Weekly Lending Review: week 34

Week 34: 19 – 25 August 2013

It was another £3 million+ week for new lending opportunities on the marketplace, including a drinks manufacturer and a Dorset beauty salon chain. The retail and property & construction sectors had the most number of loans and the majority of businesses were located in the South East.

New loans

There were 51 new business loans listed last week and there are currently 34 auctions on the marketplace.

The total value of the new listed loans was £3,135,720; that’s an average of £61,485 per loan. The largest loan value was £200,000 and the smallest loan value was £10,000.

Business loans still available for bidding on for the next 3 days or more:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The average gross yield graph is reported weekly and shows a rolling two week average. Number of loans, value of loans and secondary market are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 19-Aug represents the week of 19th – 25th August.

Weekly average gross yield (2 weeks rolling)

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Number of listed loans per week

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Listed loan value per week

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News you should know

We’ve compiled a list of the nine biggest peer-to-peer lending stories from August, including a Financial Times article which reviews data that suggests peer-to-peer lending will be worth £1 billion by 2016.

Community Discussions

Have you seen the new Funding Circle blog?  Be sure to subscribe to it with your email address to get regular updates: https://www.fundingcircle.com/blog/.

This week we’re discussing the new minimum bid rates which will come into play on Monday 2nd September. Have your say on our community forum.

Loans defaulted last week

Computer retailer from Plymouth. Loan 492

This business has been trading since 1995 but went into liquidation this month. The original loan amount was £30,000 and all 337 investors have been notified.

Enjoy lending, The Funding Circle Team

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You can read last week’s Weekly Lending Review here.

9 biggest peer-to-peer lending stories for August

9 biggest peer-to-peer lending news stories for August

Here’s a round up of the most important peer-to-peer lending industry news for the month of August. Did we miss something? Let us know in the comments.

Digital finance lending set to hit £1bn

The Financial Times digs into data released by the Open Data Institute which says that the peer-to-peer lending industry in the UK will be worth £1bn by 2016. They also take the time to look back to see that the market has trebled in 3 years to £550m. Good article, although their use of the term ‘digital finance’ is questionable!

Peer-to-peer lending boom has just begun

Continuing the theme of good times and growth in the peer-to-peer lending industry, The Daily Mail interviewed the Funding Circle co-founders on the week of our third birthday, asking questions about the business and the potential for the industry. They were kind enough to include our vital stats to date: Over 2,500 British companies have now received more than £135m of loans from in excess of 50,000 people in the UK through the ‘peer-to-peer’ lender.

Peer-to-Peer Lending Likely to Continue its March Into the Mainstream

The Huffington post joins in the growth stories this month by reporting on peer-to-peer lending’s march into the mainstream, calling it one of the most exciting developments of recent modern finance. We couldn’t agree more.

Funding Circle open its doors to sole traders as the lend-to-save firm looks to support ‘finance-starved’ businesses

More news about Funding Circle from the Daily Mail! This time they’re discussing how Funding Circle is dipping its toes into providing loans for Sole Traders, which was announced on our blog. The Scottish Herald reported on the first sole trader business to benefit from the trial, Howie’s Bistro, based in Dunkeld who raised £35,000 from 356 people in just six days.

Savers find way to beat low interest rates and inflation

The Scottish Express focusses on a report by the CEBR about savers that have turned to peer-to-peer lending and achieved a better return than an ISA. This is all good news but it’s worth remembering that peer-to-peer lending is a risk-based product, so you should do your research before diving in.

Savers risk big losses at peer-to-peer start-ups

This article by The Telegraph sounds scary at first but as you read on, you’ll find it is more a warning to savers to be careful about which website they choose to lend on and suggest it may be safer to stick with the more established peer-to-peer lenders.

Caveat Emptor Banking: Peer-To-Peer Lending Challenges Too-Big-To-Fail Status Quo

Possibly the most amazing description of peer-to-peer lending I have ever seen, Forbes dives deep into the industry comparing it’s attributes to the ‘too-big-to-fail banks’. Very interesting reading indeed.

