CommunityLend Launches Licensed Peer-to-Peer Lending in Canada
Nearly three years after starting to build out what they hoped would be the first social lending company in Canada, CommunityLend has finally launched for borrowers and lenders in the Canadian province of Ontario. Despite having a lot of the technical pieces in place for years, CommunityLend’s launch was continually delayed for regulatory reasons. Now that CommunityLend is licensed and registered in Ontario as a Portfolio Manager and Exempt Market Dealer, the site is available for borrowing and lending.
CommunityLend is most like its American cousin Prosper in that borrowers create loan listings for $1,000 to $25,000 Canadian, set a starting interest rate (which must be above a minimum rate for their credit rating), and add some information about why they need the loan. Lenders bid in a competitive auction to determine the final interest rate at which a loan will be issued. CommunityLend provides the borrower’s credit rating (AA, A, B, or C), along with an “affordability rating” and a “stability rating” (both 1-5), which indicate the borrower’s ability to afford the loan, and the relative stability of the borrower, in terms of employment, residence, and marital status. With these three simple ratings, CommunityLend has provided useful and easily understood metrics that should help lenders make decisions commensurate with their appetite for risk.
Interestingly, CommunityLend has chosen to mirror Prosper by offering their own take on Prosper’s “Groups” concept, which they appropriately call “Communities“. The idea is that communities of like-minded borrowers (quilting circles, book clubs, hockey teams) will exhibit higher responsibility in loan repayment than unaffiliated borrowers. Prosper’s implementation of this structure (which differed in that cash incentives were offered to group leaders) was eventually cut drastically and all but removed from the web site.
On the lending side, CommunityLend is open to both individual and institutional accredited investors living in the province of Ontario. The minimum bid amount is C$100, and bids must be made in C$100-increments. Individuals are also prevented from bidding more than 10% of the loan amount, which seems like a ham-handed way of encouraging diversification.
Borrowers pay a loan closing fee of 1% to 2.5%, depending on their credit grade, with a minimum fee of $75. Lenders pay an annual administration fee of 1% of the outstanding principal balance of all loans held; this fee is extracted on a monthly basis.
Congratulations to the CommunityLend team for receiving regulatory approval, launching their site, and being the first properly regulated peer-to-peer lending site in Canada.
Related posts:
- Pertuity Direct Launches Mutual Fund-like P2P Lending
In a press release today, peer to peer lending site Pertuity Direct took the “beta” label off their site and started accepting new borrowers and lenders. Pertuity Direct’s... - IOU Central Suspends Lending Activity in Canada
Only a few weeks after launching their web site, IOU Central shut down their web site on February 29 in response to a request from securities regulators in... - LendingClub launches social P2P lending site on Facebook
LendingClub, a new person-to-person lending site based in Sunnyvale, CA, launched during last night’s Facebook f8 event in San Francisco. LendingClub, headed by founder and CEO Renaud Laplanche,... - Peer to Peer Lending? Lending Club Funds 24% of Loans
Like most other social lending sites, Lending Club‘s home page includes saccharine quotes from satisfied customers. The latest happy couple is Anna & Roger from Buffalo, who like... - IOU Central becomes Canada’s first P2P Lender
Canada’s IOU Central launched yesterday, becoming the first person to person lending site in the great white north. CommunityLend, which had made their intention to launch public months...
more good news form UK, YES-secure.com also live
Hi
More competition in the UK with a new entrant: Quakle