Peer-to-beer: how 451 investors are helping produce craft beer in Hackney

451 investors help produce craft beer

Hackney Brewery was established in 2011 to bring top-quality, locally-produced beer to the thirsty drinkers of London. At the time there were relatively few craft breweries in London, and when business owners Jon Swain and Peter Hills started their venture it was the first brewing company in Hackney since the mid-2000’s.

Jon and Peter have been Hackney locals for well over a decade and love it’s sense of community. Experienced home brewers, they set about creating a range of cask and bottled beers to satisfy a variety of tastes. With 15 years of experience working in pubs between them, they also had a pretty good idea of what makes a great beer.

The brewery produce a range of beers including a Golden Ale, an American Pale Ale and a New Zealand Pale Ale, with the odd guest beer from time to time.The majority of malts they use are from the UK (exceptionally good quality malts come from East Anglia and Scotland), and the hops are sourced from across the world depending on what type of beer is being produced (English hops are good for bitters and American hops for the American Pale Ale). The beers are sold to the East End, London and beyond.

The brewery, which is a London Living Wage employer, employs 8 members of staff including a Head Brewer and a part-time Marketing specialist. Pete explains “sustainability is important to us. It’s important to do things right.” This can be seen in all aspects of the business as they use 100% renewable energy in the brewhouse and even contribute what they can to local registered charities!

Hackney Brewery borrowed £30,000 from 451 investors in May 2015 to buy a new fermenter and increase production. In this picture story, Pete discusses his experience of Funding Circle and you can see the craft beer being produced:

Hackney Brewery investors

Hackney Brewery founded in 2011

Hackney Brewery hopps

Hackney Brewery micro brewing

Hackney top quality beer

Hackney cask and bottle beer

Hackney Brewery London

Hackney brewery bar

Hackney brewery business loan

Hackney thank you investors

Business loan

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October round-up of the marketplace

October was a busy month at Funding Circle: we launched across Europe to help more businesses access finance, you helped 616 UK businesses borrow through the marketplace creating an estimated 1,800 jobs*, and it was the first month with fixed interest rates on all new loans.

charlie image

What are fixed rates?

Fixed rates are where Funding Circle sets the interest rate of a loan, based on a number of factors including the risk band and term of the loan. We wanted to improve the overall experience for our community by moving away from the auction model, to ensure that money is used efficiently, businesses have access to fast finance, and interest rates reflect the risk of a loan rather than liquidity. Now we’re one month in we wanted to share some further analysis into how the funding process has evolved from auctions, and provide more information about the marketplace today.

Money is used efficiently

Certainty of cost is important for business owners as it allows them to budget. Since moving to fixed rates, we can now provide an interest rate and repayment amount to a business before the funding process.

When a business applies for a loan and passes our credit assessment process, they can accept their loan as soon as it has fully funded. Before fixed rates were introduced, approximately 65% of borrowers would leave their auction running for the full 7 days to see whether the interest rate would fall. If you placed a bid at the start of an auction, it could take up to 2 weeks for your money to start earning interest. Now, just 20% of loans stay on the marketplace for the full listing period (typically 7 days).

Reducing the uncertainty of cost has resulted in businesses accepting their loans faster than before. By way of a comparison, the median time (from listing) for a loan to be accepted by a business has halved since introducing fixed rates, from approximately 8 days to 4 days currently, as of 5th November 2015. Committed funds are earning interest faster than before, and businesses are accessing finance faster.

Updates to Autobid

At the start of October loan requests funded very quickly and many of you fed back that it was difficult to research businesses before placing a bid. We have since made an update to how Autobid works and will continue to monitor the funding process.

How have fixed rates affected the secondary market?

The secondary market enables you to buy and sell loan parts with other investors, meaning you can build a diversified portfolio quickly.

Over the past month, liquidity on the secondary market has remained stable. The cohort graph below shows the proportion of loan parts sold which were listed for sale. Approximately 90% of loan parts listed with a discount have sold and 80% of those listed at par. Therefore if you’re looking to sell loan parts, those listed at par or a discount are more likely to be sold.

lps sold nov

Of the property loan parts listed for sale, a lower proportion of them have sold in comparison to business loan parts. This difference can be attributed to the cashback promotion we have been running on property loans. Comparing the lines on both graphs, discounted loan parts are selling for both business and property loans at a similar rate of 90%.

property LPs nov

Are you lending to 100+ businesses?

