New peer to peer lending platform Funding Societies has inked a partnership with Orangefield Trust to hold funds from lenders. The collaboration is said to “provide lenders with greater confidence in engaging P2P lending platforms”.
“We have taken steps to ensure there is no mishandling of funds that go through our comprehensive system. Engaging a government-regulated trustee to handle all invested funds will increase the level of transparency that works towards the advantage of all parties in the crowdfunding business model,” said Kelvin Teo, Co-Founder of Funding Societies.
Professor Julian Wright, Head of Department of Economics, National University of Singapore and mentor to Funding Societies commented on the arrangement;
“Peer-to-peer lending marketplaces need to earn the trust of lenders. Lenders will want proof that their funds are distributed to the SMEs directly, and not used to pay back other investors or to bail out the lending platform in the event that it does not have sufficient funds. It is therefore important that lending platforms use a registered trustee to hold all investors’ funds that are not loaned to SMEs.”
Funding Societies wants to “alleviate the financing woes of borrowers that come with a weakening economic climate and stringent banking regulations”. The direct lender believes P2P lending has become increasingly important as a source of business credits as it brings about a more personalized solution, providing SMEs an alternative to strict sets of criteria that bank loans require.
“SMEs have always struggled to raise funds through traditional methods such as banks and credit card loans, due to their small size and limited track records. Funding Societies sees the importance in helping businesses to get the right amount of funding at the quickest possible time so as to minimize time-lapse, which is an important factor in the success equation,” shared Kelvin.