A new peer-to-peer business lending platform has launched in Australia to help Australian SMEs gain access to cost effective funding while providing a viable alternative to the major banks.
ThinCats Australia is an online lending platform which connects sophisticated and wholesale investors to SME borrowers looking for flexible finance.
Sunil Aranha, the chief executive of ThinCats has more than 25 years international and local SME banking experience with Citibank
, Commonwealth Bank of Australia and the Export Finance Investment Corporation in Australia.
He says the platform is about providing a flexible and competitive alternative to traditional bank lending, not being a source of finance for distressed loans.
“We are offering SMEs in Australia, which borrow about $73 billion a year to finance their operations, an alternative to the very restrictive and high cost lending of the major banks.
“The vast majority of these businesses are hindered from growth by not having access to prompt and cost-effective funding to capture business opportunities as they arise, which is potentially available from Australia’s 400,000 high net worth investors and their super funds holding around $1 trillion in investable assets looking for better returns.”
ThinCats technology enables sophisticated investors to review and assess loan submissions made by businesses and make their own investment decision – setting the amount they wish to invest and the interest rate they wish to receive, typically between 8% and 16% per annum.
The loan is funded by the lowest bidders who get the interest rate they requested, while the borrower gets the weighted average interest rate set by the market itself. SME borrowers will be able to access funds directly at these rates for loans between $50,000 and $2 million, secured in most cases against its business assets and personal guarantees.
Aranha told Australian Broker
that peer-to-peer lending can be another feasible funding option for brokers – and they can receive remuneration for being “introducers”.
“We expect to get a large number of loan referrals from existing finance brokers who cannot get the finance that their SME clients need from the bank because of security and other restrictions.
“If a broker introduces a loan, they can receive about 25bps for just the introduction of a successful transaction through to 60bps for doing part of the credit work and organising the loan submission. On an ongoing basis, the introducer would be getting between 15bps to 25bps of trail.”