Firstly, I know, terrible pun.
Today I woke up to some interesting news coming out of the team at Pledgeme. They have applied for their Peer to Peer lending license from the Financial Markets Authority. With Harmoney, LendMe, Squirrel Money and as of last month Lending Crowd jumping into the mix, things are going to get very crowded. (Ugh, Sorry, I did it again).
Pledgeme already offer “Rewards” based crowdfunding (Similar to kickstarter) and equity crowdfunding (Invest and you get a % of the company). So to add an interest based crowdfunding on top of that is an easy expansion for them. Interestingly, Pledgeme is not going after consumer debt, but rather it is going after “Organization” debt. It seems like this can range from companies, to social enterprises to non profits. So the scope is very large, but it’s very much different from other offerings currently out there. Ontop of that, Pledgeme seem to be going for the route that these organizations already have their crowd, and are looking to utilize them to get funding rather than the existing model of Harmoney and the like, which is to almost blindly connect lender with borrower through the platform.
It comes as an interesting time as Harmoney is under fire for “double dipping” on investments. That is refinancing a large portion of existing loans to double dip on fees (While the original lenders lose out on interest). This seems to still be happening pretty regularly. At the time of writing, there is a total of 41 borrowers looking for finance, but of that 41, 26 are actually rewrites. So, atleast right now, Harmoney is double dipping on over half of it’s lending. Crazy stuff.
While I’ve been a member of Harmoney since inception, I’ve never bothered to invest. Simply for the reason that you get exceptionally minimal information about the borrowers, often a one line explanation of why they need the money. Often the lending makes zero sense too (People borrowing to repay their student loan and go overseas, but Student Loan interest is currently sitting at 5.3%, MUCH lower than Harmoney’s rates).
As an example, here is a typical borrower you come across. Looking to consolidate existing debt which is pretty normal. But really, you have very very little information about the persons ability to repay. But maybe I’m just a bit of a wimp when it comes to investing 🙂
Taking a look at the existing Pledgeme platform gives me hope that borrowers will provide much better info on why they want to borrow.
My only other debt funding experience has been a quick sign up to Lending Crowd. But so far, I haven’t seen any debts actually available to fund. Maybe they are too late to the game? It’s been telling me that there are no loans since signing up, so I’m not sure what the deal is.
I would love to hear from anyone else that has an experience using the other platforms (Squirrel Money, LendMe).