Talks begin to include peer-to-peer lending in ISAs

Super snooper, Dan Hyde from the Telegraph, has discovered that HMRC is in discussions with the industry to talk about including peer-to-peer lending into ISAs. This of course is a move we welcome and have spoken numerous times about the need for tax breaks for peer-to-peer investors.

Revenge of the nerds

The Economist explores the tech startups in London, San Francisco and New York that are taking on the world of finance, in what they describe as an explosion. It seems the rebellion is turning into an industry and it’s great to see innovation solving problems for consumers that bigger organisations won’t. We’d like to point out that we don’t drink lattes near our laptops, this is an accident waiting to happen, and we only get free fruit on Tuesdays. Although hearing that other startups get free food, we might raise this with management.

 

News

Weekly Lending Review: week 33

Week 33: 12 – 18 August 2013

There were nearly £3.5 million worth of new lending opportunities on the marketplace last week and the majority of loans were allocated to the C risk band. 11 of the new loans were in the property and construction sector and most businesses were located in the South East.

New loans

There were 46 new business loans listed last week and there are currently 28 auctions on the marketplace.

The total value of the new listed loans was £3,472,300; that’s an average of £75,485 per loan. The largest loan value was £235,000 and the smallest loan value was £10,000.

Business loans still available for bidding on for the next 3 days or more:

Recycling equipment manufacturer is looking for a £100,000 loan

Haulage company needs a £150,000 loan

Dorset-based chain of beauty salons requires a £65,000 loan

Property company is looking for a £150,000 loan

Construction company needs a £50,000 loan

Medical equipment supplier requires a £20,000 loan

Windscreen wiper manufacturer is looking for a £100,000 loan

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The average gross yield graph is reported weekly and shows a rolling two week average. Number of loans, value of loans and secondary market are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 12-Aug represents the week of 12th – 18th August.

Weekly average gross yield (2 weeks rolling)

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Number of listed loans per week

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Listed loan value per week

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Change to minimum bid rates

We committed to a monthly review of the minimum bid rates, with two weeks’ notice before they are adjusted. A number of factors were considered when reviewing the rates, including general economic conditions and costs of alternative borrowing products. The outcome of the first review is a 0.2% increase in the A, B and C risk bands. The new rates will come into effect for loan requests listed after 9am on Monday 2nd September. The new rates are as follows:

A+: 6% (no change)

A: 7.2% (+0.2%)

B: 8.2% (+0.2%)

C: 9.2% (+0.2%)

C-: 11.5% (no change)

News you should know

Following feedback from you, our investor community, we have improved the information provided in the loan book which can be downloaded from the statistics page.

For our latest success story video we visited Saber Powersports in Southampton; a powerboating company who borrowed £20k to buy a new engine for one of their jet boats in May. You can watch the video, packed with action shots from the boat on our blog.

Community Discussions

Have you seen the new Funding Circle blog?  Be sure to subscribe to the blog with your email address to get regular updates: https://www.fundingcircle.com/blog/.

This week we’re welcoming more users to the community forum. You can introduce yourself or welcome new people to the community here.

Loans defaulted last week

No loans were defaulted.

You can read last week’s Weekly Lending Review here.

Enjoy lending, The Funding Circle team

Providing you with more information about the businesses you lend to

From today, all registered investors will be able to download a new and improved version of the loan book from the statistics page. Having received feedback from you, our investor community, about making borrower information more accessible after auctions close, we have added the following categories to the loan book:

  1. Business type

  2. Loans outstanding

  3. Turnover

  4. Profit after tax

  5. Total assets

  6. Shareholder funds

  7. Credit score (n.b this is not applicable for non-limited companies)

  8. Year incorporated

  9. Asset security

This information will be displayed in bands, eg. in the case of turnover, the 4 bands are as follows: £1.5M+, £700k-£1.5M, £350k-£700k and £0-£350k.

It’s important to remember that this information is taken from when the business took out a loan and is not updated over time. The financials are from the latest filed accounts (at the time of application) in the case of limited companies, and the equivalent in the case of non-limited companies.

