New loan opportunity : Lextan Limited

We’re pleased to announce that a new loan is now live on the FundingKnight crowdlending auction site, offering the chance to lend to Lextan Limited.You’ll find full details of the loans and all the usual financial information available on our website, but to wet your appetite, here’s a quick summary:

Loan opportunity:

Lextan Ltd provides professional tanning, fitness and health and beauty products across its six salons in South Wales, the business intends on increasing its salon network and has identified a number of location for expansion.

It needs the funds to expand its salon network across South Wales.

We also have an existing auction running for Red Advertising Limited and another auction will launch imminently.

You can find more details by logging on to www.fundingknight.comand choosing Find a Loan.

Add funds to your account:

You may only place a bid out of available funds in your FundingKnight account. If you need to transfer funds to your account, click here to do this now and go to Add Funds in your My Money account. Remember you can invest as little as £25.

Bid now:

Once funds are added please go to Find a Loan for further details on the business opportunity and to make a bid.

And now you can ask questions:

As part of our continued improvements to the FundingKnight website functionality and user experience we are launching Q&A facility to enable lenders to submit questions to borrowers.  Questions will be sent directly to the borrower.  This facility will help lenders gain the additional information required when making a decision on whether to bid on a loan.

Has the Funding for Lending scheme caused dwindling interest rates for savers?

funding

Last week, research from Moneyfacts showed that the average cash ISA rate is now 1.74% – a significant and worrying drop from the 2.55% that was on offer a year ago.

A study by Which? reveals that it’s not just ISA rates that have suffered.  What they describe as the “interest rates freefall” has spread across the entire spectrum of savings accounts.

Why the drop?  After all, the Bank of England base rate has been historically low for some time now.

The answer, according to Which? is the Funding for Lending scheme which the Government unveiled back in August 2012 as its solution to the lending crisis that was preventing consumers getting mortgages and businesses from finding the business finance they need to grow their way out of economic uncertainty.

Despite the honorable intentions of the scheme – few would disagree that more business funding is needed – the unintended consequence of the scheme is that banks have cut interest rates on savings accounts because they now no longer have such a pressing need for customer deposits.

The link between savings deposits and lending is too often forgotten when it comes to coverage of the economic problems faced by the UK.  Back in the days of local mutuals, customers hoping for their first mortgage would add their name to a list and only find their application accepted when enough customer deposits – savings – had come in at the other end of the business.

Now it’s a little different, of course, but money still needs to come from somewhere.  Viewed simplistically, banks and building societies have too options when it comes to generating money to lend out to its customers.  They can use the savings deposits they’ve taken from other customers or they can raise “new money” through trading the markets.

Pre credit crunch, most large banks funded a pretty large chunk of their mortgage or small business lending through the latter – with the exception of a few, they certainly didn’t have enough customer deposits to offset the amount they lent.

Then the world changed; banks couldn’t borrow as easily – or cheaply – on the open market, they were asked to re-capitalise and the need to bring deposits and lending values closer together led to a massive scramble for savings customers.

That’s why for so long, savings rates remained far higher than base rate.

Whilst that’s great news for the millions of savers who would otherwise see their money reduced by inflation, it does beg the question of sustainability.

Then came the Funding for Lending scheme that offered banks access to cheap finance to lend on to customers.  Great news… at first.  Except that now, banks aren’t quite so desperate to real in savers and, as a result, interest rates have tumbled.

What does this have to do with crowdlending or P2P Finance?

A lot, actually.

The problem with Government schemes is that they often have unintended consequences.  The decision for Government to lend via some peer lenders could have equally unintended consequences if it leads to reducing rates on the platforms involved.

In short, it’s difficult to fiddle with one bit of an eco-system without huge consequences elsewhere – it’s what gardeners deal with everyday, we just need a bit of common sense applied to the financial eco-system.

What crowdlending offers is not a tweak to the current system but a new system.  That’s why it’s sustainable and that’s why it can offer good value for all – for investors, for borrowers and for the platforms themselves.

Crowd lenders don’t need to hold capital against the loans made as their simply arranging loans, not facilitating them.  Likewise, there are none of the costs of a big banking network to eat into returns or ramp up costs.

Savers can put their money to work (fee free in the case of FundingKnight) and borrowers can access finance generated by real people – not Government schemes or money market trades that are unsustainable at best, risky at worst.

Alternative finance is just that – a real alternative – it’s time to spread the word to investors and keep peer to peer lending going from strength to strength.

Peer to peer loans trading – How our loan exchange can help investors

loans sign

Recently, our guest blogger, Katie, published her step by step guide to the FundingKnight loan exchange.