We also published the latest distribution of returns for Funding Circle investors, at different levels of diversification. You can view these on the statistics page. As of October 1st, 100% of investors who have been lending for at least 1 year and to at least 100 businesses, with no more than 1% lent to each one, are currently earning a positive return**. Read more about diversification and it’s benefits and remember, by lending to businesses your capital is at risk.

Conclusion

We hope this has been a useful summary of how the marketplace has developed since introducing fixed rates. We continue to monitor how loans are funding, and may make small updates to the funding process over the coming months so ensure both investors and borrowers have the best experience possible.

We’re over on the forum talking about this, and we’d love for you to join us there.

The Funding Circle Team

 

*Independent research by Nesta, a government think-tank, found that businesses who receive a loan through Funding Circle employ on average 11 people, and see an average increase in employment of 27 per cent after receiving finance.

 

**The returns shown are based on all 33,616 investors who have been lending for at least 1 year (73.2% of all active investors) and have been at the stated level of diversification for at least 75% of the days they have been lending for. It includes all earnings and is calculated after fees and bad debt but before tax. Investment through Funding Circle involves lending to small and medium sized businesses so your investment can go down as well as up. This data is based off actual returns for people lending for at least 1 year and does not include future expected losses. Remember, past returns are not necessarily a guide to future returns.

 

Catch of the day: fishmonger Nic aims to be London’s best

Last month, we visited local fishmonger La Petite Poissonnerie and met business owners Nic and Zaya Rascle. The husband and wife team run a French and Japanese fusion fishmonger in London which aims to bring together the flair of French cooking and the unique ingenuity of Japanese cuisine. The produce changes daily but is always fresh.

Chef turned fishmonger Nic came to London when he was 20 to learn English, and found himself living behind a fishmonger’s where he offered occasional help. The catering college graduate became passionate about fish and opened his own shop in 2010 specialising in locally and sustainably sourced fresh fish, shellfish and smoked fish.

The couple now have two shops in London and also sell produce wholesale to restaurants. They compliment the fresh fish with a selection of French Epicerie and Wines, and a range of Japanese groceries.

La Petite Poissonnerie borrowed £30,000 through the marketplace in August 2015. The loan was funded by one larger investor, and in the short video below Funding Circle co-founder James Meekings discusses how a diverse range of investors, big and small, is important for the long term sustainability of the marketplace. You can hear more about this in this short video from our recent investor evening.

Click below to meet Nic and see him in action in this 90 second video.  

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More than 12,000 businesses in the UK have accessed finance from the marketplace, helping them with cashflow, refurbishment and much more. Check your eligibility online in just 30 seconds.

Digging into the data: how long does it take to receive recoveries?

Lending to businesses can deliver attractive returns to investors, while helping those businesses access the finance they need to grow. However, from time-to-time some businesses will be unable to repay their loans, which is why diversification is important. When this happens, the time it takes for recoveries to start reaching your account can vary but on average will take around 6 months.

What happens when a business falls behind with their repayments?

When it appears that a business is likely to miss a scheduled monthly repayment, we immediately contact them to understand their financial position and to see if we can help the business get back on track. We keep you updated on the borrower’s status by writing loan comments which are visible in your online account.

If you have any defaulted loans you may have noticed that we apply a RAG (Red, Amber, Green) rating system to help you assess the likelihood of recovery, and we update this RAG rating as we receive new information. Since we brought all of our collections and recoveries processes in-house in February 2014, we have made significant improvements in the number of loans late on their monthly repayments, and the recovery rate for investors.

In this blog we’ve set out some recent analysis in respect of the estimated recoveries and the period of time it takes to repay that money to you. These estimates:

  • are accurate as of 1 November 2015;  
  • are based on 3 months’ cash-flow on defaulted loans for the period August – October 2015, and extrapolated out for a maximum payment plan of 5 years;
  • do not include any interest payable (which we also seek to recover); and
  • give a 0p/£ recovery estimate to any defaulted loans that are in negotiation or in a court action (i.e. where there is no cash-flow). The estimates are on the conservative side, although we are currently collecting data so that all defaulted loans can have an estimated recovery rate at every stage post-default.

