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Peer to Peer Lending is Giving Banks a Run For Their Money

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People usually think of going to bank when they need to take out a loan. Banks may give people who are already their customers certain discounts on interest rates, which is a major factor we look at when choosing a lender so that we can go with them.

Banks are usually hesitant to give small business loans because of their lack of financial history. They would rather avoid having any risky investments into their portfolios. Because of that it has been quite hard for small business owners. Normally, getting approved for loans can take a long time. On top of that, consumers have to worry about the high costs of advanced underwriting and understanding their interest rates.

However, banks are in losing out to competitors recently with a company that is giving them a run for their money. Lending Club has been grabbing business from banks quite aggressively, and they are on the verge of reducing loan portfolios from balance sheets.

The Lending Club is positively altering the financial sector to make financing for consumers more gratifying and making advances much more affordable. The company matches investors with borrowers that are based on their risk appetite. The Lending Club is involved with rendering an online market that matching investors with borrowers. The platform lets members join in to trade standard or customized program loans.

Their model is a peer-to-peer lending platform. It’s a practice of delivering cash to certain consumers and all without the need of a financial intermediary. The Lending Club, in particular, is posing a real threat to most banks. According to Lending Club, the borrowers who come to them get almost 33% off the typical interest rates most credit card companies charge.

The latest quarterly results showed that the Lending Club Corporation experiences a whopping 92% year-over-year increase in regards to loan origination. As of now, the primary loan they make is for personal loans. They’re also pushing to help small businesses out as well.

The good thing about Lending Club is that they are not obligated to follow this kind of strict rules that the banks also do, thus creating a gleaming window of opportunity for them to grow their business. A vast majority of analysts look optimistically at the Lending Club’s prospects in the long run. Nine out of the nineteen analysts that covered the Lending Club stock recommended buying it. Seven of the nineteen suggested that there be a hold. At the end of October, the Lending Club stated that their earnings for the third quarter fiscal year for 2015. They happily announced that they were able to surpass even what analysts originally suspected to be both their earnings and revenue. Their earnings per Share, or EPS, came in at $0.04, which was double the amount the consensus estimated to be $0.02. On top of that, their revenue currently stands at $116.3 million, against the analysts’ predicted amount of $108 million.

The Lending Club stock traded up 3.11 at $12.58 at this past Wednesday’s close. During the same trading session, the S&P500 index rejected around 1.3%. Still, they experienced a slight increase of 0.08%. It proves that the Lending Club Corporation can do better in the market.
The Lending Club is currently well-positioned to report both fabulous operating and financial results. The Lending Club should continue to focus aggressively on marketing activities to make use of any opportunities in the future. While they are currently giving their customers a huge discount on the interest charge of a loan, it’s likely the company will continue to be successful in creating a low-cost platform that will have the ability to generate enormous earnings for them and savings for their customers.

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Why You Should Consider Filing For Social Security At Age 62

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Why You Should Consider Filing For Social Security At Age 62

Earlier this week we discussed four common regrets that retirees have when they look back at their golden years. One of the most common regrets was filing for Social Security benefits at 62, the earliest possible age. According to the Social Security Administration, about 1 out of 3 people apply for benefits at that age.

The regret is that if they had waited longer to file for their benefits, their monthly check would be much larger. For example, by delaying filing for Social Security until age 70, your monthly benefits can be as much as 75% larger than someone who filed at age 62. That’s because benefits grow by a guaranteed 5% to 8% each year that you delay your claim.

But there are always two sides to a coin. Today we wanted to discuss the benefits of filing for Social Security as soon as possible. With this, you can decide which approach you believe will benefit you the most.

The Case For Filing Social Security Early

The earliest you can file for Social Security benefits is age 62, but each month you file before reaching your full retirement age (FRA) cuts your monthly benefit amount. As an example, if your full retirement age is 67 and you start your claim at age 62, your monthly check will be reduced by approximately 30%.

Despite the reduced monthly benefit that comes with filing early, tens of millions of Americans make that decision every year. And it boils down to one line:

We have no idea what the future holds.

The financial benefits of waiting until age 70 to claim Social Security make complete sense. But we don’t know how long we will live, so we don’t know if the trade-off is worth it. If we knew we would live a long, healthy life until age 100, we would all delay filing until age 70 and reap the maximum reward.

But if you decided to wait until age 70 to claim, and unfortunately passed away before that, you would have foregone all the retirement income from age 62 on.

Waiting to file is a gamble, but so is giving up guaranteed monthly income starting at age 62.

Deciding when to claim your benefits requires serious thought and shouldn’t be a hastily made decision. And we aren’t saying that filing Social Security immediately at 62 or waiting until age 70 is the right choice. Every situation is different. If you are still healthy and working, waiting a few years passed 62 to claim but not all the way to 70 might be a good compromise. You’ll get a larger check than had you claimed right away, and your regular working income can make up for some of the reduced benefit amount since you didn’t wait until age 70.

The most important thing, whether you file at 62 or 70, is to find enjoyment in your golden years.

