Even in this time of financial turmoil, consumer credit - on a day to day basis - has not been affected. That is, unless you were trying to get a large loan - like a mortgage - then the markets are all but locked. The “stock market bailout” is not really a bailout and it isn’t for Wall Street - it is for Main Street. It is to stop the seizing up of the credit markets for business (which is happening) and the common citizen.

While the conventional markets are frozen, a new service called Loanio is providing another proven unconventional marketplace for people to lend and borrow money without banks:

Loanio is a peer to peer (P2P) lending platform today and offers subprime, thin and no credit borrowers, the opportunity to get loans without exposing higher risks to its lenders.

I say proven, because of the success that Prosper has enjoyed - both for borrowers and lenders. Lenders - if they are proactive and diligent in their analysis of the loans they buy into, are often rewarded with much higher than normal returns. The borrowers may end up paying a lower interest rate, but even more frequently they are able to fund loans that would never fly with a conventional lender.

Loanio has a lightly populated blog, but keep your eye on it as the CEO gives us the inside track on Loanio. He directed us to the press release announcing the launch of Loanio:

Loanio.com unveils its peer to peer lending platform today and offers subprime, thin and no credit borrowers, the opportunity to get loans without exposing higher risks to its lenders.

NEW YORK, Oct. 1 /PRNewswire/ — Loanio, Inc. launched its p2p lending website (https://www.loanio.com) today, addressing the needs of an underserved market–those with poor or no credit profile histories. Prior to the launch, borrowers with poor or no credit scores have been turned away from, or have had little luck, with other p2p lending platforms. Loanio is looking to change this.

Borrowers with poor or no credit scores will be permitted to participate on the p2p lending platform by using a Co-Borrower or guarantors. According to CEO and Founder Michael Solomon, “only around 10% of borrowers on p2p sites wind up getting a loan. Many of them have less than stellar credit profiles. With options for these borrowers drying up elsewhere, we believe this feature and others on the website will fill a sorely needed void in the p2p lending arena.”

To provide lenders on the platform with more reliable data, the company also introduced “Platinum Verification Services.” This service is optional and available to borrowers at the time they create their loan request. A Platinum loan will indicate to lenders that Loanio has verified certain, otherwise “self-reported”, financial profiles of borrowers such as last year’s filed tax returns, employment and income, and more. “We want to provide as much data to our lenders as possible and the verification of these items allow borrowers to tell lenders they are serious about this process. Lenders, in turn, will have the benefit of not having to wonder if the borrower may have given their income data a ‘little extra padding.’”

While the Co-Borrower option is mandatory for those with bad or no credit, both the Co-Borrower and Platinum Verification features are available to all users as an option. Solomon says, “The idea is that we want to provide all borrowers with as many possible tools to shine and present appealing loan requests to the lenders.” With these features available to all users, even a fair credit borrower may be seen as a better risk if they have a Co-Borrower with an excellent credit record attached to their loan. The combination will also help the borrower get even lower rates. “If you saw two loan requests for the same money and rates, but one had an excellent rated Co-Borrower attached to it and went through the Platinum Verification process, which one would you bet on? I think the choice would be clear” Solomon continues.

About Loanio.com (https://www.loanio.com)

Loanio, Inc. is an auction based, peer lending platform where individuals can borrow or lend money to each other. By cutting out “traditional lenders,” and adding an auction based element, borrowers can get lower rates and lenders can get higher returns than other banking options.

Loanio believes that the introduction of several patent pending features-including a co-borrower process, Platinum Verification Services, and others-will improve current practices within the industry.

Although, the term “lenders” is used on the website, all loans are originated by Loanio and then sold to website lenders who are legally considered the loan purchasers.

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