What a bank tests
A bank lends from its own balance sheet and assesses accordingly, looking at trading history, serviceability against existing debt, financial statements, and often a credit committee process with standard documentation. Strong, established businesses with clean financials and time to spare are usually well served by this route, and pricing typically reflects that lower risk.
What a peer-to-peer facility tests
LendCap's process centres on the property security and the credibility of the business purpose and exit, assessed opportunity by opportunity rather than against a fixed set of bank criteria. That does not mean less scrutiny. It means the scrutiny is applied to a different set of facts, with a decision made by a smaller group of people rather than moving through a bank's standard approval chain.
Speed and process
A bank facility can take weeks to move through underwriting. A property backed peer-to-peer facility is often assessed faster, because the process is built around a single opportunity rather than a standardised product. Speed still depends on how complete the information provided is and how straightforward the security position is, since a complex or thin equity position takes longer to assess under either route.
Security and pricing
Banks can lend unsecured or against lighter security where serviceability is strong, and price accordingly. Property backed peer-to-peer lending is priced for the risk individual lenders are taking on a specific transaction, and a registered security position over property is central to how that risk is assessed, not just a formality attached to a lower rate.
When each tends to fit
- A bank facility fits well where trading history is long, financials are strong, and there is no urgency.
- A property backed facility fits where equity exists in property but time, complexity or a bank's criteria rule out a standard facility.
- Bridging a settlement or a defined short term gap.
- Refinancing to release working capital without disturbing an existing bank relationship.
What doesn't change
Whichever route is used, the discipline should be the same. Purpose, security and exit have to hold up under real questioning. A faster process or a higher stated return does not remove the underlying risk, and for a peer-to-peer lender that includes delayed payments, borrower default, recovery costs and the possibility of capital loss. Read Risk and Security and the current disclosure statement before deciding, on this or any opportunity.