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Mnuchin: Next Stimulus Coming By End of Month, No More Extra Unemployment Money

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Mnuchin: Next Stimulus Coming By End of Month, No More Extra Unemployment Money

Treasury Secretary Steve Mnuchin said the next stimulus bill will be much more targeted than previous bills. He also said the goal is to get the next bill approved between July 20 and the end of this month. That time is when Congress will return from their holiday break and before they leave for August recess.

On Broad Stimulus Measures

It appears the White House will not support the type of broad stimulus measures of the previous bills. Instead, it will focus on direct payments to Americans. In an interview with CNBC yesterday, Mnuchin said “we do support another round” of stimulus checks to individuals. This mirrors the $1,200 payments that the government sent out as part of the $2 trillion rescue legislation passed in March.

Mnuchin didn’t mention whether he supported the idea of a $40,000 income cap to receive a check that has been floated by GOP lawmakers. The income cap for the first stimulus check was $75,000. He did say that he spoke with Senate Majority Leader Mitch McConnell. He also mentioned the “level and criteria” for checks would be discussed when lawmakers return to Washington.

Any new stimulus bill would likely not include proposals from the Democrats that include hazard pay for essential workers. It likely won’t include a longer extension of strengthened unemployment benefits, mortgage and rent relief, and support for state and local governments, too.

Mnuchin reiterated that the White House isn’t in favor of more relief money for states and municipalities to make up for lost revenue. Some state and local governments are considering trimming essential services as costs balloon and revenues drop. He said the administration does not want to “bail out” states that were “mismanaged” before the virus hit.

On Unemployment Benefits

Another critical topic the lawmakers will tackle the end of the enhanced unemployment benefits on July 30. They will do so when they return to Washington D.C.

Mnuchin said the White House has no interest in extending the enhanced benefits any further. Instead, he said it wants to change how they pay benefits. He did not give details. However, he did hint that unemployed workers shouldn’t be able to earn more money compared to full-time employees

“You can assume that it will be no more than 100%” of a worker’s usual pay, Mnuchin said. This echoes many Republicans who argue the additional benefits are preventing some from returning to work. These workers do this so that they make more at home than they would at their jobs.

While Mnuchin says the White House isn’t in favor of extending unemployment benefits, it is extending the Paycheck Protection Program that provides loans for small businesses. Earlier this week the Trump administration released a list of companies that received loans from the government. With that, backlash ensued as numerous businesses tied to wealthy individuals were found to have requested funds. Of the $130 billion remaining in the program, Mnuchin said he wants new relief to be “much, much more targeted” than past rounds of funding.

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PPP Recipients Revealed, 51 Million Jobs Saved

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The Trump Administration released details yesterday on the success of the Paycheck Protection Program (PPP). They also released the names of the businesses that took out loans from the program.

The program was signed into law in late March as part of the CARES Act. It offered forgivable loans to small businesses in an effort to keep them afloat and their employees on the payroll. The program came as the coronavirus forced the US economy to shut down. Originally, the business had to use 75% of the loan amount to keep employees on the payroll. However, that was later reduced down to only 60% of the loan amount.

The program originally had $349 billion as funding to help small businesses. After those funds ran out, the government replenished the program with an additional $310 billion.

With information provided by the Treasury and Small Business Administration, the White House released the list of companies that received a loan of at least $150,000. Loans of that amount or greater represent nearly 75% of the total dollar amount lent out by the program.

The vast majority of loans, however, were for a much smaller amount. Nearly 87% of the loans approved as part of the PPP were for $150,000 or less, according to the SBA.

PPP Funding and Other Figures

Looking at the information provided by the White House, more than half of funding went to businesses in just five industries. The health care and social assistance industry received just under 13% of the money, while professional and technical services received 12.7% of the funds. 12.4% went to the construction industry, 10.3% went to the manufacturing industry and 8.1% went to restaurants, bars, hotels and other food- and hospitality-service employers.

Other notable figures from the report:

  • The program has approved 4.9 million loans for a total of more than $521 billion.
  • According to the companies receiving the funds, the program has saved or supported more than 51 million jobs.
  • The program has about $132 billion in funding remaining.
  • The average loan size is $107,000.
  • California-based businesses received the most money overall at $68.2 billion. Texas was second at $41.1 billion and New York third at $38.3 billion.
  • Businesses in economically distressed areas as designated by the SBA got nearly 23% of the loan money, while companies in rural areas received about 15% of the funds.

Additionally, public outcry helped return more than $30 billion dollars to the fund. Ruth’s Hospitality Group, which owns the Ruth’s Chris Steak House chain, AutoNation, ShakeShack and even the NBA’s Los Angeles Lakers are among those that took out PPP loans that were ultimately returned.

The administration just extended the program, but it has already proven to be a huge success.

“The PPP is an indisputable success for small businesses, especially to the communities in which these employers serve as the main job creators,” SBA Administrator Jovita Carranza said in a statement. “In three months, this Administration was able to act quickly to get funding into the hands of those who faced enormous obstacles as a result of the pandemic.”

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