[Editor’s note: This is a guest post from Sergio Anton, co-founder and CEO of MytripleA. MyTripleA is an exhibitor and will be in attendance at LendIt Europe 2015 on October 20-21. In this post, he explains why Spain is ripe for peer-to-peer lending (P2PL) and how MytripleA has got a foothold in the marketplace.]
Growing number of SMEs
SMEs are the backbone of the Spanish economy and represent 74% of private sector employment and 85% of newly created jobs. Spain has a diverse range of SMEs, from retailers to technology companies, and its people are passionate about supporting local businesses.
However, Spain’s SMEs remain dependent almost exclusively on bank financing and, since the financial crisis, this has become increasingly difficult to obtain. Beset with political pressure, traditional banks prefer to arrange a smaller number of larger loans to optimize their administration costs. Even if loan applications are approved, the bank process is incredibly slow.
The Government is trying to stop this reliance on banks and is promoting alternative financing mechanisms. There is a growing trend towards alternative finance such as crowdfunding and support for new funding initiatives along with legislation to protect investors. This is creating the foundations of a more stable economy that will protect the future of our SMEs.
Spanish economy begins to thrive
While Spain has recovered slowly from the financial crisis and remains a couple of years behind the UK, its GDP is expected to grow by 3.1% in 2015. Spanish people are starting to feel more optimistic about the future of the economy and are willing to start new businesses. Existing business are looking to grow for the first time in years.
Support for P2PL
SMEs can only support small loans in comparison to larger companies and this means that fully automated P2P lending platforms are required to lower administrative costs significantly in comparison to traditional banks. This is why SMEs are embracing P2PL, as it bypasses lengthy processes and adapts better to the SMEs financial needs.
P2P business lending across Europe grew by 272% between 2012 and 2014 according to Moving Mainstream, The European Alternative Finance Benchmarking Report. The UK dominates the market with a large number of online platforms. While P2P business lending is relatively new in Spain it raised €13.7 million in 2014 up from €0.6 million in 2012 and it is expected to triple in 2015.
Through MytripleA we provide an effective source of funding for SMEs, enabling them to obtain capital from a pool of online investors. MytripleA is the first and only P2PL platform regulated as a payment entity in Spain. We really understand the regulatory environment and local market issues. This is crucial because compliance is complex.
Since April 2015, platforms entering the Spanish market cannot operate until they obtain a new license, as well as the payment entity license, which may take years and no European passport is applicable. MytripleA is in a privileged position. Having already obtained a license as a payment entity we can continue to operate while applying for the new license.
As a lawyer, I’ve spent years advising leading internet companies such as BuyVIP (sold to Amazon) and Idealista.com (recently sold to Apax Partners). I became very interested in how to apply online technology to the traditional business loans market to increase access to money for SMEs.
We have put together an experienced team of experts in regulatory compliance, SME credit risk and the distribution of finance over the internet. MytripleA also has strong financial backing from the UK’s leader in SME alternative finance, publicly listed GLI Finance Limited.
MytripleA works with local partners to provide finance to their SMEs. Our revenue depends exclusively on funds flowing to the solvent companies that need it. We channel the money of a multitude of investors willing to lend their money, so that the financing decision does not depend on a single financial entity, but a large number of people, investors and investment funds.
In the last six months, MytripleA has increased the number of financing applications processed from Spanish SMEs by 132%. We have been able to support this huge increase due to 32 new origination partnership agreements including a partnership with the Spanish Confederation of Small and Medium Enterprises (CEPYME). Also, MytripleA has a zero default rate due to a very robust underwriting process. These factors will allow MytripleA to grow significantly in the coming months, while keeping a stable investor base.
We strongly believe we have created a lively marketplace which addresses the inefficiencies of the traditional loans market so SMEs can flourish. We have all the ingredients for a successful P2PL platform – the best technology, underwriting process and strategy in place to protect investors and serve borrowers. We appreciate that each borrower is unique and we are far more flexible than banks. As a consequence, MytripleA is attracting lots of interest from a growing pool of lenders and SMEs.