Pertuity Direct Review – a New Peer to Peer Lending Platform

by Ryan Guina

Pertuity Direct is the newest company to make a serious entry into the peer to peer lending market place. However, the Pertuity Direct business model is very different from Lending Club or Prosper, two of the current leaders in P2P lending.

The business model used by Lending Club and Prosper  starts when borrowers post their loan request, profile, and relevant financial information. Then lenders scour through the listings and decide who they want to lend money to. Pertuity Direct makes social lending more efficient and easier on everyone involved.

Pertuity Direct – Redefining the Peer to Peer lending market

Pertuity Direct Redefines P2PPertuity Direct handles the lending process differently than Prosper and Lending Club. With Prosper and Lending Club, borrowers enter their personal information and loan request, and lenders bid for portions of the loan until enough lenders agree to lend the amount of money the borrower requested. Pertuity Direct is a direct lender and handles the loan underwriting and pricing, then fills the loan from their available funds.

If Pertuity Direct funds the loans, where do the lenders come in? Lenders are actually a vital part of the lending process. They provide the money that Pertuity Direct uses to make loans. Lenders pool all their money into an SEC-registered mutual fund, called National Retail Fund (prospectus). All lender money goes into the fund, which buys the Pertuity Direct loans.

More information about the National Retail Fund. Like many other investments, peer to peer loans are not guaranteed, and there is associated risk. The risks are mitigated by requiring all borrowers to have a minimum FICO credit score of 660, and by diversifying the loans among all investors in the National Retail Fund. The National Retail Fund is registered with the SEC, but the Funds’ shares are not listed on a securities exchange and are not publicly traded. The National Retail Fund is independent of Pertuity Direct and because of the structure is considered bankruptcy remote from Pertuity Direct.

Lending Money with Pertuity Direct

Pertuity Direct

As mentioned above, all lender money money is pooled into a “social lending mutual fund” where it is used to fund new loans. This creates an automatic diversification because you own a small percentage of every loan that is originated from that fund. Unlike lending with Prosper or Lending Club, lenders do not need to search through profiles and make independent assessments of who they want to lend to. This removes a much of the “social” aspect of peer to peer lending, and lenders take on more of a banker-like role.

Payment options. Lenders have the option of having their returns automatically paid out to their bank account, or they can have them automatically reinvested in the fund.

No subprime loans. Borrowers must have a minimum FICO Credit score of 660 to borrow money through Pertuity Direct.

Other important notes about lending with Pertuity Direct:

  • Minimum investment: $250.
  • Liquidity: You can withdraw your loans on a quarterly basis, however, there is a 2% penalty if you withdraw your funds within the first year.
  • US residents only: Must be a US resident to lend or borrow money from Pertuity Direct.

Borrowing money with Pertuity Direct

Personal loans starting at 9.6% APRBorrowing money from Pertuity Direct is a straightforward process. Borrowers simply need to fill out an online application and will receive a approval decision within minutes. Borrowers do not have to wait for loans to be filled from lenders who bid on loans. Once the borrower has received the loan approval and verified their bank information, their loan is immediately funded from Pertuity Direct’s available funds.

Privacy and convenience. The entire loan process is handled online, and Pertuity Direct maintains the privacy of their borrowers. Borrowers create a profile when they sign up for a loan, but their credit score, income, debt and payment history, and other personal financial information is never made public like it is on some other lending platforms. Each customer must complete a thorough identity verification process.

Additional information borrowing money from Pertuity Direct:

  • FICO Credit score of 660+ required.
  • Fixed rate loans from 8.9-17.9% (based on credit risk).
  • Must be a US resident to lend or borrow money from Pertuity Direct.

The social aspects of Pertuity Direct

Pertuity Direct is a social lending platform, but the social aspect is much different than Lending Club and Prosper where lenders select who they want to lend to. With Pertuity Direct, lenders can view the borrower community and read their stories, but they don’t have to go through a lengthy selection process or need to fund multiple loans to get a true diversification on their loans.

Pertuity Bucks reward good borrowers. Lenders can send borrowers Pertuity Bucks, which will lower the borrower’s outstanding balance. Lenders receive Pertuity Bucks for free when they open a Pertuity Direct account, and they can award their Pertuity Bucks to any borrower. These Pertuity Bucks are applied toward the borrower’s loan. It’s a unique way to keep the social aspect of peer to peer lending going strong within the Pertuity Direct community.

Benefits and disadvantages of lending or borrowing Pertuity Direct compared with other P2P lending

Benefits and disadvantages of lending. Investors who lend with Pertuity Direct have greater access to their funds as they can withdraw their money at any time. Prosper and Lending Club both originate loans for 3 years. Lenders with Pertuity Direct automatically receive greater diversification of their funds; other P2P lending platforms require funding multiple loans to get diversification. The social aspects of lending through Pertuity Direct are much different and involve less “interaction” between the lender and the borrower. The minimum investment for lenders is $250 through Pertuity Direct, and it is $25 at Lending Club.

Benefits and disadvantages of borrowing. Borrowers can receive their money more quickly through Pertuity Direct because they do not have to wait for a loan to be filled before it is completed. Some borrowers may also receive Pertuity Bucks, which will help them repay their loans more quickly. I don’t see any major disadvantages to borrowing from Pertuity Direct as opposed to another social lending company.

