Tag: RateSetter

SME’s Are Getting Funds Quicker, Thanks To Alt. Finance

Data from the Digital Finance Analytics Small and Medium Business Surveys highlights that firms who apply for unsecured credit are getting funds more quickly on average now, compared with 2015. You can request a copy of our latest SME report.

However, there are considerable differences between the average timeframes experienced by SME’s when they deal with the major banks, compared with those going to the Fintechs.  The new players are faster.

SME’s as they become more digitally aligned, also have a higher expectation of service, with firms saying that 4.8 days would be considered, on average, a reasonable time to time wait, as we discussed in the Disruption Index, a joint DFA and Moula initiative. The next edition will be out soon.

We think major lenders are responding to the the competitive pressure to turn applications around faster, as the number of Alt. Lenders grows. This is good news for all SME’s seeking a loan.

To underscore this, we note that RateSetter is now offering loans of up to $50k, unsecured, with a 24 hour turn around to the SME sector. RateSetter which launched in 2012 was the first peer-to-peer lender licensed to provide services to all Australians, not just wholesale and sophisticated investors. RateSetter provides secured and unsecured loans to Australian-resident individuals and businesses.

 

RateSetter Passes $150m in loans

Peer-to-peer lender RateSetter has now reached the $150m mark in loans facilitated thanks to a rapid influx of lenders into the platform.

They provide data on their portfolio via their web site, great disclosure (mainstream players take note!).  From this we see that debt consolidation and home improvement were the two main purposes, and the average debt consolidation loan was ~$20,000.

The average rate varies by term.

The term of loan distribution varies across the age bands.

Commentary from Australian Broker says that Millennial investors have helped to drive this growth, especially in RateSetter’s one-month market where these younger demographics make up 72% of the lender’s investors since the firm launched in 2014. This is followed by the one-year market where Millennials make up 40% of all investors.

“Far from wasting money on avocado toast, these young investors are seizing the opportunity to make their money work hard. For a variety of reasons they may want ready access to their money, so the one-month market gives them a stable, attractive return of around 4% p.a and easier access to cash if they need it,” said RateSetter CEO Daniel Foggo.

Investment in the platform has risen by 50% over the last five months alone after RateSetter hit the $100m loan milestone in March. There are now more than 7,700 investors registered with the platform, making RateSetter the largest P2P lender in Australia.

Foggo said that RateSetter had reached the $150m milestone sooner than anticipated because it provided added competition to the banking sector.

“We are giving everyday Australians a genuine alternative to traditional investment options; offering far more attractive returns across both our short term and longer term markets.

“Our growth has also been supported by banks doing a fantastic job of destroying the trust their customers once held. An increasing number of younger investors are showing they trust new economy services, including peer-to-peer lending, rather than traditional institutions, to act in their interests and help them achieve their financial goals.”

While younger investors seek more short-term lending options, older investors have more of a bias towards longer-term alternatives. A full breakdown of RateSetter’s data can be found below:

For the one-month market, the average amount invested has increased from $3,777 two years ago to $11,483 today.

“RateSetter’s savvy investors are making their money work hard. Instead of leaving it in accounts offering poor returns, they are seizing the opportunity to earn a decent rate of return, even if it’s only for a month”,” Foggo said.

“Younger Australians realise that they won’t get ahead by leaving their cash in a low interest rate bank account, so they are prepared to take a small amount of risk to earn better interest rates.”

Xpress Super and RateSetter announce integration to boost SMSF access to peer-to-peer lending

From Australian Fintech.

RateSetter, Australia’s largest retail peer-to-peer lender, has today announced a partnership with innovative self-managed super fund (SMSF) administration provider, Xpress Super.

The integration provides investors with direct access to their RateSetter account on the Xpress Super platform, making it easier for SMSF investors to earn attractive returns by lending to creditworthy borrowers via RateSetter’s award-winning platform.

Olivia Long, CEO of Xpress Super, says: ““Two of the key benefits of running an SMSF is the ability to select your own investments as well as invest in financial products not accessible with other superannuation vehicles.  This is exactly what RateSetter allows SMSF trustees to do.”

Since RateSetter was established in Australia in 2014, the company has facilitated more than $130 million in loans through its platform with SMSFs providing the funds for more than 20% of those loans.

Daniel Foggo, CEO of RateSetter Australia, says: “Given the historical low cash rates and uncertainty in property and equity markets, there is a real shift in where SMSFs are looking to invest. With returns of up to 9.2% a year and our exceptional track record both here and in the UK, we expect to see continued growth from SMSF investors seeking stable, attractive returns.

“Until now, investing in consumer and small business credit has been an option only available to a privileged few, including large wholesale investors and the banks.

“By working with partners such as Xpress Super, we’re giving SMSF investors an easy, simple-to-manage option to access this attractive, established asset class.”

Long says that there is a natural fit between RateSetter and Xpress Super. “RateSetter and Xpress Super have a shared belief in the importance of transparency, control and delivering value to investors.

“Xpress Super’s automated, paperless platform gives investors live, up-to-date information, helping them make informed decisions about their superannuation investments and simplifying their year-end accounting, and this service extends to new investment classes, such as peer-to-peer lending.”