NEW PAYDAY peer-to-peer lender Welendus is expecting to launch in January, after it receives full Financial Conduct Authority approval.
Its chief executive Nadeem Siam is keen to turn around the reputation of the payday lending market with his new platform, which will offer short-term, unsecured consumer loans.
“We’re expecting to launch the company as soon as we get regulatory approval, hopefully in January,” Siam told Peer-to-Peer Finance News.
“The payday lending market has a very bad reputation for mistreating customers. It is driven by greed and I think we can disrupt the sector.”
Investors will be able to lend a minimum of £10 through the site and expect returns of up to 15 per cent.
Loans range from £50 to £500, with a maturity of one to three months. Siam said the interest rate paid by borrowers would be 10 to 15 per cent of the fees currently charged by the major payday lenders: “bringing down the APR for a £300, three-month loan from 1575 per cent to around 172 per cent”.
Siam, who started off his career as a space engineer, conceded that there are risks associated with payday lending. However, he argues that as long as people are educated about the risks, it should not be a problem.
“There was a lot of market abuse,” he said. “We’re here to change this perception – we’re for the people from the people. The lender is another person, just like you.”
Having already raised money from family and friends, Welendus is now planning a £350,000 public equity raising. Siam said the company is in initial talks with a diverse mix of investors, who include institutions, angels, high net worth individuals and crowdfunding.
Siam declares Welendus “the first P2P payday lender”, although this title has previously been given to other, now-defunct companies, including TrustBuddy. The Stockholm-listed platform filed for bankruptcy last year after discovering “serious misconduct” involving misuse of client money – in a devastatingly high-profile blow for the relatively nascent P2P industry.
The Lending Well launched in 2012 with the same tagline, but the company withdrew from the payday loan market the following year due to difficulties finding high-quality borrowers. It has since re-launched as an Innovative Finance ISA wrap platform for independent financial advisers and their clients under a similar moniker, LendingWell.