New Financing Options for Islanders | Peer to Peer is HERE!

  Finally Peer to Peer lending and financing options for PEI, Nova Scotia and New Brunswick  | Alternative lending options up to $35,000 for small business and individuals wanting small loans | consolidate credit card debt | home improvement loans | car loans | vacation loans that the banks simply don't want to take the time to do or pass on high interest rated credit card companies to finance.

  The testing process is over and now Borrowell, one of the local entrants into the world of marketplace lending, is officially open for business.

“We’re now out of beta and accepting applications,” said Andrew Graham, chief executive of Borrowell, a 100%-online firm that aims to provide fixed term loans to Canadian retail borrowers on better terms than available through credit card companies or banks. “We believe Canadians deserve better borrowing options,” adds Graham, noting that developments in Canada lag behind what’s happening in other markets, particularly the U.S. and the U.K.

But the domestic market is huge. Based on estimates provided by Equifax, Borrowell says Canadians currently own more than $80 billion in credit card debt with a typical interest rate of 19.9 per cent or higher.

Related

• Borrowell set to become second member of Canadian marketplace lender’s club
• New prospectus exemption to allow issuers to more easily raise equity gathers support
• Governance and unitholders better served in Calloway/Goldhar deal

Through its technology that customizes the interest rate to a borrower’s credit profile, Borrowell aims to reduce those rates. The company, that has the backing of two institutions – Equitable Bank and Oakwest Corporation Limited, a private investment company owned and managed by the Beutel family – will provide up to $35,000 of either three or five year money at rates starting at 5.9%. Of course not all applicants will be offered loans.

Borrowell will fund those fixed rate loans – indeed match them – through fixed rate term deposits with its team of backers that also include some prominent individuals.

Certainly the banks are aware of the potential competition that marketplace lenders offer. For instance:

• In his annual letter to shareholders, Jamie Dimon, the chief executive at J.P. Morgan had this to say. Under the banner, Silicon Valley is coming, Dimon said: “There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking. The ones you read about most are in the lending business, whereby the firms can lend to individuals and small businesses very quickly and – these entities believe – effectively by using Big Data to enhance credit underwriting. They are very good at reducing the “pain points” in that they can make loans in minutes, which might take banks weeks. We are going to work hard to make our services as seam- less and competitive as theirs. And we also are completely comfortable with partnering where it makes sense.”

• Closer to home, David McKay and Bharat Masrani the relatively new chief executives at Royal Bank of Canada and TD respectively, along with BMO’s Bill Downe, have also spoken over the past month about the challenge and competitive threat posed by technology companies, particularly in the field of mobile payments.

At RBC’s annual meeting, McKay said he was interested in working with start-ups to improve the company’s mobile offerings. He was also critical of some of those competitors, which don’t “bear the financial and social costs of a deposit taking organization, or the obligations of financial regulation.”