Will WeLend Strengthen Credibility of Chinese P2P Industry?
Scaling up from the traditional Chinese tradition where people living in the same village would regularly support each other through small loans, new P2P platform WeLend is the first of its kind to launch in Hong Kong.
The island has to date been fairly unreceptive to P2P, in large part down to tight regulation and the dominance of financial big-hitters such as HSBC, but WeLend has between July and October this year received over US$16 million in loan applications. Only around 20% of these are likely to be accepted, to optimise returns, and the standard amount loaned is US$10-20,000 over a 24-month period.
The team who make up WeLab, the finance start-up behind WeLend, have considerable experience in the Asian financial sector, and hope their credentials will inspire confidence. Their current APR ranges from 3%-25%, significantly less than can be expected from banks and private money lenders. This, with only a one-day loan application process, makes them an attractive proposition to many SMEs.
WeLend believe their knowledge of the smaller, more mature Asian markets should give them a strong advantage over P2P companies in the USA and UK, which still have some work to do before they can confidently emerge into foreign markets.
The company’s arrival on the scene comes amid worries about the wider P2P industry in mainland China, where 49 lending companies have either gone bankrupt or encountered capital problems in last 12 months alone, putting many investors’ money at risk. One, called Allwinz, foundered after only 4 months. Even though a lot of the companies guarantee money in the event of loan defaults, a large bad debt can easily wipe them out.
With competition high, and rules for entry to the market lax, closer supervision and licensing is being urged by many both inside and outside the industry. It’s to be hoped that the experienced team behind WeLab will prove a good model for the future.
For any more P2P lending information and advice please contact us here at Peer to Peer Lending Advice.
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