Tag Archives: internet

Bring peer-to-peer lending to Canada!

By Aaron Hoos on January 13, 2013 in Finance

Peer-to-peer (P2P) lending is not currently not allowed in Canada but I think it should be. In this blog, I want to talk about what P2P lending is, why it’s not allowed in Canada, and lay out a case for why it should be allowed in Canada.

WHAT IS P2P LENDING

Let’s start with the basics — what is P2P lending?

Peer-to-peer lending is crowdsourced borrowing. An individual who needs money can go to a p2p site (like Prosper.com) and post their need for cash. Lenders can collectively lend money to the borrower. So if someone needs $1000, a group of lenders can each chip in a certain amount — anywhere from $25 up to the full amount — to lend money to the borrower. The borrower then pays back the full amount plus interest.

I need to make one clarification here: P2P lending (crowdsourced borrowing) is different from crowdfunding (like through Kickstarter). In very general terms, borrowing comes with an expectation to pay back while funding is more like a donation.

WHY IS P2P LENDING A GOOD THING?

People need different sources of money and not all money can come from banks or other “formal” lending institutions. This is why payday loan companies offer a valuable service (even though they are frequently disparaged by people who don’t use them)… because payday loan companies serve a clientele who cannot or don’t want to go do through a bank. The same with P2P lending.

  • Why use a P2P lending service instead of a bank? Borrowers who use P2P services might be able to go through a bank, and they would likely get better interest rates if they do. But there might be reasons why they don’t want to go through a bank. Perhaps they don’t have the credit rating or don’t want to take the hit on their credit score. And P2P is certainly faster than a bank loan, and while they might be able to access just as much (or more) than a bank loan.
  • Why use a P2P lending service instead of credit cards or payday loan services? A P2P lending service gives borrowers access to money at a rate that is frequently better than credit cards or payday loan companies, and at amounts potentially more than credit cards and payday loan companies will lend.

On the lending side, lenders minimize their risk (by only lending a smaller amount, say $50 or $100 at a time) but get a higher return than they often would with a mutual fund (especially in today’s stock market).

BUT AREN’T THERE RISKS?

I’m not naive enough to suggest that P2P lending is all roses and sunshine. On the borrowing side, it’s possible to get into debt too much with P2P lending (no different than credit card debt, I suppose), and the interest rates can be high-ish in some cases. And on the lending side, there are defaults, just as there would be for banks in more conventional loans.

But there are risks in everything we do (there’s even risks associated with doing nothing) and as P2P lending sites like Prosper.com get better and better, those risks decrease. (Plus, smart lenders decrease risks by spreading their lending across several loans instead of dumping it all into one loan).

Like any other investment, I’d rather have the option to choose to pursue the opportunity or not… instead of what I have now: It’s decided for me.

WHY CAN’T CANADIANS PARTICIPATE IN P2P LENDING?

When I first learned about Prosper.com a few years ago, I looked into signing up. No-go. Canadians cannot participate. I tried again recently and it’s still the same.

I haven’t found a lot of information on why this is the case but Wikipedia has a good and clear (yet simple) explanation, which I’m summarizing here: Giving someone money with the expectation of making a profit is a type of “security” (just like other investments are types of securities). Securities are highly regulated. (That’s a good thing). In the US, they are regulated by the SEC.

In Canada, things are different apparently. (I’m still learning this part, in spite of being a formerly licensed investment advisor and working for in the financial industry since 1999 — yeah, that’s embarrassing, although in my defense, most of my time has been spent focusing on the US financial industry!). In Canada, we don’t have a a federal securities regulator akin to the SEC. Rather, our Canadian Securities Administrators (CSAs) are provincial — each province has its own regulator. (Observation: Is it strange that a republic like the US has a federal regulator while a parliamentary democracy has provincial regulators? Maybe I’m the only one who thinks that is weird).