We hope that by becoming more transparent and providing you with easy access to this information, investors will have the tools to make more informed lending decisions going forward.

The Funding Circle team

 

Success story: did you help buy an engine for this powerboating company?

Here’s our latest peer-to-peer lending success story. Saber Powersports is the largest powerboat experience company in Europe and offers adrenaline packed experiences from Shamrock Quay in Southampton. The business was started 25 years ago by ex National Powerboat Racing Champion, Simeon Penn.

They offer a range of attractions, through Red Letter Days and Virgin experiences, for the people looking for some thrills and spills on the water.

Their Funding Circle loan details

In May they became our latest  success story by taking out a peer-to-peer business loan through Funding Circle for £20k to buy an engine for a new jet boat. The new engine will not only increase capacity, adding one more boat to their fleet, but it will also give greater fuel economy too. Their loan was funded by 168 people in less than 7 days. In this video you’ll see some of the boats in action and Simeon also shares his experience of Funding Circle.

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Welcome to the new Funding Circle blog

We’re excited to present to you the new Funding Circle blog!

Maintaining transparency and an open dialogue with our investors and businesses will always be a key priority at Funding Circle. We know that regular updates, communication and information help you to be more effective and successful within the marketplace.

Over the past few years, the blog has become one of the go-to channels for our community to catch up and comment on the latest happenings at Funding Circle. We’ve received a lot of suggestions from many of you about what kind of content you’d like to see on the blog which has helped us define and grow the relevance and volume of our communications.

The new blog not only looks great (we hope you agree!) on the surface, but it is very powerful and flexible under the hood which will help us serve your information needs better. The design also works hard to highlight some of the amazing businesses on Funding Circle, helping tell their story and giving a sneak peak into the businesses that the investors among you have helped to grow and flourish.

We truly hope you find the new blog to be helpful and informative. It is, after all, here to serve you.

Enjoy watching and reading! The Funding Circle team.

 

News

Weekly Lending Review: week 32

Week 32: 5 – 11 August 2013

Over £3 million worth of lending opportunities were listed on the marketplace last week and the majority of new loans were allocated to the A risk band. Businesses looking for funding included a travel company specialising in yacht holidays and a Brighton deli.

New loans

There were 60 new business loans listed last week and there are currently 41 auctions on the marketplace.

The total value of the new listed loans was £3,084,500; that’s an average of £51,408 per loan. The largest loan value was £100,000 and the smallest loan value was £10,000.

Business loans still available for bidding on for the next 3 days or more:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The average gross yield graph is reported weekly and shows a rolling two week average. Number of loans, value of loans and secondary market are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 5-Aug represents the week of 5th – 11th August.

Weekly average gross yield (2 weeks rolling)

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Number of listed loans per week

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Listed loan value per week

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News you should know

The Mail on Sunday wrote about the success of the Local Business Partnership; an initiative between Lancashire County Council and Funding Circle. They featured one of our great business borrowers, Ark Consultants and you can read the article here. If you want to see what Ark Consultants have done with their loan you can watch this video case study about them on our blog.

Community Discussions

This week we’re talking about improving the filters on the marketplace and you can have your say in our community forum.

Loans defaulted last week

Software and IT services provider. Loans 34 and 521
This Hertfordshire-based business provides speciality software to the NHS but was put into administration in June. The original loan amounts were £30,000 and £75,000 and all 781 investors have been notified.

Countryside maintenance company. Loans 263 and 1016
This Oxfordshire business had been trading for over 10 years but went into liquidation in November last year. The original loan amounts were £20,000 and £10,000 and all 272 investors have been notified.

Enjoy lending, The Funding Circle team

– See more at: https://www.fundingcircle.com/about-us/our-blog/weekly-lending-review-week-32#sthash.WybaAOoK.dpuf

The complete guide to growing your business internationally. Part 2: Distribution Channels

How to create an international distribution strategy for your business

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Welcome to part two of our guide to growing your business internationally. In this edition, we’ll take you through some ideas on choosing the correct distribution strategy for your business.

