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Peer-to-peer funding network the next step for 1pm
Specialist, non-bank provider of SME finance facilities 1pm announced on Tuesday that it has entered into a cooperation agreement with AS Mintos Marketplace to be a loan originator on its online marketplace for loans.
The AIM-traded firm described Mintos as a global online marketplace for loans, where retail investors could participate in a number of different loan types originated by non-bank loan providers.
Through Mintos, 1pm said it would reap the benefits of the peer-to-peer lending model in financing loans that had traditionally been funded on its own balance sheet.
The company would be the first loan originator from the UK to access the Mintos marketplace, joining around 30 other loan originators globally.
By becoming a loan originator on the marketplace, the 1pm board said it would be able to harness the resources of the fully-developed fintech capability, and to instantly reach around 50,000 registered retail investors across the globe for the first time, thus also creating a new funding channel.
The leverage created by the new funding source would allow 1pm to increase the number of loans written through its loans division without taking on significant additional risk of default, the board added.
Up to 90% of each loan originated and made available on the Mintos marketplace would be assigned to investors on a non-recourse basis.
Access to the Mintos marketplace therefore created greater lending flexibility and more growth potential than a solely balance sheet approach to lending, 1pm's directors explained.
All business loans assigned by 1pm would be in sterling, with the cooperation agreement starting with an initial six-month trial period.
"An important part of our strategic growth plan is to harness the benefits of financial technology," said 1pm chief executive Ian Smith.
"By joining the Mintos marketplace, we will now be able to accelerate our loans business origination without increasing risk and to access retail investors globally and efficiently, a funding source that would be unavailable to us without this digital capability."