Okay, as I dug deeper into some research, I found one company that was granted a license to operate a online peer-to-peer lending platform (for accredited investors only). The Ontario Securities Commission ruling from September 8, 2009 is here. The company, CommunityLend, has actually been winding down their operations since February 2012 in order to pursue a consumer lending business. In their blog post about their wind-down, they wrote a very telling analysis of the state of P2P lending in Canada: “We observed that P2P Lending, as it needs to operate within the Canadian regulatory system today, has enough headwinds blowing against it that getting to a significant scale was going to be both expensive and difficult.” (View the CommunityLend blog post: Onwards and Upwards from February 23, 2012)

Sadly, the only apparent Canadian P2P lender, already hampered by the “accredited investor” requirement, has been shut down.

Our provincial regulators have not seen fit to agree that P2P lending is worthy of making it available for all Canadians. Therefore, no average investor can participate in P2P lending here in Canada.

Why is this?

Here are a few guesses, based on totally unresearched, anecdotal observations and experience:

  • Canada is more risk-averse than the US. (Or, put slightly more positively, the US is more entrepreneurial than Canada).
  • Allowing P2P lending in Canada requires the agreement of all CSAs, which I’m sure is no easy task.
  • The potential for lost tax revenue from out-of-Canada P2P participation is likely a key factor in why Canadians can’t participate in a site like Prosper.com.

We can’t lay fault at only the regulator’s feet. As I tried to research peer-to-peer lending in Canada, I quite simply saw a gaping void in the information. There was some info when CommunityLend first got off the ground in 2008-ish but it’s been relatively quiet since. Even a site that attempted to document the microlending industry in Canada was active until about 2010. It seems like Canadian regulators don’t want P2P lending and Canadian investors don’t care.

The result is that borrowers must look to more conventional sources for loans while investors must look to more conventional sources for investing. Any informal pay-back-with-interest loans are done offline, face-to-face, and will still rob the government of their tax income.

A CASE FOR P2P LENDING IN CANADA

  • P2P lending in Canada takes an unregulated activity that is already going on and makes it regulated, and therefore safer (because of disclaimer requirements and educational opportunities and licensing).
  • P2P lending in Canada gives an option to borrowers who don’t want to use some of the conventional borrowing sources (i.e. bureaucratic banks or high-interest payday loan lenders).
  • P2P lending in Canada gives an option to investors who are aren’t seeing adequate returns from the conventional stock market.
  • P2P lending in Canada allows the country to catch up to other nations that have recognized the inevitability of social lending.
  • P2P lending in Canada regulates an activity that could generate tax revenue for the government (in the same way that other interest-bearing investments generate tax revenue).
  • P2P lending in Canada helps our economy by putting money into play.

Just read: ‘The New About Us Page Is a Social Beast’ at DuctTapeMarketing

By Aaron Hoos on February 5, 2011 in Business

The ubiquitous About Us page is frequently an afterthought, often filling in the missing pieces that aren’t necessary in a website’s other (more frequently visited) pages.

Duct Tape Marketing’s John Jantsch describes a new take on the About Us page and how to turn it from an afterthought into a valuable tool for your business’ website:

The New About Us Page Is a Social Beast :: Small Business Marketing Blog from Duct Tape Marketing.

Favorite video: Customer trends – the 21st century customer

By Aaron Hoos on November 24, 2010 in Business

In this second of 5 videos, Janice Roberts talks about how the modern customer interacts with technology… and how businesses need to understand this trend to succeed.

Watch it on Academic Earth

Online reputation management: How to clean up or eliminate unfavorable search results

By Aaron Hoos on November 16, 2010 in Business

No matter how good your business is, you’re bound to get some bad press at some point. It’s a part of business but wouldn’t be so bad… if it didn’t appear on the first page of a Google search result! Somehow, bad news or reviews seem magnetized to the very top of search results, and they remain stuck there as an obstacle to a fast-flowing sales funnel!

