Circle Lending is a company that facilitates interpersonal loans between friends, relatives, and other less formal partnerships.
For centuries, individuals have been lending money to their relatives, friends and business associates. Today, the volume of these interpersonal loans is over $89 billion according to the Federal Reserve Board’s Survey of Consumer Finances. Despite this substantial volume, the process of managing interpersonal loans is fraught with emotional hazards, administrative hassles, and financial risks. For example, the average default rate on interpersonal loans is 14%, fourteen times higher than the 1% loss rate of bank loans.
One of the main reasons that the default rate is high for interpersonal loans is that repayment is typically organized in a haphazard manner — e.g. involving a lump-sum payment at the end of the loan term. Borrowers are frequently unable to make lump-sum payments and respond to the discipline of monthly payment plans to ensure that debts are repaid. When interpersonal loans are managed with repayment plans, the default rate drops substantially. The mere act of making regular payments instills discipline and good credit habits.
The mission of CircleLending is to help individuals gain access to affordable credit and to promote successful debt repayment.
CircleLending provides borrowers with the tools, resources, and enabling technology to improve a borrower’s ability to approach potential lenders from within their circle, and provides lenders with the ability to structure less-risky debt arrangements and reduce the hassle of payment collection. The company provides unique repayment plans suited for interpersonal loan situations — e.g. seasonal repayment plans for business loans, amortized repayment plans for private mortgages, graduated repayment plans for start-ups and emergency cash flow situations. In the case of default, CircleLending empowers individual private lenders to have many of the rights and capabilities normally reserved for lending institutions such as collections, credit reporting, and loan restructuring.
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