Final thoughts on Pertuity Direct

I like the business model and I think it offers something good for borrowers and lenders alike. I am intrigued by the National Retail Fund and think it is a great way for lenders to automatically diversify their investments. If you want to borrow or lend through Pertuity Direct, you can sign up for an account at the Pertuity Direct website.

Published or updated May 18, 2011.
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{ 9 comments… read them below or add one }

1 My Journey

I am a HUGE fan of prosper (waiting for them to step it back up!) and I have never heard of this company before, but from your description I don’t like the model.

It sees like it is a poorly constructed fixed income mutual fund. I say poorly funded because instead of taking pieces of muncipalities and AAA bond rated companies, I am buying a piece of someone’s $1,500 loan with NO input like you do with prosper.

Correct me if I am wrong?


2 Ryan

My Journey: I actually like the business model – I think it is a new way of doing P2P lending, and it makes it easier for people who want to invest a lot of money, but don’t don’t have the time or assets to effectively select individual loans, or buy enough P2P loans to get a good diversification.

True, you miss out on the loan selection part, but that can take a lot of time to find a good loan (and with Prosper, you can get outbid). I think Prosper, Lending Club, and Pertuity Direct each have a distinct business model that comes with associated pros and cons.


3 PJPurpleLover

I have been trying to research Pertuity Direct and am not finding sufficient information on becoming a lender. I want to know more about the Pertuity Bucks from the lender viewpoint for one. Is that opening amount you get at the beginning all you get? Can lenders earn more from Pertuity? Do you ‘buy’ more to give more? If so, is this a charitable contribution or what?

Also, after ‘googling’ about various reviews, I finally found that it only costs $250 minimum to join, which beats LendingClub and, from what I hear, the long term plan for Prosper. But, I can’t seem to find much information on its liquidity. With Prosper and LendingClub, I believe each loan is a 3 year loan, so you would be reimbursed principal with interest over a three year period. That’s straight forward. But, if it’s a pool of loans, spanning different time periods, when do I get to get out my initial investment. Another blog I read mention there is no secondary market, so there’s no selling off your part. Would it be like any other mutual fund?

Sorry for the length. I’ve still got plenty of questions and the most I can find from Pertuity Direct’s site is a mediocre graphic with 2 paragraphs of marketing info and a couple of lines on average interest rates, etc. I never even found the $250 minimum on the website – I had to find that in a blog/review. If this info is on their site, I’m not finding it very well. They sure do a sufficient job of marketing to borrowers though. Hmm….


4 Ryan

PJPurpleLover, lots of questions, I’ll see what I can answer based on what I know. Other questions might be better answered by contacting a Pertuity Direct customer service rep.

Pertuity Bucks: I don’t know if lenders can get more after the initial allotment, but I doubt it counts as a charitable contribution because they are giving the Pertuity Bucks to a person no t a charity.

National Retail Fund: Lenders actually buy into a pool of loans through the National Retail Fund, and don’t actually but individual loans. My understanding is that you can get in and out at any time, but I don’t know if there is a time when your initial investment ends. From what I understand, the money is re-loaned and you continue to reap interest returns on your investment.

I hope that helps.


5 PJPurpleLover

I do plan to contact the company directly to answer some questions, but I wanted to get as many answers that aren’t geared to trying to sell me on the product as well, ya know?

Thank you for your responses. I like the idea of P2P lending, but am just having trouble getting in there. I signed up for Prosper, literally, the day before they entered their ‘quiet period,’ ne’er to be seen again I guess. HA! And LendingClub is ‘too rich for my blood.’ On the surface, Pertuity seems like a good P2P entry point for someone of my financial status. I will keep researching.


6 Ryan

Lending Club has a minimum investment of only $25. You may consider lending with them. You can even get a $25 Sign-up Bonus for becoming a lender at Lending Club.

I have several loans with Lending Club, and each is current. I’ve also never had a late payment or missed payment. It is a small sample size though, and every loan is different.

7 PJPurpleLover

I have heard plenty of good things about LendingClub. If I could sign up for it, I would.

For one, I live in Texas, so I can’t join LendingClub for that reason alone. They have not been registered here (yet? they say they’ve turned in registration for more states, but don’t say which ones).

But, also, their faq goes on to say:

“In addition, individual lenders who are residents of states other than California must (a) have an annual gross income of at least $70,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $70,000; or (b) have a net worth (determined with the same exclusions) of at least $250,000. Individual lenders who are California residents must (a) have an annual gross income of at least $100,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $100,000; or (b) have a net worth (determined with the same exclusions) of at least $250,000.”

I have not quite reached that point in gross income or net-worth, especially when we exclude my home, home furnishings, and automobile. So LendingClub isn’t an option for me, unless I’m missing something. 🙂 But, yeah… I do have $25 bucks. HAHA! You tell me what I’m missing and I’ll use your affiliate link to sign up. 🙂


8 Ryan

Ah yes, I forgot they changed the net worth requirement. They did not have one when I signed up. They also didn’t have limitations on state residency… I can no longer invest in new loans either.


9 Tex

I don’t like this “model” at all. I WANT to choose who to loan to. Not have some company do it for me… A main point of p2p.

Yes, I also noticed Texas is being locked out of p2p lending. Wonder why, and who’s blocking us? Big business elites / professional usurers who don’t want real people elbowing into their big boy’s game perhaps? So they insult us with a “p2p mutual fund”?!? … And force Accredited Investor requirements on us?


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