P2P Lenders in Australia Compared

The Financial Technology (FinTech) sector in Australia is booming with new companies entering the market on a regular basis. Peer-to-peer lenders, which work in direct competition with the country’s banks, are also becoming increasingly active. A number of new P2P lenders have recently established operations with several more planning to launch themselves in the coming months.

These firms have given individual borrowers and small businesses the opportunity to obtain loans in a manner that is efficient and painless. Due to this, P2P lenders are enjoying growing popularity in the personal loan business and in the area of providing funds to entrepreneurs and small companies.

An extremely limited number of P2P lenders (but more are on the way) offer small investors the opportunity to lend money through their platforms at rates that are much greater than those offered by banks on term deposits. Lending opportunities are also available to ‘wholesale investors’ but the minimum amount required to be deployed is beyond the means of most individuals.

Each P2P lender offers borrowers and lenders different terms. While some of them reveal a great deal of information on their websites others are more circumspect and divulge only a limited amount of information.

The following tables summarise details of several prominent P2P lenders for those who want to lend through them and for those looking to approach them to borrow funds:


P2P LenderWho can investAmount that can be invested. Return p.a.Remarks
SocietyOneWholesale investors approved under the Australian Securities & Investment Commission rulesA minimum of $25,000, no maximumVariable. 10% historically.In business since August 2012
RatesetterIndividuals can investMinimum $10Variable. 3.8% to 9.1%For periods ranging from 1 month to 5 years
ThinCats AustraliaWholesale investorsMinimum $1,000Decided between lender and borrower by online auctionLenders get access to detailed credit analysis of borrowers
MarketlendPrimarily for wholesale investors$10010% to 15%Has funded over $3 million
Harmoney“Sophisticated investors”$2000,000An average of 11%Started in New Zealand in 2014 and has now come to Australia
KikkaFinances loans by obtaining funds from institutional investors. Shortly launching a tie-up with Kabbage
CapifyRaises funds from institutional investors
ProspaRaises funds from institutional investors. Has funded over $99 million


P2P LenderWho can borrowAmount that can be borrowedInterest CostLoan term
SocietyOneIndividuals$5,000 to $35,0007.75% to 9.10% + feesLoan term of 2,3 or 5 years
RatesetterIndividuals for personal loans and small business needs$2,000 to $35,000Varies. For example, a 3-year loan of $10,000 is approximately 10.2%.Loan terms between 6 months and 5 years
ThinCats AustraliaThinCats AustraliaThinCats AustraliaDecided between lender and borrower by online auctionLoan terms between 6 months and 5 years or more
OnDeck AustraliaSmall businesses$10,000 to $150,000Not disclosed. In the U.S., they charge 9% to 98% according to a report in nerdwallet.comLoan term of 6 to 24 months
MarketlendSmall businesses$2,000 to $1 millionRates start at 11%Loan terms of 3 to 5 years
HarmoneyIndividuals$5,000 to $35,000Rates start at 8.99%Loan term of 3 or 5 years
KikkaSmall businesses$1,000 to $100,000Fees of 2% to 9.75% for the first 2 months and 1% for each of the remaining monthsLoan term of 6 months
CapifySmall businesses$5,000 to $400,000Business loans and merchant cash advance is on offer. The company quotes a payback amount and not an interest rate3 to 15 months
ProspaSmall businesses$5,000 to $250,000Varies. No range providedUsually less than l2 months


P2P Lenders are Untested

Most of the companies listed in these charts have established operations recently. While some have strong parentage, others have yet to prove themselves in any market. As long as the credit appraisal models deployed by these P2P lenders hold up and regulators strike the right balance, they will continue to be popular with investors.

Currently, very few companies are accepting funds from individuals. Very soon more P2P lenders will start allowing small investors to lend using their platforms. If the collection ratios of any of these firms deteriorate and individual investors lose money, there will inevitably be a backlash that may tar the whole industry especially as investments do not carry a government guarantee.

Potential for Growth

At an international level, the FinTech sector is booming. According to a recent report in Forbes.com, the lead is being taken by the UK followed by California and New York. The report refers to a survey by the consultancy group, EY, which says that, “The UK has the strongest FinTech policy environment, with the most supportive regulatory regime; policy initiatives in Singapore and Australia are increasingly progressive.”

In fact, the Australian Government has recently reaffirmed its support for FinTech by announcing a number of steps to promote the sector and promises to work with the FinTech industry to implement further reforms.

As more P2P lenders start operations in the country, the biggest beneficiary will be individual borrowers and lenders. Those seeking funds would have an even greater range of options to choose from as the number of lending platforms in the country increase.

Additionally, P2P lenders would give individual investors the opportunity to bypass the country’s banking system and loan funds directlyto end-users, earning higher returns in the process.

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