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A Comparison of Singapore’s Peer to Peer (P2P) Lending Platforms: Capital Match, Funding Societies and MoolahSense
The rise of start ups in Singapore resulted in many SMEs turning to loans to fund their businesses. However, obtaining a bank loan is often difficult and cumbersome. As a young company, they have a very brief credit history and may also lack a strong financial record. This gave birth to P2P Lending Platforms.
As an investor, you can consider using this platform to further diversify an existing investment portfolio. P2P Lending offers very attractive returns in the short term. Pay outs are also made on a monthly basis and such recurring payments can provide a periodic source of relief. You can then withdraw and cash out the money, or use it to fund more business loans. The short learning curve involved also makes it an appealing platform.
However, please be cautioned that repayments may be delayed, or worst, the company may go bust. While you can read up on the company profile before deciding whether or not to go ahead with the loan, there is still a risk that you may not get a single cent back. As such, you must be comfortable knowing that the money lent out may never come back. Beyond that, there is also a chance that the P2P Platform itself can shut down. As such, it is wise to make P2P Lending a relatively small part of your investment, depending on your personal risk appetite.
With that, let us move to the comparison amongst three of the biggest players in P2P Lending in Singapore. Namely, Capital Match, Funding Societies and MoolahSense.
P2P Lending Platforms Comparison Table
Minimum deposit | Minimum loan | Service fee | Types of loan | Auto loan option | User-friendliness | Referral program | |
$1000 | $100 | 15% | -Business term loans -Invoice Financing | Yes | Has phone application | Yes | |
$1000 | $500 (direct) $1000 (Auto Allocation) | 1% for business loan Free for others | -Business term loans -Invoice Financing | Yes | Website is easy to navigate and user-friendly | Yes | |
$1000 | $1000 | 20% | -Invoice Financing | No | Website is easy to navigate and user-friendly | Yes |
Source: ZUU online SG
Comparison Points
Money Matters
Source: Moolahsense
Minimum Loan Amount
For a start, all three platforms require a minimum deposit of $1,000 to start.The difference lies in the minimum loan. The minimum investment for Capital Match is $1,000 per facility. On the other hand, Funding Societies’ minimum loan is priced at $100, whereas MoolahSense’s is $500. This means that theoretically, 10 different loans from Funding Societies, and 2 loans from MoolahSense. In short, there is a low barrier to entry. Do note that this ignores the management time and time needed to make all these loans.
Service Fee
The next crucial item to look at would be the service fee involved as this will slowly, but surely, eat into your profits over time.Currently, MoolahSense is the only platform that has never charged any service fee at all. This means that they absorbed the collection and recovery services. Unfortunately, they will definitely introduce it some time in the future. You can visit their blog to find out more.On the flip side, Funding Societies charge 15%, and Capital match charges 20%. The service fee is a percentage of the interest earned, and will only be charged after a repayment is paid.
Types Of Loans Offered
Source: Funding Societies
There are two types of loans available: Business Term Loans, which usually span across a year or two, and Invoice Financing, which can be repaid over a much shorter time.
The business loans are often requested by Singapore SMEs to expand their business.
While many are familiar with Business Term Loans, not many may know what Invoice Financing is. Essentially, it is a product where the sellers (or in this case, the company that you are lending your money to) sell their future receivables or invoices that the sellers issue to their customers to get immediate cash. In short, Invoice Financing is an agreement for a sale and buyback of an invoice with a right to the payment on it. When the debtors (usually a large corporate in Singapore) pays these invoices, investors who bought these future receivables would receive the full payment and make a return. The typical invoice cycle can last as short as 15 days, to three months. It is important to calculate your actual returns by dividing the interest rate per annum accordingly.
While Funding Societies and MoolahSense offers both types of loans, CapitalMatch has Invoice Financing only.
Automatic Loan Option
Source: Capital Match
Funding Societies and MoolahSense has a function to automatically invest in your preferred loans. For instance, you can pre-select your preferred loan type, interest returns, and industry. This way, whenever a new loan comes up, you need not set an alarm during the launch time and frantically click on the loans to get it. CapitalMatch, on the other hand, does not have an automatic loan function.
Note that the automatic loan can be enabled or disabled whenever desired. However, you may not get every eligible loan as there may be too many investors who are eligible for a limited amount of loan.
Funding Societies follow their own algorithm for Auto-Invest, which prioritises investors who have missed out on pervious loans first. This means that they will be prioritised on the upcoming loan. This service is free.
For MoolahSense, their campaigns typically get funded within 30 seconds. As such, they have upgraded their AutoAllocation function. The minimum sum of to invest per campaign has been reduced to S$1000 from S$3000. It is a free service currently, but may be chargable in future. MoolahSense will provide the investor with a unique AA contract ID number which is allocated on a first come first serve basis. They will match your preferences and allocate a loan to you, subject to the funds available in your account of course. Once your subscription expires, you can renew your subscription to continue enjoying the Auto-Allocation service. If you wish to further boost your priority position within the Auto Allocation pool, you can upgrade to their annual “AA Prime” membership programme for $100 per year.
User-Friendliness
Currently, only Funding Societies have a Mobile Application which makes the already user-friendly platform even more hassle-free. The app is rather intuitive to use as well. For IOS users, you can even choose to login with your thumbprint if you are lazy to type your login details.
What If The Platform Goes Bust?
Should Moolah Sense become insolvent one day, DP Information Group will transfer servicing function to ensure that investors continue to receive monthly repayments on the loans that have been dispatched.
Should Funding Societies become insolvent one day, the will continue to be handled by an escrow agency, Vistra. Loan agreements in place will continue to be valid and a reputable agency will be assigned to fulfil the service duties.
Should Capital Match become insolvent one day, investors will continue to receive monthly repayments on the loans that have been dispatched.
New sign up or referral programme
MoolahSense rewards eligible investor with ‘MoolahPoints’ (MP) when they have a successful referral. A successful referral is when your referred friend becomes an eligible investor and/or invested in a campaign on our platform. The rewards will be advised at a later point once the redemption portal is up on the second quarter of 2018. Capital Match and Funding Societies offers rewards for successful referral too.
Other Things To Note
Do read up more on Singapore’s P2P Lending Platforms before committing your first $1, 000! Beyond reading up on investment blogs and FAQs on the company’s website, you can also follow them on social media. Do not be shy to ask your friends to see if anyone has any first-hand experience to share.
This article first appeared on ZUU online.
ZUU online is an Asia-based financial education online portal. Founded in Japan by Kazumasa Tomita, a former private banker at Nomura Securities, the portal seeks to fill the information gap between institutional research houses and the private investor.
The information provided above is accurate as of the time of original publication and should only be used as a reference. For the most updated terms and conditions and the latest promotions, please refer to the respective companies’ websites.
(By Vanessa Ng)
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