I’ve worked with several businesses and individuals who have bad press from their past lurking in Google search results, and we’ve rolled up our sleeves and dug in, trying to take back ownership of their reputation by taking back ownership of their top Google results. Here is the advice that I give them:

You essentially have 2 options:

  • You can talk louder and more often than the bad news or reviews
  • You can change the story completely

Both will take time and investment (sorry). I have seen both work and can’t say which one is better, although I suspect that the “better” one has to do with how quickly you need the content removed from search results about you and how flexible your prospects and customers are.

REPUTATION MANAGEMENT OPTION ONE: TALK LOUDER AND MORE OFTEN
If you have some annoying news or reviews that aren’t budging from your Google search results, you will need to get more aggressive by talking louder and more often.

Identify the keyword that is the problem. Is it your name or your business’ name? Be certain that it’s the keywords that people are actually Googling to get to you. (If your name is Bob Smith but you have earned bunch of bad reviews about “Robert Smith” that don’t even show up when someone searches for you, then forget about trying to manage it… it’s not disrupting your sales funnel unless your contacts find it in some other way). But if it’s your name (or business name) that is causing the problem, and bad news is showing up on that word when people Google you, here’s how to talk louder and more often:

Own the word: Make sure you own the domain name of that keyword. If you can think of a few different websites, consider buying related domain names. For example, I might own AaronHoos.com, AaronHoos-publishing.com, AaronHoos-writing.com, AaronHoos-speaking.com, AaronHoos-consulting.com, etc., or AaronHoos.net, AaronHoos.org, AaronHoos.info, etc. You can’t just copy and paste the content from one site to another and you should endeavor to keep each site fresh. At the very least, start with one site that is exclusively your name or your business’ name, if at all possible.

Start a blog: Start a blog with that name in the URL. Blogger and Posterous are my favorites but there are several others. If you can manage content across all of them, then start a blog at several of them. (Make it easy on yourself by assigning a function to each blog. Maybe one blog is just a quick blog about books you’re reading and every blog post features another book. Maybe another blog is for casual posts about what’s going on in your life, and it’s tied to Flickr and Last.fm and Foursquare. Maybe another blog is your professional blog. Maybe another blog is where you post your favorite videos. Again, make sure your name is in the URLs: aaronhoos.blogspot.com and aaronhoos.posterous.com, for example.

Get social: Open a Twitter account. Use your name as the Twitter ID. Create a personal Facebook page and a business Facebook page. Change the URLs to your name. Create a LinkedIn profile and business profile (if applicable) and change the URLs to your name. Create a Foursquare page. Find other social media relevant to your niche and do the same. Get active on those sites… and own your name at each site AND make sure your privacy settings allow for being crawled by search engines and published to the web.

Post content at offsite content channels: Find 5 or more article publishing or distribution sites and get actively writing and publishing articles there. Use a combination of article distribution sites (ArticlesBase.com, Isnare.com, EzineArticles.com, etc.) and article publishing sites (Squidoo.com, HubPages.com, Suite101.com, Technorati.com, etc.)

Post news: Find an online news site that caters to your niche market and report the news in your industry or niche category.

Make your own news: Write a report – just something smallish like a 5-page PDF – and then write a series of press releases. Publish them at press release sites (and consider spending the $300+/- for a press release at PRWeb.com). Host the PDF on your site (where search engines can crawl it) but submit it to PDF search engines and ebook sites. (Scribd.com is my favorite).

Create profiles: There are several sites that allow you to create and/or manage a professional profile about yourself. They have various functions but include some of the following: GoogleProfiles, Twellow, PeoplePond, DandyID, just to name a few.

Post your resume: Create an online resume at resume sites. Depending on your industry, there might be industry-relevant sites that allow you to create a portfolio page. For a broad range of services, Guru and Elance are good examples.

And remember, the key here is to always use your name or business name (whatever the critical keyword is whose reputation you’re trying to “clean up” in Google) prominently – in the URL, the page title, subtitles, and content.

