GreenNote

GreenNote is a Redwood City, Calif. based company created to help students obtain loans for education using their social network rather than through traditional lending methods such as private loans from banks.

GreenNote connects students with their social network: friends, family, community leaders and others. Students ask for small student loans. GreenNote helps formalize everything into legally binding loans and handles all the loan documentation.

Overview

The site does not require students to have a credit worthy friend or relative co-sign its promissory notes. Nor does it plan to check borrowers' credit scores.

Once a student has lined up investors, GreenNote will perform checks on his or her lenders to ensure that they're legitimate. It will also call the student's university to confirm that the individual is enrolled and that the money will be used for the student loan.

The site collects and transfers the amounts lenders contribute to schools. Students can postpone repaying these loans until after graduation. The interest rate is a fixed 6.8%, to conform to the maximum under the federal Stafford Loan program.

Students may not be able to borrow all they need. GreenNote essentially organizes the transactions among family and friends — though there is a "public" profile option allowing outsiders to loan money through the site.

Borrowers

Students do not need collateral or other credit requirements of traditional loans. Students create a profile, and then use it to solicit friends and family. GreenNote formalizes the loan so there is structure in place to aggregate the collected money, they then route the money on the student’s behalf to their school. Students can defer payments up to five years, and there is a 10-year cap on repayment.

Lenders

As with traditional loans, lenders receive a return on their investment. Everything is managed entirely through GreenNote's online platform, including all the loan documentation, necessary tax forms, and servicing and payment details.

Schools

Currently available to students at all post-secondary schools.

Terms of GreenNote Loans

Terms of a GreenNote loan include a fixed interest rate set at 6.8% and a repayment term of 10 years with the ability to defer payments up to 5 years.

GreenNote doesn't require proof of citizenship or require a co-signer.

See also

• Kiva
• Microfinance
• Student loans in the United States
• Stafford Loan