Last year Chris Barrett won $3,000 in Lending Club’s video contest. Chris Barrett’s video, complete with an actual script and actors, shows a girl who is getting her Paris Hilton news through magazines instead of the internet since her laptop broke. “I can’t believe their putting Paris Hilton in jail,” she exclaims to her friend who can’t believe she’s so behind the news. The friend suggests Lending Club to borrow the money and replace her computer.
Here is a short excerpt from the book where Barrett discusses Lending Club:
Still can’t find anyone to invest in your project? Look online. Today, a new way to finance just about any dream you have is peer-to-peer lending. One company at the forefront of this innovation is called LendingClub.com. Instead of maxing out a credit card to start a new business, you can take out a loan from a group of people at a lower interest rate than you would pay to a credit card company or bank. All you need to do is post your loan request on the site so that potential investors can get an idea of what your project is. This arrangement is a win-win for investors and borrowers, because investors split up the investment so that any losses they might suffer will be small, which in turn causes the borrower’s interest rates to be small as well. For example, right now, on LendingClub.com, a member needs $25,000 to start a DVD vending machine rental company. He has already had $24,300 invested, so he only needs $700 more before his loan is filled and he will be able to launch his company.