How to Make Money With Peer-to-Peer Lending and Pinterest
The BBC take a look at Peer-to-Peer Lending
What is Peer-to-Peer Lending or P2P Lending
The UK's Peer-to-Peer Lending Market has trebled in just three years. Digital finance lending set to hit £1bn (ft.com, article by Elaine Moor July 15, 2013)
In the wake of the 2008 banking crisis, those of us who were lucky enough to have had a little money saved, saw the interest rate plummet to barely negligible levels. The government poured billions of our hard earned tax, into the system to prop up the banks. And while this was good news for the banks, it was bad news for savers.
For the bankers, it was business as usual, not so for the savers. Banks no longer needed to compete for customer's savings. Therefore, there was no need to pay competitive rates of interest. However; as the saying goes, “it's an ill wind that blows nobody any good” and as we learned in our science classes when we create a vacuum something always rushes in to fill the void.
Enter the new kids on the block. The newcomers quickly saw the possibility of making money by cutting out the middlemen, or 'bankers,' and a way to fill the ever-widening gap in the market. They created an alternative to traditional banking and a new era of lending and borrowing.
Peer-to-Peer lending also known as P2P, social lending, crowd lending or lend-to-save, is an innovative form of online social lending services that act as an online broker between borrowers and individuals who are willing to offer loans.
Put simply, Peer-to-peer links savers to borrowers. Ordinary savers, as well as wealthy investors who are looking for a better return on their money, are brought together with borrowers seeking loans with low or competitive interest rates.
Many small businesses and individual borrowers are finding Peer-to-peer lending a real alternative to banks and building societies.
Where lenders such as Payday loans targets the most financially vulnerable people who very quickly becomes trapped in a spiral of debt, with extortionately high-interest rates, peer-to-peer lending offers opportunities for lenders and borrowers that are mutually beneficial.
The borrower gets a flexible, low-cost loan, and the saver earns better returns on their savings. The people who save and borrow money from these sites can be anyone, young professionals, pensioners, entrepreneurs or businesses. The website does the repayments and chases the borrower on the lender's behalf.
With the middleman out of the picture, borrowers are offered lower rates of interest, and the saver enjoys a better return on his/her savings than they would from a traditional bank while the site makes its profit by charging a fee.
Credit checks are used to pick the borrowers who are rated according to how risky they are assessed to be. Income tax on interest is paid as it would through the banks.
The UK's largest peer-to-peer lending service is Zopa. Set up in 2005, Zopa's total loans this year is expected to reach £200m, doubled the amount for 2012, with projections for 2014 in the region of £400m. Zopa has concentrated on offering personal loans in the past but is now looking to extend their services to businesses.
Thus far, peer-to-peer are not regulated. However, regulations are pending as the Financial Conduct Authority gets into gear for April 2014. Regulation will offer some protection to both borrower and lender. This types of saving and investing can work well if the investors are willing and able to lock their cash away for a period.
The saver chooses how much money to put away and for how long, to get a fixed rate (after fee and bad debt adjustment). Currently, for three years rates are 4.1% for 4-5 years 4.4%
Crowdfunding is another simple idea where people come together to fund specific projects. The project can be anything, finance for a small business, publishing a book or funding for filmmaking
However; where Peer-to-peer lending consists of a loan that the borrower must repay, Crowdfunding is a means of raising money by asking a large number of people to contribute a small sum for a particular project.
This type of fundraising is gathering momentum as more entrepreneurs than ever before are taking to the web for cash to finance various ideas.
This latest funding innovation, also offers small business owners who are unable to raise money from the banks, an opportunity to get funding from different investors. Anyone can benefit from investing in fledgling start-ups, investments may be large or small, as much as the individual is happy to risk.
Projects range from help with the financing of community projects where there is no financial gain, to large investments purely for monetary gain.
The UK Crowdfunding Association list three types of crowdfunding;
- Donation Crowdfunding people may invest in a project because they believe in the cause; the reward could be as simple as a pair of tickets to an event, some free gifts, regular updates, or in the case of a music album, acknowledgement on the album cover. Individuals who donate are personally or socially motivated and expects nothing in return. UK sites include: www.banktothefuture.com, www.buzzbnk.org, www.crowdbnk.com, and www.peoplefund.it
- Debt Crowdfunding Investors get their money back with interest, i.e., Peer-to-peer lending.
- Equity crowdfunding People invest in an opportunity in exchange for equity. Money is exchanged for shares in a business or venture. Sites include:
Never A Borrower Or Lender Be
Some people work hard to avoid debts, some take on far too much. Where do you fit?
The Disadvantages of Peer-to-peer lending
There are many advantages to peer-to-peer lending, but there are also disadvantages. Disadvantages are mainly to do with the risk factors associated with this type of lending and borrowing.
Once the money is borrowed, the borrower may default on the loan. However, sites like Zopa carries out very stringent credit checks on loan applicants. Money is divided into ten chunks and spread across different borrowers to minimize the risk.
According to the chief executive of Zopa, the company's default rate is only 0.23 percent. Both Zopa and Ratesetter have built up funds to reimburse any losses as a result of default on payment of money borrowed, plus the interest.
In our current economic climate, the phenomenon that is Peer-to-peer lending is a simple concept who's time has come.
Members of Consumer Magazine Which? have rated the UK's three biggest peer-to-peer lending sites.
Explanation of risks to savers
Ease of use
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How to Make Money With Pinterest
Make money With Pinterest
Here on HubPages, most of us are using Pinterest to post our hubs and beautiful pictures, but are we taking full advantage of this social networking website? Are we making money from popular social networking sites like Pinterest? I bet the answer is a resounding no or very few. Pinterest is fast becoming the best social networking site for promoting and selling your business, anything from Clickbank affiliate products, Amazon affiliate program to your latest ebook.
Although it is not possible to place an opt-in form on your pinterest boards, there are ways to encourage people to subscribe to your email blast or website, you can do this by taking a screenshot of your opt-in page, upload it to Pinterest then edit the link to point back at your opt-in page. Explain why people should subscribe in the description box.
Your followers on Pinterest will be directed to find more information. Do some research, find out how other businesses are getting signups for Pinterest. What call to action they are using, you can try, 'to join our mailing list click here,' or, for more information click here.
If you have a giveaway incentive for signups, include some impressive images to represent the incentive. On the other hand, if you do not have a giveaway or an opt-in page, you can use a picture that grabs the attention, and use the description for the image to its best advantage. Make use of any interesting statistical data that will help to sell your product, pin it and link to the opt-in page.
Use an explainer video to walk potential customers through a specific problem. Show them how your product can help them to solve their problem. Make your point quickly and clearly, and remember to place a link to your sale page in the video and the pin. If someone repins the video, they also get your link.
Selling Physical Products on Pinterest Social networking site
When it comes to pinterest, physical products are the best sellers. To promote your product, show it in use, or photograph it in an appropriate setting. If your product is cooking utensils, makeup, or home decoration, show it in action.
Make use of Pinterest's rich pins functionality, to help your business and product stand out on Pinterest. Pinterest is about the visual representation of your products, your mailing list and services. Only the best images will result in likes, shares, click-through and comments.
Pinterest widget add Pinterest widget button to your website or mobile apps. Businesses who use the Pin It button see good increase in referral traffic. If you haven't already, get your Pinterest invite and start pinning. See New York Times on Pinterest
By J Alexis-Hagues © 05 /11/2013