New Trends in Private Money Lending

[Corey Dutton]

The financial technology sector has grown in leaps and bounds in recent years, churning out startups such as Square, the money transfer startup ‘TransferWise,’ and so many others. In the private money lending space, there are also new technology driven trends that are being tried, tested, and of course, copied by others at break neck speed. A couple of the most notable trends in private money lending include:

1.Crowdfunding: This is a new trend whereby money is raised from a large number of individuals via the internet to invest in projects, businesses, or other ventures. Most commonly associated with sites such as Indiegogo and Kickstarter, the crowdfunding concept has gained huge steam and many copycats have followed suit. This concept has inevitably leaked into residential and commercial lending. However, the legality of crowdfunding on residential real estate is questionable, given the new legislation under Dodd Frank and the Safe Act. Will these crowdfunding sites that lend on residential real estate be shut down due to non-compliance, or will they just operate under the radar? Either way, crowdfunding in real estate is a new trend that is yet to be fully tried and tested. Many companies posture as if they are doing it well and making money at it, but no one has yet seen the numbers so only time will show if crowd funding works in real estate or not.

2.Microlending: A concept that’s been around for awhile but is gaining steam as a new trend in lending is microlending. This is the giving of small loans from an individual or group to an impoverished person or business entity. Most commonly associated with the website ‘Kiva,’ microlending allows individuals and businesses to obtain credit in a geographic area where credit may not be readily available.

As technology continues to advance in the area of private money lending, more trends like these will grow and thrive. For those who have trouble obtaining loans, concepts like these will be welcomed with open arms.

Posted by Corey Curwick Dutton