In this article, SG Wealth Builder is pleased to catch up with Pawel Kuznicki, co-founder of Capital Match, a homegrown Singapore-based peer-to-peer (P2P) lending platform that helps Singapore SMEs obtain loans financed by individual investors.
1) Peer-to-Peer lending is something new in Singapore. In your opinion, what are the potential pitfalls that investors should look out for when choosing the right platform to invest?
The key risk of this type of investment is a default risk of the borrowers. The investors should carefully assess if the information provided to them about the potential borrower is sufficient to make an informed decision on the risk involved and if the proposed interest rate is sufficient to compensate for the risk.
2) How does Capital Match deal with default loans and what mitigating measures can investors expect from Capital Match?
If the default were to happen, we would employ a debt collection agency to attempt to collect the debt from the borrower. The directors of the borrower have to provide personal guarantees so the debt can be collected both from the company and its directors. If the debt collection is unsuccessful, we would then advise lenders if they should start the legal action against the borrower. The cost of debt collection is on us, the cost of subsequent (if any) legal action has to be borne by lenders. In the future we will also introduce secured loans to provide better security to lenders?
3) How does Capital Match differentiates itself from other P2P lending platforms and how much market share do you foresee Capital Match will gain in the next five years?
There are currently only two peer-to-peer lending platforms in Singapore. We believe our key competitive advantage is a credit risk capability allowing more borrowers to get approved (despite potentially unfavourable credit …Read more