- Today’s main news: Funding Circle, Stripe partner on small business expansion. Goldman, Citi drop Chinese P2P lenders. RateSetter attracts 75K investors. MarketInvoice gets 56M GBP in equity, debt funding. Hexindai shares credit data with Baihang Credit.
- Today’s main analysis: PeerIQ on bank earnings.
- Today’s thought-provoking articles: The link between marketplace lending and personal bankruptcy. 10 best places to pay down debt. 86 million Americans fear maxing credit cards on large purchases.
- Goldman, Citi drops Chinese P2P lenders. I think it’s safe to say that China’s peer-to-peer lenders are a very bad risk right now, and they will be as long as this government crackdown continues.
- The link between marketplace lending and personal bankruptcy. This makes total sense. The Madden decision caused Lending Club and Prosper to reduce lending in states affected by the verdict. That had a domino effect, evidently.
- Banks see strong earnings. PeerIQ comes through again with a very good analysis of banks’ earnings. Comparisons between Bank of America, Citi, Goldman Sachs, JP Morgan, Morgan Stanley, and Wells Fargo.
- 10 best places to pay down debt. Cincinnati tops the list. Most of these are mid-size cities.
- 86 million Americans fear maxing credit cards on large purchases. Infographic.
- Credit line increases most likely to happen at the beginning of the year.
- Lendio provides over 5,000 Kiva loans.
- Lendio named No. 1 financial services brand by Entrepreneur.
- CrediFi surpasses $29 million in total capital raised.
- Lending Express celebrates $100 million lending milestone.
- Fundation launches digital lending capability.
- One-third of businesses start with less than $5,000 in capital.
- Government cautions federal workers against online payday lenders.
- Most people would loan money to family for a business start-up.
- Unconventional mortgages make a comeback.
- North Capital launches REITless impact income strategies.
- BFS Capital receives $2 billion in funding.
- KeyBank to acquire Laurel Road.
- GROUNDFLOOR lanches real estate investments specific to Georgia residents.
- Community banks increase lending.
- Breakout Capital Finance expands board of directors.
- ProPair adds advisory board members.
- RateSetter attracts over 75,000 investors. Congratulations. Great milestone.
- MarketInvoice receives 56 million GBP in equity, debt funding. Congrats.
- Marcus reveals assets under management.
- Metro Bank shares crash after loans blunder.
- Glenhawk hires from LendInvest.
- Hexindai shares credit data with Baihang Credit.
- China crackdown aims to push P2P lenders out of industry.
- Chinese investors picket P2P lender.
- China tries to control economic risks.
- Funding Circle, Stripe partner on small business expansions. This is an interesting partnership. I’ll be anxious to see how this plays out. It looks like it’s mostly in the U.S.
- Boost Capital parent hits $2 billion in lending.
- India: Matrix Partners invests in LiquiLoans.
- Denmark: Fellow Finance launches.
- India: Former Lendingkart executives launch MoneyOnClick.
- India: Non-metros, women top up on credit.
- Ireland: LendEDU says average student debt at public college is $26,872.
- Indonesia: Zero down payment policy drives multifinance growth.
- India: Sacorooms raises pre-series A funding.
