Peer to Peer (P2P) lending, sometimes called Marketplace Lending, has been around in Australia for several years, but is only just now really taking off. Marketlend, a wholly owned subsidiary of Tyndall Capital Pty Ltd, is one of the newer players to market and we caught up with CEO Leo Tyndall for a quick Q&A.
Q: Why can P2B, or Market Lending, provide a better solution to the borrower?
A: Simply put it gives the borrower direct access to investors. In response to your question:
Q: Why can it provide a better solution for lenders?
A: For lenders, it offers:
Q: Does it provide access to people who otherwise could not get a loan?
A: Marketlend will not lend to borrowers who are unable to get credit elsewhere; it can see how many queries a borrower has made, and it is not a lender of last resort. As Marketlend invests, it will not offer a listing on the marketplace that it is uncomfortable with the risk profile for. Furthermore it will not list or invest in startups or borrowers with defaults.
A: Can borrowers expect better priced loans than through traditional lenders?
Q: When a comparison is made for business loans not secured against property real estate, trade credit, debtor invoicing, it is definitely cheaper, varying between 4-8% in some cases.
Q: How do you manage the investment risk for lenders?
A: Other than the fact that investing in a term deposit has the backing of a rated bank, with insurance and cash collateralization, we would argue that the only increase in risk is the infancy of the industry and lower performance history, to date we have had all loans pay on time and no defaults.
Q: What is the approval process for a loan? How long does it take? Is it faster than traditional lenders?
A: Approval process is as follows:
A: What risk profile of investor, in your opinion, is suited to P2B lending?
Q: Investors suited to the platform are investors seeking strong returns, with transparency. The investor must understand that this is not a bank, and that the industry is still young. We find we get investors from all areas, and it is the fact that they are disclosed all the facts that they can make their own assessment and chose different risk.
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