The emergence of alternative sources of finance for investors and consumers has been growing steadily in the US. Many new platforms have been created to offer a needed alternative to expensive financial intermediaries. Canada so far has been somewhat behind in this trend. Borrowell intends to fill that space beginning in Q1 2015 with an innovative marketplace lending platform.
The company announced on December 3, 2014 that they have raised $5.4 million in funding for a new lending platform based in Toronto. They intend to use this funding to put their service together, including technology that will allow qualified applicants to receive instant loan approval. Some of Borrowell’s notable investors include Equitable Bank (a domestic bank), Oakwest Corporation (a private investment company), as well as individual investors Roger Martin, John Bitove, and Dan Debow.
Borrowell’s CEO, Andrew Graham (recently a leader in the insurance business at President’s Choice Financial), has said:
“We’re very encouraged by the speed and success of this initial funding round, which suggests that our strategic partners see the same vast potential in the Canadian prime lending space that we’ve identified … When it comes to borrowing money, there are traditional options and expensive options, and we think it’s time for an innovative option.”
Marketplace lending is a way to avoid traditional middle men when applying for a loan, which can save time and money. It makes it possible for institutional investors to lend money to consumers in a direct and convenient way. The About Us section of their website also states, “At Borrowell, people with better credit get better rates.” This is great because credit is currently offered to most Canadians at about the same rate, which makes it hard for low risk borrowers to find more reasonable options.
It is clear that their investors feel the same way and are excited to take part in introducing this new business model to Canadians. Andrew Moor, CEO of Equitable Bank, commented:
“Equitable Bank shares Borrowell’s vision of providing Canadians with innovative alternatives in the financial services sector, and we’re looking forward to playing a role in their success … We have always felt that choice is important, and Borrowell adds a long overdue new borrowing option for Canadians.”
One of Borrowell’s largest obstacles will be educating the public on how this new form of lending works and proving that the concept is safe, legitimate, and for some a better choice than the ones they have now. At the moment relatively few Canadians are knowledgeable about peer-to-peer, marketplace lending, and crowdfunding in general.
Andrew Graham has said that he intends to go big with Borrowell, a post by Bankless Times noted. In the US many niche businesses are started and people tend to take more risks. There is less choice and competition in Canada, especially in the banking industry. Graham admits that he thinks millions of Canadians with good credit will benefit from their service once they get a chance to see how it works for themselves.
