Peerform Offers an Institutional Approach to Peer-to-Peer Lending
Prosper and Lending Club have dominated the peer-to-peer lending industry in the United States for the last for years, but a new wave of peer-to-peer lending companies, including LendStreet, National Family Mortgage and Rebirth Financial are offering their own take on peer-to-peer lending. One of these companies, Peerform, plans to compete in the peer-to-peer lending with some unusual bedfellows. Rather than spurning financial institutions as inefficient and unnecessary as Prosper and Lending Club have, Peerform is embracing existing financial institutions to help build their business.
Peerform CEO Mikael Rapaport and the rest of the company’s executive team largely come from financial institutions, including investment banks and hedge funds. Rapaport previously managed a New York structured credit derivatives desk at Cantor Fitzgerald and held positions at ICAP North America and Bear Stearns. Other key executives include Elie Galam, Founder and Investor Relation, Meytal Benichou, Founder and CTO and Ouriel Lemmel, COO.
Rapaport commented about the role financial institutions can play in the world of peer-to-peer lending in a recent interview, “There is a real need for financial institutions for this asset class. We are bringing institutions to help us start but eventually, our goal is to become a real peer to peer lending platform where private investors are able to invest directly.”
The company has a business model similar to that of Lending Club and Prosper, but has a much different pitch to investors than its competitors. Rather than allowing investors to select individual loans by way of a marketplace, Peerform is developing tailored investment products, such as tranches products and capital protection options. These products are alternative investments, but they are much more traditional financial products than the marketplaces offered by its competitors. Individuals looking to invest in Peerform’s products must qualify as accredited investors. The company also has taken a more conservative approach with borrowers, hoping to the reduce risk of, add liquidity to and build confidence in the peer-to-peer lending industry.
The company is lending to borrowers in 13 states, including Arizona, California, Connecticut, Florida, Georgia, Illinois, Louisiana, Maryland, Michigan, Missouri, Ohio, Virginia and Washington. Peerform is offering 3-year fully-amortizing fixed-rate loans with interest rates up to $25,000. Interest rates that borrowers pay range from 4.56% to 27.08%. Loan fees depend upon the borrower’s creditworthiness.
The following internally-produced video describes Peerform’s product:
Peerform is anticipating to have facilitated between $10 million and $15 million in loans before the end of 2011. The company has ten employees and has received angel funding totaling less than $2 million.