Triple A rated - a perspective on P2P in Spain
- 20 Nov
A guest post by Sergio Anton, Founder and Chief Executive, MyTripleA
The success of P2P crowdlending and crowdfunding is a worldwide phenomenon. Whilst the US obviously tops the league in terms of sheer size, the onward march of alternative finance in Europe is, in many ways just as impressive, especially given the lack of harmonisation in regulation across the various jurisdictions.
In many countries, local legislators are struggling to keep pace with the industry’s explosive growth and development - and it is no different in Spain. The common goal, however, is to ensure that innovation is not strangled by red tape and that SMEs are given access to the finance they need in order to flourish and grow.
My own company, MyTripleA, based in Madrid, is the first and only fully-regulated lending platform in Spain: we have a payment entity license from the Bank of Spain, which no other Spanish platform has yet managed to obtain.
A recently introduced law stipulates that new entrants can only enter the market with both a payment entity license and a license to operate a lending platform, and that only those businesses existing as of April 2015 are permitted to continue their activities. We are, therefore, in a hugely privileged position, particularly since acquiring a license in Spain is such a complex and time-consuming process.
MyTripleA is a business finance platform that offers short and medium term funding for Spanish SMEs. There are two basic products: 1) loans - insurance-guaranteed for conservative investors and non-guaranteed with higher risk/higher returns for the less conservative; and 2) invoice finance.
Our lenders come from all levels: institutions, High Net Worth individuals and retail (non-accredited) investors. Unlike the UK, where there is no limitation, regulations in Spain stipulate that no retail investor can have more than €3,000 in any one loan, and that each individual can only invest €10,000 in P2P loans in any one year. Our intention is to always maintain diversity among our lender group and to have a good balance between institutional and retail investors.
Our main focus at the moment is on attracting creditworthy borrowers and, to this end, we have signed more than 30 partnership agreements to originate deals. We have been selected as the exclusive partner of CEPYME – the main national association of SMEs in Spain, which has more than 2 million members and, in addition, we have signed several partnership agreements with local mutual guarantee companies – a type of insurance company operated in association with local authorities – which target SMEs exclusively. The number of borrower applications is increasing significantly as a result.
Another major development has been the inward investment of GLI Finance, which has turned out to be a fantastic partnership. In recent months we have been able to work closely with GLI on such matters as underwriting processes, strategy, business development and cyber security. GLI is also constantly buying loans originated from MyTripleA, which ensures that we have no constraint on the lender side.
The Spanish media has been broadly supportive of P2P finance to date and, just as in the UK, has an important role to play in building awareness and education of the sector. Similarly, the Spanish banks are watching the evolution of the P2P industry closely and a number of them have entered into open discussions with some of the platforms.
The unknown in the future is always likely to be regulation, which can change the landscape overnight. What we do know is that there is a strong move within Europe to create a legal framework for the P2P sector which will harmonise the basic rules within the EU.
This would be helpful for companies such as mine, but I fear full cross-border legislation could still be some way off.