Online Lending

Review of Online Lending Platforms – MyC4 and Veecus

David Costa who is the Dean at the Robert Kennedy College – University of Wales MBA in Zürich, Switzerland reviews two online lending platforms on his blog http://microfinance.fm/blog

I had initially the wrong impression about this platform. I did change my mind after reviewing this. The idea is to allow lenders to charge an interest rate (and perhaps make a profit) in the process.

The only difficulty is that the loan is then transferred in local currency and an investor should get familiar with the inflation rate/currency depreciation before bidding. Of course you can bid for a lower interest rate but you will then have an higher chance to loose money.
The whole process is not sugar coated in the sense that, an investor, has the chance to experience the real interest rate charged to the borrower + the default rate. All this happens behind Kiva too but in MyC4 you do see it directly. It makes of you a micro banker with some of the relevant decision making issues (how much to charge, selecting the clients, reviewing collaterals).
All in all it requires a bit more time than Kiva but it is a totally different concept. It focuses solely on Africa. My suggestion is to start small (20-50 Euro) and focus on MFIs with low delinquency rates.
I am not sure about this provider. They work only with 1 MFI from Cameroon. Some of the loans appear to be out of proportion (800-1000 Euro? it does sound out of proportion) and their profit model doesn’t seem to be very transparent
“Veecus gets revenue from membership fees paid by Veecus lenders on the very first loan, and a volume-based fee paid by microfinance institutions once they have received funds for microentrepreneurs’ projects.”
How high is the fee?
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