So, you’ve decided to grow your business internationally. Great! As we outlined in our introductory article this decision takes place after you’ve done your research, secured the advice of experts, and even sanity checked if it’s right for your business to grow overseas in the first place. Once you’re happy with the decision to go forward internationally, you’re going to need a distribution channel strategy.

A distribution channel strategy answers the fundamental question:    “How do I get my products into the hands of customers in another country?”

Direct and Indirect Distribution

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There are two types of distribution; direct and indirect. Direct means you, as the producer, provide your products directly to the end customer. Indirect distribution uses any number/combination of intermediaries who become part of the path to getting your products to the customer. This could include agents, wholesalers, and retailers dependent on your distribution channel strategy.

And selection depends on a number of factors which differs even between businesses in similar industries; for example digital businesses aren’t automatically direct distributors simply because they can sell online. Distribution intermediaries might be critical to the success of their business; for example Amazon for digital books, iTunes for digital music etc.

Factors Impacting Distribution Channel Strategy

Distribution is not just a logistics issue, there are four key factors that will impact your distribution channel strategy:

  1. Sales: Who is your customer – is there a local market provider who already reaches this audience you should collaborate with? And how do they like to buy e.g. is it a “high touch” product customer need to touch, see, and try before buying. Will you need specialist agents to sell it? Or is it customized so you need direct access to your customer.
  2. Logistics: How will it, ultimately, reach the end customer? Is it a perishable that needs fast, managed shipping and strict control standard or a one-click download? Are there local regulatory factors you need to take in to account?
  3. Finance: What working capital will you need/have access to? What credit arrangements will you need/offer? How will you process customer payments?
  4. After-Sales Support: What happens after the product is in the hands of the customer? Do they need any ongoing support or training? What if there’s a problem, how will you resolve it e.g. repairs and returns.

Any of the above factors can place certain limitations – or highlight opportunities – based on your product and business.

For example, if you sell clothing and don’t have the working capital to establish manufacturing in another market you may decide to sell direct via an online shop, or you may run a cost analysis and decide that the most profitable way to both sell and manufacture locally is to license a local manufacturer to product your clothing. In that case, the best channel, is the one that best addresses the business’ needs.

Distribution Channel Stakeholders

When developing your channel strategy, there are three types of stakeholder to consider:

  1. Customer: Your No 1. Consideration starts with the Customer. Do they want your product? Are they willing to pay for it? How do they buy? Asking some hard questions, and quantifying with research, at this stage will prevent costly mistakes.
  2. Intermediaries: These break down further into Agents, Wholesalers, and Retailers. You may choose any combination of these for indirect selling.
  3. Producer (you): Ultimately the distribution channel has to make sense for you. If it’s damaging your brand equity or simply not profitable you need to ask yourself why your doing this. Which leads us to….

The Four Steps do Distribution Channel Selection

Taking the above Factors and Stakeholders together we recommend going through a four-stage process to select your distribution channel strategy.

We’ve created a handy planning matrix you can download, print out and work with while going through these decision steps.

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  1. First, start with your customers: What are their needs? How does your product meet those needs? How will they find you? Buy from you? And even become brand evangelists?
  2. Then ask, “Does this make sense strategically?”: Remember back in Growing Your Business Internationally: Part 1 the second step was to think strategically and decide if selling overseas made sense for the business. We’ve repeated that decision step here specifically related to channel selection – the channel must make sense for your current corporate and marketing strategies.
  3. Next, make sure your product fits: It might be a relatively simple step to set up an online web store and ship from the UK to overseas but does that work for your product? High touch items need a greater degree of hand-holding. Likewise, some products come with their own logistical challenges – like perishables – that even though they can be shipped there is an impact on both quality and profit margin.
  4. `Finally, check the finances work: You’re in business for a reason, primarily to make money. So the distribution channel you pick has to work profitably for the business. It doesn’t matter if there is a crazy amount of demand for your product in another market – if you can’t provide it to them cost-efficiently (and without impacting quality/brand perception) then you need to go back to the drawing board and choose again until the numbers add up.

