As media coverage of the peer to peer lending industry grows and a lack of business funding continues to stifle British small businesses, FundingKnight CEO, Graeme Marshall, explains why FundingKnight offers something quite different from crowdfunding.
I doubt I’m the only one watching with interest as the media shine a spotlight on the growing industry in alternative finance. In little more than a week we’ve had Wonga’s entry at the less competitive end of small business loans and then Crowdcube, a website which allows people to buy shares in start-ups, being accused of misleading potential investors with the way they advertise fundraising companies.
As another new entrant to the world of alternative finance, these developments have shown me the importance of being clear about FundingKnight’s objectives, what we are – and are not – when it comes to business funding. So, here are four things that set us – and peer to peer lending – apart from the crowd.
1. We want to lend to well established, proven businesses which have been trading for at least two years. We recognise the importance of start-ups and entrepreneurial zeal, but our goal is to maximise returns for our lenders and that means only selecting the very best UK businesses to lend to.
2. We provide debt financing – through small business loans – rather than equity funding. Our lenders don’t take a stake in the businesses they invest in, in fact, they’re encouraged to spread any investment over a wide selection of businesses where possible to minimise the risk of placing ‘all their eggs in one basket’ or ‘concentration risk’ as it’s known to the trade.
3. Whereas crowdfunders talk of the ‘newfangled’ we like to focus on the tried and tested. Our approach is traditional cash flow lending, helping to support well established businesses manage their funds more efficiently.
4. Where others might revel in ‘bank bashing’ we know that a healthy banking system is in everybody’s interest. We’d like to bring back certain elements of ‘traditional banking’ that we think have been lost along the way. We’ve built the FundingKnight team using years of industry experience because we want to capture some of the sense of trust and community that big banks have recently struggled to offer.
Finally, we think it’s time to forget zero sum games. We don’t think that everything needs to be good for one person, bad for another. There’s a growing sense of collaboration sweeping many aspects of society, a sense of mutual reward and shared objectives.
We think it’s high time that the ‘what’s good for you is good for me’ mentality hit financial services and we’re convinced that FundingKnight has a bright future ahead making that happen. If you agree why not subscribe to the FundingKnight blog or head over to www.fundingknight.com to find out more about the higher interest rates we can offer lenders or the competitive, flexible terms we apply to our small business loans.
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