New P2P entrant targets the SME market

The latest peer-to-peer lender to set up shop in the Australian market, ThinCats Australia, has introduced something different to the model by using finance brokers as intermediaries.

ThinCats Australia is a joint venture between local investors and ThinCats UK, which was established in 2011 and has loaned about £100 million.

ThinCats is a specialist lender to small business. Borrowers must apply through a "sponsor" - a licensed finance broker - who vets the applicants and helps them prepare their documentation.

ThinCats Australia chief executive Sunil Aranha said P2P lenders providing unsecured personal loans to consumers could rely on credit scoring technology but lending to SMEs required the involvement of a sophisticated lender who could understand the application.

"When dealing with a business the lender needs to make an assessment of its cash flow position, inventory management, the industry it is in, the business risks and so on," Aranha said.

The brokers play an important role in helping prepare the applicant's documentation. They also provide quarterly updates on each loan account.

Aranha said ThinCats' sweet spot was loans worth around $250,000. It will lend from A$50,000 upwards.

He said the default rate in the UK was two per cent. ThinCats' agreement with its lenders gives it the authority to pass a loan in default to a debt collector.

Aranha said the target lender market was high net worth investors and self-managed superannuation fund trustees who were self-directed investors.

The business was launched in December. It has 134 registered lenders and brokers and has completed two loans. Aranha said there were more in the pipeline.