I never expected to be writing about swimming pools on this blog; certainly not twice in the same month. But there was an interesting announcement earlier this week regarding a new partnership between Lending Club and the world’s leading distributor of swimming pool supplies, POOLCORP.
Like the Viking Pools partnership I wrote about a couple of weeks ago, POOLCORP will be sending borrowers to Lending Club who are looking to finance their swimming pool. They own the domain name, swimmingpool.com and they have setup a page on their site for pool financing. This page in turn will take you to a landing page on Lending Club’s site for borrowers. POOLCORP will earn a referral fee for every borrower that obtains a loan through Lending Club and they will be refunding that fee back to the borrower.
Playing Both Sides of Peer to Peer Lending
The big difference between the Viking Pools partnership and POOLCORP is that POOLCORP will be playing both sides of the transaction. By this I mean they will be also investing in the loans. Yes, they have set aside up to $2 million to invest in the loans of people they refer to Lending Club. Now, according to Mark Joslin, CFO at POOLCORP, they won’t be funding a large portion of these loans, it will just be to the tune of $500 of so. But this is the first time that I have seen a company invest in loans for borrowers that they have referred.
When I chatted with Joslin earlier this week he said that he analyzed the Lending Club loan data from 2010 and he noted there were about 50 loans issued for swimming pools. By creating this program he hopes that number will increase many times. Although I don’t think he will need $2 million because it will be unlikely to jump from 50 to 4,000 loans in one year no matter how much they promote the service.
Good Marketing
This looks to be more of a marketing exercise than anything. It is unlikely that this partnership will drive a significant increase in pool financing, but at least POOLCORP can be seen as being proactive in their customers eyes. The pool and spa industry has picked up on this news, so their marketing is already paying dividends. The whole program is going to cost them very little and for the money they invest they will be earning some decent interest on that money.
Regardless of the success of this program I find it interesting that a company is partnering with a peer-to-peer lender both to drive new borrowers and to invest in loans. It brings up an interesting idea for a company whose customers are struggling to obtain financing. Maybe we will see more of this kind of thing going forward. Companies that aren’t large enough to have their own financing division could partner with a peer to peer lender and provide a hybrid company/peer to peer financed loan.
