FISCAL DISASTER LEADS TO PEER TO PEER LENDING

Sacramento Bee - "Twebster302" needed $1,200 for a root canal. "JulesWWC" wanted $13,000 to open a fair-trade chocolate shop. "Needhelp," who said he's a state employee, asked for $1,000 to get his finances in order and help his handicapped brother.

These and other cash-strapped borrowers are part of the financial world's version of Match.com. They're posting personal financial profiles in hopes of connecting online with investors seeking sweeter returns.

Known as peer-to-peer lending ­ or P2P for short ­ it's a 4-year-old industry that's flourishing amid the current credit crisis. . .

The number of Web sites ­ and participants ­ has grown in recent months, fueled by struggling borrowers and tight-fisted bankers.

LendingClub.com, a Sunnyvale-based site that hosts only prime borrowers with credit scores above 650, more than doubled its membership, from 82,000 in January to 140,000 in May.

And at least two P2P sites are in the midst of issuing stock, including New York-based Loanio.com, which filed a $50 million initial public offering June 22 with the Securities and Exchange Commission. . .

Here's how it works: Borrowers attract lenders by posting profiles detailing their financial goals online. They display credit scores, personal tales and even pictures of puppies in hopes of landing a willing lender.

Investors peruse those listings and agree to make loans as small as $25. They earn interest rates of anywhere from 7 percent with the safest borrowers to 20 percent from the riskiest.