RAINFIN, a South African peer-to-peer lender that is part-owned by Barclays, has more than doubled loans in the past year by tapping the needs of small businesses and the company forecasts further growth.

Daily lending directly from RainFin increased to about R1m from about R400,000 in August last year, CEO Sean Emery said. The amount lent through Barclays was “significantly more”, Mr Emery said, while declining to state the total.

“I feel we have just pulled the Ferrari out of the garage,” Mr Emery said last week on the sidelines of a banking conference in Johannesburg. “We are very much at the beginning of our growth cycle.”

RainFin, the largest peer-to-peer lender in SA, is among online businesses seeking to win market share from traditional banks in areas such as credit, insurance and remittances.

RainFin wants to emulate the success of the San Francisco-based LendingClub by offering services via mobile phones and the internet without branches to cut costs.

Barclays, whose South African unit bought 49% of RainFin last year, helps the company cope with regulation that often stymies the growth of small lenders, Mr Emery said.

After three months refining credit models with the bank, RainFin will this week start advertising on radio for the first time. The company will expand loans to small businesses by matching them with idle capital at institutions such as insurers pursuing higher returns than bonds, Mr Emery said.

“It’s a completely under-lent market,” he said. “We’re just getting everything working, then we’re going to open the doors.

“Our strategy is to convince institutional capital that we can deliver the returns that we predict in our models.”

The company was begun in 2012 and has 50 employees. It will expand to Kenya, its first location outside SA, during the first half of next year by partnering with Barclays. Then it will turn to Zambia, he said.

Default rates ranged from less than 1% on the least risky loans to as much as 11% in the fifth and most hazardous category, the CEO said.

Borrowers can raise as much as R500,000 for terms as long as 48 months and the annual interest rate for a loan is 10% to 33%.

Source: http://www.bdlive.co.za/business/financial/2015/09/15/rainfin-has-pulled-the-ferrari-out-of-the-garage