The Singapore-based peer-to-peer (P2P) lending platform Capital Match which targets Singapore SMEs obtain loans financed by individual investors has launched. The company stated that its are two-fold, to provide business borrowers with the next best interest rates after banks and to give investors access to an attractive yield with a low investment entry amount. Capital Match has an in-house credit function that carefully evaluates the circumstances and purpose of each borrower to determine an appropriate loan amount, tenure and interest rate. This in turn allows CM to provide investors with a curated selection of loans to build their investment portfolio.
According to figures released by Singapore SME consultancy Loyal Reliance, only about 13% of loan applications made by its SME clients in 2012 were approved. “The SMEs we speak to tell us it is increasingly difficult for them to get loans from banks,” commented Pawel Kuznicki, an ex-management consultant formerly from Rocket Internet, who co-founded the company with Kevin Lim, an ex-investment banker and Dr. Arnaud Bailly, a software engineer.
“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,” stated Kuznicki.
The P2P lending model is already very successful in the United Kingdom, the United States and China, but is still in its infancy in Southeast Asia. Last year alone, P2P lending platforms in the United States arranged almost US$ 9bn of loans, according to the release. Local Singapore banks have also been focusing their efforts on innovative technologies to improve their offerings.
“The banks do not see P2P lending platforms as competition, but rather filling a gap in the banking ecosystem,” said Lim, “we want to help SMEs build their credit history and eventually be able to go back to their bank for a loan.”
On the lending side, CM targets investors who wish to add a fixed-income return to their portfolio and diversify away from asset classes such as equities and real estate. Loans on the platform can produce monthly returns of up to 2% with a short commitment of 3 – 12 months. Each investor has an online account in which they can view available loan listings, make investments and monitor their loan book. “Ease of use and security are our top priorities”, says Dr. Bailly, who is the chief architect of the online platform. The platform has completed two loans totaling S$250,000 since its first listing in February 2015. All Singapore registered businesses, regardless of industry, can apply to be a borrower. Typical loan sizes range from S$50,000 to S$200,000, tenure of 3 – 12 months and interest rate of 1.5% – 2.5% per month, with a minimum investment S$1,000.