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Zopa, the UK based peer to peer lending company, is shutting down their US branch due as a result of toughening conditions that are currently being experienced by the US economy. Zopa provides loan services in the UK, as well as in Italy and Japan through a pure P2P style marketplace. Borrowers would request loans, and then the individual lenders would contribute as much or as little as they wanted to, towards the request. Then when enough funding has been collected, the loan is finally put together and granted. As the borrower pays back the loan, interest earned goes back to the lenders. This micro lending model has made the system popular in the UK and the Italy, and Zopa is soon to open a branch in Japan following the same model.

With the opening of the United States branch, Zopa found that they could not launch the same kind of lending system due to regulatory issues. In order to provide their service, they have teamed up with credit unions in order to provide these lending services. Lenders would park money in CDs with the credit unions, and this would allow their money to sit before borrowers request the money. This would enable the borrowers and the lenders to enjoy the same sort of interest rate benefits as the European users. The regulatory restrictions that were placed upon Zopa would ironically cause the same conditions leading to the closing of Zopa’s United States branch, however.

The same regulations behind the restriction of Zopa’s services are a part of the US economic crisis that has cause interest rates to skyrocket and the economy to experience a great deal of turmoil in the process. With less and less benefit being offered to lenders and borrowers, Zopa was forced to close down the United States branch. US lenders and borrowers will not be completely put out, however. Zopa is directing its current and future US customers to deal directly with the credit unions that it had partnered with.

Despite rumors, the credit unions had not reduced the amount of loans created. Rather, the credit unions has increased the number of loans made as traditional US bank and lending institutes have reduced their volume. Credit unions are not susceptible to the financial woes of Wall Street, and as such are making as many loans as before, if not more for making up the reduction that is a result of the economic crisis. For this reason, Zopa is glad to be able to provide US customers with a viable option that can provide a great service.

Existing customers will be gradually migrated to the partnered credit unions. Individual borrowers and lenders will still enjoy the same interest rates, customer service and federal insurance for CDs made. Payment schedule will also be identical, only payments will transfer over to the credit unions. This transition is made easy since in the US, loans were setup already with the credit unions.

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Just received the following email…

Welcome To Pertuity Direct

Welcome! Thanks for signing up to receive updates about the Pertuity Direct launch.

We have been hard at work for the last two years, building a social lending business that is targeted toward busy people that would like to enjoy the high investment returns and low loan rates of peer to peer lending, but don’t want to deal with figuring out all of the ins and outs of optimizing the process.

We make social lending hassle free:
For lenders, your investment dollars are deployed and start to earn returns immediately
You get the safety of automatic diversification
If you want to withdraw your money early - not a problem, just a few click to get your money back
Our borrowers are rewarded for working hard to maintain good credit by getting approved and funded quickly with great, low rates
Welcome to social lending without the bidding, gaming or guessing. We handle all the work for you. You get all the benefit.

We are just a few short weeks away from launch and are putting finishing touches on everything so that you will enjoy your experience at Pertuity Direct. So stay tuned, we will be coming to market in September and will keep you in the loop.

The Pertuity Direct Team

I have had several bloggers ask for advice on their listings or potential listings…  One of them even joined my group and successfully received a $25K loan at an interest rate he was happy with…

As a blogger the reputation of your blog has meaning for you both in terms of your persona, but also in real financial terms…  I have said privately, that I would lend to any blogger of 1 year duration or longer that placed their blog reputation on the line in the listing…

My offer to any blogger that has asked has been the same…  Write a listing and mention your blog and url and I will endorse and bid on your listing and offer all the tips and assistance I know how to provide in order to get your loan funded and the rate as low as possible… 

While I am still making that offer to any blogger, I thought I would share my tips for creating the best possible listing that anyone can use on prosper to get a loan.

1. There are some credit statistics that are factual and out of your control (current inquires, current delinquencies, etc.).  These are simple related to your circumstance and are difficult to adjust for your benefit by definition…  There are others that you can control namely loan amount and the related DTI.  If at all possible with your statistics that are our of your control, adjust your loan amount and there by your DTI to conform to a portfolio plan slice.  These slices are updating frequently and they can be a moving target (ask deep market… his listing went live at 3 in the afternoon and the slices were adjust that evening.)  Why? because the default portfolio plans have a lot of purchasing power…  (My own listing might have gotten as much as $12K+ in portfolio plan bids in 4 days.)
2. End your listing around 5pm est…  For whatever reason that seems to be the time when more bids are placed.  This leads me to believe this is a time of peak lender activity.
3. End you listing on Thursday (assuming normal weekend and not a holiday)…  This may no longer hold the same power as it once did (due to the $50 instant transfer for Facebook users), but the theory goes…  Any lender transfer  of money occurring between 11:01am est Friday and 11:00am Monday will result in the money being available for bidding on Thursday due to the time it takes for the transactions to clear the bank… Not everyone is a facebook user or has the Prosper facebook application installed and therefore I would still use this tip.
4. Tell you story.  Be truthful and honest and put as much detail into the story as you feel comfortable with…  An expenses breakdown and a list of income amount and sources might help with a lower interest rate.  But only provide what you are comfortable sharing.  Your listing should make sense financially, else why are you getting the loan?
5. Use a relevant picture… Do not you use a picture of someone else’s house or someone else’s blond girlfriend (hat tip to Freakonomics who says that young blond women out sell all other demographics in America).
6. Choose the right starting interest rate… Prosper now provides interest rate guidance.  Use the rate with the best chance of funding. You cannot get a loan if you listing does not reach 100% funded…  The listing will only begin to be bid lower after it reaches 100% funded.
7. Get endorsements from friends and get bids from friends who have endorsed your listing.  I had 14+ endorsements (maybe a bit of overkill) and 11 bids from Prosper friends.  I also have a number of bids from friends that are not confirmed Friends on Prosper.  Try to get at least 3 friends to endorse and bid on your listing.
8. Answer questions.  If a lender takes an interest in your listing enough to ask a question, they deserve an answer.  I answered all the questions asked.  Even the question that involved details of my financial life that I am not comfortable sharing.  I intentionally left out an income and budget breakdown from my listing. I do not recommend this if you are trying for your lowest possible interest rate.  But I simply did not feel comfortable sharing that information (perhaps to my interest rate detriment).  But even then I answer the question politely decline to answer and stating my reasons.