Fast Company

Lending Club and Virgin Money Team Up to Salve the Recession With Social Network Lending

uncrunch

Credit card companies are canceling your account. Student loans, home mortgages, and auto loans are all getting harder to obtain, and the big bank where I have an account is insolvent; how about yours?  

Starting today, a range of next-generation financial services companies, all of whom employ technology in innovative ways, have teamed up to market some much-needed help to consumers with the Uncrunch America campaign. Like a team of of financial Superfriends, Lending Club offers personal loans through a peer-to-peer model, Virgin Money (yes, a pro-social for-profit offshoot of the Branson empire) has peer-to-peer mortgage financing, OnDeck Capital offers small business loans with a proprietary holistic scoring model, CreditKarma has credit score tools, and Geezeo offers personal finance and budgeting tools.Since the beginning of the year, UnCrunch members have lent almost $75 million to one another.

The site has an overwhelmingly grassroots, patriotic feeling and look, as though it were a stray page from MoveOn.org or recovery.gov. "The American people will solve the credit crisis by helping each other," it proclaims. 

Does this fine-sounding premise hold up? Peer-to-peer lending is one of the oldest ideas in finance. In its online incarnation, it doesn't have anything like the volume yet  to fill the trillion-dollar gap in the consumer credit market. But it does offer an intriguing alternative to the standard profit-happy credit model, and it's been spreading as a close cousin of the microfinance or social lending movement. As a niche both for borrowers shut out of the credit market and for investors looking for a better return than the stock market can offer, it's likely to grow.

[via Uncrunch America ]

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4 Comments

  • Mauricio Llaguno

    is there anyway to get this company to latin america? mexico could be a great market and a greta help for the small and micro companies (pymes) get a loan from any bank , vene before the crisis was almost imposible, in my case i need not a big loan to get some new technology for my editorial business i tried with regular banks in mexico but no anwer at all...

  • Anon Y Mous

    "Caveat Emptor" -- Let the buyer beware! Although Virgin Money appears to have taken the time to be properly licensed (and is therefore government regulated), Lending Club takes the position that it will rent-a-charter of WebBank, an Industrial Loan Bank that's had problems (with factoring loans) in the past. In addition to origination licenses, Lending Club should have servicing licenses in some states in order to service current loans, and collection agency licenses to service past due loans. I would avoid Lending Club until they are properly licensed and state regulated.

  • khurram zaveri

    True.. Recent years have proved that large banks have become "too big to fail" and extremely dangerous. Its time to start up the financial industry at the grassroots level.

    Valencio
    DesktopBudget.com

  • D.K. Kidd

    We are so more and more evidence that banks rarely if ever have our best interests at heart. We now have the technology as well as the model to take peer to peer lending mainstream.

    It's time we took matters into our own hands! We don't need to wait for a giant government stimulus package. We have over 6 trillion dollar sitting in "high yield" savings and CD's.

    Lets work together to Uncrunch America.

    dk
    Product Ambassador
    lendingclub.com