Cornerstone Bank's novel idea about facilitating loans to family members has mushroomed into a complete line of personal loan products, but the Stamford, Conn., bank doesn't lend the money itself.

Its Person-to-Person Loan program is designed to facilitate virtually any loan between individuals, professionals, and businesses. The program, unavailable at other banks, positions Cornerstone as an independent third party between individual borrowers and lenders.

Traditional, with a Difference

These are traditional loans in every respect but one -- an individual lends the funds, instead of the banks's doing so. The loan is made with terms that the lender can control, including interest rate. Any individual who would like to lend money to a family member, close friend, employee, to an associate buying into a professional practice, or to the buyer of a house or business can do so by depositing the amount of the loan in a special account at Cornerstone.

In turn, the bank provides the lender with all the basic services.

Growing from a Family Base

The $80.4 million-asset commercial bank introduced something called the Familoan program this year, later renaming it Person-to-Person Loan because of its growing popularity for nonfamily lending.

Norman Reader, Cornerstone's president, said the program emerged from inquiries that revealed many similar uses for loans like those between family members. The program became more compelling as rising interest rates fueled a need for alternatives to bank loans.

Cornerstone has facilitated three person-to-person loans totaling $150,000, and has two $100,000 loans pending.

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