Shakespeare may have written “neither a borrower nor a lender be.” But that’s only because he didn’t live long enough to see the rise of peer-to-peer lending.
Reuters reports that the former Chief Executive of Morgan Stanley, John Mack, has joined the board of Lending Club Corp, a peer-to-peer lending website. It’s a big sign of confidence in peer-to-peer lending from the man once known as Mack the Knife for his relentless cost cutting when he led Morgan Stanley.
Peer-to-peer lending, which uses the power of the Internet to directly match lenders and borrowers, has been a crucial source of credit since the financial collapse, particularly for small business owners and aspiring entrepreneurs. Lending Club, for example, has already lent $589 million since it launched in 2007, and has generated $51 million of interest for investors. For small business owners, Lending Club offers loans of up to $35,000 at a lower rate than most banks typically offer. Prosper, which was the country’s first peer-to-peer lending site when it launched in 2006, offers business owners up to $25,000 at generous rates.
It’s not only the U.S. that’s embracing peer-to-peer lending. According to the Financial Times, “the peer-to-peer model is also gaining traction in Germany and China, which has an estimated 100 lending sites.” And it’s little wonder: peer-to-peer lending has been a crucial source of credit ever since the big banks have tightened their belts.
As for silly old Polonius, the character who actually said “neither a borrower nor a lender be?” He ended up getting stabbed to death by Hamlet. We think you’ll find a happier ending.