How long after a business defaults do I have to wait until I start seeing some recovery?

When a loan is defaulted, the business has usually failed. This is why most of the recoveries we see come through guarantors starting new businesses, realising assets or entering employment and providing us with a fair and affordable payment plan. Sometimes the guarantors will enter a formal insolvency procedure as a result of our enforcement action, action from another creditor or by themselves voluntarily. Unfortunately these options rarely give an immediate material recovery.  

Why is there a difference between actual and estimated recovery rates?

As you can see from the H1 2015 bars, it usually takes around 6 months before we have sufficient cash-flow to estimate a recovery over 5 years of just under 40p/£, and just over a year until the actual recoveries have reached 30p/£. We are still negotiating many of the defaults in 2015 H1, and we expect both the purple and blue bars in the graph below to increase.

Estimated and actual recovery rates by default date cohort

The estimated and actual recovery rate by when the loan was accepted

If we now look at recoveries on defaults by when the loans were accepted, we see that material recoveries of approximately 30p/£ can be expected within 3 years of the accepted date for those defaults, but for the same group the estimate over 5 years is nearer 40p/£. The reason for this is that there are less “new” defaults in older group of loans. New defaults dilute both the actual recovery rate and the estimated recovery rate, but have more impact on the actual recovery rate as there has been less time to build up recoveries.  

Recovery rates by origination cohort

As an aside, in February 2014 we received recovery on only 40% of all defaults.This figure has steadily climbed and reached a peak of 62-63% in April 2015, and has maintained this level since.

Where loans have defaulted, and we have made a recovery, approximately 80% are in payment plans (rather than insolvency procedures). On this basis we believe that defaulted loans that are originated in 2015 will ultimately recover nearer 45-50p/£.

How does the rate of material recovery change over time?

 

Proportion of defaulted loans for which a partial or whole recovery has been made
Conclusion

At Funding Circle we are committed to having the best collections and recoveries process in the industry. We are constantly looking to innovate and use technology to recover as much money as possible for investors, and further improve our communications with you. We always appreciate your feedback, so please feel free to send this to contactus@fundingcircle.com.

Record value of new lending opportunities | Weekly Lending Review

Week 45: 2 – 6 November 2015

We’ve been shortlisted at the Consumer Moneyfacts Awards 2016 for Peer-to-peer Provider of the Year, which helps the public make the most of their money by showcasing the very best products and providers available when looking at their personal finances.

Voting takes a couple of minutes and we’d really appreciate your vote.

Record value of new lending opportunities

There are currently 31 loan requests on the marketplace, and thousands of loan parts available for you to buy.

The total value of new loans listed on the Funding Circle marketplace was £16,188,020 averaging at £73,496 per loan. The largest loan value was £450,000 and the smallest loan value was £5,000.

Business loans available to bid on:

Gross interest rates are before fees and bad debts. Your actual return may be higher or lower as your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 2-Nov represents the week of 2nd – 6th November 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 45 Yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 45 Loans listed

Listed loan value per week

WLR 45 Loan value

Total amount lent

Amount lent

Loan parts available to buy from other investors

WLR 45 Loan parts

Loans defaulted last week

Care service. Loan 3661. Risk band C

This South Ayrshire business has been running since 2004 and ceased trading in August .

Farm. Loan 5826. Risk band D

This County Down business was established in 2014 and has ceased trading.  

Metal workshop. Loan 15188. Risk band C

This Herefordshire business has been running since 2009 and was placed into liquidation in  November.

Audio technology specialists. Loan 8277. Risk band A

This Berkshire business was established in 2009 and is commencing steps to be placed into liquidation.

Creative agency. Loan 4030. Risk band D

This Plymouth business has been running since 2009 and is proposing a Company Voluntary Arrangement.

Online clothing retailer. Loan 1000. Risk band B

This Gloucestershire business was established in 2005 and has consistently failed to make its repayments.

