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SG Peer-to-Peer (P2P) Lending Platform: Funding Societies vs MoolahSense vs Capital Match

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Why a Peer-to-peer (P2P) lending Platform?

One common challenge when running any business is funding. For young businesses especially, getting loans through the banks can be a challenging due to a few reasons:

  • The lack of collateral (necessary for bank loans)
  • Young credit history (which makes banks reluctant to loan)
  • Imperfect financial record
  • Long processing time

With peer-to-peer lending platforms in place, small businesses now have a new avenue to turn to, when in need of funding.

How P2P lending works?

  • P2P lending platforms connect the public to businesses in need of funding.
  • Public investors can lend money to these businesses and get returns based on interest rates when borrowers repay the loans.

Pros and cons of investing into P2P lending

Pros

  • Low Barrier of Entry: Low investment commitment (minimum investment of S$100, or less for some platforms)
  • Diversification: Alternative investment products to diversify your portfolio
  • Returns: Attractive returns of more than 10% usually (higher than inflation)
  • Monthly Returns: Investment principal with interest earned returned to investors on a monthly basis.

Cons

  • High Risks: Given that the loans are for SMEs, there is a risk that investor lose their investment when the company defaults on payment
  • Platform risk: If the platform (the middleman) you invest in closes down, your investments will not be managed effectively

TL;DR: The P2P Platform Review

After hours of research from a user perspective, here are our 2-cents worth on the P2P platforms.

CategoryP2P Platform
Best Investor's ExperienceFunding Societies + MoolahSense
Best Team + HistoryFunding Societies + Capital Match
Best PricingMoolahSense
Best Risk ManagementFunding Societies
Lowest Barrier to EntryCapital Match

*Important Note: We do not get referral fees from any of the P2P Platforms. The above is strictly our point of view. Seedly does not accept sponsored content and we plan to keep it that way.

In order for this article to happen, the Seedly team personally invested in some of the platforms to test it out. We are awesome, we know. ūüėČ

Players in the market

All the mentioned platforms are regulated by the Monetary Authority of Singapore (MAS). They were issued with Capital Markets Services License.

We tried out all their onboarding process, and they are generally quite easy and does not take up much time. 

*Disclaimer: P2P investing is a high-risk investment. This article does not constitute as financial advice but rather is seen as an unbiased comparison between some of the P2P Platforms in Singapore.

Funding Societies

  • History: Kelvin Teo and Reynold Wijaya founded Funding Societies in 2015 while studying for their MBA at Harvard. Prior to Funding Societies, Kelvin is a management consultant at Accenture and McKinsey & Co., while Reynold is a leading executive in a family business conglomerate in Indonesia.
  • Funding:¬†US$7.5 million Series A.¬†Investors include Alpha JWC Ventures and Sequoia Capital
  • Interface: Modern, clear and rather easy to use.
  • Has a statistics page to allow a quick overview on some of their numbers.
  • Pricing: 15% of the interest rate earned from investors
  • Loans funded: $70.5 million as of 11 October 2017
  • Rate of default:¬†Lowest default rate of 1.9%. This is however, a combination of all the countries they operate in and we believe that Indonesia might have bumped up the number a little.
  • Risk Management:
    Borrowers:
    Assessment culminates in an FS Scoring Grade which is a rating of opinion on both the business’ and their owners’ capacity and willingness to repay the loan. Personal guarantor (usually company directors) is required.
    Platform: Funding Societies holds the investors’ funds in a trust account.¬†Should they become insolvent one day, the funds will continue to be handled by an escrow agency, Vistra. Loan agreements in place will continue to be valid and a reputable agency will be assigned to fulfil¬†the service duties.
  • Skin in the game: Funding Societies’ founders invest a bit of their money in every loan they dispatch.

MoolahSense

  • History: First crowd-financing campaign in year 2014. Founded by Lawrence Yong who was a Vice President at Macquarie Capital before he founded MoolahSense.
  • Funding: Undisclosed. Seed round led by East Ventures and Pix Vine Capital.
  • Interface: Modern, clear and easy to use
  • Has a statistics page to allow a quick overview on some of their numbers.
  • Best Pricing:¬†Do not charge investors any fees at the moment.
  • Loans funded: $37.9 million as of 11 October 2017
  • Rate of default: 3.48%
  • Risk Management:
    Borrowers: 
    Credit assessment model that assesses potential Issuers according to the nature and outlook of the industry they operate in, the strength of their financials and overall business model as well as the background and character of its Directors.
    Platform: Should Moolah Sense become insolvent one day, DP Information Group to transfer servicing function to ensure that investors continue to receive monthly repayments on the loans that have been dispatched.

Capital Match

  • History:¬†Established in 2014 to create a more inclusive channel for companies to access debt financing and for investors to generate strong fixed-income returns. Founded by Pawel Kuznicki who was a tech entrepreneur with venture development before founding Capital Match.
  • Funding: Raised US$710K from Series A in August 2015. Investors include Innosight Ventures, Crystal Horse Investments, CE-Tech Invest.
  • Interface:¬†More heavy on numbers, fewer graphics.
  • Best Pricing:¬†The price quote on the platform to investors are net of fees. The net interest (net of all fees) per loan from 14% to 35% annualized with an average net interest of 22%.
  • Loans funded: $54.6 million as of 11 October 2017
  • Rate of default:¬†5%. Take note that Capital Match is on invoice financing, hence a rate of below 5% is rather healthy.
  • Risk Management:
    Borrowers:
    Invoice financing offers more secured arrangement over unsecured loans. Only invoices issued to large debtors (corporates, government entities etc.) are accepted, and Capital Match always verifies invoices and in most cases redirect the payment from a large debtor to our bank account. This allows Capital Match a high level of control of the repayments.
    Platform: Should Capital Match become insolvent one day, investors continue to receive monthly repayments on the loans that have been dispatched.

Tips for P2P Investing

Should one decides to invest in any of the P2P platforms, do take note:

  • P2P investing is a high-risk investment. Only invest in the portion of your money set aside for risky investments.
  • Always diversify when investing in P2P. Eg. Instead of throw all of your S$1,000 into one company on the platform, split them up into 10 companies of S$100 each.
  • Diversify your investment into companies across different industries.
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