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Funding Options and Funding Circle webinar
 

Funding Options and Funding Circle webinar

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A webinar about Funding Circle and peer-to-peer loans, hosted by Funding Options. ...

A webinar about Funding Circle and peer-to-peer loans, hosted by Funding Options.

Peer-to-peer lending is set to increase fivefold in the next three years, according to a recent forecast from Ernst and Young.

It looks like more and more SMEs are turning to alternative finance products out of frustration with the banks.

Given the hype, you'd think that most businesses are aware of the options available, right? Wrong. According to a recent survey, only 29% of respondents even knew what peer-to-peer lending is.

If you've got questions about peer-to-peer, this is your chance to ask Funding Circle. The first site of its kind in the UK, Funding Circle was launched in August 2010 and has since facilitated over £164 million in loans to SMEs, providing flexible business loans up to £1 million.

We'll be answering questions on the basics, as well as the details: What is peer-to-peer lending? Who is Funding Circle? What types of finance are offered? How does it work? What are the risks?

We'll also look at how you can put together the best possible finance application, and we'll take questions on whether your business or your clients might qualify.

This is a special event webinar ran by Funding Options in conjunction with Funding Circle. The award-winning Funding Options team works with a range of lenders to provide free, no-obligation advice about the best finance for your business.

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  • According to the BDRC Continental SME Finance Monitor
  • Net average lending flow to UK businesses by banks and building societies. Data from Trends in Lending 2013 report from the Bank of England
  • Source: P2P Lending report 2013, includes Zopa, Ratesetter and Funding Circle

Funding Options and Funding Circle webinar Funding Options and Funding Circle webinar Presentation Transcript

  • The rise of peer-to-peer lending: A chance to ask Funding Circle
  • Bailey Kursar Account Manager, Funding Options • Part of a team that helps businesses access a range of lenders with one application • Works with the ICAEW and Forum of Private Business • Find out more at www.fundingoptions.com or call 0845 366 4199
  • Laura McMullen Responsible for all introducer relationships at Funding Circle • Has helped Funding Circle grow over the last two years • Since launching in August 2010, Funding Circle has facilitated loans of £165 million to over 3,000 SMEs • Find out more at www.fundingcircle.com
  • What we’re going to cover ① Context around SME finance and trends in lending ② What is peer-to-peer? ③ How can Funding Circle help? ④ Q&A
  • What’s the main reason you think businesses aren’t getting finance? ?
  • Businesses don’t think they will get approval Business uncertainty Waiting for the economy to improve Businesses don’t know how or where to apply By approaching the bank their existing facilities may be reduced Confusing array of finance products
  • Businesses don’t know how or where to apply “Not even clear how much they want to borrow and what it is for” “Many do not have adequate business plans or accounts”
  • Confusing array of finance products
  • 7% of SMEs wanted to apply for a loan or overdraft but something had stopped them, with discouragement and issues around the process of borrowing most likely to be mentioned Businesses don’t think they will get approval
  • Business uncertainty
  • Waiting for the economy to improve Net monthly flow £billion 8 6 4 2 0 2007 -2 -4 -6 2008 2009 2010 2011 2012 Q2 2013 Jun-13 Jul-13 Aug-13
  • Is Peer-to-Peer lending the solution?
  • What is Peer-to-Peer lending? ?
  • What is Peer-to-Peer lending?  Lending money directly to unrelated individuals or companies  Doesn’t go through a bank or traditional financial institution  Takes place online
  • The rise of Peer-to-Peer Source: P2P Lending report 2013, includes Zopa, Ratesetter and Funding Circle
  • The rise of Peer-to-Peer  The UK government is now supporting SMEs through non-traditional routes to finance
  • How aware of Funding Circle were you before this webinar? ?
  • What do Funding Circle do?  Launched in August 2010 as the first UK Peerto-Peer lender for businesses  They provide an online platform where lenders can ‘bid’ amounts and interest rates to become part of a loan  Lenders lend to lots of businesses, and businesses are lent to by hundreds of lenders
  • What do Funding Circle do?  Flexible business loans up to £1 million  Terms from 6 months to 5 years  Unsecured and secured loans, as well as asset finance. No early repayment charges  A community of over 50,000 individual investors ready to lend
  • What do Funding Circle do? Average rate 8.6% and no early repayment penalties Unsecured loans Secured loans Asset finance  £5k - £150k  £100k - £1m  £20k - £1m  Suitable for a wide range of purposes  2nd charge OK  Suitable for a wide range of hard assets  All asset security agreement, or  PG required  Charge on property  Hire purchase agreement  100% LTV + VAT if required
  • What types of business do Funding Circle lend to?
  • What are the minimum criteria to apply?
  •  Limited companies, LLPs and selected non-Ltd firms  Established companies: trading for 3+ years with at least 2 years of filed accounts  Good credit history. Upward or stable financial trends  Minimum turnover: £100,000  Directors: majority UK resident, good credit history  No CCJs over £250
  • How does the process work?
  • ① Pre-approve your business online ② Complete full application in 15 minutes ③ Decision within 3 days
  • Applications are then credit assessed Businesses are given a risk band at assessment which determines the rate on the marketplace Businesses are listed online and lenders bid to be part of the loan Funds can be transferred as soon as the full loan amount is reached
  • What fees are charged?
  •  There are no fees to apply.  Borrowers are only charged fees on drawdown (2 year loans at 3%, 4 and 5 year loans at 4%).  Fees can be added or subtracted from the loan where possible. E.g. Based on a £50k loan over 3 years, repaid in equal monthly repayments: Cost (rate) Cost (amount) Interest (annual rate) 6.0% £3,259.49 Fee 3.0% £1,500.00 Total cost = interest + fee £4,759.49 Monthly repayments £1,521.10
  • Do I need to offer a personal guarantee?
  •  For most unsecured loans and some secured loans, a personal guarantee is required from one or several of the officers.  Normally required from the major controlling shareholders (25% and above).  May be joint and several. Also, cross company guarantees are possible.  Over 95% of guaranteeing officers are homeowners, but for loans below £50,000 if they are not a homeowner the application will still be considered.
  • A one minute case study A leading property purchasing company was looking for short term finance in order to buy property at a lower gearing. They wanted £300,000 over 60 months. With the help of Funding Circle and 4576 lenders, they achieved an interest rate of 9.98%. Turnover: £9.9 million Profit after tax: £764,000 Credit rating: B
  • ?
  • www.fundingcircle.com To enquire about becoming an introducer to Funding Circle, email broker@fundingcircle.com or call 0203 667 2203. info@fundingoptions.com 0845 366 4199