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May 1, 2008 5:15 pm US/Pacific
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Save With Dave: Need A Loan?
SACRAMENTO (CBS13) ―
A big bank isn't your only option when looking for a loan.
Madeline Smith found funding for her pet clothing boutique online. She went to a website called Prosper.com, where people who want to borrow money meet people who want to lend it.
All she did was take a credit check and map out her business plan.
"Forget a bank this is greater than a bank this is actually you and me working together," she explains.
Within two weeks, complete strangers funded Madeline's $5,000 loan. And her nine percent interest rate means she'll pay about $400 less than if she'd used a credit card, or went to a bank.
In the six months since opening her business, Madeline's already using the profits to pay back the lenders who believed in her.
Lenders say although a small percentage of borrowers default, there's a great potential for profit.
"I have earned a higher rate than most, but you have to be really careful because there are a lot of bad loans out there," explains Benjamin Fleck.
Sites like Prosper.com are flourishing, helping people do anything from reducing their credit card debt to paying for college.
And Madeline says she's not just growing her business.
"As a matter of fact, now I am a lender, I turned around, and paid it forward," says Madeline.
Madeline got a $5,000 loan with an interest rate of nine percent that saves her about $400 compared to if she used a credit card to get that money.
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