Social Lending Will be the Next Big Web 2.0 Thing

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When banks and other traditional money lenders say "no," the Web and some new social networking sites might just say "yes." Allen Stern explains that this might be the next big thing for Web 2.0 -- and why it is a development worth watching closely -- in a three-part series of stories on the popular Web site CenterNetworks.

When banks and other traditional money lenders say "no," the Web and some new social networking sites might just say "yes." Allen Stern explains that this might be the next big thing for Web 2.0 -- and why it is a development worth watching closely -- in a three-part series of stories on the popular Web site CenterNetworks (http://www.centernetworks.com).

Social lending web sites, such as Zopa.com and Prosper.com, allow people in need to make their case to ordinary people when seeking loans. Potential lenders then determine whether or not the cause is worthy. Interest rates on the loan are determined on the basis of the credit of the borrower, although generally lower than typical commercial rates. The funds are generally pooled from dozens of lenders. Obviously, such loans are seen as riskier than traditional investments, but both borrowers and lenders seem to appreciate the more human aspects of the process.

"My belief is that social lending is working for the same reasons that MySpace, Facebook and the other social networking sites do," Stern said. "There is something 'in it for me' when I help someone get the funds they need to do whatever it is they want to do."

Aside from laying out all the potential pitfalls -- both for lenders and the marketplace at large -- Stern takes a closer look at the two largest sites and then follows up with a look at why making such loans might just make you feel better than a lot of other investments (despite the likely greater risk).

The social lending series is available at:

http://www.centernetworks.com/social-lending-web-2-0

About CenterNetworks

CenterNetworks (http://www.centernetworks.com) is the online guide to the next generation of the Internet, Web 2.0 and social networking. CenterNetworks helps readers keep up with the latest news, trends, interviews with influential personalities and conference coverage from around the world.

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