Launched in 2020, the company seeks to connect everyday borrowers with individual investors
Eighteen months after launching digital loans platform GoPeer, the company’s co-founders say it’s going from strength to strength – and that Canada’s mortgage broker community has emerged as a potent referral source.
The product went live in September 2020, aimed at allowing everyday borrowers to secure loans by connecting them with other Canadians who are seeking to invest. The latter gain access to a marketplace that lets them invest in a fraction of loans, while borrowers receive an amount that they repay each month.
For borrowers, unsecured loan terms of either three or five years are available from a low of $1,000 as high as $25,000, with rates starting from 7.5%.
The company’s progress since its inception has seen it receive over $150 million in loan applications to date, according to co-founder and CEO Marc-Antoine Caya (pictured top left). It’s also carved out a niche as a popular option for mortgage brokers whose clients are in need of a specific solution to improve their mortgage prospects.
“One of the things we realized is that there’s a lot of traction with mortgage brokers,” Caya said. “Many of our clients come from referral from brokers to consolidate their loans or refinance their lines of credit or credit card – essentially to qualify for a better mortgage.”
Significant work has gone into developing the platform’s technological capabilities, Caya said, making it as easy as possible for users to take a loan application through the system (sometimes in as little as two minutes).
“You don’t need to submit any documents. You don’t need to submit proof of ID, you don’t need to submit a T4, income paystubs or anything,” he said. “We’re fully integrated with various partners in the ecosystem. We get rich data sets from various sources that our system uses to automatically underwrite loans.”
GoPeer’s team is “small and lean,” Caya said, with an average interest rate of around 16% on loans offered. For borrowers with better credit, meanwhile, the company is “highly competitive with banks” where unsecured term loans are concerned.
At present, the company does not directly offer mortgages, even if those offered rates make it an appealing choice for brokers to send their clients to where more mainstream or institutional lending is not available.
“The primary use case that we’re seeing is those mortgage brokers [that] refer us their clients that typically didn’t have the line of credit [options] a lot of people would have,” said Caya.
Rates that are competitive with or lower than those offered by many non-bank lenders mean brokers can provide alternative solutions – ultimately allowing them to close and obtain better deals for their clients.
“We’re sort of in that sweet spot for that use case,” Caya said. “That’s where we see a lot of traction from those channels like mortgage broker referrals.”
It might be assumed that launching a company amid the COVID-19 pandemic would come with its own complications, particularly with the lending and borrowing landscapes shifting drastically in 2020.
However, the pandemic provided an unexpected tailwind for the fintech, according to co-founder and chief technology officer Joseph Buaron (pictured top right), who told CMP it opened the eyes of many Canadians to the opportunities presented by digital borrowing and lending
“It kind of pushed more people online and helped people adapt to this new model. At the time, people were still more comfortable going in person,” he said. “Even though they typically didn’t like doing things and waiting weeks for it to happen, they weren’t as familiar with the online lending approach. That’s changed significantly with COVID.
“The other thing was that one of the concerns was defaults increasing with people losing their jobs. It seems like there was the opposite effect because of the government aid – fewer people [were] defaulting, so it helped us on both sides there.”
The lack of delinquencies means the company is seeing better performance on its loans than it had originally envisaged, said Caya, to the ultimate benefit of its investors (GoPeer itself does not take any profit from its interest rates charged).
Central to its next steps will be leveraging technology to advance analytics and constantly improve underwriting, as well as identifying key segments to help grow the company’s business: not just mortgage brokers, but also those borrowers that “fall through the cracks” of the normal banking system, according to Caya.
“Think of self-employed [individuals] or newcomers,” he said. “Those are areas that we want to continue to improve and offer additional services to, for these less well-served customers.”