Mr. SEC, Can I Loan Money To My Brother?
September 5, 2008 2 Comments
I can’t believe it…oh wait YES I can.
Have you heard of these Peer-to-Peer lending websites? You can go onto the sites and loan money to other individuals. In return you will charge them interest on the loan. You are able to choose to whom and how much you loan. It is a great idea. It allows the regular Joe to get involved in private lending. On these sites you can loan just a portion of what the person is asking for so you don’t have to take on the full risk of that one loan.
Some people might say that sounds risky to lend like that and so they just keep funding their 401k and other stock market related accounts. I guess what that means is the stock market is less risky then private lending ( According to who?). Have you watched your stock portfolios pay you 15% interest year after year? How about those 401ks?
The SEC is now stepping in to tell these companies they need to be registered as a security (surprise surprise). Is it because they want to save the consumer from a massive pitfall? One reason might be that it can cost these companies anywhere from $250,000 to $1 Million dollars to register. Sounds like financial motivation to me.
Sometimes I wonder if people with financial motivation will always mess with good things that come around. And I am referring to legit business models.
Here are a few of the sites that I am aware of. I have 0 financial motivation to introduce these sites and am not responsible if you lose money.
http://www.lendingclub.com/home.action
Here is a good article on the subject.
http://www.nuwireinvestor.com/articles/p2p-loans-may-be-classified-as-securities-51813.aspx
Veracity Financial Blog 
If you want to keep your family financial arrangements private you might try http://www.VirginMoneyus.com and after our launch http://www.zimplemoney.com. These two sites are designed for families.
I don’t know of any other sites that are targeting the family and friend world.
Maybe we need to let more ‘regular’ people get involved in the market. I bet that I’m going to be a lot more picky about my money since it’s ‘MY’ money than some underwriter.