider p2p lending community with interest rates capped at 9%. But many people maintain strong ties to their alma mater and this is one way they can give back in a real and measurable way.
Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.