- United States
- Goldman, Citi Drop Chinese Peer-to-Peer Lenders After Crackdown (Bloomberg), Rated: AAA
- Marketplace Lending & Personal Bankruptcy: Cause and Effect (Lend Academy), Rated: AAA
- Strong Bank Earnings (PeerIQ), Rated: AAA
- 10 Best Places to Pay Down Debt (LendingTree), Rated: AAA
- 86 Million Americans Fear Maxing Out Plastic on Large Purchases (WalletHub), Rated: AAA
- Credit Line Increases Drive Consumer Engagement and are Most Likely to Happen at the Beginning of the Year (AP News), Rated: A
- Lendio Provides More Than 5,000 Kiva Loans to Support Women-Owned Businesses Around the World (Lendio), Rated: A
- Lendio Franchising Named No. 1 Financial Services Brand in Entrepreneur’s Franchise 500 (Lendio), Rated: B
- Commercial Real Estate Finance Platform CrediFi Milestone: Total Capital Raised Has Surpassed $ 29 Million (Crowdfund Insider), Rated: A
- Lending Express Celebrates $ 100M Lending Milestone & California’s Golden Opportunities (Crowdfund Insider), Rated: A
- Fundation Launches Digital Lending Capability with Banc of California for Small Business Customers (OAOA), Rated: A
- Entrepreneurs Take Note: Success Is Within Reach (WWD), Rated: A
- Officials caution federal workers of predatory online payday lenders during federal shutdown (News 8), Rated: A
- Most People Would Not Loan Their Loved Ones Money to Start a Business (Fundera), Rated: A
- No Pay Stub? No Problem. Unconventional Mortgages Make a Comeback (WSJ), Rated: A
- North Capital Launches REITless Impact Income Strategies (PR Newswire), Rated: A
- BFS Capital Achieves $ 2 Billion in Financing (BusinessWire), Rated: A
- KeyBank To Acquire Online Lending Business Laurel Road (PR Newswire), Rated: A
- GROUNDFLOOR Launches Real Estate Investments Specific To Georgia Residents During Federal Shutdown (PR Newswire), Rated: A
- Is community banks’ loan growth too much of a good thing? (American Banker), Rated: A
- Breakout Capital Finance expands Board of Directors, appoints Neil Gurvitch and Firoze Lafeer (PR Newswire), Rated: B
- Samsung NEXT, NBKC Executives and Ellie Mae Veteran Join ProPair Advisory Board (BusinessWire), Rated: B
- United Kingdom
- RateSetter attracts over 75,000 investors (Bridging and Commercial), Rated: AAA
- MarketInvoice secures £56m equity and debt funding (MarketInvoice), Rated: AAA
- Goldman Sachs’ Marcus platform reveals AUM (AltFi), Rated: A
- Metro Bank shares crash after loans blunder revealed (The Guardian), Rated: A
- Glenhawk grows team with LendInvest hire following strong start to 2019 (Property Funds World), Rated: B
- Hexindai Begins Sharing Credit Data with Baihang Credit (PR Newswire), Rated: AAA
- China crackdown aims to push peer-to-peer lenders out of the industry (Australian Financial Review), Rated: A
- Chinese investors try to storm company after P2P lender failure (Business Times), Rated: A
- Xi Tells Cadres to ‘Prevent and Control’ Risks as China’s Economic Woes Mount (The Epoch Times), Rated: B
- European Union
- Fellow Finance Launches Peer to Peer Lending in Denmark (Crowdfund Insider), Rated: AAA
- Note to Irish and US parents: college not the only path for your cherished offspring (Irish Central), Rated: A
- Funding Circle partners with Stripe to help small businesses expand (PR Newswire), Rated: AAA
- Boost Capital ups firepower as US parent hits $ 2bn lending milestone (AltFi), Rated: A
- Matrix Partners invests in P2P lending platform LiquiLoans (Techstory), Rated: AAA
- Fintech startup floated by ex-Lendingkart execs MoneyOnClick raises funding (VC Circle), Rated: A
- Women, non-metros topping up on credit, says BankBazaar survey (MoneyControl), Rated: A
- Online rental marketplace Sacorooms Rises fresh funding Pre-Series A (Times of India), Rated: A
- OJK Zero Down Payment Policy Drives Multifinance Growth (Tempo.co), Rated: AAA
Goldman, Citi Drop Chinese Peer-to-Peer Lenders After Crackdown (Bloomberg), Rated: AAA
First came a sweeping government crackdown and a surge in defaults and failures at thousands of China’s peer-to-peer lenders. Now, in another troubling sign for the industry, some of the biggest investment banks have stopped taking them public.
Wall Street firms including Goldman Sachs Group Inc. and Citigroup Inc. walked away from U.S. initial public offerings of Chinese P2P lenders in recent months, people with knowledge of the matter said. Their concerns mainly stemmed from the timing of the deals, with an uncertain outlook for P2P companies and a slumping market knocking down valuations. In each case, the businesses went ahead with their offerings after finding new underwriters.
Marketplace Lending & Personal Bankruptcy: Cause and Effect (Lend Academy), Rated: AAA
A national wave of personal bankruptcies that began in 2008 reached a peak in the year ending September 2010, when nearly 1.6 million bankruptcies were filed.
Filings fell by 1.8 percent for the 12-month period ending March 31, 2018, compared with the year ending March 31, 2017. The data continues a national trend of declining bankruptcy filings since 2010-2011.
