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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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The rise of peer-to-peer lending: A chance to ask Funding Circle
Bailey KursarAccount 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 McMullenResponsible for all introducer relationshipsat 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
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 we’re going to cover
What’s the main reason you think businesses aren’t getting finance?
?
Businesses don’t know how or
where to applyBusinesses don’t think they will get
approval
Confusing array of finance products
Waiting for the economy to
improve
By approaching the bank their existing facilities may be
reducedBusiness
uncertainty
“Not even clear how much they want to borrow and what it is for”
“Many do not have adequate business plans or accounts”
Businesses don’t know how or
where to apply
Confusing array of finance products
Invoice
finance
Hire purchase
Leasing
Commercial mortgages
Government-
backed lending
schemes
Term loans
Overdrafts
Alternative
lenders
Crowd funding and peer-to-
peer
Merchan
t cash
advance
Short term
loans
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
2007 2008 2009 2010 2011 2012 Q2 2013 Jun-13 Jul-13 Aug-13
-6
-4
-2
0
2
4
6
8
10
Net
mon
thly
flow
£bi
llion
Is Peer-to-Peer lending the solution?
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
What is Peer-to-Peer lending?
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?
?
Launched in August 2010 as the first UK Peer-to-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?
What do Funding Circle do?
Average rate 8.6% and no early repayment penalties
Unsecured loans
£5k - £150k
Suitable for a wide range of purposes
PG required
Secured loans
£100k - £1m
2nd charge OK
All asset security agreement, or
Charge on property
Asset finance
£20k - £1m
Suitable for a wide range of hard assets
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 [email protected] or call 0203 667 2203.
[email protected] 366 4199
