I refer to Getting A Business Loan In Two Hours (Life, Jan 17), about the new phenomenon of P2P (peer-to-peer) crowdlending, which matches investors with small businesses that need funds.

Investors should approach this "hot new lending phenomenon" with caution.

There is scant data about how many businesses have defaulted and left investors high and dry. Moreover, P2P lending is largely unregulated by the Monetary Authority of Singapore (MAS).

If anything, the P2P platforms appear to be circumventing safeguards put in place by MAS, such as limiting the loan tenure to no longer than 12 months to avoid having to issue a prospectus - an important source of information for investors to assess risk.

P2P websites say they perform their due diligence, but their processes are still a poor safeguard against the investment subsequently turning bad.

As with equity crowdfunding, I suggest that would-be P2P investors go in with their eyes open and see themselves as pioneering contributors to an ecosystem in Singapore that empowers innovators and entrepreneurs to become the next Sim Wong Hoo, Jack Ma or Mark Zuckerberg.

If the investment pays off with handsome dividends, so much the better.

Until then, I say "caveat emptor" (let the buyer beware).

Woon Wee Min