A new peer-to-peer lending platform is getting personal with its latest service, by focusing on financing between family and friends.
Unlike established peer-to-peer platforms such as Zopa or Ratesetter, where individuals can borrow money directly from a broad network of lenders – Flendr aims to become “A social lending platform for collecting, donating and lending but all among friends,” according to chief executive Daniel Green.
“At the moment, £12 billion of lending is going on among friends. The problem is we think that could be much, much more,” Green explained.
“A lot of people would rather go to pay-day loan company. Wonga then ask their friends and that’s very concerning. From our point of view, giving and sharing is friendship.”
Flendr, which was launched three weeks ago, aims to formalize a normally informal borrowing arrangement, to get rid of the stress attached to borrowing from relatives and to make the loan more secure.
“The problem with lending with friends is that you are concerned that either it’s not going to come back or you are embarrassed to ask somebody,” said Green. “The advantage of Flendr is that, it does all the recording and it does all the chasing.”
The other aspect of Flendr is that the interest rate can be set by the borrower. Instead, Flendr labels the interest rate as a “reward” for supportive friends and family. Through a system of micro-loans, a borrower can ask large groups of people for small amounts, rather than approaching a bank for a single, large loan. Flendr then collects a fee of £1 per lender, up to a maximum of two percent of the amount being borrowed.
“Our platform is not about making money out of friends or trying to make money out of each other,” Green explained. “There is an opportunity for them to have interest, so they can agree an interest rate among each other. Unlike peer to peer lending, where you are absolutely in it to make and take money off the other guy, in this case this is your friends and you are trying to help them out.”
Image Credit: CC by Flendr