A pair of peer-to-peer lenders are taking a novel approach to the booming business model: actually having peers lend to or vouch for one another.
Able, which caters to small businesses, is expanding operations nationally today with $US6 million in venture capital funding. Investors include Blumberg Capital.
Vouch, which launched from Austin, Texas, in April, is backing consumers refinancing or taking on new loans with a credit line of up to $US15,000.
The two use the power of social networks to facilitate lending.
Able, for example, requires that the people that borrow from it gather about 25% of the loan they’re looking for from friends and family.
Borrowers from Vouch need at least one sponsor to get a loan, meanwhile, with those sponsors agreeing to pay a sum of money if the borrower defaults. The more sponsors a would-be borrower has, the more they are able to borrower.
The broader business plan is for startups like these to displace bigger lenders as they expand their actual social networks, and possibly later expand to loan verticals beyond consumer or small business offerings. They’re already putting a lot of cash to work.
Able is aiming to make $US100 million in loans over the next 18 months.
“We have lined up several agreements with credit funds,” said Able co-founder Will Davis.
Vouch does not work with credit funds providing loans; but it, like Able, has issued “hundreds” of loans between thousands of its social network’s members, says founder Yee Lee.