1. Under embargo until 00.01 20 June 2011
NEW ONLINE MARKETPLACE ENABLES EXPERIENCED INVESTORS TO BYPASS BANKS
AND MAKE SECURED LOANS DIRECTLY TO UK COMPANIES
A new type of investment providing steady, predictable income with security
Lenders take part in an online auction to join loan syndicates
Returns typically between 8 and 11%
Lenders set their own interest rates and investment amounts
Facilitates secured loans of between £50,000 and £1m to professionally vetted businesses
No fees for lenders
Investments can be held in a SIPP
Officially launched today, ThinCats.com is the first ever online marketplace allowing investors to make secured
loans directly to UK businesses.
The service, which commenced trialling in the Midlands in January 2011, has so far facilitated eight loans totalling over £1
million, the largest of which was £250,000 for a clothing company based in Cannock.
Kevin Caley, Managing Director, ThinCats said: “As bank lending has contracted, more companies are looking for alternative
ways to raise the funds they need to grow. At the same time, investors are frustrated by the very low interest rates available on
their savings and the volatility of the stock market. ThinCats provides a solution to both these problems. By bringing lenders and
borrowers together and cutting out the bank, both sides get a better deal.”
No fees for investors
The service is intended for experienced investors who register and become members. In registering, lenders undertake to
keep the information they receive confidential. Lenders are not charged a fee for using ThinCats and there is no
obligation to lend. However, they are expected to demonstrate their commitment by placing £1,000 into their client
account. The minimum bid is £1,000 and there is no maximum amount. Currently, the most common loan per person, per
company is £5,000, however, bids of £50,000 are not uncommon.
How it works for lenders
Lenders log onto the ThinCats website to view information packs with details of businesses seeking funding. These reports
are compiled by ThinCats’ accredited ‘sponsors’ who are all experienced bankers or corporate finance specialists.
Having read the report, lenders then decide if they want to participate in an auction setting the interest rate and the
amount they would like to lend to the business. The syndicate is then made up of those bidders offering the lowest
interest rates.
The business is then offered the loan at the average interest rate and if it is competitive, the deal proceeds. The auction
and therefore 'the market,' determine the appropriate interest rate in a totally transparent way.
Kevin Caley, Managing Director, ThinCats.com said: “Up until now, peer-to-peer lending sites have facilitated smaller,
unsecured loans but we have shown that there is a demand from serious investors and established businesses for a
more sophisticated service providing access to the secured lending market previously dominated by the banks.”
A steady, predictable income for lenders
Paul Meier, Technical Director, ThinCats said: “ThinCats offers investors a stable and predictable income at a time when
investments linked to financial markets are extremely volatile. Because a ThinCats loan offers income stability and a
decent return well above inflation, it can form a valuable part of any diversified investment portfolio.”
In recent months, some lenders have achieved interest rates of 15%, however, it is anticipated that rates will gradually
settle down at between 8 and 11% as the marketplace matures.
Once the auction has been completed, ThinCats arranges all the legal documents, holds the security on behalf of the
syndicate and arranges collection of the repayments and allocation of the funds to each lender.
In the event that a business falls behind with its payments, the sponsor is responsible for working with the borrower to
overcome the problems in agreement with the loan syndicate. This might involve re-scheduling the loan. As a last resort
ThinCats would call in the loan security. To date there have been no missed payments or loan defaults.
Tom Moore, an experienced user of peer-to-peer lending who has made four loans via ThinCats said:
“As an investor, ThinCats appealed to me because it provides direct access to low risk investment opportunities which,
up until now, have been the preserve of the banks.
2. “The rate I am earning on my money is double what I would receive elsewhere, and the income I receive is steady and
predictable.
“I like being able to review the sponsors’ reports on the business as it helps me to make a more informed decision about
the amount to lend and the rate. I feel that the risk is low given the thorough vetting process, coupled with the fact that
the loan is secured.”
High quality, low risk businesses
Every business accepted onto ThinCats has to have the support of one of the ThinCats’ accredited sponsors. The
sponsor works closely with and on behalf of the borrower, preparing an information pack for lenders which is typically 20
- 30 pages long. The data is gathered and compiled over several face-to-face meetings and includes information about
the management team, the business and market in which the company operates, its trading performance, what the loan will
be used for, profit forecast, ability to repay and details of the security offered. Only businesses that can demonstrate their
ability to repay the loan and provide good security are likely to be successful and make it through to auction. The
ThinCats risk committee reviews the security available and decides whether the proposal is suitable for listing.
Whilst sponsors don’t make investment recommendations their credibility is dependent on establishing a reputation with
lenders for delivering high quality deals. As a result, only businesses that can demonstrate their ability to repay the loan
and provide good security are likely to be successful.
Kevin Caley said: “We set out to operate like a traditional bank with old fashioned values; getting to know our borrowers
and understanding in detail how their business operates. By visiting each business, we are able to make a much more
informed decision about their ability to repay than if we simply relied on credit scores and a telephone interview. Our
objective in taking this approach is to minimise the risks for lenders whilst offering a better service to businesses”.
Opportunities for SIPPs
Lending using a self-administered pension (SIPP) can be particularly tax efficient and currently over 40% of the lending
undertaken on ThinCats is being done through pension funds.
Borrowers’ costs
Most of the costs involved are contingent on obtaining an acceptable loan offer. The sponsor negotiates a fee of between
2% and 6% of the total amount being raised. This covers their costs, including those involved in sorting out the
appropriate security.
