We like… West Country Radio

One of the reasons we set up our crowdlending business was to provide a way for people to invest in the things that are important to them. You see a business model you like, an ethical standpoint you admire or simply a gap in the market and then invest into a company that fits with your beliefs. You have the power to make good things happen.

As we build up our business we hope to make that dream a reality but in the meantime, we’re keen to help local causes in whatever way we can.

Over the next few weeks, we’ll be looking at business models we admire, want to be involved in or just think are worth sharing. We’ll also follow progress as these companies grow, taking our readers, lenders and investors on a virtual journey.

First out the bag is West Country Radio. Just launched on 13 August 2012, their business is a not-for-profit radio station aimed at promoting the south-west, increasing tourism and promoting businesses, resorts and events. It is a local business aimed at improving the lives of local people.

Its uniqueness comes in the form of how the radio station is broadcast. All presenters broadcast from home studios, transmitting their shows live and pre-recorded. This of course reduces costs enormously and allows money acquired by the station to be used on other things such as marketing and promotion.

What’s more, the station is completely run and produced by volunteers, minimising costs and providing fantastic volunteer opportunities, internships and training for people keen to get involved and learn about how a radio station works.

Opportunities like these are incredibly valuable for a local community and are applicable to all ages, from young people looking to gain experience for the future through to retired volunteers looking to give something back in their spare time.

Whilst relying on volunteers and therefore reducing overheads considerably, West Country Radio are also looking for funders, advertisers and sponsors to aid and increase capacity and grow the station’s listenership. The hyper-local nature of the station means that local businesses and events would benefit enormously from getting involved in the station whilst also helping out in the early stages of growth and helping to benefit the local area.

Local ventures such as West Country Radio are exactly what Funding Knight want to promote. Sometimes, we’ll help by providing business finance via our crowdlending model, and when that’s not viable we’ll help spread the word about local people committed to helping local people. We believe life is about more than just business, it’s about getting back to the roots of community and the warm fuzzy glow you can get as a result.

P2P Lending: Many lenders make light work

Peer to peer lending, including the type of business funding that people to business lenders like FundingKnight offer relies on matching up lots of individual lenders to fund one business loan.  This maximises returns for lenders and helps make P2P Lending better value for all concerned compared to traditional bank business loans.  Today, we explain how things work behind the scenes and why many lenders make light work.

 

 

 

My last post tackled the issue of interest rate spreads and the potentially tricky issue of financial literacy.

Money can easily become something that makes peoples head spin, so today, we’re carrying on with our straightforward explanation of how peer to peer lending works by explaining how lenders can club together to invest in healthy British businesses.

Something that can easily be mis-understood about peer to business lending is that a single loan made available to a borrower might actually be made up of lots, potentially hundreds, of individual lenders who all pool their funds together to finance the loan.

diagram of one business loan being funded by multiple lenders

The process works roughly like this:

A borrower approaches a peer to business lender and applies for a loan. That loan application gets thoroughly checked and analysed by professionals and a decision is taken on whether or not to lend.

If things move forward, the loan will be made available to lenders via the marketplace.  Those wishing to get involved add their money together with funds from other lenders and collectively stump up the loan that the borrower needs.  All of the servicing and money transfers etc. are taken care of by the peer to business lending service who will also often commit to ongoing monitoring of how individual businesses are doing.

The more lenders that are involved in a loan, the more any risk is spread around and reduced.

In reality, of course, during the early days of any peer to peer lending service it will inevitably take time to grow the lending base. That’s why FundingKnight management will also be participating in all of our early loans.

That gives us a personal, as well as a professional interest in ensuring that our loans perform well.

We’ll also work with our initial lenders to ensure that each one of them understands the features of early lending via FundingKnight and is aware of the potential for concentration risk – which occurs when there are less loans available to spread your investment over.

We also have all sorts of plans in development for a secondary market that will help people buy and sell loan parts to help spread their risk or get easy access to their money.

These are exciting times as we put the finishing touches to the FundingKnight peer to peer lending proposition so please do sign up for regular blog updates and let us keep you posted as things progress, and, in the meantime, if there’s something else you’d like us to explain, simply drop us a line via the comment box below and we’ll do our best to help.


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