SA social lender RainFin admits teething problems

 ·13 May 2013

Peer-to-peer lending company RainFin says it continues to modify its approach as it closes in on its one year anniversary since launching in July 2012.

“We are up and running, learning and modifying our approach as we go,” said CEO and founder of RainFin, Sean Emery.

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.

“We have modified our approach to now appeal more to individuals who are not being targeted by the traditional banks.

“We are building closed peer-2-peer communities which is proving very successful in pilots,” Emery said.

In these pilots, the group has created a private marketplace for a group of people with a common link, namely small companies supplying a common big buyer.

Under the RainFin business model, 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.

Sean Emery

“As our criteria for allowing loans in to public marketplace are quite high we are seeing less individuals pass these criteria,” Emery admitted.

“So we modified the criteria to now allow individuals without payslips into the environment, but they have to have small businesses (with valid registration documents), be self-employed professionals (with associations) and have a good high individual credit score.”


  • Value of loans applications in Public Marketplace: R21 561 891
  •  Number of loan applications in public marketplace: 1,263
  • Value of loans funded in Public MarketPlace: R1 371 911

Rainfin said that less than 8% of loan applications received for the public marketplace passed RainFins moderation, and the 55 loans which passed moderation to enter the public marketplace, 80% receive some portion if not all of the funding they requested from unknown lenders.

  •  Value of loans applications in Private Friend to Friend MarketPlace: R7 873 019
  • Number of loan applications in Private Friend to Friend marketplace: 125
  •  Successful loan applications funded in Private Friend to Friend marketplace: R2 301 017
  •  Of the 125 loans in the private friend to friend marketplace 95% receive some portion if not all of the funding they requested from their know lenders

 Total loans

  • Total Value of loans funded across both environments: R 3 672 928
  • Median Loan Value: R19,663.64
  • Median Interest Rate funding received: 13.20%
  • Number of loans moderated by the RainFin not suitable to be placed in Public marketplace: 1208


  • Number of lenders in public marketplace: 22
  • One lender is a wholesale funder who has over 60% of loans (they are in essence kickstarting the marketplace)
  • Average return excluding the wholesale lender and after bad debt 10.2% (average bad debt 4%)
  •  Number of lenders in Private Friend to Friend marketplace 85
  • Average return of Private Loans in friend to friend marketplace 12.5% (average bad debt 1%)

More on RainFin and social lending

Financial services providers and social media

RainFin reveals early progress

SA crowdfunding start-up unveiled

RainFin aims to “shake up” financial services in SA

Wonga aiming for right local formula

Social lending to hit SA banking

Businesses are continuing to cut costs

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