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Marketlend Academy: The Lending Challenge For Small to Medium Enterprises
Why a digital marketplace for SME lending? The simple answer is a need among SMEs for more access to capital and investment opportunities. Here as part of our Marketlend SME Academy, Marketlend Founder and CEO Leo Tyndall talks about how the search for money was a source of pain for many in the SME landscape when he began. (Prefer to read, not watch? The transcript is below.)
Q: What was the pain that you were seeing in the market [when it came to SME lending]?
A: What really was obvious was there was a number of things: firstly, that the size of transactions that was sort of sitting between the businesses turning over one to 20 million, they weren’t really getting the proper attention from the banks. The banks weren’t giving those SME’s and their sort number one attention. What also was seen is that suppliers would give credit that suppliers would have a vested interest in when they gave credit so that they would change the credit terms quite regularly, and then at the same time, they wouldn’t actually give them credit for different suppliers. They would only give them credit for one supplier.
So then, what we saw also, was that the investors would complain they weren’t getting yields. So they would go into major investment schemes, other type of investments, find that their managers were charging them one to 2%, find that there was a fee here, and a fee there, and by the time that they looked at their net return, they were lucky to get much more than what the banks were doing, and the banks were actually offering them, as they do now, one to 2% yield and yet they’re landing on the other side of 12, 14, even up to 20%.
So the SME’s, when we first started, which was in December 2014, what we found is the SME’s at that time didn’t have a lot of options. So there wasn’t that many SME lenders out there either, and they were very, very expensive. There has been a lot more SME vendors pop up, close to about 60. However, their rates have been still quite high, so the risk is not being matched against the actual, essentially, profile of the borrowing, not getting any interest rate for risk. So what you’ll find is a business that’s turning over, say one to ten million, which should be a fairly positive risk, is turning out to be paying quite high rates.
AMPAC awarded collection services contract.
On 4th November 2014, Marketlend engaged AMPAC to perform collection services for any loans in default on the Marketlend platform.
A highly regarded collections agent, AMPAC debt recovery has a direct role from the point of time that the borrower makes a second debit dishonour.
The preferred agent to Euler Hermes, Marketlend’s selected insurer, AMPAC has already worked successfully with Marketlend’s parent company Tyndall Capital over the last two years.
Siblings the ideal solution for BPO services.
Marketlend has agreed in principle with Pioneer Mortgage Services to enter into a long-term contract for referral services.
Marketlend will use the Pioneer Mortgage Services brand online site to generate SME business by accessing applicants through various channels. These channels will include internet, affiliate databases, the existing customer base of Pioneer Mortgage Services and Pioneer’s broker network.
Pioneer Mortgage Services is an established Australian non-bank lender operating since 1990s and has being a mortgage manager for a number of the large financial institutions in Australia. Additionally Pioneer Mortgage Services has also been an originator and servicer of their own securitisation program.
Marketlend forms agreement with Pioneer Mortgage Services Pty Ltd to maximise SME loan origination.
Marketlend has agreed in principle with Pioneer Mortgage Services to enter into a long-term contract for referral services.
Marketlend will use the Pioneer Mortgage Services brand online site to generate SME business by accessing applicants through various channels. These channels will include internet, affiliate databases, the existing customer base of Pioneer Mortgage Services and Pioneer’s broker network.
Pioneer Mortgage Services is an established Australian non-bank lender operating since 1990s and has being a mortgage manager for a number of the large financial institutions in Australia. Additionally Pioneer Mortgage Services has also been an originator and servicer of their own securitisation program.
Marketlend platform enhanced by underwriters Jardine Lloyd Thompson(JLT).
Building on a strong 6-year relationship with JLT, Tyndall Capital has engaged the leading underwriters to add to the robust nature of the new Marketlend transaction and investment platform.
Jardine Lloyd Thompson is a leading provider of risk management and employee benefit solutions in 135 countries. It is the wholly owned subsidiary of JLT Group PLC, FTSE250 Company employing over 7,600 people worldwide.
JLT will provide insurance services, rigorous risk minimisation and backup servicing arrangements. Specifically JLT will manage the credit insurance process, effectively inputting applications into the insurer’s system and obtaining the granting of insurance.
JLT will also perform the role as coordinator of the collection process on behalf of the insurer for a number of trade receivables transactions including the Motor Trade Card program, a wholly owned subsidiary of Vacc.
Marketlend launch delivers SME’s direct access to the capital markets.
Marketplace lending is already making a major impact on the dynamics of SME funding and investor opportunities worldwide.
Developed by Tyndall Capital, Marketlend now brings this revolutionary online funding and investment platform to Australia. Essentially, it gives SME’s direct access to the capital markets without the hidden costs and excessive red tape.
At the launch, Leo Tyndall, Marketlend CEO and Founder, highlighted the far-reaching benefits of this market innovation.
“For decades, the securitisation market has given corporates and non banks the ability to access the capital markets and fund like the banks. The GFC brought about a lot of negativity to the market, and significant additional regulation that was good for the market. However the need for historical data and rating of markets that were established has inhibited growth and innovation.
