Student P2P lending site Fynanz stops taking new loans

Student P2P lending site Fynanz stops taking new loans

Fynanz, a US person-to-person social lending Web site aimed at college students, is to stop accepting new loans due to tough "market conditions" and will now focus on offering its platform to financial institutions.

Launched last March, Fynanz targeted college students struggling to find loans in the post-credit crunch market. But it has now stopped taking new members, although existing loans are still being serviced.

Instead, the firm is now offering its "turn-key, Web based" lending platform to banks and credit unions looking to establish their own private student loan programmes.

The change of tack comes as P2P lending continues to face regulatory difficulties in the US. Over the last few months, Prosper, Lending Club and Loanio, have all been forced to stop taking new loans whilst they registered under the Securities Act.

Last month Prosper paid $1 million to US regulators to resolve a probe into the sale of unregistered securities over the site. The SEC had issued the marketplace with a 'cease and desist' order for selling promissory notes in violation of the Securities Act.

Meanwhile, the UK's Zopa shut down its operations in the US in October - just 10 months after launching in the country - blaming the harsh economic climate.

Comments: (1)

A Finextra member
A Finextra member 26 June, 2009, 01:16Be the first to give this comment the thumbs up 0 likes

If it's true that many consumers cannot get credit right now, than shouldn't market conditions actually be favorable to P2P lending companies? I certainly understand the regulatory challenges as I was in constant contact with PayPal (in another P2P product cateogry) in their early years. My point is that "market conditions" should not be confused with "regulatory conditions", and the former may be quite strong for lenders while the latter is always a challenge for any new type of product.