Capital Match: Singapore’s Peer-to-Peer Lending Fintech

Capital MatchKevin LimCapital Match

Capital MatchSince SG Wealth Builder was founded in 2010, I had the opportunities to meet CEOs and entrepreneurs who unselfishly shared with me their visions and investment insights. Today, I am excited to be granted an email interview with Pawel Kuznicki, co-founder of Capital Match. The company is a peer-to-peer lending fintech start-up in Singapore.

1) Can you share with the readers your background and business model?
I started my career as a consultant with McKinsey & Company in Europe and Africa. Then I moved to Rocket Internet, global venture builder, to build their portfolio companies in Southeast Asia (Zalora and Lazada). Last year I started my current business, Capital Match.

Capital Match is a peer-to-peer lending online marketplace to SMEs. Peer-to-peer lending is essentially banking without a bank as an intermediary – investors lend money directly to companies with Capital Match facilitating the transactions by providing credit risk assessment, legal documentation and debt collection services.

We mainly serve SMEs who cannot get a bank loan (a majority of SMEs in Singapore). We provide them loans of SGD 50,000-200,000 for a term of 3-12 months. Loans are syndicated with multiple investors providing funds to one borrower. The interest rates vary from 1.5% to 2.5% per month (on top of it there is additional processing fee of 0.2-0.5% per month). Investors have full discretion which loans to invest in and what amount. Their return is interest rate less 20% commission that Capital Match collects.

2) What are the needs that your business is addressing?
1. Of SMEs: Providing SMEs with a substantial alternative financing option to improve their working capital or stimulate the growth
2. Investors: Providing alternative investment option with full operational support offering 1.2-2% return per month (15-25% annualized) and a minimum investment of S$1,000

3) How does peer-to-peer platform works?
Let me explain it in step-by-step process:
1. Borrower and lenders have to first register on the platform by providing required identification documents (list is available during registration process)
2. Once user’s account is activated, they can engage in a funding process
a) Borrower submits a loan request to us specifying the loan details
b) We perform credit risk assessment, proposing a final loan request proposal to the borrower for his approval
c) Subsequently, the loan request is made available on the platform for investors to commit funds
d) Investors can view all the open loan requests and commit funds as they wish – they decide which company to fund and in what amount
e) Once the commitment of a company reaches minimum 80%, the borrower can accept the loan request
3. Upon borrower’s acceptance of a sufficiently funded loan request, we prepare the legal documentation for both parties to enter in
4. Subsequently, the funds are disbursed to the borrower and we set up GIRO to collect monthly repayments

4) Who can apply for the loan and who can apply to be an investor?
Any private limited or LLP that is registered in Singapore can become a borrower with Capital Match. Regarding investors we accept both corporate and private investors with the only requirement being a Singapore-based bank account.

5) What is the expected rate of returns for investors?
The interest rate we charge to borrowers is 1.5-2.5% per month depending on the credit risk involved. Our commission is 20%, so investors can expect 1.2-2% net return per month.

6) What are your views on SME borrowing money to fund their business expansion?
I expect the SME market for borrowing funds from alternative sources to expand, mainly due to mainstream banks scaling down their lending operations, especially in commercial space. Also alternative financing options are also attractive to corporate borrowers who are currently not served by banks at all.

7) Peer-to-peer lending is growing rapidly in the US, UK and China but it has yet to really take off in Singapore. In your view, what do you think could be the reason?

It is still in its infancy in most countries around the world (except those three who are just at the forefront of Internet disruption). Other countries are slowly adopting it. I don’t see any particular barriers for adoption in Singapore – in fact, Singapore in many ways closely resembles mature markets, like the UK, so I would expect for the market to quickly catch up with the mentioned countries.

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