Interview with Alwin Meyer, founder and CEO of swisspeers AG, on P2P business loans in Switzerland.
Swisspeers markets itself as a lending platform. What exactly does that mean?
Alwin Meyer: We act as a broker between companies in need of financing and investors looking for investment opportunities. The money does not have to take an expensive longcut through financial institutions, but flows directly from investors to companies. Interest payments flow directly from companies back to investors.
What sets P2P business loan financing platforms apart from conventional bank business loans?
P2P loans are made available by a large group of primarily private investors. Borrowers and lenders establish a direct peer to peer connection on a level playing field. Loan procurement can be handled discreetly or be publicized as part of a company PR campaign. All processes are fully digital, from loan applications to contract creation, loan transfers and loan repayment.
What are the advantages for investors?
Investors build a portfolio of fixed-interest investments in Swiss francs and earn average interest of 5.5% in exchange over a 1.6-year term. That is a good business move in the current meager market for fixed-income investments. Investors also know exactly which companies their money is being invested in. That ability to invest selectively enables the creation of impact investing portfolios. Investors can choose to invest only in companies which they consider worthy of financing.
What kind of investors do you cater to?
We cater to private investors with a good risk capacity who want to invest at least 30,000 Swiss francs. We also cater to institutional investors in need of fixed-income investments denominated by Swiss francs.
What are the risks for investors?
Investors bear the lending risk themselves. In exchange, they receive interest payments averaging 5.5%. The lending risk in the case of loans to SMEs is the risk of a borrower going bankrupt. Part of our job as a peer to peer lending platform is rating borrowing companies based on their risk of default and transparently providing these ratings to potential lenders.
We also have tools and procedures in place which make it possible to filter out loan applicants with poor creditworthiness. Since our founding, the Swisspeers portfolio has delivered a clean return of 3% after defaults. Investors should be prepared to accept losses of around 2%. A well-diversified loan portfolio is an important factor for successful investment in SMEs.
Does the current, negative interest environment affect you as a P2P platform?
The negative interest regime has created a state of emergency in the realm of fixed-income asset classes. But SME loans will remain an interesting investment opportunity despite the rising interest curve because investors are compensated for the current value of their money in addition to being compensated for the lending risk. The interest rate environment doesn’t change the fact that investors have the option of using this asset class which only loosely correlates with interest regimes.
What kind of borrowers does Swisspeers cater to?
Swisspeers is suitable for all companies in need of business loans ranging from 50,000 to 1 million francs. Particularly loans for financing growth, acquisitions, orders and the leasing of investment goods.
What is Swisspeers’ unique selling point over other lending services?
We are able to offer complex financing structures for loans as low as 50,000 francs. Arrangements like asset deals, debt assignment and loans secured by real estate are not extraordinary for us.
In addition to offering companies a discreet financing option, we also give them the opportunity to include their stakeholders in their financing campaigns. Ultimately, it is the easy and smooth loan processing and personal touch which have led so many of our users to recommend us to others.
You are still a fairly young Swiss fintech company. Where do you see Swisspeers in five years?
We aim to become the first stop for small and mid-sized businesses looking for financing. We constantly upgrade our digital platform in order to make the procurement of financial resources faster and simpler. We want our platform to strengthen the Swiss SME sector so that it can continue to provide employment to future generations.
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