Posted on 04.02.2014, by Rob Warlow

New figures released reveal that peer-to-peer lending (P2P) increased by 121 per cent during 2013.

The report published by the Peer-to-Peer Finance Association (P2PFA) shows that cumulative lending at the end of quarter four in 2013 hit £843 million compared to just £381 million at the end of 2012.

The report further reveals that at the end of 2013 there were over 3,700 business borrowers, 70,000 consumer borrowers as well as more than 86,000 active lenders.

The data has been supplied by Zopa and Ratesetter who service the individual/personal market and Funding Circle, Thin Cats and LendInvest. With many other providers in the market the actual figure will be higher, although these are the major players so constitute the majority of deals.

With the P2P platforms set for regulatory oversight by the Financial Conduct Authority from 1st April the alternative lending market is going to be set for further growth this year.

Posted on 01.02.2014, by Rob Warlow

Our weekly Friday Business Finance Bulletin video is out. This week Rob Warlow looks at a new campaign being run by the banks to get businesses borrowing (yes, you did read that right!); how a UK crowdfunding finance raise for a property developer has broken all records and finally why you should never have to find an excuse to pick up the phone to chase late payers.

Posted on 27.01.2014, by Rob Warlow

In this edition of the Business Finance Bulletin Rob Warlow looks at the low level of awareness among business owners of crowdfunding and peer-to-peer lending; how the government has been taken to task for its lack of success in stimulating bank lending; and why you need to keep a close eye on cash during times of growth by balancing the use of cash with different forms of finance.

Posted on 14.01.2014, by Rob Warlow

The number of new peer-to-peer lending sites continues to increase with the recent launch of Lending Works.

Lending Works, which focuses on the personal loan market, is headed by a team from the banking, accountancy and finance industries, and it aims to provide a simple, flexible and transparent way for users to lend and borrow money.

In line with the traditional P2P model Lending Works’ online platform allows people to lend their savings for a competitive return to creditworthy people requiring finance. Personal loan borrowers are prudently selected by the company’s team of highly experienced underwriters using advanced underwriting techniques and electronic credit scoring. Loan terms and lending periods are both one to five years.

To kick start the business Lending Works completed a successful pre-launch fundraising round raising £3.5 million from venture capital and angel investors.

Rates are promised to be highly competitive for both lenders and borrowers and the company is targeting a net return to lenders of approximately 5.1% AER when their money is lent for five years.

Whilst the platform is there to fund personal financial needs research shows that many business owners do resort to using personal funds as a source of business capital.

You can find out more about Lending Works here.

Posted on 23.12.2013, by Rob Warlow

In the latest Business Finance Bulletin video I look at the crowdfunding market and talk about two surveys carried out by Nesta and business crowdfunder, Funding Knight. As we close 2013 I also share 3 key priorities for you and your business to focus on in 2014.

Posted on 01.12.2013, by Rob Warlow

In the latest weekly Business Finance Bulletin Rob Warlow looks at how business owners are using personal resources to fund growth, and the increasing use by banks of the Enterprise Finance Guarantee Scheme.

In the business finance tip of the week Rob shares 5 tips on crowdfunding issued by the FSB and UK Crowdfunding Association.

Posted on 20.11.2013, by Rob Warlow

The crowdfunding and peer-to-peer (P2P) loan market has been very much focused on providing short to medium term loans for traditional business needs such as additional working capital and asset/equipment purchases.

However, in a sign that the P2P market is maturing, some players are starting to venture into property funding.

Funding Circle, the most recognised marketplace for business loans, has signalled its intent to move into the property finance space, with the hire of Luke Jooste, formerly Commercial Director at Barclays Business. With an extensive experience in the property sector Luke has been brought in by Funding Circle to develop a property-focused offering.

Depending on what exactly the product is it should be a good source of property funding and will be music to the ears of businesses operating in this industry who have been badly serviced by the traditional High Street banks. I suspect the service will initially focus on secured bridging loans which is an easy toe in the water.

The P2P bridging market though does have a new confirmed entrant. Existing bridging lender Wellesley has launched a peer-to-peer lending service with the aim of funding its short-term loans.

Private investors will be able to fund bridging and development property loans of up to £1m. The shareholders of Wellesley are committing £5m so they will invest along side private investors.

The property being funded will be taken as security and sold if borrowers default. In this instance, the private lenders will be paid off first, with Wellesley’s shareholders being repaid from the remainder.

You can find out more here, Wellesley

Posted on 12.11.2013, by Rob Warlow

The banks have long countered the claim that they are not lending with the argument that many businesses don’t wish to borrow. Whilst the banks have to accept they can be too risk averse a new survey has back up their assertion that there is a lack of appetite amongst business owners to borrow.

A new YouGov study finds that almost two thirds (64%) of SMEs have not sought any extra finance over the past two years from banks or any other form of lenders.

The SME Banking 2013 report reveals that that amongst those SMEs that had not obtained additional finance in the last three years, the two main deterrents were not wanting to go into debt (34%) and fears about the economic climate (21%).

The YouGov’s research found the next five factors putting SMEs off from borrowing were,

20% didn’t like the interest rates charged
16% didn’t want to face the hassle of setting up a new facility
12% disliked the terms and conditions of the deal
11% thought they would be turned down and
10% were unhappy with the security demanded by the bank

Looking at the wider picture, the YouGov’s study shows that only 36% of SMEs have looked at alternative sources of finance but 21% have secured funding via crowdfunding and 20% took out leasing/HP agreements. Instead of searching out external finance 18% of business owners have used their own money to fund the business.

The findings of this survey confirm what we have been saying for some time in this blog… more needs to be done to highlight to business owners that there are alternative ways to fund growth other than banks. Also the government must take heed of the fact that a large number of businesses just don’t wish to borrow and so they need to be more selective in the schemes they put in place.