• by Tanya Gazdik , October 16, 2007

Virgin USA, a venture capital organization, has acquired the financial services company CircleLending, Inc. and has re-christened it Virgin Money USA.

The Waltham, Mass.-based, privately held company, which launched in 2001, has set up $200 million in loan volume while maintaining a default rate of less than 5% on private loans and less than 1% on private mortgages. It offers consumers alternatives to traditional and costlier forms of credit, such as providing a way for people to make loans between relatives and friends. Interest rates are typically lower than what a bank charges, and repayment schedules are flexible.

The new company was launched in Boston on Monday during an event at Copley Square with comments by Virgin Money USA President and CEO Asheesh Advani and Sir Richard Branson, founder and chairman of the Virgin Group.

Themed "a revolution" for changing the face of money, the event featured people dressed as George (and Georgette) Washington handing out branded red dollar bills and inviting people to "join the Virgin Money revolution and win" $10,000 through the Web site. Washingtons handed out bills in New York as well.

Other marketing support, says a spokesperson, is through a PR initiative in print and broadcast as well as print and radio ad buys.

Services include loan documentation, loan servicing, record-keeping services, mortgage services including recording and tax and insurance escrow and free educational materials.

The company's product line currently includes a suite of financial offerings to help customers determine the best available options for their individual situations:

Handshake Plus is a simple way to manage loans with family and friends for a car, tuition payment, credit card debt, wedding or anything else. The borrower and lender mutually decide on interest rates and repayment schedules.

The Business Builder loan is for coordinating business loans between friends, family, and business associates for start-ups that typically would have a difficult time getting bank financing.

The Family Mortgage loan is a private loan between friends and family secured by real estate and used toward the purchase of a home, allowing borrowers to deduct interest payments just as if they had borrowed from a bank.

The Retirement Mortgage is for house-rich, cash-poor homeowners to get money without losing the family home to the bank; similar to a reverse mortgage, but without the costs and restrictions.

Future products in the planning stage include an education loan, a start-up loan and financial planning services.

Other Virgin businesses in the U.S. include trans-Atlantic airline Virgin Atlantic Airways and domestic airline Virgin America, wireless youth network Virgin Mobile USA and music store Virgin Megastore.