Cycle shop. Loan 11303. Risk band D

This Solihull business has been running since 2010 and is being placed into insolvent liquidation.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans and they will provide you with updates in the loan comments section on your summary page. Read more about how our collections and recoveries process works on our blog.

Enjoy lending, The Funding Circle Team

Funding Circle launches in Europe. October industry news

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Funding Circle launches in Europe in bid to become ‘household name’

Last month we joined forces with Zencap, creating the first truly global marketplace lending platform. Our mission is to help millions of businesses across the world access finance from investors, and this is an exciting step to helping businesses across Europe access the finance they need to grow. The Continental European business in Germany, Spain and the Netherlands will operate separately from Funding Circle in the UK, so there will be no change to your lending experience. In time, we hope that you will be able to lend across borders to further diversify your investment. More coverage can be found in Financial Times, CNBC, City AM, Evening Standard, The Times, Reuters, Business Insider. Read the full story on our blog or you can join the conversation on our forum.

Is this Government bank behind the alternative finance boom?

The Government continues to promote marketplace lending to small businesses through the British Business Bank. The bank has lent £60 million through the Funding Circle platform since 2013, which has helped to raise awareness of the choice business owners now have when they are looking for finance. The role of the British Business Bank funding is to create a stable and diverse platform for our investors, and help more small businesses access finance across the UK.

MPC member highlights increased role of alternative lenders

Monetary Policy Committee member, Ian McCafferty, stated last month that since the financial crisis, there has been a rise in small and medium sized businesses turning to marketplace lending platforms for finance. Although still small in comparison to traditional bank lending, marketplace lending volumes are growing quickly and are becoming increasingly important in helping to close the ‘funding gap’.

Treasury sings praises of peer to peer lenders

MP Harriet Baldwin, speaking at LendIt Europe last month, branded marketplace lending a “brilliantly innovative new form of finance – which we want to see continue to grow and evolve.” The MP for West Worcestershire said she’s proud the UK has the largest alternative finance sector in Europe, and highlighted the introduction of a third ISA which will allow investors to hold lending through marketplaces, such as Funding Circle, within an ISA from 6th April 2016.

Cameron to announce affordable housing starter homes

Last month, at the Conservative Party Conference in Manchester, David Cameron launched a housing ‘crusade’ announcing the Government wishes to help build 200,000 new homes by 2020 to combat the UK’s housing shortage. Following the announcement, Head of Real Estate Finance at Funding Circle, Luke Jooste, stressed the importance of financing smaller property developers to meet the growing demand. Coverage also seen in Architects Journal and Property Wire.

Funding Circle investors hit £100m lending mark

The Funding Circle Property Team also announced that you have facilitated £100 million in property loans through the marketplace, helping established developers to build over 600 new homes across the country. You can read more about this property milestone in Mortgage Introducer and Best Advice.

News

How 634 investors are helping refurbish a Northampton hairdresser | Weekly Lending Review

Week 44: 26 – 30 October 2015

Lara Boot Hairdressing is a highly passionate and professional unisex hair salon based in a residential area of Northampton. Business owner Lara has been working in the industry for 22 years, and borrowed £35,000 through the Funding Circle marketplace to expand the salon and create a modern environment for her team and clients. In our latest picture story you can see how the renovation work is progressing.

New loans available to you

There are currently 32 loan requests on the marketplace, and thousands of loan parts available for you to buy.

The total value of new loans listed on the Funding Circle marketplace was £13,050,120 averaging at £73,730 per loan. The largest loan value was £400,000 and the smallest loan value was £5,000.

Business loans available to bid on:

Gross interest rates are before fees and bad debts. Your actual return may be higher or lower as your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 26-Oct represents the week of 26th – 30th October 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

Yield WLR 44

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 44 loans listed

Listed loan value per week

WLR 44 Loan value

Total amount lent

WLR 44 Amount lent

Loan parts available to buy from other investors

WLR 44 loan parts

Do you have any technical questions for us?

Post your questions on the forum by 6th November, and our VP of engineering will answer them.

Loans defaulted last week

Pallet deliveries. Loan 1728. Risk band C

This Northumberland business was established in 1984 and has been placed in administration.

