ThinCats: A Review of The Commercial Peer-To-Peer Lender

We continue to see an increasing number of peer-to-peer lending schemes flourish at a time when many small and medium size enterprises (SME) are struggling to raise finance through more traditional channels with the high street banks.  One of those peer-to-peer lenders is ThinCats appeared on the business lending scene back in January 2011. Since then, though Funding Circle have taken a greater market share and hogged the publicity, ThinCats have been very active and have made a significant impact. At the time of writing (updated Sept 2014) it has lent almost £80million made up of 100s of loans using funds provided by thousands of lending members.

Private investors who are seeking a higher rate of return on their surplus funds use ThinCats' auction of lending opportunities to provide business loans to SMEs providing the investor with an excellent rate of return and the SME with the funds that they may well have struggled to obtain elsewhere.

If you are an SME, who has perhaps been turned aside by your bank when seeking finance, we think this ThinCats review may be quite useful. Let's start by examining the criteria you need to meet to get a ThinCats loan:

Criteria

• ThinCats will only provide loans to established businesses that are profitable.
• Your business can borrow between £50,000 to £1,000,000 by way of a loan repayable over 6 months to 5 years at a fixed rate of interest. The interest rate the loan will be offered at will be dependent upon market forces during the auction but you can expect it to be competitive.
• Loans are fully secured and personal guarantees may form part of the security requirement. Having said that, the ability to meet the loan repayments must be demonstrated.
• Usually there are no additional charges or penalties for early repayment of the loan providing flexibility.
  • The funds can be used for most purposes.

Process and costs

You must first find a sponsor - something we can arrange at Choice Loans at no cost. That sponsor is like your old-fashioned bank manager. He or she will discuss the proposition with you and help you prepare an "Information Pack" to support your request for finance to attract as many auction bids as possible with a view to obtaining the most attractive interest rate. A negotiable fee of between 2% and 6% of the amount raised is payable by you to the sponsor should the application prove successful to cover their costs and for dealing with the security.

The risk committee at ThinCats reviews the proposition to decide if it is worthy of placing in the auction. A listing fee of £450 is payable by you but if you do not receive a loan offer it will be refunded.

Your information pack and other relevant details are placed on the website and the auction commences sometimes lasting between 1 to 2 weeks. During that time potential lenders can access your application, ask you questions and make you an offer for all or part of the funds you require including the interest rate they would like to receive.

Assuming that the amount of the bids covers the amount you requested when the auction closes you will be offered the loan at an average rate of all the successful bids plus a 2% margin. ThinCats adds this margin with 1% to cover its costs and 0.5% is paid to your sponsor to ensure that they retain an interest in your business's continued success plus the remaining 0.5% is spread over the term of the loan and paid to ThinCats . You decide if you wish to accept the offer.  Once everything is completed the funds are then drawn down with the average timescale for this being 22 days from the date the auction closes. Monthly repayments are set up. There will continue to be close liaison with your sponsor throughout the term of the loan.

You may be interested to note that many of the loan requests are processed very quickly through the auction system with one of the quickest being for the sum of £200,000 that only took 10 minutes to raise for the borrower! That's not uniformly typical though and some loans do take several weeks to fill depending on the loan offer.

If this ThinCats review is of interest to you or you wish to discuss other forms of either peer-to-peer or conventional finance the we at Choice Loans would be happy to help. We can advise on P2P funding with ThinCats, Funding Circle, Funding Knight or any of the other providers Please either call us on 0845 1260350 or complete our Commercial Loan enquiry form.