dont get the idea!

Ok, I will be able to send money from my bank account to other bank accounts as a loan, then on due dates it would re-credit my bank account for the loan amount.

Wouldn't banks have to agree with implementing this? Or do you intend to sell this idea to banks?

They have agree to it, I now have an ACH account with a major bank. I would like to sell it to paypal or a major bank, any ideas?

I think you should look at what prosper.com is doing. Lending money and dealing with financial institutions is a regulated environment. Your idea would require a lot of effort to implement.

Well not really, prosper.com is an auction model, I am just talking about :

A social lending utility that deposits loan funds from your bank account via ACH into your friends/family members bank account via ACH and then re-credits your bank account on due date(s).

Prosper does not do this, and no way would I lend to a friend at prosper.com just the name sound like am making money out of them.

It would be nice to lend money to a friend through an online service then I wouldn't have to bug them to repay, could just leave that to the email bots!

I guess Jay

and if the money isn't there? who is responsable for getting it back? why would the banks allow themselves to lose business by supporting this? i rate low unfortunitely

Hi RedTable

I think that you are in effect saying that since when someone takes out a bank loan repayments are automatically withdrawn from their account, the same should be possible for person-to-person loans between friends/family.

To some extent Prosper and other P2P lending networks do offer this, but you are right, they are not focused on lending to friends and family.

There are also a number of IOU tracking applications that let you keep tabs on friends that owe you money. To the best of my knowledge they do not faciliate repayments, except possibly only to send automatic reminders in accordance with agreed repayment dates.

So I suggest that what you want to develop is a P2P lending app dedicated to friends/family with the capability of automated repayments. You would definitely need regulatory approval and bank buy-in, so it won't be trivial.

Well Willcom you explained it right. To debit from the lender checking account and credit the borrowers checking, I would need ACH, which I have. And yes a big bank has approved my ACH account to move forward.

I like the idea. I find myself in this same position too many loans end up being gifts. :)

I agree

Not sure I agree with the premise of lending money to friends - nothing breaks a friendship faster than money woes. Family is a different story. However, I just do not see why major banks would allow this. Perhaps cooperatives like Desjardin or the Cooperators would be more open to this type of transaction, as that is wimilar to how they build their banks.

Well over $89 billion is lent every year to friends and family. 6,000,000 loans are exchange informal hands each year. Inc. just said that startup capital from family and friends is at 21.6%, banks 17.7%. So its happening guys, and I am trying to come up with a solution.

Looks like CircleLending are already in this space. Found the following on their website:

“A smart way to manage a loan between family or friends is with a professionally-administered loan from CircleLending. The company will send statements and track payments -- and provide healthy distance.”
-Kiplinger's Personal Finance

and

“Not all situations involving money and wealthy friends and relatives have a happy ending. CircleLending recommends drafting a formal agreement with a repayment schedule, to avoid straining personal ties.”

i am increadibly bias againsed banking ideas i admit. there is an old saying "never lend money to a friend your not willing to lose".

CircleLending does not....

Have a social lending utility that deposits loan funds from your bank account into your friends/family members bank account and then re-credits your bank account on due date(s).

Reason? I have a 2005 patent pending on this idea :)

Ok you are bias, yeah... But the fact is this:

2. Friends and family. At the very early stages of any startup, entrepreneurs also tend to raise money from relatives, colleagues and other people they know well. Take Blue Joe Estate Coffee, a Lake Oswego, Ore.-based company selling gourmet coffee. When they started the business three years ago, with no products and little previous experience in the industry, founders A.J. Brown and John Shanebrook decided their only route was to tap friends. They raised $480,000. Now that they're further along in their plan, they're looking for funding from other sources. Usually, friends-and-family financing is informal. You probably won't have to write a business plan beforehand, for example. But no matter how well you know your early investors, you'd be wise to draw up a contract to prevent any misunderstandings down the line.
http://money.cnn.com...b/raising.money.fsb/

Indians in my country are loan sharks...how much is your interest?

Well it manages loans from family and friends, is your friend or family a loan shark? if so then avoid them. :)

Re CircleLending, I believe what they do is let you loan money to (or borrow from) people you already know, e.g. your family etc. As I understand it, they provide an agreement that can be digitally signed by both parties. Like any other P2P lending site (e.g Prosper), I believe they will also enforce payment terms, which I assume means that at an agreed date the agreed payment will be taken from the borrower's account, deposited in CircleLending's account and then forwarded to the lender's account.

This type of paymet would work quite easily in the U.K where I live because we have what are known as Direct Debit Mandates, whereby you authorise a company to take regular payments from your account. I am assuming that the same is available in the U.S and Canada. If I am wrong then perhaps my whole perception of how the P2Ps handle payments in the States is wrong. I would be very surprised though if every monthly payment has to be manually made by the borrower every time, without the option of automatic payments.

I am doing something in the P2P lending space currently so I would appreciate being enlightened on the U.S payments process if I am wrong in what I have stated above.

Does Circlelending debit the lenders bank account for the loan amount and then credits the borrower's bank account for the loan amount?

Meaning does Circlelending work similar to Paypal, in that it moves money from one user account to the other user account (loan amount)?

I know they do optional bill pay.

This is what I assume they do, but probably not by themselves. Like LendingTree, Zopa, Prosper and other P2P lending sites, they most likely use a payments platform like paypal or bankserv (magex) to effect transfers between lenders and borrowers - both ways.

I contacted Circlelending, and they said that when the agreement is signed that both paties hand over cash offline. They do not deal with the trasfer of loan funds but they do offer a service of repayment. Next question.

Circle Lending doesn't seem much of a service in that case. Did they say how the repayment service works - do they take funds from the borrower's account and transfer it to the lender's?

All the best with your idea.

Yes, they could do an ach from the borrowers account and then send a check or make a credit on the lenders account. But no paypal method.

Re: bcforrester and mashersmasher's comments above: I think that if anything, this site will make lending to friends and family EASIER. Problems arise when payments can't (or won't) be met and one is left in the unfortunate position of having to either demand money from a friend or write off the loan as a loss. If this is all handled by computers, by prior agreement, all of that is removed. Yes, people will still have difficulty paying back loans, but one can't get as annoyed at a computer, or argue and plead with it either.

A loan default fix:

The lender lends the money out e.g. $1,000, the borrower defaults on the loan. Loanstar within 30 days of non-repayment will allow the lender to sell the loan to Loanstar at a discount of 25% of the total loan amount.

The lender will be able to recover 75% of his/her money.

Now Loanstar has the borrower’s SSN and will go after the borrower to repay the Total loan and a penalty fee.

If the loan is repaid to the lender before selling the loan to Loanstar the lender gets the loan amount and interest rate fee.

What do you guys think?

Loanstar is a fake company name.

perhaps partner up with the guy that owns the weloancash.com domain in this round

No thank you.