Although low interest rates still plague income investors, direct lending companies such as iBorrow fund loans to borrowers with money from third-party investors. While iBorrow considers itself a participant in the peer-to-peer (P2P) lending field, they do not currently conduct loan origination or syndication via an online platform. However, iBorrow plans to offer online functions in the future, making it competitive with other players such as Prosper.com and LendingClub.com.
In an article published by Investor’s Business Daily, iBorrow co-executive chairman Harlan Peltz discusses how many P2P lenders have diversified portfolios and why iBorrow focuses on loans solely for commercial real estate. “A lot of the carnage in real estate in 2008 was on the residential side, not the commercial side,” says Mr. Peltz. “Residential property tends to experience much greater price swings.”
iBorrow takes several steps to cut risk on its loans—all of their loans are collateralized by commercial real estate. This practice means that if iBorrow has to take possession of a property and sell the property in the event of a default, it does not have to spend the time and money typically required to go to court to get the property.