Tech innovators are making serious inroads into the Australian commercial lending and residential property markets.
Following its entry into the Australian credit space in December, peer-to-peer lending platform ThinCats Australia has partnered with over 150 lenders, 80 finance brokers and has generated a strong pipeline of SME loans.
The online lending platform connects wholesale investors with small and medium sized business borrowers across Australia, capturing a customer segment not optimally serviced by bank and non-bank financial institutions. Lenders benefit through higher returns and diversification, and borrowers reduce their borrowing costs.
ThinCats Australia has delivered its first loans at interest rates ranging from 11.5 per cent to 14 per cent to diverse businesses including a stone importer for the building industry, commercial solar energy systems supplier and an industrial and commercial auctioneer.
The ThinCats Australia platform is a joint venture with ThinCats UK, which has completed more than $190 million worth of secured business loans over the last four years and is one of the two leading peer-to-peer business lenders in Great Britain.
“We are delighted with the response from lenders, borrowers and brokers to our unique platform, targeting specifically the millions of small to medium businesses whose financial needs are often ignored by the big lenders,” ThinCats Australia CEO Sunil Aranha said.
“We have already found a good niche with the SMEs, which borrow about $73 billion a year to finance their operations, and expect to build our portfolio of loans quickly as sophisticated and wholesale investors discover the potency of our platform,” Mr Aranha said.
“We are also generating a lot of interest from finance brokers, who we will be rewarded as they bring loans to the platform,” he said.
Mr Aranha has more than 25 years' international and local SME banking experience with Citibank, CBA and the Export Finance Investment Corporation in Australia.
He noted that the global market for peer-to-peer lending is currently worth over $6 billion and doubling in value every year, as the concept gains broader understanding and acceptance.
The news comes just weeks after a major North American online lender announced its entry into the Australian lending space.
NYSE-listed OnDeck is a platform for small business loans and its entrance into the Australian lending market is its first venture outside North America.
The lender has partnered with MYOB and a group of prominent Australian technology investors. MYOB will provide valuable local expertise and make the OnDeck solution available to its approximately one million business users across Australia.
The technology-enabled small business lender evaluates, approves and funds small business loans the same day.
Headquartered in New York City, the company has originated more than US$2 billion in loans to small businesses in more than 700 industries across all 50 US states and Canada.
“Australia represents an exciting growth opportunity,” OnDeck CEO Noah Breslow said.
“Similar to the US market, in Australia we see a huge gap between small business financing needs and the availability of capital from traditional sources,” Mr Breslow said.
“There is significant unmet small business lending demand in Australia, and we believe our online platform is well suited to address the capital needs of Australian small businesses,” he said.
The lender’s proprietary small business credit scoring system, the OnDeck Score®, utilises more than 100 external data sources and 2,000 data points per loan application and leverages a database of more than 10 million small businesses.