private lending

When you deposit money with banks, especially small amounts, you get a very small interest. Some times, you might have to pay to the bank for having and using your money. I am not blaming them - well that's their business model.

On the same front, when it comes to taking loan from lenders, the interest rates are way more than the interest you get for your deposits. Well, that's how banks can employ and make profits for their owners (share holders).

How about cutting the middle man in this industry?

When I bought my home 2 years back, I used to tell few of my friends on the possibility of getting their investments to pay for my mortgage loans. Well, I was not too serious and I did not go too far. Incidentally one of my friend complained how little he got for his investment and now he got to pay tones of interest for the borrowing.

Is it possible to match make lenders and loan seekers for tiny winy cut? Can the small lenders get a dip in to the loan seekers market? What's the government rules to help such transactions? Can we do this through eBay like service? When Visa can issue currency like denominations world wide why can't this be a reality? How to protect small investors through ‘insurance’ like process? Can we buy government insurance? Would insurance companies/government be interested in helping out? I know it is too much hassle for these agencies to check out the lending habits of these small lenders. Also, the lenders will have to follow government regulation like equal opportunity. Well eBay and visa over come these regulations… why can the lending/loan be done with no/minimal intervention?

Looks like Promissory note is a possible solution.