Funding Circle alternatives are good for the peer-to-peer lending industry

Businesses and consumers are increasingly driven by ethically minded decisions. In the aftermath of a financial crisis which has exposed the worst aspects of financial services, investors are more inclined to see their money out towards to good use, rather than supporting reckless speculation.

Peer-to-peer lending does this. With the dual benefits of loans for growing SMEs and above-average returns for individuals, it is curing two of the most noticeable after effects of the crisis.

The market leader, Funding Circle, has done much to raise the profile of the market and should be congratulated for it, but there is another way to connect businesses and lenders…

 

Key Differences to Funding Circle

With Funding Circle you dont get to choose the loans, so you a dependant on trusting their credit risk team. As a public company, they have shareholder pressure to lend, since this is the primary driver of their revenues.  But we know that economic cycles can impact on confidence and business performance, so wheras you might choose to hold off from lending in a recession, its unlikely that Funcing Circle will self-sabotage their busienss model.

Other differences

The BuyBack Guarantee allows risk adverse lenders to share the risk with other lenders on the platform with an appetite for higher risk and reward. This innovation is unique to rebuilding society and works well for new lenders.

We facilitate relationships between businesses and their lenders by encouraging lenders to go the extra mile and earn their interest by simply helping out businesses where they can. Examples of this are:

  • Following the borrower on Twitter and retweeting messages
  • Making a LinkedIn introduction to a potential client
  • Suggesting a candidate for a job opportunity

We’re passionate about rebuilding society by changing attitudes and habits towards money and ultimately making it all go further.

In Summary

There’s a saying turnover is vanity, profit is sanity. The same is true when it comes to lending, its good to have volume, but a healthy net return is more important.  At the time of updating this post, we had average Net Return of 7.7% pa vs Funding Circles 5.5% pa. 

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