03.06.09
By Gerri Detweiler
Several social lending websites are joining together in an effort to unthaw the frozen credit markets and get credit flowing again to consumers and small business owners. A new initiative dubbed "Uncrunch America" brings together non-traditional lenders VirginMoney, Lending Club, and On Deck Capital. The three sites report they have facilitated $74,595,300 in loans since the beginning of the year. "The credit crunch is making social lending more relevant," insists Renaud Laplanche, founder and CEO of Lending Club, one of three lending services behind the campaign.
The campaign describes itself as a platform where credit-worthy consumers can find lending alternatives with the help of social lending networks, Virgin Money and Lending Club, and small business lender On Deck Capital. With recent reports that credit card issuers are raising interest rates and cutting credit lines, social lending is becoming a more attractive alternative for consumers looking for fixed-rate, fixed-term loans. Lending Club, for example, reports that over half of all borrowers obtaining loans through their platform have requested loans for debt consolidation, often to pay off higher-rate credit card debt.
Social lending requires both creditworthy borrowers as well as lenders willing to make loans in this troubled market. But lenders are confident they can help facilitate both. "(The credit crunch) is not due to a lack of available resources," Laplanche insists. "There are trillions of dollars sitting in bank accounts and CDs. Individuals who have savings, or those who want to make a better return on their savings, are willing to lend to creditworthy borrowers."
If the campaign is successful, social lending may increasingly bring good news to an industry where the news seems to be increasingly bad.
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