The biggest issue facing the recovery of our economy is the lack of credit for small business owners. Forget about all the stimulus money that President Obama and the SBA push at banks, they still aren’t lending. Their balance sheets get better, they may even pay back some of the stimulus mone, but so precious few dollars are flowing through to where it is really needed- small business. My bank when they stopped lending started to offer coffee and cake in their lobby on Saturdays; fair trade don’t you think?
Even Goldman Sachs who earned $3.2B last quarter is now “sharing the wealth” a bit and will make $500 million in initiative called “10,000 Small Businesses“.
But don’t dispair! Being the entrepreneurial country we are, an entirely new capital source has been created called Peer to Peer lending…companies like Prosper and Lending Club are lending hundreds of millions. I have even participated to small extent with good results. Today on the radio show, we talkedwith borrowers and investors in P2P lending including:
Rob Garcia who is the Senior Director of Product Strategy at Lending Club who cites statistics from his company which amazed me:
1. 3 year loans are paying investors an average of 9.67% as of this morning, and that is after Fees and Defaults
2. Nearly 90% of our investors have earned more than 6% returns to date
3. $6M loans in October alone!