RainFin reveals early progress

Social lending company RainFin says it had 106 applications in its first month of operating, with 22 successful loan application funded by peers during that time.

Peer-to-peer lending, also known as person-to-person lending or social lending, is a type of financial transaction which occurs directly between individuals or “peers”, without the intermediation of a traditional financial institution.

According to RainFin, any South African resident over 18 can borrow and lend through the company. After passing a strict credit vetting process, borrowers can apply in the marketplace for loans of between R1,000 and R75,000 with a maximum repayment period of one year.

Individual lenders can invest between R100 and R500,000 across a portfolio of RainFin loans. Borrowers can specify the loan amount, the maximum interest they are willing to pay and the loan duration up to a year.

According to CEO Sean Emery, the figures from 3 July to 3 August revealed that the group was “slightly ahead of our forecasted run rate of daily applications”.

Statistics (3 July to 3 August):

  • Value of loans applications from 3rd July to 3rd August: R2.433 million
  • Number of loan applications 3rd July to 3rd August: 106
  • Successful loan application funded by Peers: 22
  • Value of loans funded: R542,600.00
  • Average Loan Value: R24,663.64
  • Average Interest Rate funding received: 12.20%
  • Number of loans rejected by the marketplace: 84

“These stats are showing the correlation with international trends that only in the region of 20% of loan applicants get funding in the marketplace. The reason for this being the case is due to RainFin’s credit department and the lenders filtering out the applicants who have either a low credit score or an unverified loan application form that does not prove affordability,” Emery told BusinessTech.

According to the chief executive, the funding had been received at lower interest rates than available, for unsecured loans in the banking world and considerably cheaper than loans from the present unsecured lenders who may charge in excess of 28% Interest.

“The last significant trend for us is that each loan is being funded by more than three lenders on average (3.3). So no individual lender is exposing themselves to risk of funding the whole loan, they are spreading their portfolio across many borrowers,” Emery said.

He said that the average terms of the loans granted through the platform was 10 months, and while there were currently zero bad debts, “we are just into the first payment cycles”.

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RainFin reveals early progress