Singapore-based financial services firm Silver Bullion Pte. Ltd. has seen its bullion-secured peer-to-peer (P2P) lending programme, launched in August 2015, disburse over S$5 million ($3.51 million) worth of loans, or more than S$1 million ($702,000) a month since its launch.
The firm was founded in 2009 by CEO Gregor Gregersen,
Vergel Villasoto, a director of Silver Bullion, said, “Silver Bullion Pte Ltd is the first company in the world to offer bullion secured P2P loans. We also have the largest P2P lending platform for secured loans in South East Asia.”
Villasoto added, “In a market where we have yet to see many secured P2P loan offerings, a loan with gold or silver bullion as collateral represents absolute safety for the lender.”
Borrowers with gold or silver bars have the option to borrow on a portion of the value of the bullion, without needing a credit check. These bars – which are the collateral underwriting the loan – are stored in Silver Bullion’s 630-ton precious metals vault, The Safe House.
Requiring 200 per cent collateral as part of the P2P lending programme, Silver Bullion has reduced the risk of credit default. This enables lenders to offer interest rates as low as 4.5 per cent per annum.
For instance, borrowers holding investment grade previous metals must put up bullion worth twice the quantum of their loan amount as collateral. Failure to repay will see the bullion sold and funds returned to lenders.
By requiring 200 per cent collateral, Silver Bullion said it reduces the risk of credit default, enabling it to offer interest rates are as low as 4.5 per cent per annum. Currently, they offer loans with interest rates as high as 6 per cent, and made across three different durations; six months, 12 months and 24 months.
In a statement to Channel News Asia in August 2015, Gregersen expained: “For a P2P system, you would see around 14 to 15 per cent interest rates. In our case, because it is so safe, you get a lower return, but you do not have to worry about the chance of default. And by accepting a low interest, that becomes beneficial to the borrower because it means the borrower can loan at a low interest rate.”
Fully insured for the duration of their storage, this programme is an extension of its primary offering – the storage of tax-exempted precious metals for investment and storage. Lenders’ funds are kept in a segregated Silver Bullion client bank account meant solely for P2P funds. Currently, loan requests can be made in either Singapore dollars or U.S dollars.