As part of our continued series of meeting business finance lenders, we spoke to one of the more alternative and specialist crowdfunding platforms, FundingKnight, to find out more about their service.
One of their main aims is to make the process of raising finance as clear and simple as possible, and through the use of their web platform they have managed to fund over £14m worth of loans.
Please describe the type of business you love to lend to.
Businesses which have an opportunity to grow and need rapid access to working capital to achieve their goals. This may be a new contract, an expanding order book, a seasonal surge in business or a bolt-on acquisition. These businesses are the backbone of the British economy and we love to help them on their journey through Responsive Lending.
Can you tell us a bit about your company history, and how you stand out from the crowd?
Graeme Marshall formed FundingKnight in 2011 to address two problems. Firstly, with interest rates at an all-time low, lenders were getting a very poor return on their savings; secondly, SMEs were being starved of access to finance. Our solution was to build a crowdlending platform matching lenders to business borrowers and incorporating a secondary market. We built our initial platform in 2012 and started lending at the end of that year. By the start of 2015, we had passed our first £10m of lending, with three different loan products available – business loans, property bridging loans and renewable energy loans.
We stand out from the crowd in a number of ways through our Responsive Lending approach:
- - We recognise the importance of speed and transparency of decision-making; we engage personally with the borrower from the outset, explain clearly the stages they have to go through and, if they have all the information to hand can put them in funds within three weeks of initial contact.
- - We treat each business as an individual case and can thus arrange loans for companies that don’t fit the conventional mould.
- - The range of lending solutions we can offer as a result of being multi-product. For example, a business owner needing access to working capital but not immediately qualifying for a business loan may be able to access finance through a property bridging loan.
- - We have a track record of filling every auction launched on our site without extension and putting the borrower in funds on the day the auction closes.
How do you view the alternative lending market for small businesses and your own role in the market?
Support from the Business Bank, the introduction of a series of tax incentives and legislation to compel high street banks to refer rejected loan applications to alternative sources of finance are together a good indicator of the strong political will to widen the sources of finance for small businesses and thus break the monopoly of high street banks. Peer to business lending is in the mainstream of this market growth, having grown more than tenfold in the last two years. The alternative market is expected to grow to over £12 bn in the next three years, at which point, it will no longer be viewed as “alternative”. It will have become a permanent part of the financial landscape.
FundingKnight is the centre of this revolution – democratising the lending process by making institutional rates of return available to everyone in return for the risk of direct lending and widening the borrowing options available to smaller businesses through its Responsive Lending approach.
What’s the strangest business you’ve ever lent to?
The businesses we lend to offer a wide range of products and services and that diversity is what keeps us on our toes! We see many businesses that are looking for additional funds for their growth and development, and others seeking working capital. We recently completed our first renewable energy loan for a wind turbine company as well as our first property bridging loan.
What’s coming up for you in 2015?
2015 will be a breakthrough year for us. We expect to grow very rapidly; by the end of April, we will have arranged more loans than in the whole of 2014. Having now increased our loan ceiling to £500,000, we will be making larger loans as well. We have already increased our product range in 2015; we hope to introduce even more products by the end of 2015, giving SMEs even greater flexibility.
What’s your message to any business looking to apply for finance?
The process of securing finance for your business can be both quick and easy. Prepare your case first, explaining why you need the money and how you will repay it. Then make sure you have put together the financial information that lenders generally require to support your case. At FundingKnight, we provide lending as it should be – fast, responsive and personal. If you’re looking to grow your business and want a response within 24 hours, please get in touch.
Visit the FundingKnight website to find out more information.
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