Asked by Anonymous
Asked on 27 Jun 2019
So far, all the P2P platforms seem to be focused on SME lending. Are there any P2P lenders in Singapore that crowdfund loans to other people? How can I participate?
SMEs in Singapore, commonly referred to as the 'backbone' of our society, account to 99% of Singapore companies, and contribute to 50% of the nation's GDP). Local P2P lending platforms offering SME lending, continue to fill this important gap in society -- providing credit-worthy MSMEs with customised financing solutions for their growth, expansion and cash-flow optimisation, with the funds contributed by investors (both individual and institutional) who are of a suitable risk appetite, through debt crowdfunding.
P2P platforms, taken together, present an array of funding opportunities to serve these local businesses. In light of your words, the potential for consumer lending via debt crowdfunding does exist, given its prevalence in Europe and the US. In Singapore, however, there exist stringent regulations to protect (consumer) borrowers in Singapore by Ministry of Law (instead of the Monetary Authority of Singapore, which regulates crowdfunding for financial instruments under a different set of regs), which consumer financing/lending comes under. To this end, they have closely regulated this industry, having recently awarded 6 companies with specific licenses) to provide data-driven personal lending (which in itself does not regulate consumer financing through crowdfunding by P2P platforms). Some other inquisitive P2P investors have in fact, like you, discussed the possibility too, alongside one of the representatives from Minterest on Crowdfundtalks! Assuming the regulatory hurdle is cleared, it ultimately boils down to the platform's chosen target market (e.g. one of Funding Societies' main focuses is to impact societies through the empowerment of SMEs).
Hope I was able to address your concerns! Feel free to voice your opinions on this, happy to discuss further.
Interesting, your question got me thinking! The P2P portals here in Singapore, on a quick check, definitely focus on Individual-to-SME lending. None I've seen so far have done Individual-to-Individual lending, unlike in the US with a few such as Prosper and LendingClub. I guess that sort of answers your question.
To add on, I would say that perhaps the margins in the personal loans business segment are just not high enough, especially in a small market like Singapore; adding to the costs is the issue of having to coordinate and chase numerous individual borrowers at lower lending sums versus companies with higher per-loan volume.
Secondly, the legal requirement for lenders to obtain a moneylender's license may be unhelpful to the development of such a crowdlending structure (multiple lenders - does that mean that all the individual lenders, lending money to other individuals, need moneylending licenses?).