Having evolved out of independent financier Finance Direct, the platform plans to facilitate loans of between $2,000 and $200,000 for small and medium sized businesses (SMEs), as well as loans for vehicles and personal loans for three and five year terms. The loans will be secured by a registered vehicle, a second security on residential or commercial property, or a combination of the two.
Lending Crowd believes there is a huge need for cheaper and more flexible loans in New Zealand, especially for SMEs and individuals struggling to access capital through traditional channels.
Wayne Croad, Managing Director of Lending Crowd, commented:
“Lending Crowd will make business finance easier and cheaper so it doesn’t become a ball and chain. And in doing so we will give people an opportunity to invest in the productive economy with balanced risk and returns, which for many will be an alternative asset class.”
Lending Crowd assigns each loan listed on the platform a loan grade and interest rate based on an assessment of borrower creditworthiness and security offered. There are four categories of borrower loan risk (A1, A2, B1, B2) and interest rates range from 7.90% to 19.75%.
Lending Crowd is reportedly also the first P2P lender in the country to offer all borrowers the option of a fully underwritten insurance product to cover them for death and terminal illness. This will be expanded to include bankruptcy, hospitalization and redundancy, in early 2016. Once the business is up and running in New Zealand, the management team intends to expand into Australia through several partnerships.
Lending Crowd is just the fourth online lender to have secured a licence in the country. The first one was Harmoney, by far the largest NZ marketplace-lending platform, which received its licence in December 2014. After just a few months, other platforms followed suit, such as the peer-to-peer consumer lending platform LendMe – that began operations at the beginning of December – and Squirrel Money, which is not yet operational.
Though the New Zealand market may be starting to heat up, Mr Croad says there is plenty of room for new players as well. Will we see other platforms emerging soon?