Lainaaja.fi (direct translation: “lender.fi”) is slowly building traction in Finland. The service opened end of last year and it has attracted loans worth of tens of thousands of euros. The concept is simple. Anyone can apply for a loan on the site and lenders, regular individuals, can give offers based on the suggested terms the borrower is asking for. Essentially, it’s a crowdsourced way to borrow money and for the lenders, it’s a way to make money by borrowing with good rates. Most of the rates on the sites are between 15 and 20 percent, so relative to other “investing opportunities” out there, the return is good.
I talked to Tuomas Talola, the founder behind the concept and my first question was to know if this kind of a service requires a license from the government. He said that after having talks with numerous entities – the answer in each case was no. The Financial Supervisory Authority of Finland has stated that such a service is of no interest to them and thus does not require a license.
Lainaaja.fi makes its revenue in three ways. First, it takes 60€ of the loan for handling purposes. Secondly, each month it takes a 3-5€ cut of the payments by the lender itself and a 1 percentage point off the return for lenders themselves.
Currently, the service limits itself to loans between 1 000 to 15 000 euros and 1 to 3 years in payback. While there’s a risk naturally involved in services like these for the lenders – Lainaaja.fi carries the risk as well. If lenders are not finding good applicants, no one will use the service itself. Thus, its of interest to Lainaaja.fi to keep the default risk as low as possible. Tuomas Talola stated that in the future they will bring in metrics to help make decisions regarding applicants.
One example of future development is the expansion of the loans into business loans. Naturally, the requirement for capital is larger among companies. An example of this can be seen with Hub Helsinki. They’re asking for a 50 000 euro loan with 1% interest rate. The loan hasn’t been funded yet, so there’s definitely need for more lenders.
Lainaaja.fi has been developed in co-operation with Vendep. Vendep is a Finnish company that brings in development resources for a stake of ownership in the company.