The global market for peer-to-peer lending is currently worth $6 billion. It is growing at a accelerating pace as the concept gains more traction as a credible and vital alternative to large scale banks when it comes to loans and financing. The new breed of P2P lending companies offers affordable lending facilities especially to the SME market. Recent estimates claim that this sector could be a trillion dollar industry within the next decade.
Recently Launched in Australia, ThinCats is a new peer-to-peer business lending platform poised to help the country’s 2.1million small and medium sized businesses. For SMEs, the company is bringing access to cost effective funding while for investors, it is providing an ideal platform to lend directly to such businesses.
SMEs can apply for loans up to $2 million through a ‘sponsor’. This sponsor is actually a licensed finance broker who handles the application procedure and also prepares credit submission on behalf of the SME. ThinCats then accepts applications and lists eligible loans for auction on its platform. Registered lenders can then access the detailed information and have their queries resolved before making the decision to make a bid for a portion of the loan. Lenders also have the option of citing the limit on the amount they are willing to spend and also their expected interest rate in return. They usually cite an interest between 8 and 16 % per annum.
Once the auction is done after the chain of application processes, ThinCats handles the transfer of funds. The platform helps manage individual loans by collecting monthly repayments from borrowers and distributing to lenders. Lenders can monitor their investments online via dashboard. ThinCats is currently targeting the Australian lending market which witnesses SMEs borrowing about $73 billion a year.
Consider a scenario where someone wants $20,000 to establish a restaurant. ThinCats can then get say $1000 each from 20 investors with the loans secured over the restaurant’s assets. In case businesses default on loans, then ThinCats calls in collection houses to recover what they could from the business and return it to the lenders.
The company is portraying itself as an alternative to the high-cost lending which major banks offer. In UK market, ThinCats is already an established player having completed more than $160 million worth of secured business loans over past four years. It is already amongst the leading peer-to-peer business lenders in UK.