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New US Platform Will Lend Where Lending Club/Prosper Dare Not

Microsoft co-founder Paul Allen has poured $125 million into a new lending platform for “emerging prime” borrowers.  

a stack of money

Investors in the new site – FreedomPlus – will have to meet the regulatory requirements of an “accredited investor”. They will be able to invest in pools of loans, but FreedomPlus is not a peer-to-peer lending company. The platform remains a relevant one, however, due to the types of borrowers to which it will lend.

The target customer-base of this new service is defined by FreedomPlus as “emerging prime” borrowers – a neglected set in the US at present. Banks have increasingly looked to lend to more credit-worthy clients. Even the major US P2P lenders, like Lending Club and Prosper, have turned their backs upon masses.

Joseph Toms, president and chief investment officer of FreedomPlus, described the platform’s customer base “as ‘emerging prime’ consumers who currently reside in the near-prime-credit segment but whose credit scores do not accurately reflect their improving conditions.”

Mr Allen’s funds have been directly invested in the San Mateo-based debt consolidation company Freedom Financial Network, to support the newly launched lending platform. The service will offer unsecured loans of up to $35,000.

FreedomPlus will be a beacon of hope for the credit-starved droves, but will also raise alarm in some circles. Critics will doubtless point to the platform’s model as an example of “subprime lending”. In reference to that term, one synonymous with the global financial crisis, a FreedomPlus spokesperson said: “That’s too black-and-white of a term. They [FreedomPlus] feel that their job is to find the emerging prime customers within what is traditionally labelled subprime.”

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