She was keen to point out that the loan exchange can be a great way to begin your FundingKnight journey.  After all, buying part of an existing loan (rather than bidding to get involved in a current auction) has several advantages:

You can start earning interest immediately

Since these loans are already live, your money starts working as soon as you “buy it now”.  No need to wait for an auction to end, no need to worry about getting out-bid and not having the chance to re-submit your offer.

It makes spreading your investment easier… and quicker

Most people agree that spreading out your cash (diversifying your portfolio) is a good idea.  It helps minimize risk because you reduce your exposure to any one loan failing.

But waiting for new loans to come on stream can be time consuming, particularly if you’re using a new platform with less loan traffic.

The loan exchange can help.

Instead of bidding on new loans, you can instantly buy parts of existing ones.  That gives you instant access to all the loans that were listed before you started investing and provides the perfect way to quickly spread your investment out thinly.

You can choose shorter investment periods

Existing loans have obviously been running for some time before you buy into them, in fact, some will only have months left to run – meaning that you enter loans knowing exactly what interest rate you’ll earn (assuming no defaults) and exactly when your investment will be repaid.

And of course, if you need to access your cash earlier than planned… you simply head back to the loan exchange.

Selling part of a loan is easy, too…

When it comes to selling part of your investment – perhaps because you want to switch to another loan or simply because you need to access your cash – we’ve tried to make things as simple as possible.

Rather than having to sell your whole loan in an “all or nothing” way, you can choose exactly how much of any investment you want to sell and whether you want to apply a discount or premium to the original price.

This flexibility can be useful if you want to invest a large sum into a loan but know that you’ll soon want to sell part of your investment and buy into newer loans to speed up diversification.

It’s a feature that Steve Lee – who featured in this  investor Q&A about peer to peer lending – singled out for particular praise.

We asked Steve, “are there any FundingKnight features you particularly like?” and this was his reply:

I’m impressed with the way that the loan exchange works, letting you buy and sell loan parts.  Say I have £500 to bid, I often want to do 5 x £100 bids at the same interest rate.  On most sites I have to do it manually five times and keep scrolling to the bid rate that on a tablet or phone is not easy. 

 

FundingKnight allows you to split up an investment and only sell part of it on the loan exchange, giving you the option to state exactly how much you want to sell at any one time.  In my opinion that makes it a superb solution, the best one available on any of the platforms I’ve used.

 

To visit the loan exchange, log on to www.fundingknight.com, choose Find a Loan from the menu on the left hand side and scroll down to see the loan exchange.  If you’ve not already signed up, register for free via the FundingKnight website and enjoy fee free crowdlending for investors.

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The Loan Exchange – A Step by Step Guide

stock exchange

So you have chosen to invest your money into FundingKnight’s peer to business lending scheme. Congratulations!

But now what to do with it?

There are a few choices for the uninitiated to make when investing in FundingKnight loans, such as which company you want to get behind and lend to, how much you want to lend and lastly the method in which you lend.

The first two choices of who and how much are fairly self explanatory but the method of how you lend is an interesting one.

Investors have two choices. You can bid on current new loans where you’ll be bidding in a reverse auction against other investors with the lowest bids – in terms of the interest rate you offer to lend at – being accepted to form the final loan.

The alternative lies in The Loan Exchange. This investment is no longer a live auction but rather, if we look at it in terms of those well known online auctioneers, ebay, a “buy it now” option.

And the process is ridiculously simple. Register as a lender on FundingKnight and deposit an amount of cash that suits you and your investment needs. You are now a bona fide lender and head straight to the my money page. You’re getting close…

   My Money

Now it’s time to choose the business and loan you want to invest in. Head to ‘Find a Loan’ and expand The Loan Exchange option.

You’ll find lots of different loan parts available to choose from.  These are investments that existing FundingKnight lenders already hold but are choosing to sell on, perhaps to release their cash, or perhaps just to spread the investment across more loans ad diversify their portfolio.  Some will be small parts, say £25, others will be much larger, say £1,000 or more.

Choose the loan part you would like to buy.

the loan exchange

Click on ‘Tell Me More’ and everything you need to know about your prospective loan terms, returns, business information, turnovers, financial history and more is there to read in clear, jargon free plain English.

Loan details

And this is where FundingKnight comes into its own: it’s a simple and clear process, user-friendly and quick. Any questions you might have will be answered here but if you need to know more then FK are more than happy to get back to you with further information.

Then one you’ve chosen and done your research (and providing you have enough funds in your account!) it’s a one-click process, just “buy now” and submit. Success! You are now a peer to peer lender!

So why would you want to “buy it now” rather than bid on a loan?

Even to a newbie like me, there are some clear advantages that might make you opt to “buy it now” rather than bidding. Clearly the danger of being outbid is removed and the process is quicker – and we like quick. Also, even if there are aren’t live loans online available to bid on, there will always be loan parts available to purchase on the loan exchange. Sometimes time is of the essence and a one click process is all you have time for.

