Under the terms of the agreement, on April 26, 2009, Loanio licensed their source code to an unnamed corporation. Loanio sold the code under a perpetual term (i.e., forever), and in return received $375,000, of which $100,000 was paid upon signing. The balance will be paid over 18 months beginning in September 2009. It would be fascinating to know who licensed Loanio’s code, especially since, among P2P lenders, it is one of the least mature. The Loanio site was only active for a few months during Loanio’s original launch in October 2008.

The remainder of Loanio’s filing looks fairly straightforward, with not a lot of changes to their original marketplace model. It’s clear with this revision that the SEC asked Loanio to clarify and expand on a few subjects, notably the role of a future “national lending partner” that might help them escape state-by-state lending regulations. (Lending Club and Prosper use WebBank as their national lending partner, allowing them to accept loan applications from borrowers in almost every state.)

Among the 7 loans that Loanio issued during the few months it was active, Loanio has reported that as of June 30, 2009, one of the loans has become 30 days past due. The only other notable detail about the company is that the engineering team has shrunk since the last filing from 5 full-time to 3 part-time members, befitting a company that’s running out of cash while they wait on regulators to approve their registration.

Related posts:

1. Don’t Count Loanio Out; Files S-1 with SEC
2. Be Employee Number 3-6 at Loanio; They’re Hiring
3. Prosper Files Sixth S-1 Amendment With SEC, Corrects CEO’s Name

The CTO role describes an engineering team that might be offshore. Not a huge stretch for a startup, especially one as cash-strapped as Loanio, but a tough decision for any young company. Other than that, none of the job listings is particularly revealing, especially in comparison with their S-1 (which has a ton of detail), but it looks like Loanio is trying to put in place a management team of six before they head out for venture capital. Along with founder and CEO Michael Solomon, they’ve already got a CFO, so the next hire would be employee number 3.

As described in their S-1, Loanio has been self-funded by Solomon (and possibly other angel investors) from the beginning, incurring over a quarter million dollars in expenses. As a result, all of the job listings state that Loanio is building its management team in anticipation of raising VC funding, and are looking for candidates who “understand and would be able to delay full salary for 4+ months, if necessary”. That’s a tall order in a recession like this one, but if you’re out of a job, it might just be worth your while.

Loanio is headquartered in Nanuet, New York, a small town about 20 minutes north of New York City. You can enjoy a historical and pictorial tour of the town online.

Related posts:

1. Loanio Files Amendment to S-1 with SEC; Cedes Code for Cash
2. Don’t Count Loanio Out; Files S-1 with SEC
3. Prosper Won’t Stop ’til They Get Enough SEC Filings

This regulatory filing is similar to the first steps taken by Lending Club, Prosper, and IOU Central. (To date, only Lending Club has been approved.) Unlike Prosper and Lending Club, however, who had originated millions in loans and had the opportunity to test their platforms and raise money before submitting to the will of the SEC, Loanio has had a tough row to hoe. According to the S-1, Loanio was formed in April 2007 and eventually launched on October 1, 2008, only to be shut down eight weeks later on November 25.

The S-1 itself is very similar to those filed by other peer lenders. In fact, the diagram explaining the flow of money is common among all 4 U.S. P2P lending companies:

Among the unique details of Loanio’s proposal:

• Borrowers can pay $35 for “Platinum verification”, in which Loanio will manually verify their identity, address, employment, and finances in an effort to improve their chances with lenders.
• Loanio also allows borrowers to specify a co-borrower (essentially a co-signer) on their loan. For certain low credit grades, a co-borrower is required.
• Borrowers (or their co-borrower) must have a minimum Experian VantageScore of  604.
• Borrowers can request loans with terms of 12, 24, 36, 48, or 60 months.
• Origination fees are 3% for single borrower loans, or 4% with a co-borrower.
• A borrower may choose to receive a loan if at least 35% of the loan is funded by lenders.
• Lenders may bid as little as $20 per loan (down from $50 previously).
• Loanio has not yet lined up a national lending partner (like WebBank for Lending Club and Prosper), or a broker dealer to administer a secondary market (like Folio Investing for Lending Club).

An interesting disclosure about the company funding loans a la Lending Club appears on page 10:

Q: Does Loanio participate on the platform as a lender member?

A: Yes. From time to time, Loanio, Inc. may act as a lender member on the platform to provide additional funding for the borrower loans. In order to avoid any conflicts of interest that may arise due to the fact that the Company has access to information not available to the general population of lender members, Loanio will not participate in the bidding process in any way. Instead, after the bidding period for a loan request expires and the interest rate has been determined through the auction process, Loanio may at its discretion fund part or all of the difference between the funding commitments made by lender members and the total value of the loan request. As a result, Loanio’s participation on the lending platform will not impact the auction bidding process or the setting of the interest rate on the Notes or the corresponding borrower loans.

You have to give Loanio founder/CEO Michael Solomon credit (no pun intended) for sticking it out this long. According to the filing, during the eight weeks that it was active, Loanio site issued 7 loans for a total of $14,358. For comparison, during their first two months in operation, Lending Club issued $1,365,350 in loans (Sep 13 – Nov 13, 2007), and Prosper issued $1,859,398 in loans (Feb 6 – Apr 6, 2006).

Not only has Solomon stuck it out for over two years, but according to the filing, he has bankrolled the entire operation on his own: about $250k from inception through Q1 2009. Aside from the 41 year-old Solomon, Loanio’s only other full-time employee is Todd Walters, 27, who is listed as the acting CFO. All of Loanio’s engineering, marketing, and legal work is outsourced.

Loanio’s S-1 is relatively short and straightforward. Perhaps with IOU Central and Prosper still entangled in details, the SEC will throw Loanio a bone and approve their registration? It’s only for $50 million – one tenth of  Prosper’s request, and a fifth of IOU Central’s. Hopefully the small amount and Solomon’s tenacity will pay off in the end.

Related posts:

1. Loanio Files Amendment to S-1 with SEC; Cedes Code for Cash
2. Be Employee Number 3-6 at Loanio; They’re Hiring
3. IOU Central Files S-1 with SEC