An interesting white paper (The Real Effects of Financial Technology: Marketplace Lending and Personal Bankruptcy) co-authored by Dr. Piotr Danisewicz, University of Bristol and Ilaf Elard, Assistant Professor of Finance at Shanghai University of International Business and Economics was released last summer.
Among the many additional conclusions Danisewicz and Elard reach in the white paper are:
- The Madden win triggered Lending Club and Prosper, the two largest U.S. marketplace lenders, to reduce lending in the states affected by the verdict.
- The co-authors attribute the increase in the incidence of personal bankruptcy following Madden to the reduction in marketplace lending. This hypothesis is supported by a number of further results.
- The consequences of Madden are limited to the enforceability of marketplace loans and suggest that the increase in bankruptcy rates following Madden arises predominantly from changes in marketplace lending.
- Danisewicz and Elard also rule out that the rise in bankruptcy following the verdict could be the result of an increase in defaults by marketplace borrowers in the affected states. This may occur if marketplace borrowers are over-indebted and default after being unable to obtain additional marketplace loans in the affected states.
Strong Bank Earnings (PeerIQ), Rated: AAA
Banks had a rough quarter for trading revenues. FICC revenues at MS dropped by 30% YoY and by 18% YoY at GS. Bank of America’s 15% YoY drop in trading revenues was offset by a 10% increase in consumer banking revenues. Revenues at Wells Fargo dropped by 5% YoY driven by lower consumer loan balances. WFC faces a regulatory asset cap until the end of 2019 which is hampering loan growth. JPM was the only bank where the provision for credit losses increased, driven by a reserve build for credit cards due to loan growth.
10 Best Places to Pay Down Debt (LendingTree), Rated: AAA
Americans’ debt balances continued climbing in 2018, with total consumer debt tracking to top $4 trillion by the end of that year. With balances climbing high, many borrowers will want to use the new year to take their debt down a peg. For those who do so, prioritizing paying off debt can bring major rewards both in the near and long distance future.
86 Million Americans Fear Maxing Out Plastic on Large Purchases (WalletHub), Rated: AAA
The holiday shopping season is over now, and many Americans are seeing the impact on their credit card bills and bank statements. During the holidays, people often make a lot of large purchases, and sometimes max out their cards in order to do so. In a nationally representative survey conducted by WalletHub, 34 percent of respondents say they worry about maxing out their card with a large purchase.
Credit Line Increases Drive Consumer Engagement and are Most Likely to Happen at the Beginning of the Year (AP News), Rated: A
According to a new study from TransUnion (NYSE: TRU), consumers are 50% more likely to receive a credit line increase (CLI) between the months of January and May. However, credit line decreases (CLD) occur at twice the normal rate during the month of January.
Lendio Provides More Than 5,000 Kiva Loans to Support Women-Owned Businesses Around the World (Lendio), Rated: A
Lendio announced today that through continued efforts to support business growth around the world, the Lendio Gives program has funded more than 5,000 Kiva microloans. To-date, Lendio’s employee contribution and employer matching program has provided more than $130,000 in loans to underserved business owners in 78 countries.
Lendio Franchising Named No. 1 Financial Services Brand in Entrepreneur’s Franchise 500 (Lendio), Rated: B
Lendio Franchising recently ranked in Entrepreneur magazine’s Franchise 500, the world’s first, best and most comprehensive franchise ranking. Named #1 in the Business Financial Services category for the second year running, Lendio Franchising was recognized for its outstanding performance in areas including unit growth, financial strength and stability, and brand power. Placement in the Franchise 500 is a highly sought-after honor in the franchise industry; Entrepreneur received more than 1,000 applications this year, making it one of the company’s most competitive rankings ever.
Commercial Real Estate Finance Platform CrediFi Milestone: Total Capital Raised Has Surpassed $ 29 Million (Crowdfund Insider), Rated: A
CrediFi, a fintech and commercial real estate finance platform, on Wednesday it has raised an additional $6 million in funding. This funding comes on the heels of the $13 million previously raised in Series B funding. The company reported that the total amount it has raised has surpassed $29 million.
Lending Express Celebrates $ 100M Lending Milestone & California’s Golden Opportunities (Crowdfund Insider), Rated: A
Lending Express, an Israeli tech company dedicated to creating a better world of funding for SMBs, has surpassed $100 million in financing facilitated between small and medium business owners and online lenders. Lending Express also obtained state permission to open for business in California.
