'Social' borrowing and lending site expands to US

Online lending and borrowing exchange Zopa today announced it had raised US $12.9 (€9.7m) to fund a US launch and to expand its UK operations.

The group, which launched two years ago as an online “social” marketplace where individuals can lend and borrow money on an unsecured basis, is set to open for business in America by the end of the year.

Zopa will also introduce a raft of initiatives in the UK by the end of the summer after securing funding from venture capital backers Bessemer Venture Partners in the US, Benchmark Capital, which is based in America and Europe, and Munich group Wellington Partners.

Changes for the UK site include plans to introduce the ability for people to specify who they would like to lend to, or borrow from, by factors such as age or location, and will allow people to gain tax-free returns from lending on the exchange via self-invested personal pensions.

Co-founder and UK chief executive James Alexander said the funding was achieved following a successful inaugural two-years for the business, which has clocked up more than 135,000 users since its launch in March 2005.

He added today’s expansion plans would be followed imminently by a further overseas launch, but remained tight-lipped on the details.

Mr Alexander said: “Our role is to continue to grow Zopa and give lenders and borrowers access to a better deal than they can get elsewhere.”

Zopa employs 40 people in the UK and is looking to take on about 10 staff initially to run its US business.

The group also announced today the appointment of Douglas Dolton as global chief executive to replace Richard Duvall, who died last year.

Zopa does not yet allow sub-prime lending or borrowing on the exchange – a contentious issue in the US after banking groups such as HSBC recently revealed rising default rates in the States.

Mr Alexander stressed the group makes rigorous affordability and credit history checks and so far has a default rate of just 0.2%.