14 - 04 - 2015 | |
Singapore's alternate finance industry has been witnessing frantic activity off late. Several crowdfunding sites have propped up in the recent past. On Tuesday, a new venture capital backed peer-to-peer lending platform - Capital Match - launched operations officially with the aim of helping local small and medium sized businesses obtain business loans financed by individual investors.
Capital Match said its objectives were two-fold: Provide business borrowers with the next best interest rates after banks, and give investors access to an attractive yield with a low investment entry amount.
For now, it is restricted to Singapore registered businesses, and typical loan sizes range from S$50,000 to S$200,000, with tenures of 3-12 months, and interest rate of 1.5% - 2.5% per month.
Put simply, Capital Match's business model is similar that of popular P2P platforms such as US-based LendingClub and Prosper, UK's Zopa and Funding Circle, with its value proposition - speed and efficiency through technology - also in line with such platforms globally. Capital Match provides each investor with an online account where they can view available loan listings, make investments and monitor their loan book.
The company said it was targeting investors who wished to add a fixed-income return to their portfolio, and also diversify away from asset classes such as equities and real estate, even as it highlighted that the platform could produce monthly returns of up to 2 per cent with a short commitment of 3 - 12 months.
While such platforms, that offer borrowers and lenders a better deal, have been operational for years in the US and Europe, Asia in particular has woken up to this phenomenon only recently. Last year alone, P2P lending platforms in the United States arranged almost $9 billion of loans.
"The SMEs we speak to tell us it is increasingly difficult for them to get loans from banks", said Pawel Kuznicki, an ex-management consultant formerly from Rocket Internet, who co-founded the company with Kevin Lim, an ex-investment banker and Arnaud Bailly, a software engineer. Prior to this, Lim has had stints with JP Morgan, Macquarie Capital and Standard Chartered, while Baily had been with Murex.
"P2P lending will provide a much needed source of alternative financing for our local SMEs. We chose to start our operations in Singapore because of the robust regulatory and legal framework, but we have ambitions to grow regionally", Kuznicki added.
According to Lim, 'banks do not see P2P lending platforms as competition, but rather filling a gap in the banking ecosystem'.
"We want to help SMEs build their credit history and eventually be able to go back to their bank for a loan," he added.
Capital Match said it had already completed two loans totaling S$250,000 since its first listing in February 2015.
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