Ever since launching in Australia in 2012, peer-to-peer (P2P) lending has become more and more popular, with ASIC reporting a total of $300 million in loans being written in the last financial year. Here is a quick rundown of some of the key current providers of P2P lending in Australia.
Who offers peer-to-peer lending in Australia?
The number of P2P lending platforms – where individuals can seek loans from private lenders (their peers) rather than using a traditional lender – has certainly increased over the past few years. Below we list some of the key P2P lending platforms available for borrowers in Australia.
SocietyOne claims to be the first P2P lender to launch in Australia back in August 2012. Since launching, SocietyOne says it has connected borrowers and investors to over $450 million worth of loans.
Investors provide SocietyOne with an investment mandate to select individual loans for their portfolio based on:
- Their personal risk-return horizons
- Stated loan purpose, borrower risk grade
- Geographic and other credit criteria
Investors can also offer secured and unsecured loans; SocietyOne recommends investors diversify across more than 100 loans. Borrowers can apply for a loan of up to $50,000 to be repaid over a loan term of two, three, or five years, and there are no monthly or early repayment fees attached.
MoneyPlace has a large range of P2P personal loans to choose from depending on your circumstances. MoneyPlace states its loans can be used to finance car loans, medical loans, holiday loans, debt consolidation and home improvement.
Money Place offers P2P loans with comparison rates starting from 7.65% p.a.** at the time of writing. Borrowers can apply for an unsecured P2P loan of up to $45,000, and there are currently no monthly service fees for using the Money Place platform.
MoneyPlace also claims to have a group of experienced financial experts at its disposal, to help consumers and investors with their loans.
Arriving in Australia in November 2014, RateSetter is part of the international RateSetter group, which launched in the UK in 2010 and states it has since attracted more than 700,000 customers and over $5 billion AUD in loans.
Rate Setter currently offers personal loans of up to $45,000 for a minimum of six months and a maximum of five years. Interestingly, RateSetter claims to be the first P2P lender to release its loan book data in Australia, which it said demonstrated its commitment to developing real trust with borrowers and lenders. RateSetter was also the first P2P platform to win a 5-Star rating for Outstanding Value for personal loans from Can star back in 2015.
Keystartfunds is the newest comer on the Australian p2p scene which was started in April 2019 by Australian top home loans company Key start Loans.
KeyStartFunds offers unsecured personal loans, which it says can be used for almost any worthwhile need. Keystartfunds offers P2P loans between $10 and $500,000 , with affordable interest rates.
KeyStartFunds claims to have been designed for maximum simplicity, transparency and safety for both borrowers and investors. They don’t charge a fee, but make a margin on the rate of interest paid by borrowers. Key Start Funds also provides a buy back guarantee and will buy back loan (principal amount and accrued interest for full term), if a borrower is late with the repayment for over 60 days.
For investors, KeyStartFunds provides the highest rate on returns in terms of profits on investments compared to all other players in the market.
Harmoney claims to be Australasia’s leading P2P lender; it moved across to Australia in December 2015 after a successful launch in New Zealand. Harmoney currently offers personal loans ranging from $5,000 to $70,000.
Harmoney is 100% managed online, which can mean relatively fast sign ups and applications. Harmoney loans can offer the following benefits:
- Unsecured – so borrowers don’t have to declare assets you own as collateral
- Tailored interest rates starting from 5.95% (comparison rate 6.64% p.a)*
- Flexibility – loans can be used for any legal purpose
- No early repayment fees
ThinCats Australia is an offshoot of ThinCats, a UK-based online P2P lending platform established in 2010 offering loans of up to three million pounds.
In Australia, ThinCats is targeted at small to medium enterprises (SMEs) and offers secured business loans of up to $300,000, for loan terms of up to five years.
As a P2P lender, ThinCats Australia aims to connect investors with borrowers across the country and offers interest rates averaging 14.8% p.a. These secured loans can be available for loan terms of between two and three years, and are advertised as having no hidden fees or repayment charges.
ThinCats Australia claims to have accumulated more than 250 lenders on its platform with loans aggregating just over $11 million to date.
Wisr (formerly DirectMoney) claims to have been the first P2P business model to float on the ASX, via a reverse takeover of Basper Limited.
A personal loan from Wisr is unsecured, which it says can be used for almost any worthwhile need. Wisr offers P2P loans between $5,000 and $50,000, starting at a rate of 8.5% p.a. (9.36% p.a. comparison rate*), although the rate you get will vary depending on your credit rating and credit history.
To apply for a Wisr unsecured personal loan, you must satisfy the following criteria:
- Be at least 18 years old
- Be an Australian resident or citizen
- No credit problems in the last seven years (no missed repayments, etc.)
- Annual gross income of at least $30,000/year
Wisr charges no repayment fees, administration fees or annual fees, but like most P2P providers it does charge a one-off establishment fee of $595.
OnDeck is a technology-enabled small business lender that advertises that they can evaluate, approve, and fund small business loans as fast as the same day. Headquartered in New York City, the company claims it has originated more than $8 billion in small business loans in more than 80,000 small businesses across the USA, Canada and Australia.
In April 2015, US-based P2B lender OnDeck announced a strategic partnership with MYOB – Australia’s leading business accounting software provider – and commenced lending in Australia in December 2015.
OnDeck offers flexible term loans lasting up to 24 months, valued between $10,000 to 250,000. It only offers loans to businesses that have been operational for more than one year. It claims applications can be completed online in under 10 minutes.
Formed in June 2016, Bigstone specialises in offering small- to medium-sized businesses with a finance alternative to banks and other lenders. Bigstone offers business loans worth up to $1,000,000 for commercial, equipment and relevant purposes, and states it has no hidden fees or terms. These loans are said to be verified and completed entirely online, with Bigstone claiming it can take as little as one hour for a loan to be approved if the loan is for $100,000 or less.
Bigstone does not advertise interest rates but instead will tell you the total cost of the loan based on product selected, the asset, term and loan size. In order to apply for a loan with Bigstone, your business must:
- Be more than two years old
- Be an Australian company or trust
- Have more than one employee
Entering the P2P lending scene in 2015, Marketlend offers business loans for the purchase of vehicles, equipment, or business expansion. As of today, Marketlend claimed to have funded a total of just under $48 million in loans for 588 businesses.
Marketlend says it reduces investor risk by taking a stake in each loan itself. Marketlend investment is ranked below the investors and will take the first loss if a borrower defaults.
Since Marketlend invests its own money as well, it does not lend to borrowers who would likely be unable to get credit elsewhere, and does not offer a listing on the marketplace if it is uncomfortable with the risk profile of the borrowing business. Furthermore, Marketlend does not invest in start-ups or borrowers with defaults.
With Marketlend, businesses can borrow between $100,000 and $1,2000,000 depending on their credit history.
How peer-to-peer lenders make money
You may be wondering how P2P lenders make money. Well, similarly to other peer-to-peer business such as Uber (which takes a percentage of driver earnings) and Airbnb (which charges a percentage fee), P2P lenders also take a cut in the form of a platform fee – and also sometimes an application fee.
The platform fee is factored into the loan costs that borrowers pay. For example, SocietyOne noted in their submission to the 2014 Financial Systems Inquiry that its business takes a commission fee of 1.25% p.a. from the interest paid by borrowers, and passes the rest of the interest on the loan to investors.