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What Is P2P Lending And How Can You Invest In Singapore

Here’s how investors new to P2P lending can weigh the pros and cons to determine if it is right for them.


P2P lending has been heating up over the years, not just in Singapore, but in other countries such as China as well. Over the past decade, China has become the world’s largest P2P lending industry, with total loans of about $200 billion.

What Is P2P Lending?

Peer-to-Peer (P2P) lending is the lending of money to individuals or businesses through online platforms. Lenders are able to use their money to finance others’ loans in return for interest on the money lent out. This allows an individual or company to obtain a loan from another individuals rather than borrowing traditionally from a bank.

There are two different parties in P2P lending – the borrower and the lender. The borrower is an individual or business that is looking to borrow money. The lender is an investor that is willing to lend their money in return for higher returns. The loan amounts of these lenders can be pooled to provide the total loan amount to the borrower.

P2P investing offers higher returns for your investment, making it a viable option for investors looking for an investment vehicle that provides greater returns. P2P lending is also a way for some investors to diversify their investments. It adds another dimension to traditional investments such as stocks, bonds, funds, commodities and more.

Read Also: 3 Reasons Why Peer-To-Peer Lending Should Be In Your Portfolio

With higher returns comes higher risk. There is a chance of the borrower defaulting and being unable to return the promised returns, or even your capital. In 2019, there have been high profile P2P lending incidents in China. In these lending failures, the borrower is unable to pay off the loan taken.

Other risks apart from the safety of your investment include the reliability of the platform as well as the transparency of what the loan will be used for. While this risk could be stomached by a younger investor that has more years on their investment horizon, higher risk might not be something all investors are willing to take on.

Read Also: 3 Key Risks In P2P Lending

How Can Singapore Investors Make P2P Investments?

P2P lending platforms facilitate P2P lending by connecting and matching the borrowers to the lenders. There are a few platforms in Singapore that allow you to become a borrower or a lender.

Due to the high risk of P2P lending, it’s important to invest using a platform that is regulated by the Monetary Authority of Singapore (MAS).

Read Also: Pros and Cons of Peer-to-Peer Lending for a Small Business

You will first need to register as a member for any of these platforms before you can see the available campaigns and select which one to invest your money in. The platform should allow you to view loan requests and monitor your investments. Here are a few of the P2P lending platforms in Singapore.

#1 Funding Societies

Founded in 2015, Funding Societies is the first P2P lending platform using government-registered escrow account for security of funds. As of April 2019, Funding Societies has funded more than $500 million in loans regionally.

#2 MoolahSense

Founded in 2013, MoolahSense was the first digital lending platform to receive the full Capital Markets Services license from MAS. MoolahSense provides investors and businesses with two allocation mechanisms, either through an auction or through a first come first serve basis. MoolahSense also allows you to start investing in campaigns with as little as $100.

#3 Capital Match

Capital Match was established in 2014,to provide P2P lending and invoice financing platform for SMEs in Southeast Asia. Capital Match allows investors to invest with a minimum investment of loan $1,000 in each loan.

#4 SeedIn

Established since 2013, SeedIn has funded more than $2.88 billion to businesses across the Asia Pacific.

Read Also: 12 Investment Platforms Singaporeans Can Use To Invest A Fixed Monthly Sum

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