Author Archives for Graeme Marshall

FundingKnight – The Video

We talk a lot on this blog about why FundingKnight is different or about how peer to business lending differs from mainstream banking.

There are a lot of reasons we’re different, but one of our favourites is the fact that we like to have fun.  Of course, there’s a serious side to lending and borrowing money, but we want to enjoy the experience too.  We therefore want our Crusading Knight cartoons to stick in the minds of everyone who comes across us.

This video, featuring our very own FundingKnights, is an early step in creating a memorable brand which we intend will make a positive difference to small business funding.  We hope you like it.

Have a look for yourself and feel free to leave us a comment.

And if you’re impressed, why not pop over to see our fantastic cartoonist Robert, you’ll find information about everything from greetings cards to conference cartoons on his website.

P2P Lending and why FundingKnight aims to stand out from the crowd

blue arrow standing out from the crowd of black and white arrows

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.

Photo used under creative commons license

Peer to peer lending: Why FundingKnight is a mile away from payday loans

image of three lego knights

Peer to peer lending, or P2P Lending as it’s sometimes know can easily be confused with other types of business funding or alternative finance.  Today’s blog explains why the small business loans offered by peer to business lenders like FundingKnight are very different from payday loans.


The news that Wonga is to extend its services to small businesses has, understandably, been met with some concern.  www.thisismoney.co.uk reported the development saying:

“As of today, a company boss can apply for a loan of up to £10,000 from Wonga for Business and receive the money as soon as 15 minutes later.

At FundingKnight we’re keen to see a growth in business loans.  A growth in business funding is essential to the future health of the British economy.

We don’t entirely agree with comments from Chuka Umunna, shadow Business Secretary, who said: “This is a damning indictment of our banks, and their failure to serve our businesses”. After all, banks are being forced to rebuild capital bases and it’s impossible to ‘have your cake and eat it’, but we do wholeheartedly agree with his later point that, “it is deeply worrying that our small and medium-sized businesses are driven into the hands of a company like Wonga to get access to the finance that they need.”

It’s clear that British businesses need alternative sources of business funding.  We’re committed to helping the banks service the financial needs of small businesses, but we want to do so in a way that provides fair value for all.  We believe that peer to peer lending – or, in the case of FundingKnight, peer to business lending – improves things for both borrowers and lenders.  We’ll offer higher rate of interest than savers can typically find on the high street but we’ll offer competitive rates for business loans too.

The potential for extortionate interest rates is just one reason why we’ll campaign to see peer to peer lending regulated.  We want to ensure that all lenders and borrowers have adequate protection and benefit from the best – not the worst – that alternative finance has to offer.

EDIT: Thanks to @Zerocredit_UK for pointing out that although Wonga has been criticised for APRs of 4,000% on personal lending their business loans will be more competitively priced.  

From the Guardian:

“The high-cost lender Wonga is launching a business loans service, promising to make funds available within 15 minutes of an application.

Wonga was reluctant to quote a typical annual percentage rate, or APR, for loans, saying the measure was inappropriate as they could be taken out for as little as a week. The firm has been heavily criticised for lending to individuals at an APR of 4,214%, but claims business loans will be at rates starting at 17% APR.

Loans of £3,000 to £10,000 will be available for terms of between one and 52 weeks. The cost, including a variable application fee and interest, starts at 0.3% a week and the loans must be repaid in weekly instalments.”

(The Wonga business loans website did not quote typical rates at the time of writing, and a potential business borrower must apply before getting a quote.)

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Photo used under creative commons licence

Peer to peer lending: An industry that wants to be regulated

the houses of parliament

 

Peer to peer funding is currently an un-regulated activity in the UK.  Today, FundingKnight CEO Graeme Marshall explains why people to business lenders like FundingKnight would welcome regulation.

 

In an age where the country has gone regulation-mad, it is unusual to find an industry crying out to be regulated. When this happens, the government should pay close attention, as the industry is usually right.

The founders of the UK’s largest P2P lenders joined forces to call for their sector to be regulated last autumn in response to “fears that “shoddy operators” could put consumers’ money at risk.  The founders have also established a self regulatory body that they hope will act as a ‘blueprint’ for regulators.”

By establishing the Peer to Peer Finance Association (P2PFA) as a self- regulating body to set standards for the industry, the leading firms engaged in P2P and P2B lending have made just the right early move. The Rules and Guidelines for their members both set standards for consumer protection and form a clear pathway to appropriate regulation for the industry.

Alongside setting rules to regulate themselves, the P2PFA has rightly called upon the government to introduce regulation to oversee Internet- based matched lending – the process in which many lenders ‘club together’ to jointly fund a loan to a borrower.

Although matched funding does not in itself require much capital, as the firms don’t actually do the lending themselves, the principles behind holding client money and assets, selling practices,  clear explanation of services and costs etc are otherwise no different from mainstream lending.

Effective regulation will reduce the risk that poor practice by marginal operators will bring financial harm to lenders and tarnish the reputation and growth of this exciting and much needed sector of the lending market.

Indeed, Giles Andrew, the founder of Zopa, has been lobbying the FSA and the Government for greater regulation for some time now.  He is also pushing for ISA status for peer to peer lending and hopes that the P2PFA will “provide impetus for regulators:

“We want to provide comfort to consumers that the businesses conform to some public operating standards and provide a useful blueprint to shove in front of would be regulators.”

Back in 2004, I found myself in a similar position in equity release, when the government decided to regulate the main product (lifetime mortgages) but not the alternative product -  Home Reversions. At the time I was on the board of Safe Home Income Plans, the industry body for equity release, and chaired their home reversion product board. SHIP decided to campaign for regulation and, following a formal consultation we were successful in bringing the matter to the House of Commons for debate. MPs quite appropriately questioned the point of adding yet more legislation to the statute book. The response that “the industry had themselves asked for it” carried the day. Home Reversions have consequently been regulated since 2007.

We at FundingKnight wish the P2PFA every success in calling for appropriate regulations over arranging and marketing P2P lending.  We intend to be active in supporting their aims – and, in particular, campaigning for regulation.

Photo credit used under Creative Commons Licence


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