Fundation Launches Digital Lending Capability with Banc of California for Small Business Customers (OAOA), Rated: A
Fundation announced that it has recently launched a digital lending solution in partnership with Banc of California, enabling the California-based bank to offer a new, streamlined end-to-end solution for small businesses seeking a business loan or line of credit. The solution enables small businesses to apply for loans and lines of credit through a simple online application at Bancofcal.com and receive funds in a little as one business day.
Entrepreneurs Take Note: Success Is Within Reach (WWD), Rated: A
With insight from 600 “thriving” U.S. small business owners, a study by global financial services platform Kabbage, Inc. reveals one-third of small businesses started with less than $5,000 in start-up capital.
According to the report, particularly scrappy or thrifty entrepreneurs may want to consider starting a business in one of the three categories costing $5,000 or less “during the first six months.” Accounting; at 45 percent, online retail; at 44 percent and construction and landscaping; at 39 percent represented the least amount of start-up capital, or lowest entry barriers.
Officials caution federal workers of predatory online payday lenders during federal shutdown (News 8), Rated: A
Attorney General William Tong and Department of Banking Commissioner Jorge Perez cautioned federal workers on Wednesday to avoid predatory online payday lenders who may seek to exploit the struggling workers during the partial government shutdown.
Most People Would Not Loan Their Loved Ones Money to Start a Business (Fundera), Rated: A
The time and effort it takes to raise the funds for your startup can quickly get out of hand, which may be the reason that 29% of new small businesses run out of cash and fail.
In fact, 38% of startups are funded by friends and family members.
We surveyed 1,000 Americans on whether or not they would loan a friend or family member money to start their business and found that 82% of people would not loan a friend or family member money to start a business.
Lenders issued $34 billion of these unconventional mortgages in the first three quarters of 2018, a 24% increase from the same period a year earlier, according to Inside Mortgage Finance, an industry research group. While that makes up less than 3% of the $1.3 trillion of mortgage originations over that period, the growth is notable because it came as traditional home loans declined. Those originations fell 1.2% over the same period and were on track for a second down year in 2018.
North Capital Launches REITless Impact Income Strategies (PR Newswire), Rated: A
North Capital Investment Technology Inc. recently launched a new investment vehicle, REITless Impact Income Strategies (REITless), focused on lending and strategic debt investments to primarily single- and multi-family real estate development and redevelopment projects that aim to produce positive social impact in communities nationwide. The impact initiatives targeted by the company are energy efficiency, employment generation, affordable housing, and green-housing improvements that promote environmental sustainability. REITless is managed by North Capital Inc., an SEC-registered investment advisor (RIA).
BFS Capital Achieves $ 2 Billion in Financing (BusinessWire), Rated: A
BFS Capital, a leading small business financing platform, today announced it has now issued more than $2 billion in financing to over 22,000 small businesses across the United States, Canada and, through its United Kingdom subsidiary, Boost Capital.
KeyBank To Acquire Online Lending Business Laurel Road (PR Newswire), Rated: A
KeyBank National Association today announced that KeyBank and Laurel Road Bank have entered into a definitive agreement for the acquisition by Key of Laurel Road’s digital lending business; Laurel Road’s three bank branches located in southeast Connecticut are not part of this transaction. Through the acquisition, Key will enhance its digital capabilities with state-of-the-art, customer-centric technology and will leverage Laurel Road’s proven ability to attract and serve professional millennial clients.
GROUNDFLOOR Launches Real Estate Investments Specific To Georgia Residents During Federal Shutdown (PR Newswire), Rated: A
Today, Atlanta-based GROUNDFLOOR is launching new investment opportunities specific to Georgia residents. The crowdsourced real estate investing and lending platform regularly offers investment opportunities to accredited and non-accredited investors throughout the country. Due to the federal shutdown and furloughs at the Securities and Exchange Commission, GROUNDFLOOR is now resurfacing state-by-state securities to continue to offer investors the opportunity to invest on a fractional, self-directed basis in Georgia real estate.
