eBay Gets Into the P2P Lending Game: MicroPlace.com
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Today, eBay announced a new venture called MicroPlace. eBay's new venture is a little different than some of the other P2P lending organizations in that individual investors buy securities from issuers who are then tasked with making the smaller investments through various lending organizations in third world countries. Learn more about how MicroPlace works by clicking here.
For example, MicroPlace is offering a current investment opportunity in Nigeria through a group called Lift Above Poverty Organization (LAPO). Per the website, "LAPO seeks to empower the poor to break out of the grip of poverty. Specifically LAPO seeks to: Enhance income generating capacity of the poor through access to flexible financial services, embolden poor women through self-esteem enhancing programs and promotion of gender equity, empower Community Based Organization (CBOs), and promote healthy living through access to healthy living tips." This particular loan portfolio currently contains over $9 million in outstanding loans to more than 84,000 borrowers (an average of $99 per borrower, 98% of whom are women) and has a 97% borrower repayment rate. The catch? The investment only yields 2% interest per year to the lenders. With a 97% repayment rate, lenders can expect to lose a small amount of money on this loan.
Thus, this is an excellent vehicle for P2P lenders looking to loan based on social values and not on superior financial returns. I would encourage you to check out MicroPlace if your P2P lending motivations fall into the social lending category as this effort is backed by reputable, high quality organizations led by eBay. A recent article on the launch is below. Good lending!
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eBay site lets people finance the world's poor
By Jonathan Stempel
EBay Inc, the world's largest online auctioneer and payments company, launched on Wednesday a Web site allowing ordinary investors to buy securities aimed at improving conditions in the world's poorest countries.
MicroPlace, located at http://www.microplace.com, will allow people to invest as little as $100 to support development in impoverished areas.
So-called microfinance is the supply of loans, savings, insurance and other basic financial services to low-income households and businesses, typically without collateral. It is often conducted in emerging economies, where people cannot typically obtain bank loans.
Microfinance is at work in more than 100 countries, and is generally provided by financial institutions or wealthier investors. It gained wider renown last October when Bangladeshi economist Muhammad Yunus, who pioneered it in 1976, and the Grameen Bank he founded won the Nobel Peace Prize.
"Capital markets are just waking up to this asset class," Tracey Pettengill Turner, the founder and general manager of MicroPlace, said in an interview. "This is different because it is the first Web-based service for the everyday investor to invest in microfinance, and earn an investment return while addressing global poverty."
Turner said she has worked in Bangladesh, and worked at Grameen in 1998 after graduating from Stanford Business School. She said she sold MicroPlace to eBay in June 2006.
Another microfinance site, Kiva.org, said last week it has built a $13 million loan portfolio in its first two years to help about 20,000 entrepreneurs. Other sites include Finca International's http://www.villagebanking.org and Accion International's http://www.accion.org.
TRACK RECORDS
MicroPlace chose the Calvert Social Investment Foundation to offer its first 10 securities, where funds are designated for such countries as Cambodia, Ecuador, Ghana and Tajikistan.
The securities mature in two to four years and, despite lacking credit ratings, yield just 1.5 percent to 3 percent a year. That's below the 3.8 percent yield on similar maturity U.S. Treasuries, which have essentially no credit risk.
Turner said issuers "generally have very good track records, often with 10 years in investing in microfinance with no history of defaults." She added that the issuers often set aside reserves to limit potential credit risk.
Investments may be made through eBay's PayPal service, or a regular bank checking account, and investors are assessed no fees, commissions or expenses. Prospectuses are available online, and MicroPlace is regulated as a brokerage by the Financial Industry Regulatory Authority.
Turner said MicroPlace makes money from charging issuers to list. "We aspire to break-even, and if and when we reach profitability, eBay intends to reinvest any profits back into its own social initiatives," she said.
Catherine England, a spokeswoman for San Jose, California-based eBay, said the program will be "not material" to results at the online auctioneer and payments company.