When the information pack is ready, the company pays a listing fee of £450. On completion of a successful auction,
ThinCats adds 1.5% to the average interest rate. This contributes towards its operating costs and covers the sponsor in
continuing to monitor the loan. The borrower also contributes £500 towards the cost of preparing the legal documents.
However, if the auction’s result is not acceptable to the borrower then the only cost payable will be the listing fee.
There are no early repayment penalties which means that borrowers can take out a loan over an extended period with
the option of paying it back early if they wish.
-Ends-
For more information or to speak to a lender or borrower please contact:
Giles Abbott / Amy Mankelow
Marketforce Business Media Ltd
Direct line: +44 (0) 20 7760 8631 / +44 (0) 20 7760 8614
Switchboard: +44 (0) 20 7608 3222
Email: gabbott@marketforce.eu.com / amankelow@marketforce.eu.com
About ThinCats.com:
ThinCats is the trading name of Business Loan Network Ltd and was set up by the team who manage the £10m
Advantage Early Growth Fund (AEGF) together with thirteen business angel investors who they have been co-investing
with for the past 7 years. The team identified a requirement amongst high net worth investors for lower risk investment
opportunities, producing regular returns better than they could obtain from a bank deposit.
The Advantage Early Growth Fund was one of the most active venture capital investors in the UK. Between 2004 and
2009 it made 111 investments in 61 early stage businesses.
About the ThinCats Directors:
Kevin Caley BSc DMS MBA (Cranfield), Managing Director
Kevin Caley has a degree in metallurgy and began his career as a production engineer before going onto become a
graduate training officer in the automotive industry. He has since spent 27 years in venture capital and small business
finance, making over 350 investments and specialising in the smaller early stage end of the market. In this capacity, he
set up and managed one loan fund and nine venture capital funds, and also operates as the Managing Director of the
3. Advantage Early Growth Fund. Kevin is the author of several books and e-publications on small business finance,
including guides on funding small businesses, interactive databases of grants and venture capital. Moreover he
published a DTI-sponsored guide to setting up early stage equity and loan funds. Most recently he was responsible for a
CD-ROM “Guide to Enterprise Investment Tax Relief,” which was produced with RSM Bentley Jennison.
Peter Brown FCA, Company Secretary
Peter is a Business Consultant, Interim Manager and Non-Executive Director with considerable experience as Managing
Director, Finance Director and Company Secretary, in a variety of businesses both large and small. His particular
expertise is in investment due diligence, business valuation, interim management and business turnaround. A hands-on
manager, willing to take on all tasks, who understands the need to lead by example and motivate team members in
order to bring the best out of a business, Peter is part-time Operations Director of the Advantage Early Growth Fund and
mentors a portfolio of AEGF investee companies.
Paul Meier, BA Cambridge, MIT, Sloan School of Management (Financial Economics), IT Director
Paul has a career in newspaper publishing as a director of Claverley Company (since 1985). Claverley is the holding
company of the Wolverhampton Express & Star, Shropshire Star, and Guiton in the Channel Islands. He is also a
director of the Claverley technology subsidiaries: Press Computer Systems (since 1982), and Itex Ltd (since 2004).
His key competencies are choosing strategic computer technologies, large system specification and design, market
research, corporate finance, as pertains to private companies, and detailed pension and investment knowledge, gained as
a trustee since 1993. Paul founded Meier Pollard Limited in 2000 to produce the Inrax online accounting and e-
commerce system, which is used to power the ThinCats website. In 2005 he funded and chaired Selectapension, the
leading provider of online calculators to IFAs for pension transfers and management. He is a director of Online Web
Accounting Ltd (Ireland), which he funded in 2005 in order to develop an offshore accounting and data entry facility in Sri
Lanka, and an onshore front office in Dublin. In 2007 he funded buying the assets of Orchard Network from the liquidator
into a Newco now called Rolonews Limited, which is currently developing an online B2B and B2C news, advertising, and
business networking proposition. Rolonews will be making a significant contribution to the ThinCats website.
About the ThinCats risk committee:
Bob Cox
Bob Cox is a career banker with Barclays with his last 30 years in Commercial Banking. Bob spent 10 years in Barclays
as Area Director, Commercial Banking in Birmingham with a team of fifteen Relationship Managers with eight hundred
customers. Post-Barclays, Bob has worked with Advantage Transition Bridge Fund (a loan fund of £16m to support
viable business through the recession period) in both a front-line and a Non-Exec capacity. Bob has a strong empathy
with the SME business sector and a thorough and practical approach to assessing lending propositions.
Tony Lucas
Tony Lucas spent twenty-one years with NatWest, in a variety of roles including working with borrowers in the front line
through to assessing credit proposals. He has extensive experience of the SME market, major corporate customers,
retail and corporate banking as well as the leasing market. Tony was appointed as Finance Director at start-up company
Pan Security International, pioneers of on-line automated security testing. Moving onto Business Link he was appointed
Operations Director in the Black Country and as Client Services Director for the West Midlands giving him a great
experience of the SME sector. Tony is also a non-executive director of the Advantage Early Growth Fund.
Sponsors:
Currently there are three accredited ThinCats sponsors: BLN Sponsors Ltd, Sterling Capital Reserve and Blue Sky
Corporate Finance. ThinCats is keen to establish a network of sponsors to cover the whole of the UK.