Is community banks’ loan growth too much of a good thing? (American Banker), Rated: A
Total loans at publicly traded banks with assets of less than $20 billion rose 9.2% in the fourth quarter from a year earlier, based on Jan. 18 data compiled by FIG Partners. Publicly traded banks above that threshold have reported a 2.7% increase in loans.
Breakout Capital Finance expands Board of Directors, appoints Neil Gurvitch and Firoze Lafeer (PR Newswire), Rated: B
Breakout Capital Finance, a leading fintech innovator, announces the expansion of its Board of Directors by appointing Firoze Lafeer, company CTO, and Neil Gurvitch as an independent director. In making the appointments, Carl Fairbank, Breakout’s Founder and CEO, said, “We continue to see rapid growth in our lending- and technology-focused endeavors. Adding more seasoned leadership continues our expansion and growth plans.”
Samsung NEXT, NBKC Executives and Ellie Mae Veteran Join ProPair Advisory Board (BusinessWire), Rated: B
ProPair, a Silicon Valley innovator using machine learning and predictive decision-making to change how mortgage lenders are assigning and prioritizing their leads, today announced the additions of Leo Chang, Chad Cronk and Nick Hedges to its advisory board.
RateSetter attracts over 75,000 investors (Bridging and Commercial), Rated: AAA
Since its launch in 2010, investors have earned £120m through the P2P lending platform at an average interest rate of 4.4% per year.
RateSetter currently has £830m of investment under management, including £170m invested through its Isa.
MarketInvoice secures £56m equity and debt funding (MarketInvoice), Rated: AAA
Fintech business MarketInvoice today announced it has raised £26m in new equity funding. This Series-B funding round was led by Barclays and Fintech fund, Santander InnoVentures with significant participation from European venture fund Northzone, an existing investor in the company. Technology credit fund Viola Credit, who also participated in the equity round, will provide a debt facility of up to £30m. The facility will help scale the MarketInvoice business loans offering that sits alongside their core invoice finance solutions.
Goldman Sachs’ Marcus platform reveals AUM (AltFi), Rated: A
The US investment giant said its digital bank attracted has more than £5bn in UK savings just three months after its launch.
The US investment giant debuted its online lending and deposit platform, Marcus, in the UK at the end of last summer, and pulled in 100,000 customers and £5.4bn in the final quarter of the year.
Metro Bank shares crash after loans blunder revealed (The Guardian), Rated: A
Metro Bank has revealed a major blunder in how it classifies its loan book, an admission that drove its share price down by nearly 40% on Wednesday, wiping £800m off the value of the company.
The bank, which has been opening new branches as established rivals cut back, revealed that hundreds of millions of pounds of commercial property loans and loans to commercial buy-to-let operators had been wrongly classified in risk terms, and should have been among its “risk-weighted assets” (RWAs).
Glenhawk grows team with LendInvest hire following strong start to 2019 (Property Funds World), Rated: B
Having originated GBP28.4 million of potential loans since the start of the year, and completed on just over GBP4 million, early indications are that 2019 will see accelerated demand for Glenhawk’s fast and flexible short term property finance. Wareham joins Glenhawk’s 20-strong team of real estate professionals, supporting an increasingly diverse range of borrowers across the South of England and Midlands.
Hexindai Begins Sharing Credit Data with Baihang Credit (PR Newswire), Rated: AAA
Hexindai Inc. (NASDAQ: HX) (“Hexindai” or the “Company”), a fast-growing consumer lending marketplace in China, announced today that it has connected its systems and begun sharing credit data with Baihang Zhengxin (“Baihang Credit”).
China crackdown aims to push peer-to-peer lenders out of the industry (Australian Financial Review), Rated: A
Chinese authorities have further tightened controls on the peer-to-peer lending industry, aiming to clear out as many P2P platforms as possible, according to an official document seen by Caixin.
Microlenders need to obtain licences from the regulators and meet certain minimal capital requirements. For instance, a microlender in Shanghai needs to register its business with more than 200 million yuan ($41.2 million). P2P platforms usually don’t have to meet such requirements.
Chinese investors try to storm company after P2P lender failure (Business Times), Rated: A
In the latest sign of turmoil in China’s once booming peer-to-peer (P2P) lending sector, around 80 investors in failed lender Xinhehui protested outside the Hangzhou headquarters of a related company on Tuesday, demanding a US$330 million bailout.
