July 29, 2013
I’ve come across two recent articles that hammer home the point that the landscape of small business lending continues to change.
And speed to market is more important to a segment of borrowers than rate.
To meet his company’s payroll a borrower pawned a Picasso painting and obtained a $39,500 loan for six months. He was willing to pay the monthly 3% interest rate in exchange for immediate access to cash.
And check out what crowdfunding lender Kiva is doing. They continue to innovate their lending products and forge partnerships.
Borrowers apply for Kiva Zip loans by filling out an online application form. Every borrower must be endorsed by a trustee. Trustees never handle the money, but their public reputation is tied to the repayment record of the borrowers they endorse.
Lenders visit the Kiva Zip website, and choose which borrowers they want to make a loan to. Once a loan is fully funded, Kiva Zip sends the loan amount directly to the borrower. Over the course of the loan term, the borrower promises to pay their lenders back in regular installments. As the lenders get their money back, they can relend the money, or withdraw it from Kiva Zip.