High Concept

"Friendship," said Mark Twain, "... will last through a whole lifetime, if not asked to lend money." If Twain was right -- and he usually was -- then CircleLending may actually advance human relationships by managing loans among the near and dear.

The pernicious influence of money on social and familial bonds worries many of Circle's customers, such as the young man who borrowed a significant sum from his mother, and another who made loans to two friends. Both wanted the terms of their loans spelled out. Neither wanted to talk about it with the other parties. "They like us because we take away all the emotions," says Asheesh Advani, CEO and founder of Human Capital Interactive Corp., the parent of CircleLending.

Advani was working at the World Bank when he first envisioned a person-to-person loan service. He discovered that informal credit transactions -- loans made by family, friends, and employers -- amounted to $315 billion annually worldwide. Default rates on such loans are very high, says Advani, "but if you structure them with a written agreement and a series of installments, the default rates fall substantially." CircleLending's Web site guides users through the process of establishing terms and setting repayment schedules, and the company handles disbursements and collections as well. In the case of default, "we offer options to make sure that relationships aren't ruined," the CEO says.

Circle launched in February; so far about half of its borrowers are entrepreneurs starting or running small businesses. It's a group Advani can relate to: some of the start-up capital for Circle came from -- yes -- his family and friends.



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