(Additional reporting by Eric Auchard in San Francisco)
----------------------------------
Today, eBay announced a new venture called MicroPlace. eBay's new venture is a little different than some of the other P2P lending organizations in that individual investors buy securities from issuers who are then tasked with making the smaller investments through various lending organizations in third world countries. Learn more about how MicroPlace works by clicking here.
For example, MicroPlace is offering a current investment opportunity in Nigeria through a group called Lift Above Poverty Organization (LAPO). Per the website, "LAPO seeks to empower the poor to break out of the grip of poverty. Specifically LAPO seeks to: Enhance income generating capacity of the poor through access to flexible financial services, embolden poor women through self-esteem enhancing programs and promotion of gender equity, empower Community Based Organization (CBOs), and promote healthy living through access to healthy living tips." This particular loan portfolio currently contains over $9 million in outstanding loans to more than 84,000 borrowers (an average of $99 per borrower, 98% of whom are women) and has a 97% borrower repayment rate. The catch? The investment only yields 2% interest per year to the lenders. With a 97% repayment rate, lenders can expect to lose a small amount of money on this loan.
Thus, this is an excellent vehicle for P2P lenders looking to loan based on social values and not on superior financial returns. I would encourage you to check out MicroPlace if your P2P lending motivations fall into the social lending category as this effort is backed by reputable, high quality organizations led by eBay. A recent article on the launch is below. Good lending!
----------------------------------
eBay site lets people finance the world's poor
By Jonathan Stempel
EBay Inc, the world's largest online auctioneer and payments company, launched on Wednesday a Web site allowing ordinary investors to buy securities aimed at improving conditions in the world's poorest countries.
MicroPlace, located at http://www.microplace.com, will allow people to invest as little as $100 to support development in impoverished areas.
So-called microfinance is the supply of loans, savings, insurance and other basic financial services to low-income households and businesses, typically without collateral. It is often conducted in emerging economies, where people cannot typically obtain bank loans.
Microfinance is at work in more than 100 countries, and is generally provided by financial institutions or wealthier investors. It gained wider renown last October when Bangladeshi economist Muhammad Yunus, who pioneered it in 1976, and the Grameen Bank he founded won the Nobel Peace Prize.
"Capital markets are just waking up to this asset class," Tracey Pettengill Turner, the founder and general manager of MicroPlace, said in an interview. "This is different because it is the first Web-based service for the everyday investor to invest in microfinance, and earn an investment return while addressing global poverty."
Turner said she has worked in Bangladesh, and worked at Grameen in 1998 after graduating from Stanford Business School. She said she sold MicroPlace to eBay in June 2006.
Another microfinance site, Kiva.org, said last week it has built a $13 million loan portfolio in its first two years to help about 20,000 entrepreneurs. Other sites include Finca International's http://www.villagebanking.org and Accion International's http://www.accion.org.
TRACK RECORDS
MicroPlace chose the Calvert Social Investment Foundation to offer its first 10 securities, where funds are designated for such countries as Cambodia, Ecuador, Ghana and Tajikistan.
The securities mature in two to four years and, despite lacking credit ratings, yield just 1.5 percent to 3 percent a year. That's below the 3.8 percent yield on similar maturity U.S. Treasuries, which have essentially no credit risk.
Turner said issuers "generally have very good track records, often with 10 years in investing in microfinance with no history of defaults." She added that the issuers often set aside reserves to limit potential credit risk.
Investments may be made through eBay's PayPal service, or a regular bank checking account, and investors are assessed no fees, commissions or expenses. Prospectuses are available online, and MicroPlace is regulated as a brokerage by the Financial Industry Regulatory Authority.
Turner said MicroPlace makes money from charging issuers to list. "We aspire to break-even, and if and when we reach profitability, eBay intends to reinvest any profits back into its own social initiatives," she said.
Catherine England, a spokeswoman for San Jose, California-based eBay, said the program will be "not material" to results at the online auctioneer and payments company.
(Additional reporting by Eric Auchard in San Francisco)
posted by Blogging Man @ 10:07 AM
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