We can’t be prescriptive about which is the right distribution channel for you but we hope we’ve helped by providing a framework for your decision making process. Like most strategies, coming up with your distribution channel strategy takes a little time and a lot of knowledge about your business and the market you wish to sell to.

A Quick Guides To Intermediaries:

Agent/agency

You source an agent to represent your business in the target market managing both selling and customer services. Often these are setup as commission only deals making this a low-cost route into a new market, but bear in mind you will probably have to provide sale collateral and invest in marketing support for your agent. You may even need to invest in training them to deliver high touch sales.

Distributor

When working with a distributor they usually buy from you and then are responsible for selling on to a customer – this may be direct or on to other businesses. This option works well when you find a local distributor with a good base and expertise in selling to your customer but the reduction in risk means you can lose a lot of control – in particular with how the product is marketed and after-sales support.

Joint Venture/Licensee

Business create a Joint Venture or licensing partnership to sell a product or service locally with a partner – they may even manufacture your product/s locally. It can offer more control than a distributor deal but the risk becomes shared.

Retailers

Retailers are the last stop in the supply chain and sell to the customer direct. Retailers take on all the burden of attracting customers, making sales, and offering after-sales support. For this reason they can negotiate tough contracts on everything from product & packaging, delivery and volumes, payments terms, and both wholesale and recommended retail pricing. A good retail agreement can boost your business but a bad one can cause losses. Approach with caution.

Wholesalers

Wholesalers are like agents and distributors. They purchase product (at wholesale prices and typically in large volumes) and then sell on or distribute to retailers, distributors, or even other wholesalers.

Weekly Lending Review: week 31

Week 31: 29 July – 4 August 2013

It was another £3 million+ week with over £3.5 million worth of loans being listed on the marketplace with most loan requests being listed in the A risk band.

New loans

There were 51 new business loans listed last week and there are currently 39 auctions on the marketplace.

The total value of the new listed loans was £3,501,760; that’s an average of £68,661 per loan. The largest loan value was £250,000 and the smallest loan value was £8,500.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The average gross yield graph is reported weekly and shows a rolling two week average. Number of loans, value of loans and secondary market are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 8-Jul represents the week of 22nd – 28th July.

Weekly average gross yield (2 weeks rolling)

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Number of listed loans per week

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Listed loan value per week

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Loan parts currently available to buy from other investors

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Records and milestones

July was the biggest month ever on the marketplace with £14 million being lent out in total during the month. 210 loans were accepted in July which is also the highest amount ever in a month.

News you should know

After the launch of the new minimum bid rates at the end of June, we committed to a monthly review of the rates, with two weeks’ notice before they are adjusted. We will review the rates in the middle of each month and any adjustments to the minimum bid rates will be announced in the corresponding Weekly Lending Review email. The adjusted rates will come into play on the first day of the following month.

The first of these reviews will take place on 15th August and any resultant changes to the rates will be announced in the Weekly Lending Review on Monday 19th August.

Community Discussions

We’re talking about the addition of non-limited loans to the Funding Circle marketplace, have your say here.

Loans defaulted last week

Sacffolding provider. Loan 1273
This business provides commercial and domestic scaffolding from their base in Essex. They had difficulties with cashflow and the business entered into liquidation in July. The original loan amount was £50,000 and all 450 investors have been notified.

Scotland-based off-license. Loan 1433
This business owns two retail off-licences in Caithness and we received notice that the business was in liquidation in June. The orginal loan amount was £25,000 and all 237 investors have been notified.

Enjoy lending, The Funding Circle Team

– See more at: https://www.fundingcircle.com/about-us/our-blog/weekly-lending-review-week-31#sthash.3wXvPHS8.dpuf

5 minutes with… Ed Wray

5 minutes with... Ed Wray, co-founder of Betfair

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As the economic outlook looks set to improve with latest Niesr projections showing GDP growth of 1.2% this year, many businesses will be looking at the future with renewed hope and starting to plan ahead for how to take their business to the next stage.

Whether it is winning a big new contract, exporting overseas or hiring an extra couple of employees, growing a business presents many exciting opportunities but also a few challenges.

