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Peer-to-peer lending gets approval in New Zealand

Photo courtesy of Simon Cunningham on Flickr

Photo courtesy of Simon Cunningham on Flickr

Small businesses will now have a new avenue to pursue funding, as New Zealand’s Financial Markets Authority issued the first licence for peer-to-peer lending website Harmoney, recently.

Peer-to-peer lending enables businesses or individuals to procure loans from other individuals without having to go through a bank or financial institution, although they still have to use an intermediary like the Auckland-based Harmoney.

New Zeland’s director of compliance Elaine Campbell said peer-to-peer lending would bring “new opportunities for lenders and borrowers” in this country.

“The service has great potential but lenders should also realise the risks are greater than putting money in a bank,” said Campbell. “Lenders can lose money or not get the interest they expect if borrowers fail to repay the loans.”

The FMA said business and consumer borrowers could not raise more than $2 million in any 12 month period through peer-to-peer lending.

“The regulations don’t impose any limits on the amount lenders can lend, although some service providers may impose limits,” the regulator said. “Lenders should remember they may not be able to withdraw their money at short notice.”

Harmoney chief executive Neil Roberts said the platform would launch soon.

“Harmoney has a fully compliant online platform that automates the process of investing and borrowing,” Roberts said. “We couldn’t be more excited to lead the charge and shake up New Zealand’s personal lending market with a new competitive and technologically advanced investment and lending platform.”

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