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Wednesday, June 3, 2015

How to Become a Banker without the Baggage by Marc Charles

How to Become a Banker without the Baggage

7:02 AM

Dear Entrepreneur:

I stumbled on to a business opportunity which is unlike anything you’ve ever seen before.

You’re going to like this one!

On top of that, now you’ll have an opportunity to play along with “fat cat bankers”.

Granted, I’m slow on the draw on this one….it’s already been featured in The Wall Street Journal, Time, USA Today, Forbes, Wired, Fast Company, CBS News, Business Week, and Money Magazine - to name a few. And it’s catching on like wildfire but there is still an opportunity to make money.

I’ve done the research for you and it’s legit.

I can’t imagine why someone didn’t think of this sooner…

Here is the deal….

I’ll get into the details in a second…but first a short story.

Twenty five years ago, I hired a young kid from Southeast Asia.  His name was Pao. 

One afternoon during a lunch break Pao described an approach to entrepreneurship (and financial lending) which blew me away.

I thought I was the "hot shot" entrepreneur.

Here’s what Pao said…..

Pao explained why Asian businesses tend to grow faster than U.S. businesses.

It started to sound like Pao had some hidden “mysterious” knowledge about growing businesses.

Pao explained how Asian entrepreneurs coming to North America often leverage an ancient financing “formula”.

An ancient financing formula in a nutshell…..

Pao explained when an entrepreneur has an idea for a business; he or she would present the idea to a small group of elders or “advisers.” 

If the group approved the business idea, the entrepreneur would receive all of the necessary start-up capital to start the business.

This type of loan would enable the young entrepreneurs to own their businesses lock, stock, and barrel, unlike a bank or venture capital (who always have their hands in your pocket).

There was only one requirement. 

When the Asian business became profitable, the entrepreneur would be required to contribute funds to the group so they could help the next entrepreneur succeed

It’s brilliant.

When the strategy is working in full force the elders could fund dozens of ventures, or in some cases hundreds!

I’m sure yo0u’ve noticed how immigrant businesses often spread like wildfire in the United States, Canada, and other parts of the world. Part of this success is due to the Asian business formula Pao explained to me that day.

Wouldn’t it be great if everyone could launch and finance a business this way? 

Can you imagine the mountains of red tape that could be eliminated?

The opportunity I discovered is very similar to the ancient business formula.

It’s an opportunity for people like you and I to fund other entrepreneurs directly, and receive compensation for doing it.

It’s like having your own web-based bank!

The opportunity I’m talking about is called Prosper.com.

Prosper.com is a people-to-people (P2P) lending marketplace.
 
It goes like this…..

Prosper.com leverages some of the basic principles of the Asian business formula, namely lending money to eager entrepreneurs, and receiving interest just like a bank.

The objective of Prosper.com is to make consumer and business lending more rewarding for everyone. 

Prosper.com works like an online auction. 

But instead of listing and bidding on items, people list and bid on loans

Entrepreneurs who want to lend money to other people set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000.

If you think that’s great… you’ll love this…

People who want to lend money can easily diversify their holdings by using "standing orders," which automatically makes dozens of small loans to different borrowers. 

If you understand anything about banking you’ll know the secret to making money is by “spreading the risk”. Banks do this by lending money in the form of hundreds, thousands, and even millions of small loans.

Bankers understand the philosophy of “spreading the risk” and diversifying by lending to as many people as possible. This limits their losses when a miniscule number of customers default.

This past weekend I attended a dinner party at a swanky resort on the coast of Maine. One of the guests was a high powered “risk assessment” director. His job was to “spread the risk” of the bank’s assets and limit downside “exposure”.

We had a great conversation….and he smiled when I mentioned Prosper.com, but he quickly added, “I hope our customers don’t find out about it”.

Can see the advantage of a Prosper.com diversification strategy?

Borrowers can post loan needs for up to $25,000 and set the maximum rate they are willing to pay a lender. 

The auction process begins as people who want to lend bid down the interest rate. 

When the auction ends, Prosper.com takes the bids with the lowest rates and combines them into one simple loan

In addition, Prosper.com handles all of the administration tasks including loan repayment and collections on behalf of the matched borrower and lenders.
I committed funds to Prosper.com within 24 hours of discovering it. This site has fulfilled one of my goals of owning a bank.

In addition to making money as a lender, you can make money by referring borrowers and lenders too.

How the Prosper.com Referral Program Works:
1. You can add a special link to Prosper on your website, blog, e-mail newsletter, discussion forum, MySpace page, Facebook page, YouTube video, and so forth
2. An individual clicks on your Prosper link
3. A person must join Prosper within 30 days of clicking on your link
4. Within 90 days of joining Prosper, when your referral gets a funded loan (as a borrower) or funds a loan (as a lender), you get cash in your Prosper.com account (this happens as soon as your referral’s first monthly payment clears [as a borrower] or first loan originates [as a lender])
Referral Fees
When you refer a lender to Prosper.com you receive $25. Your referral receives $25 as soon as they fund his or her first loan. When you refer a borrower, you receive 0.5 percent of your friend's loan amount as soon as your friend's first monthly payment clears.
It’s truly amazing.

Many companies have tried to make this business work. But it looks like Prosper.com has the trading platform down, and it’s incredibly easy to use (as a borrower or lender).

Now you have an opportunity to become a financial lender in 15 minutes or less. That’s how long the signup usually takes - although confirming your bank account will take a little time, too.

Regards,

Marc Charles


********** Action Strategy **************
Open an account at Prosper.com.

You can open an account as either a lender or borrower. 

It’s fast, easy, and fairly painless. 

Once your identity and bank account are verified, you can fund your Prosper.com account and start lending. It took me about 24 hours.

You can start out small and place a “cap” on the lowest interest rate you’re willing to accept. 

What’s more, you can also choose to only work with people with the highest credit ratings!

My favorite strategy is “diversification.” This enables you “spread the risk” with different kinds of borrowers.

The best part about this opportunity (besides money making potential) is you’ll be helping honest, hard working people… and having fun in the process!

Valuable Resources
MicroPlace (an eBay company)
LendingClub (another P2P lending site)
Loanio
Zopa
P2P Lending News

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