UK

Short News: Smava, Fidor, P2P Equity, SEIS, This is Money

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German laws require a banking license to hand out loans. To comply with regulation the two active German p2p lending services partner with a transaction bank, which originates funded loans and then sells the debt claim to the individuals (‘lenders’) that did bid on the loan request on the p2p lending marketplace.
Smava now switched it’s bank partner. Since Smava’s launch in 2007 the bank partner was the biw Bank für Investments und Wertpapiere AG. For all new loans after Dec. 1st, Smava cooperates with the Fidor Bank AG (see earlier coverage on Fidor). Smava feels that Fidor is a great match and praises the integration advantage Fidor offers with its web APIs. The change does not bring any immediate benefits for lenders other than a) unlend money will now earn 0.5% interest p.a. and b) the e-money license of Fidor allows lenders to start lending without verifying identity first – but that’s rather symbolic as it applies only to amounts of up to 500 Euro (and the minimum bid on Smava is 250 Euro) meaning that new lenders could test Smava with up to 2 bids before going through postal identification process.

P2P Equity

Smarchive, the fourth startup pitching at German marketplace Seedmatch (see earlier coverage on Seedmatch) raised 100,000 Euro in less than 3 days. The pitch originally was for 50K, but was oversubscribed to the maximum possible amount (100K).

Seed Enterprise Investment Scheme (SEIS)

In the UK the market the surrounding conditions for the emerging p2p equity market get better and better. From April 2012 investors in eligible startups will be able to claim 50 percent income tax relief (on a maximum investment of 100,000 GBP per year). The minimum required investment is just 500 GBP per startup. The new law will replace the Enterprise Investment Scheme (EIS) which currently already offers a generous 30% tax break. The British government will also ease some of the restrictions of the current EIS scheme.
The SEIS will bring a huge boost to p2p equity marketplaces in the UK.
Maybe an idea to be copied in other legislations to foster startup foundation?

ThisisMoney on P2P Lending Risiks and Quakle

ThisisMoney has two (1,2) long articles on the failure of Quakle and risks associated for lenders with p2p lending in general. While not wrong, the articles oversimplify some things. And actually there are more risks for lenders then the two mentioned (compare my old article ‘For Debate: A Flaw in Current P2P Lending Models?‘). The author is a strong advocate of the P2P Finance Association: ‘Checking for the association membership is crucial. It’s a self-governing industry body, so does not carry the same weight as regulation by the Financial Services Authority – something the industry wants but lacks as yet – and is currently the best benchmark for those considering lending.‘. Not a bad advice, but with the association and the market so young, I see that as a bit of limiting, possibly excluding any new entrants that might launch.

UK Borrowers Benefit From Lower Interest Rates at Ratesetter

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Borrowers needing a small loan can turn to p2p lending marketplace Ratesetter, which matches borrower requests with funding supplied by private lenders. Borrowers can choose a variable rate loan (rolling loan) or a 36 months fixed rate loan. Nominal rates for the 36 months loan have fallen considerably in the past six months from approx. 9% to now under 7% (that translates to a representative APR of slightly under 9%).

Ratesetter has facilitated over 10 million GBP in loans since its inception.

Last week Ratesetter completed raising  series C round of funding, raising 1.5 million GBP (approx. 2.35 million US$). The total amount raised so far is 3 million GBP.

RateSetter CEO Rhydian Lewis said: ‘…RateSetter is continually working to narrow the spread between what Savers can earn on their money and what creditworthy Borrowers can pay. This investment will ensure that customers will continue to get great value and a great service‘.

Civilised Money Raises 100K Through P2P Equity

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UK startup Civilised Money has raised 100,000 GBP from 121 individual investors using the p2p equity platform Crowdcube. The investors will own 10% of the funding after the legal process of the funding is completed. The funding was completed in just 9 days, showing the potential p2p equity has in the UK.

Civilised Money plans to offer crowdfunding first and p2p lending in a second step. Katherine Byles of Civilised Money told P2P-Banking.com earlier this week that this is actually the second funding round for the company: ‘We have a first round of crowdfunded investment from ‘The Pillars’ 20 key supporters.‘.

Asked whether the technology is self-developed or licensed, she told P2P-Banking.com: ‘The technology is licensed. We have a one-off revenue share based licence for one of the most powerful and flexible P2P platforms available.  Through the core technology platform we will be able to roll-out a number of products, enabling us to cut the cost of using these – once funds are on the platform moving them between the different products is a simple and fast process.‘

Asked about the USP as compared with Zopa, RateSetter or Fundingcircle Byles said: ‘Civilisedmoney will offer all the people-to-people financial services products in one integrated service.  It has launched with crowdfunding. People-to-people loans are coming next. It is developing new products too. Civilisedmoney is becoming a one-stop-shop for all your people-to-people financial products that create a viable alternative to banks. …‘

The company has ambitious goals as a quote from information provided in the pitch shows: ‘While its service is not yet available in the U.S., CivilisedMoney’s plans are to expand from the U.K. to greater Europe, and then eventually to Africa and the U.S. (CivilisedMoney’s services offered will depend on region, since, for example, crowdfunding equity stakes for startups isn’t yet legal in the U.S.)‘.

RateSetter Finishes Successful First Year

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In England p2p lending service RateSetter celebrated it’s first year in business anniversary a few days ago. The loan volume matched is close to 9 million GBP, spread out over 2.400 loans.RateSetter has currently about 65.000 members.
RateSetter has a rather unique business model in the p2p lending landscape which builds on anonymously matching demand and supply for two loan “products”: 36-month loans and rolling loans (the total loan volume is spread nearly 50:50 on these products).

RateSetter says that due to the provisions fund mechanism “every single RateSetter lender has received every single penny of capital and interest that they expected.“. The fund is an instrument set up by RateSetter to “reduce the risk for lenders“. Borrowers pay an amount upfront into the Provision Fund based on their creditworthiness.  Yesterday RateSetter announced that on Sep. 3oth the team managing the Fund decided not to distribute any money from the Fund back to the lenders, which is possible if the team considers the Fund to be excessivly capitalised.

Borrower representative APRs ranged from 7.6% to 11.6%. 79% of borrowers are homeowners. The two purposes car loans and home improvement loans were given for more than 50% of the loans. In the last six month, interest rates for 36 months loans on RateSetter have been falling, whereas the rates for the rolling loans remained mostly at the same level.

RateSetter is a founding member of the Peer-to-Peer Finance Association (see: ‘Peer-to-Peer Finance Association Founded by British P2P Lending Services‘).


(Source: RateSetter)