Another plus point is that it helps you spread your investment and diversify your loans and that keeps it interesting – as well as spreading out your investment to reduce the risk that one bad loan will wipe out the returns on your whole portfolio. It also allows you more flexibility as you are able to invest in past loans that have already come and gone, no matter when you registered as a lender.

The loan exchange also lets you choose shorter term lending periods as some of the loan has already been paid off, leaving less time for the rest of the loan to run. This allows your money to go in and out faster than it might if you bid on a current loan.

Sometimes, it might even be cheaper. Because the investor selling may want quick access to their cash, they might offer it at a discount and everyone loves a bargain right?

And for those who may be slightly impatient (and I count myself in this!) you won’t have to wait around for your cash to start earning interest. No need to wait, get involved straightaway and start to see some returns as soon as possible.

You can find out more about becoming a FundingKnight lender here or click on the Katie’s crowdlending journey to find out more about my adventures in peer to peer finance.

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Crowdlending helps North West business grow

scanning machine

Whilst the UK digests the news that Britain may be heading for a triple-dip recession, Secure Archive Solutions are proving that it doesn’t need to be all doom and gloom for the UK’s small businesses. The business is going from strength to strength proving viable businesses throughout the UK need investment for growth.

Mick Collins, Founder of Secure Archive Solutions said,

“It’s great that small businesses like us can find new ways to get the funding we need. We’ve got big plans for the future and know we can grow profitably with the right small business finance in place.  FundingKnight provide a fast, flexible service. Our loan was live on their website within a week and is already nearly 40% funded.”

Secure Archive Solutions credits expansion into new areas such as scanning as being a key source of growth, and are backed by a strategic vision to find innovative ways to help the company grow profitably and sustainably.

Secured Archive Solutions launched a new round of funding on www.fundingknight.com at the end of last week and the loan is already 40% funded, demonstrating a healthy interest from investors.

The loan still has nine days left to run so if you’d like to get involved simply add funds to your FundingKnight account and go to Find a Loan to place a bid.  If you’ve not yet signed up with FundingKnight head over to register as a lender.  It’s entirely free to join, there are no fees for taking part in a loan and you can start lending with an investment of £25 or more.

New crowdlending opportunity: Secure Archive Solutions Ltd.

SAS Ltd logoA new investment opportunity is now live on our website for all registered lenders to bid on.  If you’re already registered with FundingKnight you can log straight into the website to read all about the loan opportunity, review the financial information and, if you wish, place a bid.  If you’re new to crowdlending or not yet signed up with FundingKnight simply go to www.fundingknight.com to sign up as a lender.  You can start investing with £25 and we charge no fees for taking part in a loan.Whilst it’s early for us to predict rate which potential lenders will achieve, our first auction-based loan provided lenders on average with a rate of 9.98% p.a.

New borrower: Secure Archive Solutions Limited

Amount: £50,000

Period: 2 years

Auction duration: 14 days

Based in Altrincham, Cheshire, Secure Archive Systems provides document storage and archive facilities, offering bespoke solutions in the document management service sector, with a turnover of over £400,000 in the last financial year.It needs the funds to extend its storage capability, installing racking in its newly acquired warehouse, building an extension to its vault, and upgrading its IT.

Once registered, you can find more details by logging on to www.fundingknight.com and choosing Find a Loan.

 

Crowdfunding accountants: Invest in abacus Franchising

abacus franchising logo

New loans are now live on the FundingKnight website, offering the chance to start investing in abacus Franchising.

Abacus is a national network of qualified accountants, supporting small businesses in all aspects of accountancy and taxation.

There are two separate auctions providing a chance to invest in British business:

1 – year loan of £20,000

3 – year loan of £30,000

Each loan will be crowdfunded, using the FundingKnight investment community to attract investors.

You can start investing with as little as £25 and peer to peer lending is fee free with FundingKnight.

To lend to British business you need to register as a FundingKnight investor.  Once that’s done, you simply log onto www.fundingknight.com and choose Find a Loan to start investing.

You decide what to invest in, you decide the rate that you want to bid and you have the chance to access your cash whenever you need it by selling or all or part of your investment to a new lender via the FundingKnight loan exchange.

Read about the abacus loans below, or for full financial analysis and information log onto the FundingKnight website.

Business seeking funding: abacus Franchising Company Limited

Loan 1:

Amount: £20,000

Period:  1 year, repayable in 12 installments

Loan 2:

Amount: £30,000

Period:  3 years, with a 3 month repayment holiday

Auction duration:

Fast track auction of up to 14 days, to close when both loans have been filled at the reserve interest rate.

Reason for loan:

Expansion, following new contract awarded by Scania GB.

