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Social Investing Sites

January 08, 2008

By MoneyRates Team | Money Rates Columnist

Social investing sites give investors a new way to invest their money, as socially-conscious lenders, either through small loans to third-world borrowers (Microfinance) or through peer-to-peer lending (Social Lending). Both types of social investing are aimed at helping entrepeneurs thrive. The sites below have been reviewed by money-rates.com:

Prosper.com

Prosper has 490,000 members and offers loans from $1,000 to $25,000.. If you are a borrower and your loan is funded, you will be charged a percentage of the amount borrowed (1% -2%) or $25, whichever is greater, depending on your credit grade. Borrowers must have a credit score of 520 or higher and pass identity verification and anti-fraud checks) Lenders earned an average of 9.12% APR on AA loans from June 1, 2006 to December 8, 200. Borrowing rates are as low as 7.70% APR.

Zopa US

Currently operating in United Kingdom the company is coming to the United States December 3rd, 2007. Zopa takes lenders who have placed one year CDs at participating credit unions and allows them to bid down loans placed at the same credit union. Zopa charges borrowers a fee of 0.5% of their loan amount and lenders a 0.5% annual service fee. Lenders pay an annual 0.5% fee on the amount they lend to borrowers.Credit score of 640. Borrowing rates currently range from 6.00% to 10.00%

Lending Club

Borrowers complete a loan request and instantly view the interest rate at which they pre-qualify. A minimum credit score of 640 is required. Borrower processing fees range from 0.75% (A) to 2.00% (G). Lenders pick a suitable portfolio of loans to fund. The average portfolio performance according to their site is 12.25%. 7.12% (A1 credit score) to 18.36% (G5 credit score).

MicroPlace

MicroPlace is currently the only website that provides everyday investors with the ability to make investments in the microfinance industry. Through MicroPlace, an investor can make investments that earn financial returns while having a positive social impact. The program is designed for the working poor who use their loans to build businesses. They repay their loans and pull themselves out of poverty. Initial loan amounts are small, typically between $30 and $200, and have to be repaid in weekly installments within three to six months. As borrowers establish their credit, they become eligible for larger loans. Most of the loans do not require collateral. Borrowers will often form groups whose members guarantee each others’ loan payments. Some microfinance institutions require borrowers to establish a savings pattern before they can receive loans.

Kiva

Kiva lets you connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, you can sponsor a business and help the world's working poor make great strides towards economic independence. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates from the business you've sponsored. As loans are repaid, you get your loan money back.

Your responses to ‘Social Investing Sites’

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Anonymous

10 January 2008 at 9:30 am

Dear SI, this is a great list of social investing Web sites. That said I feel compelled to point out that you missed a very significant player in the social investing field. ACCION USA (www.accionusa.org) is the largest microlender in the U.S. with a national footprint. For those in the U.S. interested in addressing issues in their own backyard, ACCION has a portfolio of about $8 million in domestic microloans, which are disbursed through offices in Atlanta, Boston, and Miami, as well as nationally via the Internet. Individual investors have the opportunity to make double bottom line investments in ACCION's revolving loan fund.

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