LENDING Loop has become Canada’s first peer-to-peer lender, after finally winning regulatory approval.
The platform is now live and offering loans and investments to both retail and business customers across the country, with borrowing rates starting at 5.9 per cent and rising to as much as 26.5 per cent for the riskiest loans. Investor returns are 1.5 per cent less than the borrowing fee.
There is a minimum deposit of C$50 (£30.60) and a maximum of C$500,000. Investors are encouraged to diversify their portfolio across a range of different loans.
“While peer-to-peer lending has been highly successful across the globe, we had to navigate some unique regulatory challenges in order to bring this business model to Canada,” said Cato Pastoll, chief executive and co-founder of Lending Loop.
“It can be challenging for new entrants and regulators to adapt novel business models to existing regulations, and we’re extremely proud to be pushing this industry forward. We’re bringing a new form of finance to Canada that makes capital more accessible for small businesses while offering a brand new asset class to all Canadians.”
Lending Loop was founded at the end of 2015, but had to overcome a series of regulatory hurdles before launching its online platform. It began the registration process to become an exempt market dealer in March 2016, but it was another seven months before the firm won regulatory approval from the Ontario Securities Commission (OSC), the last of the country’s provincial regulators to approve the lender’s license.
Despite the huge growth of the P2P market in the UK and the US, Canada’s fragmented regulation laws have seen it lag behind its trading partners in terms of P2P lending. However, the country’s fintech market is booming, and Canadian firm Katipult recently brought its peer-to-peer lending software to the UK through a partnership with Mangopay.