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Second licensed P2P lender, LendMe, a different animal to Harmoney

11 May 2015 | Gareth Vaughan

New Zealand has a second licensed peer-to-peer (P2P) lender with LendMe joining trail blazer Harmoney.

LendMe says it has received a licence from the Financial Markets Authority and is aiming for a mid-year launch.

Unlike Harmoney, LendMe won't be targeting the consumer finance market. Rather it's looking at areas such as the rural sector, loans to borrowers struggling to get into the home loan market due to the Reserve Bank's restrictions on banks' high loan-to-value ratio (LVR) residential mortgages, commercial property and business.

But like Harmoney LendMe won't actually just be matching members of the public wanting to borrow with members of the public looking to invest/lend. The company says it's in talks with a number of organisations, including banks, both in New Zealand and overseas about becoming institutional investors. Harmoney's institutional investors include Heartland Bank.

Loans up to $2 million

LendMe founder Mark Kirkland, a lawyer and ex-Westpac counsel, said LendMe's loans will range in size from $25,000 to $2 million. Harmoney currently lends between $1,000 and $35,000. LendMe says lenders/investors may fund loans in full or in increments of $1,000. Loans will be secured by mortgages over borrowers’ assets.

"LendMe will offer kiwis secured loans for top-up deposits, home purchases, residential investments, commercial property, business growth, new equipment and the rural sector. Loans will be secured against borrowers’ assets, in the majority of cases by first mortgage over property," said Kirkland.

“Borrowers who can show a good credit history and ability to service debt but don’t have a deposit and can’t borrow through the traditional banks due to the current LVR restrictions, will be able to borrow 100% through LendMe to purchase a home,” Kirkland added.

"The rural sector will also be a key focus for LendMe with mortgages on farms and equipment, seasonal lending plus environmental product lending on offer. Unlike traditional investment opportunities, lenders can expect to receive higher returns on their money and will know exactly where their investment is going."

LendMe's CEO is Kirkland's sister Kerry, the former head of marketing services at the University of Otago.

LendMe says it'll also cater for older people who might be excluded by banks from borrowing money based on their age.

How loan security will work & what the interest rates will be

All loans will be "fully secured by tangible assets" with security held by Magna Trust, and beneficial owners of the security held by the lenders on a pro-rata basis depending on the amount of their investment, LendMe says.

LendMe says interest rates and origination fees for borrowers will be based on a credit risk grade which is assigned to each loan application. At this stage, indicative interest rates range from 5.89%, for borrowers with the lowest perceived risk, to 14.29% for borrowers with the highest perceived risk.

Lenders/investors will receive a gross interest rate, which will again be based on the risk grade of the borrower within the above range, minus an administration fee ranging from 0.95% to 2.25%.

"LendMe sets the interest rate for a loan based on a borrower’s credit score and criteria such as their credit history and available equity. LendMe services the loan and manages payments and collections."

The major shareholders in LendMe are Mark Kirkland and Edwin Morrison. Both are directors at Auckland law firm Kirkland Morrison O’Callahan.