In an industry dominated by Lending Club and Prosper it is easy to stay focused on the top two players. But there are other alternatives in the unsecured consumer loan space and one of the up and coming players is Peerform.
To call Peerform up and coming is probably a bit of a stretch because they have been around almost four years now. I have written about them several times before, most recently back in May after they re-launched their platform.
Since then Peerform has been making slow but steady progress. They have a long way to go having just re-launched in April of this year but they are starting to build a track record. When I spoke with CEO Mikael Rapaport and Chairman Gregg Schoenberg this past week they were happy to provide an update on Peerform’s progress. They have now issued over 500 loans at a total loan volume of around $2 million. This included $600,000 of new loans issued in November and they are on track for $700,000 in December.
Peerform’s loan book is a little different from many other platforms. Here are some details of their loans made in 2014:
Average Interest Rate: 19%
Average APR: 23%
Average FICO: 675 (minimum FICO is 600)
Average Income: $82K (all loans are fully income verified)
Full Loan Descriptions Available for Investors
As investors would expect Peerform makes available a full spectrum of credit data. There are over 100 data points in their downloadable data file. They also have something that the big two platforms don’t have: loan titles and loan descriptions.
There were many investors who were disappointed with Prosper and Lending Club when they did away with loan descriptions. Some investors had done a great deal of analysis on the semantics of these descriptions and had built predictive algorithms based on this data. Now, you can dust off those algorithms and put them to work at Peerform.
Investors can use the Peerform API, invest manually, or download the CSV file of in-funding loans to do analysis before investing. And while the loan volume at Peerform is only a tiny fraction of Lending Club or Prosper when I downloaded the available loans file earlier this week there were 65 loans to choose from and most of them were high yield.
A Healthy Supply of Borrowers
One of the advantages that Peerform has over other newer platforms is that it gets a lot of free traffic from Google each month. This is partly due to the fact that their website and blog have been around for almost four years now. Consequently, its borrower acquisition costs are low and its borrower supply is very healthy. In fact, they have an oversupply of borrowers today and Rapaport says Peerform could easily do $5 million per month just based on current traffic. Currently, they are available for borrowers in 23 states.
An Opportunity for Accredited Investors
Peerform has a fractional and whole loan platform that operates in a similar way to Lending Club and Prosper. But one of the big differences being that there are far fewer investors on Peerform, which means much less competition for loans, although they are only available to accredited investors.
While Peerform is still working to get established they are making all the right moves. They recently hired a new Chief Risk Officer, Fred Smadja, who has a long history in risk management. Their Series A, which was originally expected to close by the end of 2014, should now close early in Q1 next year. Once that happens they will be able to start building some scale.
While I am not endorsing Peerform I think for accredited investors looking for high yield opportunities they are worth considering. Particularly when given the fact that yields have been coming down at the two big platforms over the last 12 months.
Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.