There’s a new peer-to-peer lender on the block, known simply as Lending Crowd. The new P2P start-up will open for business later this year and will be the first in New Zealand to offer SMEs business loans to a maximum of $200,000.
Along with business finance it also aims to shake up vehicle finance and provide an alternative for personal loans.
Functioning much the same as other P2P companies, Lending Crowd is an online platform where people who want to borrow are matched with those who want to lend or invest. It bypasses banks and aims to provide better interest rates and more individualised loans for both borrowers and lenders.
Wayne Croad, Lending Crowd managing director, says the product is based on years of experience in the offline management of borrowing and private lending.
"We’ve looked extremely hard at what really matters to borrowers and investors in New Zealand and have built Lending Crowd with the prime focus of driving down the cost of borrowing money.
"The flip side is investors know that all borrowers have skin in the game, or security of an asset, that’s baked into all loans at inception," he says.
Lending Crowd’s P2P platform will manage loans of between $2,000 and $200,000, all secured by either a registered vehicle or vehicles, a second security of residential or commercial property, or a combination of both.
"We’re pleased to offer investors access to an investment asset class normally dominated by the big banks. In particular we believe the SME finance market is ripe for disruption," Croad says.
"We know from experience business owners have a lot of frustration at the unnecessary bureaucracy when trying to access funds from big banks to purchase assets, obtain working capital or fund business expansion. Lending Crowd is aimed at easing this process,” he says.
According to Croad, a key market ready for the disruptive forces of a P2P funded service is vehicle finance.
"New Zealanders have traditionally obtained finance for cars, motorbikes and commercial vehicles directly through either a motor trader, broker, finance company or their bank.
"But with new technology the traditional avenues of raising money are highly inefficient and cost New Zealanders millions of dollars every year.
"Car dealers are only one sector that earns substantial commissions and are incentivised to clip the ticket by upselling higher interest rates to consumers," he says.
On top of this, banks and other finance companies have a ‘one interest rate fits all’ approach to borrower risk, despite the fact that this is unsuitable for most, he says.
Borrowers and investors are paying for increasing overhead structures, such as bank branches, and through inflated or deflated interest rates. According to Croad, these are ‘completely unnecessary’ and essentially equate to ‘expensive billboards’.
"Using P2P, Lending Crowd pledges to offer crowd sourced money from like-minded people and institutions driving down interest rates with 100% transparency around fee structures.
“This approach will result in substantially more money in the pockets of New Zealanders versus mainly overseas owned institutions," he says.
Lending Crowd intends to launch with a special offer for people buying cars, motorbikes, trucks, caravans or any other vehicle with a registration number.
On the stiff competition in the P2P space, Croad says Lending Crowd has years of knowledge and IP behind them.
He says, the company evolved out of Finance Direct, a well-known independent national Non-Bank Deposit Taker (NBDT) with a 16 year history.
"We see our heritage as a huge competitive advantage and a perfect platform from which to stir up disruptive change - after all you can’t stop progress.
"Our directors have successfully weathered economic ups and downs including the Global Financial Crisis. The result is we believe we have more hands-on expertise in credit and risk assessment than any other P2P player in New Zealand,” he says.
Croad says pending a successful launch in New Zealand plans are already in place for expansion into Australia with trademarks secured.
"We’re delighted to have received our licence and are now looking forward to giving the finance and P2P market something new and different.
"We have built a strong foundation from which to offer borrowers and investors the best deals, all delivered by a fully online and transparent process that people will feel good about using," he says.