British billionaire Richard Branson who started his 'Virgin Records' business from a loan he took from an aunt knows the effect of small loans. He is today launching Virgin Money USA, a financial-services powerhouse he plans to carve out of what’s currently a small Waltham start-up.
Branson is creating Virgin Money USA out of rebranding the Circle Lending Co., a “peer-to-peer” lender that the Branson bought in May for an undisclosed sum.
Founded by entrepreneur Asheesh Advani, Circle Lending helps friends and families formalize loans to one another.
"We’ve developed a very flexible set of products where you can pick your own interest rates, miss a payment if you want - basically enjoy a freedom that’s totally different from what you get at a bank,” said Advani, who’s staying on as Virgin Money USA’s CEO. “Our vision is to build a major Boston-based financial-services company.”
Advani and Branson intend to add education loans, financial planning and other services to Circle Lending’s existing line of mortgages, personal and small-business loans.
Advani's six-year-old company emerged alongside the "peer-to-peer" lending industry that seeks to snatch business away from banks by using the Internet to match borrowers with lenders. However, unlike CircleLending, those services generally pair up strangers.
In CircleLending, because borrower and lender know one another, loans typically carry lower interest rates than banks offer -- without the unforgiving nature institutional lenders often adopt with delinquent borrowers, Advani says.
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