We want to help fuel businesses ambitions so we are partnering with some of the UK’s leading entrepreneurs and inviting you to ask them any questions you have about how to take your business to the next level.

First up will be Ed Wray, Angel Investor and co-founder of Betfair. Ed helped build Betfair from a business with two people into the world’s largest internet betting exchange, redesigning how the entire betting market worked. He is now an Angel investor and adviser for a number of growing businesses, including Kabbee and, of course, Funding Circle.

Ed will be answering your questions on what it takes to grow a businesses, so if you have a question about a particular business issue, or simply want to ask Ed about his experiences with Betfair, send us your questions to community@fundingcircle.com.

You have until Friday 23rd of August to submit your question. We will publish the top 10 questions with Ed’s answers here and on the forum.

New business types coming to the Funding Circle marketplace

Over the coming week you’ll see loan requests for new types of businesses listed on the marketplace which will be available for you to lend to. Previously, only limited companies and limited liability partnerships (LLPs) have been able to apply for a business loan through Funding Circle but from this week, you’ll be able to start lending to non-limited companies, in the form of sole traders and partnerships, too.

Why are we doing this?

More than 70% of all businesses in the UK are non-limited, including some partnerships and sole proprietors. By expanding the types of businesses we lend to, we can help support even more enterprises across the UK while offering a greater variety of lending opportunities for investors.

What’s the difference between limited and non-limited companies?

There are two key differences between limited and non-limited companies. Firstly, owners of limited companies are not liable for the debts owed by the business; their personal liability is limited. The owner of a non-limited company on the other hand is liable and has a personal obligation to repay any debts; their personal liability is unlimited. The second key difference is that a limited company is required to file their accounts and key documents at Companies House whereas non-limited companies do not. You can read more about these types of businesses in our help centre.

Who are non-limited companies?

Non-limited companies include professionals such as barristers, doctors and veterinary practitioners as well other business types such as farms. They can look like a limited company, for example by having many employees but may have been formed as a non-limited company many years ago and have evolved since then.

Will there be any other differences between the businesses I’ll lend to?

Non-limited companies must pass very similar qualification criteria to limited companies, in that they are required to have maintained a good credit history, have at least 2 years of accounts & trading history, have no county court judgements (CCJs) over £250 and pass Funding Circle’s full credit assessment. The non-limited companies will be put into the same A+ to C- risk bands as limited companies according to their level of risk and level of expected bad debt.

Non-limited companies will be able to borrow from £25k (vs £5k for limited companies) due to regulatory differences.

How will this affect my lending?

If you’re an Autobid user, there’s nothing you need to do to lend to these businesses via Funding Circle. Your Autobid will automatically include all types of businesses when bidding and buying loan parts.

If you place bids manually, you’ll be able to see the company type on the individual loan request page.

We’re excited to help more small businesses, the backbone of the British economy, with access to finance and we’d love to hear your thoughts on this. You can join the discussion on our community forum.

News

4 top tips for growing your small business from a fellow business owner

In our latest business advice video, Michael Kain, Managing Director of Bramley and Gage, shares with us his 4 top tips for growing a small business. Having taken over his family business, which produces fruit liqueurs, Michael has grown Bramley and Gage from strength to strength by expanding into new product areas. Their 6 O’Clock gin is now supplied in Waitrose stores nationwide, and their fruit liqueurs have won numerous awards.

 His 4 tips are:

  1. Manage your cashflow and know what things cost
  2. Look on eBay to make sure you get the cheapest price
  3. Product development is key
  4. Don’t be afraid to make mistakes – learn from them

Watch the video for more detail on each tip.

Bramley and Gage borrowed £25k in May from 248 people through Funding Circle to buy a new gin still, allowing them to increase capacity. If you’re looking for business finance, find out how your business loan could be funded by people across the UK.

– See more at: https://www.fundingcircle.com/about-us/our-blog/4-top-tips-for-growing-your-small-business-from-a-fellow-business-owner#sthash.3uiakVJK.dpuf