"Crowd Funding" Bill Passes in US House, Now Moves on to US Senate

On November 9th, HR 2930, the "Entrepreneur Access to Capital Act", passed in the US House of Representatives, opening the door to crowdfunding ventures. The bill was passed in the Senate in early 2012.

What is "Crowd Funding"?

In essence, "Crowd Funding" means raising small amounts of money (capital) from large numbers of people (investors), in exchange for a return or other form of interest in that business.

Crowd funding offers a potential boon to existing small businesses who are suffering through an incredibly tight credit market, not to mention startup businesses whose access to capital is equally crippled by archaic regulation and burdensome (incredibly complex and expensive) compliance processes.

Removing these burdens could be a potentially very positive step to spurring economic growth, both domestically, and, as many other developed nations have similar restrictions, globally. This is one area where old laws need to catch up to new technological reality. And fast...

Peer to Peer Lending: New Social Lending, Credit & Loan Websites

P2P Credit: Personal Loans and Investing

P2P-Credit.com is an online social lending marketplace which connects borrowers with both individual and institutional investors. Borrowers apply for loans and investors sort through the (anonymized) loan applications and invest from $25 to $35,000 into those loans. P2P platforms handle all servicing of the loans, borrowers receive lower rates than from traditional lenders, and investors can achieve high yields on an investment opportunity which was previously only open to banks and credit card issuers.

Integration of this type of socio-financial networking infrastructure with social networking functionality seems inevitable - a big opportunity.

P2P Credit offers many loan types:

• Personal Loans (for any use)
• Debt Consolidation Loans
• Credit Card Consolidation

Similar providers are offering financial services such as motorcycle financing, vacation financing, wedding financing, et cetera, via online lending platforms.

Some of the newer online loan providers are offering loans to military members. In addition to personal loans, some of these lenders are also providing business loans for veterans looking to start up a veteran-owned business or to finance expansion of an existing business. Another new market for online lending is healthcare financing and medical loans (these are consumer loans), where online loans are provided to finance medical procedures, surgeries, and things like dental care (think braces for the kids), cosmetic procedures, and fertility / IVF.

The P2P personal loans function exactly like bank personal loans. Loan terms range from 1 to 5 years, with loan amounts to $35,000 per individual borrower. Rates are set, primarily, based upon the credit score of the individual borrower, and investors merely choose which loans to fund and how much they will invest in each loan (the minimum is $25 per).

Platform investors receive all proceeds from the interest rates charged to borrowers, minus a small servicing fee, and even collect any late fees that borrowers may incur, exactly like a bank or credit card company would profit from such an event. In the event that a loan is late or ceases to repay, platforms handle all collection efforts on behalf of investors in P2P Credit loans, just as a bank would.

P2P lending's returns are very attractive. The average ROI is around 8% for a well diversified loan portfolio.

Access to the new US platforms for peer to peer lending is available here.