Last post: Nov 2, 2012
In the old days a bank was pretty much the primary source of finance for a business looking for a cash injection. Today smart businesses are coming to realise that there is another way that is more beneficial for both borrower and lender: peer-to-peer commercial lending.
In the old days a bank was pretty much the primary source of finance for a business looking for a cash injection. Today smart businesses are coming to realise that there is another way that is more beneficial for both borrower and lender: peer-to-peer commercial lending (aka Crowdfunding) Peer to Peer lending options for UK businesses have increased hugely in the last 2 years. Now there are three main sources of unsecured and secured finance available in this space. They are: 1. Funding Circle This is the oldest (since Aug 2010) and biggest player within this increasingly active sector. With over £60 million lent since its inception they are currently the market leader by some distance. Funding Circle offer:
- Unsecured loans from £5,000 up to £100,000
- Secured loans (Asset Finance) of up to £500,00
- Rates ranging between 6.5 and 12%
- Services provided to Limited Companies and LLps only
- No application fees or early repayment charges
- Fees of 2 to 4%, depending on the terms of the loan taken
2. ThinCats Second largest with £12m in loans (since Jan 2011) an impressive 0% default rate to date, ThinCats works slightly differently to Funding Circle in that the process has more human intervention and consequently they can be much more flexible in what they do. They offer:
- Minimum loan of £50,000 rising to a maximum of £1m
- Indicative rates between 7 and 13%
- Good credit record/profitable trading history required
- A 'Sponsor' who champions your application to the Network of Lenders
- Listing fee of £1,000
- Funding Fees of 2 to 6%
3. Funding Knight This is the newest entrant to the market and at time of writing (Oct 2012) their online platform is not fully live but hey are open for business through a network of private backers. With a strong emphasis on good value they offer:
- Unsecured loans from £10,000 up to £100,000
- Rates between 6 and 12%
- Repayment terms of up to 3 years
- Application fee of £250 which is refundable on success
- Fees of 2.5 to 3.5%, depending on term of loan
While the three companies highlighted are perhaps the biggest hitters within peer to peer lending at the moment, a few others are noteworthy: Rebuilding Society They exhibited recently at the MOrtgage Business Expo in London and though their platform is in 'beta' and they have yet to fund a loan, they have shown a clear desire and ability to enter this market. They have similar criteria to Funding Circle but their max loan for now is £50,000. One to watch we feel. You Angel They did launch early in 2012 but technical difficulties have held them back. Among others, a key USP was that they were prepared to lend to partnerships as well as limited companies. A relaunch is planned for 2013. Civilised Money Launch planned for Q1 2013 Whatever option you choose, at Choice Loans we have experience of dealing with all the peer to peer commercial lenders and as we don't charge you a fee to process your loan (we get paid by the Peer-to-peer lender at no extra cost to you) you effectively benefit from our experience for free. To find out more either complete our Peer-to-peer Commercial loan enquiry form or call us on 0845 1260350.
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