As a small business owner it makes sense for me to ask why would I approach FundingKnight rather than a bank to borrow some funds? I struggle to borrow books from the library so a business loan from anywhere seems like a crazy notion to me but many, many people and companies do it all the time so maybe it’s about time I learnt a little bit more about it.
I asked FundingKnight to explain a bit more about the whys, hows and advantages of going down the crowdlending path.
FK: Here’s a simple answer: a lot of banks say no – they have been advised by the government to build up their capital bases (keep more cash in reserve) and that doesn’t fit very well with lending more money out!
KK: What about the process of approaching FundingKnight compared to a bank?
FK: Lots of businesses don’t like the red tape and bureaucracy of banks – we try to treat people likes names not numbers
KK: Are there other advantages that businesses can benefit from?
FK: Flexibility is a big advantage with borrowing from us. Often business loans let you choose build your own loan.
KK: Like a lovely financial menu?
FK: Exactly. You can borrow for any number of months between 6 and 36 (3 years) rather than choosing between 1 or 3 year products, typically on offer. This could save you a lot of money if you have a decent sized loan that you only need for a few months to cover stock purchase.
Even when loan providers don’t charge early repayment penalties, interest is usually charged for the full period of the loan so it always makes sense to borrow for as short a time as possible.
KK: What about if I need to take a break from paying the loan back?
FK: If you want you can take upfront payment holidays, i.e. you don’t start to repay the loan until after the first three months.
KK: That’s fabulous, and great if I needed an initial investment in my top secret manufacturing venture I am currently thinking about. This would be a perfect solution to any cash flow issues that are bound to happen.
FK: Well, perhaps not. We only lend to Limited Companies who are registered with Companies House and have been trading in the UK for at least 2 years. We also take quite a close interest in cash flow projections, but good luck anyway!
So my journey into the rather marvelous world of crowdlending continues. There’s still more to learn but the pieces are beginning to come together nicely.