MONEYTHING is planning to lend to less risky businesses to attract a wider pool of investors.
The manual peer-to-peer business lending platform said it was not sustainable to focus purely on the higher risk/return side of the market and thus it will start lending to lower-risk businesses at lower rates.
It will offer investors returns ranging between seven and 10 per cent, instead of 12 per cent. MoneyThing also said that it may launch an auto-invest option.
Sophie Pearce, managing director of MoneyThing, said investors have already said they will happily back the lower risk approach.
“We will continue to focus on secured small- and medium-sized enterprise (SME) lending and secured property bridging,” an update to investors said.
“Our borrower proposition is based around the fact that we don’t make purely automated decisions.
“We look at each deal on its own merits so we are focused on the underserved part of the SME market that requires a person to consider the whole business picture rather than taking a tick-box view.
“The pricing reflected on the platform will be an accurate reflection of the risk and return for each loan opportunity.
“Over time, this will allow lenders to gain a better balance of risk within the platform and it will reduce the expected default rates.
“It will also allow us to offer more market-competitive rates to borrowers and it will broaden the range and volume of lending opportunities we can offer to lenders.”
The platform said it will still offer some higher risk loans but added that moving down the risk scale would attract a wider pool of lenders.
“To date, MoneyThing has been best suited to very savvy lenders that have the time to manage their accounts, time to read through and understand each loan proposition and know how to diversify their risk by spreading their lending across loans and platforms,” the platform said.
“Moving down the risk scale will also make our proposition more appealing to a wider segment of lenders. Scaling the business in this way will also allow us to launch different products over time such as an auto-invest or account model to appeal to lenders who prefer a more hands-off approach to their lending.”
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