Once you’ve done all (or a majority) of these, you need to manage them: Cross link them, push RSS feeds from one to another, refresh your content, and add new content. Obviously it’s too much for anyone to do in a day or even a week, but it is manageable if you plan to write a blog every day, an article every week, a series of website refreshes every two weeks, and an update your profiles every month. Not everything has to change all the time but a good cross section of it should be refreshed regularly so that there is always something new being posted somewhere. In my opinion, there is no such thing as too much. If you can produce content – a lot of content – and that content is high quality and consistent, you will eventually claw back your reputation.

REPUTATION MANAGEMENT OPTION TWO: CHANGE THE STORY
If the above list of opportunities is too much time or effort, or if you have to move quickly and aren’t afraid of shedding a few of your prospects or clients along the way, simply change the story. Find a new, related keyword that you can use and start marketing with that one aggressively.

If you are Bob Smith and there is some bad press out there, start marketing yourself as Rob Smith, for example. If you don’t have a name you can shorten (like Aaron), switch to your initials or even a pen name or professional name. Lots of people use pen names or professional names, and not just for reputation management. If you are “Fast Web Designs,” change your name to something else and aim for another related keyword… “Quick Website Builders”.

SUMMARY AND ADDITIONAL RELATIONSHIP MANAGEMENT TIPS
The internet gives entrepreneurs an advantage and a disadvantage: The advantage is rapid deployment of marketing to quickly build and fill sales funnels with contacts. The disadvantage is rapid spread of news and reviews (which tends to more likely to be bad than good). Like any other asset, your online reputation needs to be monitored and managed carefully. And if you ever find bad news and reviews creeping onto the search results for your business, you can talk louder and more often or you can change the story.

Favorite video: Eric Schmidt on web 3.0

By Aaron Hoos on September 1, 2010 in Business

In this video, Google’s Eric Schmidt says “web 2.0 is a marketing term”. I disagree. It certainly may have started that way, but the lexicon of us commoners tends to use it in a way that is beyond marketing. In spite of that, Schmidt gives us a vision of what web 3.0 looks like. It won’t come as a huge surprise to some of my readers but to others it will be a good, succinct statement of what changes we’re seeing in technology (and ultimately in the online marketplace).

Just read: ‘The long tail of keyword research’ at WordTracker

By Aaron Hoos on June 21, 2010 in Business

Love this article about long tail keyword research, rejecting the “head” keywords, and how to profit from long tail. Wanted to share it with you.

The long tail of keyword research.

I think drop.io is the coolest thing ever

By Aaron Hoos on March 30, 2010 in Business

When I’m not writing for businesses, I’m writing for magazines, which requires me to pitch article ideas. The problem is: Editors want to see writing samples (“clips” is the lingo) and I’ve got a bunch and I want to send more than one or two but I don’t want to send a 10MB file of PDFs to editors.

So I hunted around for a solution. Posting them on this site is one option but I don’t want editors to feel like they have to download each file to open it. I want to make it easy for them to quickly review a couple.

Image representing drop.io as depicted in Crun...
Image via CrunchBase

So, in hunting around for a solution, I came across drop.io. How have I missed this? I mean, I’ve heard of it but never heard about how exciting it is and it certainly isn’t on the tip of anyone’s tongue… but I think it should be. It’s the most comprehensive, robust, brandable, user-friendly free file-sharing tool I’ve ever seen (and to call it a file sharing tool limits its capabilities).

It’s easy to create a “drop”, it’s free up to 100MBs, it has a variety of really useful permissions and password settings, and there are extra features coming out of the wazzoo. So, you can use it like I am to do some showcasing. Or, you can use it to collaborate with your team — and they can upload and comment on files or not, depending on your permission settings. Or, it has a bunch of other uses and even comes with a paygate so you can sell one-time or recurring access to information and files. For a new business starting up, I would consider this to be an essential tool in their operations (along with tools like Zoho or GoogleDocs).

Few sites really inspire me with the profound number of business opportunities that I think are untapped. Drop.io is one of those sites.

Check it out. Create a drop. Imagine the possibilities.

(I hate that I have to say this but in case you’re wondering: No, I am not receiving any compensation or special consideration for my glowing review. This is a completely unsolicited recommendation based solely on how impressed I am with their awesomeness).

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