Finally, Bankers Are Getting Some Competition

As good credit is getting harder and harder to get – at least for ordinary people and small businesses – new solutions is starting to emerge. Like the lending clubs.  The concept is not new – in fact – this is what the good old banks once used to do.

“Folks just need a way out.”

Don Burke


Planet Depos owner Joe DiMonte was struggling with his bank to get funding for his newly started business, so he reached out to Lending Club, an online peer-to-peer lending service, and got his money in less than 2 weeks.”Someone from California gives $25. Someone from Alaska or Florida gives another $75 and before you know it, you’re up to $15,000,” the happy business owner reports.

The staff of the 9 month old startup is working to get depositions taken all over the world.

But this time last year, Planet Depos, barely had a camera or a court reporter.

And, they struggled to get any help from a bank.

“You go there, and you just kinda get laughed at,” says Planet Depos owner Joe DiMonte.

So DiMonte reached out to Lending Club, an online peer-to-peer lending service, and got his money in less than 2 weeks.

“Someone from California gives $25. Someone from Alaska or Florida gives another $75 and before you know it, you’re up to $15,000,” he says.

Ages ago, when simplicity reigned, neighbors were the real community bank.

Now there’s a rebirth of this kind of transaction, through what’s called peer-to-peer lending.

“It’s not being paid to a nameless, faceless bank. They know there’s a real person on the other end. It’s the same for investors,” says John Donovan COO of Lending Club.

Donovan says the approach is simple; credit worthy borrowers get low interest rates and investors see big returns.

However, the selection process is very detailed. You must have a score of at least 660 to qualify.

Peer lending differs from bank lending in the way they diversify their loans. Today’s large banks aren’t putting all their eggs in one basket, and the people who invest get to spread out their risk.

The lending clubs are putting a few eggs in a few baskets. Borrowers get money from different sources and by given only smaller amounts, they also reduce their overall risk.

“I have 899 that are currently in some stage of being paid back – and current,” investor Don Burke says.

Burke joined a lending club 18 months ago to diversify his investments.

But the stories behind the loan applications, made him clinch the deal.

Loans From The Heart

One of his first loans truly tugged at the heart:

“A fella ended up in a wheelchair and needed to make his home more wheelchair accessible,” he says.

Something Mr Burke probably will have to do in a few years, as he has muscular dystrophy.

“Folks just need a way out,” Burke says.

A Game Changer

Both givers and receivers call this approach to banking – a game changer.

Business owner Joe DiMonte says he hopes to complete the circle.

“Maybe one day I’ll be an investor on Lending Club.”

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1 Comment

Filed under International Econnomic Politics, National Economic Politics

One response to “Finally, Bankers Are Getting Some Competition

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