Business background:

Incorporated in 2004, abacus has developed a national network of qualified accountants who support SME businesses with all aspects of accountancy, taxation and administration functions.  The network has over 3,000 clients. Its collective fee income would make it one of the top 100 accountancy firms in the UK. Abacus is the only national accountancy franchise for qualified accountants approved by the British Franchise Association.

The loan is to provide finance to support the expansion of the business following an award of a new alliance with Scania GB to provide services to its customers.

Find out more, or search for new loan opportunities by registering as an investor with FundingKnight.

Peer lending and Crowdfunding praised by Bank of England’s Andy Haldane

the Bank of England

Perhaps an industry knows it is on to something when someone who confesses to being “congenitally pessimistic about most things in life” admits to being really optimistic about its future… Certainly, the latest comments from Andy Haldane, director of financial stability at the Bank of England will be music to the ears of peer to peer lenders in the UK.

Speaking to the Independent in an interview published today, Andy Haldane told Margareta Pagano of his bright hopes for the future of crowd lending:

“It’s a time of opportunity knocking for finance.  Hopefully, the growth of peer-to-peer lenders, such as Zopa, Funding Circle and Thin Cats, and those involved in crowd-funding, such as Crowdcube, will help solve the problems we have in the UK with lending for SMEs.”

Haldane went on to explain how he thinks online technology has “the potential to transform finance and fill the gap left behind by the big high street banks which have little appetite for taking on risk in lending to SMEs.”

You can read the full article “Bank supremo: Peer-to-peer lending is a good reason to be cheerful” in the Independent, or start peer to peer lending yourself by registering as a lender at FundingKnight and taking part in one of our live peer to peer loan auctions.

 

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Peer to peer loan descriptions: What’s in a name?

analysis

I’m an avid reader of the Lend Academy blog by Peter Renton, in fact, I recently reviewed his book about Lending Club, The Lending Club Story on the Funding Knight blog.

One of the reasons I love Lend Academy is the amount of information and analysis on offer for P2P enthusiasts.  Yes, it’s focused on the US market but it never fails to get me thinking…

This week, it’s the a guest post called Loan Descriptions – Can They Be Helpful When Choosing Loans? that has caught my eye.  Written by Sam Kramer, a financial sector old-timer and keen P2P investor (You can find him on Twitter @P2P_CT), the post delves into historical data to investigate whether the loan description that introduces a P2P loan is at all predictive of its eventual repayment rate i.e. can you predict which loans will default simply by reading their name?

Well, I won’t let all of the results out of the bag, you should head over to Lend Academy to read the full post for that (and subscribe since this is just the opener in a 2 -part guest slot) but here’s a taster to whet your appetite.

chart tracking default rate by loan description length

Default rate by loan description length

Top level analysis: Very short loan descriptions (between 1 and 10 characters) have a reasonably high default rate.  (Note, interestingly, no-description loans have a lower-than-average default rate, as do short loan descriptions of 11 – 350 characters).

The post goes on to look at the impact of longer descriptions as well as drawing attention the the impact that recency of loans will have – if no-description loans are a relatively new thing, then logic says they’ll have a lower default rate since less of them will have grown to maturity.

This latter point is relevant for virtually every piece of analysis you’ll see about peer to peer lending as the whole industry is so young.  Finding a way to compare default rates of very young ‘unseasoned’ loan books with the much more mature lending portfolios of mainstream banks could throw up some interesting analysis… any volunteers?

Rothschild backs peer to peer lending as new meets old

old leaf on new grass

Following Friday’s news that peer to peer lending, including peer to business lending  is set to be regulated by the FCA (the regulator about to replace the FSA), the industry has received a further boost with news that RIT Capital Partners, Lord Rothschild’s London-listed investment trust has invested in Zopa, the UK’s first peer to peer lender who started the alternative finance wheels in motion back in 2005.

It’s a move which will inevitably prompt a whole host of “old meets new” clichés as one of the most famous bastion’s of banking joins forces with a disruptive player on the alternative finance circuit.

Speaking to the Financial Times, Lord Rothschild said,

“We are witnessing the growth of the non-banking lending market.  Following the 2008 crisis many of the banks remain under capitalised.  In these circumstances alternative forms of credit will be developed on a significant scale.  This is happening.”

UK peer to peer lending enthusiasts will no doubt watch to see whether the involvement of such an internationally renowned name does for Zopa what the arrival of John Mack did for Lending Club.

Lending Club have now processed over $1bn of loans in the US and their success has often be credited, in part, to the fact that they managed to engage the support of a recognised industry chief who could bring Lending Club the gravitas it needed to go mainstream.

Although Lord Rothschild left his family bank three decades ago, his name remains synonymous with what was once the globe’s most impressive banking group.  The decision of RIT Capital Partners to invest in Zopa will surely be seen as a rubberstamp for an industry which is rapidly growing from a small stream of niche financing into a genuine alternative to mainstream banking.