Marketlend, bypasses these hurdles, by using new peer- to- peer technology to enable investors direct access to understanding the risk and SME’s direct access to the investors both in Australia and overseas with full transparency and flexibility. It’s simply financing that makes good sense and the way of the future.”
Tyndall Capital is particularly well credentialed to deliver certainty and security in this area. Founded in Sydney in 2006, Tyndall Capital Pty Ltd (Tyndall) has established itself as a respected player in the financial industry. Tyndall focuses on capital markets advisory and trust management. For the larger corporate, or financial institution, Tyndall has enabled them to access the capital markets with advanced securitisation methodology. Now Tyndall, through Marketlend, is bringing the same methodology and disciplines to the SME market with the added advantages of more flexibility and direct access to Australian and overseas investors.
More at www.tyndallcapital.com.
Credit worthiness boosted by Creditworks Australia Pty Ltd assessment and application services.
Based on the need to ensure credit worthiness and efficiency within the Marketlend platform, Creditworks Australia has granted Market lend access to its CA edge platform. This will greatly assist with numerous aspects of credit application.
The completed credit applications will seamlessly pass through an automated credit application verification system and be managed on a credit application portal provided by Creditworks. This results in a new account application being processed in as short a time as 2 to 5 minutes, subject to the number of applicants within one application.
Leo Tyndall, Founder of Marketlend, comments:
“When considering what options were in the marketplace to ensure that we satisfactory performed all external credit checks, and had a decision automated system, Creditworks stood apart from its competitors as being the best choice.
Consistent with our goal to provide direct access to capital markets for the applicant, the ability to remove any subjectivity through automation again reiterates the objectives of Marketlend to provide the borrower direct access to the investor without all the red tape.”
Creditworks is a specialist niche services provider of innovative enterprise grade and highly customised credit risk management solutions to large Australian listed and unlisted enterprises. The company’s management has long standing experience and strong credentials in successfully building and delivering leading edge cost effective and best practice credit information services to the Australasian marketplace. Creditworks employs a highly skilled and uniquely experienced in house development team with an impressive track record in terms of building specialist high integrity and integrated qualitative & quantitative solutions and work-flows for use in comprehensive decisioning applications.
Creditworks proprietary decisioning platform engages with a number of key risk management databases on a concurrent basis including Veda Advantage; Australia’s leading credit bureau, as well as important statutory databases such as ASIC, PPSR and land titles (via the company’s own direct brokerage arrangements) so as to optimise risk management outcomes.
Marketlend’s marketplace lending platform development awarded to peer-to-peer specialists Rebuilding Society.com Ltd.
On September 15, 2014, after three months of due diligence, Marketlend awarded Rebuilding Society.Com Limited the development and hosting of Marketlend’s advanced marketplace lending platform.
The rebuildingsociety.com platform is an enterprise class peer-to-peer/crowdfunding technology solution, which uses industry proven technology. It already powers rebuildingsociety.com and other leading peer-to-peer and crowdfunding companies.
The platform is based on a popular open source content management system, a fantastic tool for maintaining a website. It is so popular that it’s currently estimated to power around 18% of the web.
The platform incorporates a variety of advanced features that make it easy and efficient to process the transactions involved in peer-to-peer lending. This includes uploading funds to the platform, placing bids on loan auctions, completing loans, calculating interest and assigning repayments to the correct lenders.
The open source technology also means Marketlend can modify things to integrate with chosen plugins specific to client wishes and operational needs.
Marketlend chooses world- leading innovator Veriluma to develop internal rating system.
Realising the need to analyse the risk of the repayment of the notes issued and secured by the underlying loan and provide a grounded basis for the rating of peer to peer/marketlending loans, Marketlend has agreed with Veriluma, to develop a system providing a rating on the loans on its platform. The rating is the expectancy of the repayment of the note issued to fund the loan. Using similar methodology as rating agencies but with predictability factors taken into account, the rating is an opinion that not only considers the past but the posssible factors in the future.
Rating Analysis
Marketlend uses a developed system between Tyndall and Veriluma that runs on a Java based solution called Intelfuze.
The system is hosted on Tyndall and Marketlend servers and Veriluma’s patented Sheba technology lies at the core of our product and helps individuals and organisations find certainty and clarity. It generates knowledge about complex and uncertain situations or problems, and provides the insight needed to make better decisions, faster.
My Verified ID offers world-first Identity Verification as a Service (IVaaS™).
This is the first plug and play Identity Verification with options such as Face Biometric Recognition, Voice Biometric Authentication and Digital Signatures System. The technology includes a set of API’s that can be installed on the platform. The Verification and Authentication technology platform enables instant verification of users applying for services or products and or authenticating users signing in. My Verified ID contributes in reducing risks associated with online transactions and online data exchange while meeting AML and KYC compliance.
Invoice Receivables Payment System
In addition to application, identification and rating, payment systems, an invoice receivable payment system is operated by Marketlend supported by JLT and an established BPO, Sibling Solutions, will manage credit limits and invoice payment process. The bureau system is hosted on Xero for the support for the daily management of the payments and reconciliation with the bank and the trustee.