Three years ago Colin Henderson worked at the Bank of Montreal in online banking; his future partner Michael Garitty, was a VP at epost, an organization that put bills and bill payments online. Their jobs were as secure as any job can be in today's market and their companies employed thousands. So why did they chuck it all in to take a risk on a first-of-its-kind peer-to-peer lending company start up?  "I really enjoyed working for the bank for all those years, but the ability to change the technology that you want to change is great," says CommunityLend's Chief Technology Officer Henderson. They fully believe in their tagline, 'Changing the rules of lending,' and that the introduction of Community Lend's technology, a completely online service, could change the future of banking in this country.

Though that seems like a tall order, judging by the regulatory hurdles they've already had to clear -  amounting to a three year delay on their launch - they're up for it and more than ready.

Peer to peer lending (sometimes called social lending) is new to Canada, a fairly conservative country financially speaking, though organizations like Prosper in the US and Zopa in the UK have been running for a number of years now. Borrowers who possess good credit file their information online, requesting from $1,000 to $25,000, with the opportunity to outline why they are asking for funds; home renovation, children's tuition, or small business seed money. The loan request is then put up for auction to accredited lenders, whether an individual, a group of individuals or an organization who have demonstrated their financial clout. Once the loan is fulfilled, the money is transferred to the borrower's account, with a small administration fee taken by CommunityLend.  Key to this model is that the borrowers' identities are known to CommunityLend but are anonymous to the lenders. Borrowers can also suggest the rate at which they can afford to pay back their loans (within guidelines set out by CommunityLend). Lenders diversify their money by funding a variety of loans, not just one, thereby decreasing risk of loss. The higher the rate, the more attractive the loan will be to lenders.

Community Lend collects the borrower's credit information and loan request and passes it on to lenders without disclosing their identity. The benefit for both parties is they enjoy unmediated, direct communication: lenders concerns are quelled and borrowers have a chance to explain their financial history and why they require money now.

Recently Gartner Reseach in the US, a leading technology research and advisory company, predicted that peer-to-peer lending will increase by more than 60% - which means rather than banks investing in the majority of consumer debt, people are investing in people. This is a significant prediction, considering the state of consumer debt in the US at the height of last year's recession. In Canada consumer debt equals $100 billion. "Most people carry the majority of their debt on credit cards at high interest rates, " says Henderson. "Our model allows ordinary investors a piece of that pie, at a convenience to borrowers who can go online anytime to participate."

CommunityLend should not be confused with micro-credit: small loans for those without collateral or who live in poverty. Nor is it sub-prime lending, the practice of making loans available to the riskiest sector of borrowers and considered largely responsible for the US's recent "credit crunch." This is not a road for people looking to repair their credit rating.  Borrowers are required to disclose their financials and are subject to credit bureaus as is traditional but minus the loans officer and without having to wear their Sunday best to make a good impression at the bank.

Despite the three year wait, now might be just the right time for this model to work. With social networking at an all-time high in popularity, and people becoming ever more accustomed to doing various kinds of transactions from their laptops or mobile devices, a loan model like this one gives them the kind of empowerment over their financial life they might be looking for. At the time of launch, CommunityLend had about 5,000 anticipatory emails. Henderson believes that borrowers will come in three categories: those looking for seed money for small business start-ups; those looking to pay down credit card debt; and those looking for lifestyle loans for vacations or home renovations.

"Canadians are private about money and don't talk about their financial issues publicly," says Duarte Da Silva, Senior Manager, Content and Client Care, who previously reported to Henderson at Bank of Montreal. "This gives them their privacy and anonymity without having to deal with a bank or credit card company." Da Silva believes that the majority of borrowers will be young, well educated, technologically savvy and active in social networking. The website also has a community component where borrowers (still anonymous) are encouraged to join and tell a wider story of their life and financial needs, get financial advice, and increase their attractiveness to lenders.

Among those waiting patiently for CommunityLend is a young man who recently posted the following comment on the site's blog: "I have recently been admitted to a very credible medical school in the Caribbean, Saba University. However, I am unable to obtain the line of credit I need from the bank due to a lack of strong enough co-signers. I am hoping that this site can help me obtain the medical education that I've been dreaming of!"

With CommunityLend, he'll get a chance to find his "angel" lender directly.

Carla Lucchetta is a Toronto based writer and TV producer.