Mrs Xue, who would only provide a surname for fear of retaliation, said she arrived at 8am with around 80 other investors from Zhejiang and neighboring provinces, demanding payment for 2.26 billion yuan (S$452 million) of products that Xinhehui had sold, including 860 million yuan (S$172 million) worth that were due for repayment on Jan 6.
Xi Tells Cadres to ‘Prevent and Control’ Risks as China’s Economic Woes Mount (The Epoch Times), Rated: B
At a high-level meeting of senior Chinese Communist Party officials held in Beijing, Chinese leader Xi Jinping gave an opening speech on Jan. 21 that hinted at the severity of China’s economic downturn.
Fellow Finance Launches Peer to Peer Lending in Denmark (Crowdfund Insider), Rated: AAA
Finland based peer to peer lender Fellow Finance is now operating in Denmark. The company says it will offer Danish consumers access to credit while Fellow Finance investors will be able to fund Danish loans. Currently, Fellow Finance provides consumer loans in Finland, Germany, Poland, and Sweden.
Note to Irish and US parents: college not the only path for your cherished offspring (Irish Central), Rated: A
According to the student loan marketplace www.lendEDU.com, the average debt per borrower at a public college is $26,872. This rises to $31,710 if you’re inclined to a private college experience. For graduate school students – whose parents have by now presumably said, “Time to pay your own way, sunshine” – the average debt is a staggering $57,600.
Funding Circle partners with Stripe to help small businesses expand (PR Newswire), Rated: AAA
Funding Circle, the global small business loans platform, today announced that it has joined the Stripe Partner Program, providing businesses using Stripe with access to affordable business financing through Funding Circle. As a verified extension partner, Funding Circle now enables Stripe users to import their data directly and securely to apply for a business loan up to $500,000 — making the process faster and easier so they can get back to running their businesses.
Boost Capital ups firepower as US parent hits $ 2bn lending milestone (AltFi), Rated: A
Small business lender Boost Capital has refinanced its credit facility lifting its funding capacity to $60m, as its US parent targets European growth.
The Chelmsford-based platform, which provides business loans and merchant cash advances, said it upped its credit firepower from $40m after signing a deal with New York-based investment firm Atalaya Capital Management.
Matrix Partners invests in P2P lending platform LiquiLoans (Techstory), Rated: AAA
Mumbai based peer to peer lending platform LiquiLoans, one of the few players to have secured a P2P license, has now secured an undisclosed amount of funding from some of the existing investor that is Matrix partners India.
Fintech startup floated by ex-Lendingkart execs MoneyOnClick raises funding (VC Circle), Rated: A
Two former executives from online lending platform Lendingkart have quit the firm to set up a new venture in the alternative lending space, catering to consumers.
According to their respective LinkedIn accounts, the startup, which has been operational since October 2018, has already raised $2.25 million (Rs 16.02 crore at current exchange rates) as part of its first institutional funding round from undisclosed investors.
Women, non-metros topping up on credit, says BankBazaar survey (MoneyControl), Rated: A
Non-metro cities have emerged as the bigger market for unsecured credit in terms of volume than the metros in 2018, according to BankBazaar Moneymood 2019 report.
The average personal loan ticket size in non-metros is Rs 2.80 lakh compared to Rs 2.55 lakh in metros. The unsecured credit portfolio includes personal loans and credit cards which are used more for consumption activities than secured loans.
Online rental marketplace Sacorooms Rises fresh funding Pre-Series A (Times of India), Rated: A
Sacorooms, a start-up that is building co-living spaces, has closed a pre-Series A round of funding for an undisclosed amount from Mr. Broadway. The investment comes after a strategic round led by Incubate Fund and a group of investors from the real estate industry this year.
OJK Zero Down Payment Policy Drives Multifinance Growth (Tempo.co), Rated: AAA
The recent policy of zero percent down payment for vehicle credit issued by the Financial Services Authority (OJK) believed to be able to drive the performance of the multifinance industry. Businesses are confident that multi-finance companies will perform better with the new regulation.
Chairman of the Indonesian Financing Company Association (APPI) Soewandi Wiranto, said that the business expansion stated in the new regulation can increase financing industry growth. Based on APPI’s calculation, industrial asset growth for 2019 can reach up to 9 percent while the growth rate of receivables is predicted to be in a range of 6 to 7 percent.