Printers. Loan 9676. Risk band A

This Greater Manchester business has been running since 2002 and has been placed into creditors’ voluntary liquidation.

Convenience store. Loan 7889. Risk band D

This Surrey business was established in 2010 and the borrower has become unresponsive.

Online gift shop. Loan 7019. Risk band D

This Lincolnshire business has been running since 2011 and is being placed into creditors’ voluntary liquidation.

Accommodation marketplace. Loan 11474. Risk band C

This London business was established in 2012 and ceased trading on 7 August 2015.

Chain of coffee shops. Loan 3693. Risk band B

This Shropshire business has been running since 1991 and the guarantor is in the process of declaring bankruptcy.

Recycling engineers. Loan 926. Risk band C

This Cheshire business was established in 2004 has continually failed to make its repayments on time.

Nursing home. Loan 4108. Risk band A

This Yorkshire business has been running since 1985 and the directors have commenced steps to place the company into liquidation.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans and they will provide you with updates in the loan comments section on your summary page. Read more about how our collections and recoveries process works on our blog.

Enjoy lending, The Funding Circle Team

 

Picture story: Are you helping to refurbish a hairdresser in Northampton?

Lara Boot Hairdressing is a highly passionate and professional unisex hair salon based in a residential area of Northampton. Business owner Lara always wanted to be a hairdresser. She has been working in the industry for 22 years and believes the key to a successful business is investing in her 15 staff.

We asked Lara about fashion trends in hair and the most popular styles. ‘My favourite hairstyle would have to be a classic bob, as it suits a variety of face shapes. However, the requests in the salon change depending on what’s in fashion and the time of year, although recently the pixie crop (a la Frankie Sandford from The Saturdays) has been a popular choice.’

If you’re looking to add shine or for something slightly more bold and vibrant, Lara’s salon has the products, techniques and knowledge to help. They welcome 60 customers into the salon each day!

Lara Boot Hairdressing borrowed £35,000 from over 600 investors in March 2014 to expand the salon and create a modern environment for the team and their clients. She is part way through this process and the re-fit will be completed in mid November.

In this picture story below, Lara discusses her experience of Funding Circle and you can see how the renovation work in the salon is progressing:

Lara Boot cover

Lara Boot hairdresser outside

Lara Boot reputation

Lara Boot hairdressing industry

Lara Boot hairdresser clients staff

Lara Boot hairdressing training

Lara Boot hairdressing fashion

Lara Boot hairdressing refit salon

Lara Boot hairdressing thank you

Lara Boot Hairdressing apply

Do you need a business loan? We’ve helped more than 12,000 businesses in the UK and US access finance. You can check if you’re eligible for a business loan online in just 30 seconds.

We’ve launched in Europe! | Weekly Lending Review

Week 43: 19 – 23 October 2015

We’re excited to announce that Funding Circle has expanded into Germany, Spain and the Netherlands to help millions of businesses across Europe access finance. You can read about the news here or watch this short video.

We’re excited to help more businesses access finance, although due to regulatory differences in each country, lending for UK investors is currently restricted to UK businesses.

New loans available to you

There are currently 30 loan requests on the marketplace, and thousands of loan parts available for you to buy.

The total value of new loans listed on the Funding Circle marketplace was £11,709,360 averaging at £73,656 per loan. The largest loan value was £460,000 and the smallest loan value was £5,000.

Business loans available to bid on:

Loan parts available for you to buy:

Your actual return may be higher or lower as by lending to businesses, your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 19-Oct represents the week of 19th – 23rd October 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

Yield WLR 43

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

Loans listed WLR 43
Listed loan value per week

Loan value WLR 43

Total amount lent

Amount lent WLR 43

Loan parts available to buy from other investors

Loan parts WLR 43

News you should know

Updates to how Autobid works

Over the coming weeks we will make a change to how Autobid works, helping to provide more time for those who want to research a business before placing a bid. No action is needed if you are a current Autobid user.

Going forward, Autobid will fund up to 50% of the available loan after a loan is listed, and if the loan does not reach 100% within the first 2 days the Autobid cap will be removed completely.

Things we’re talking about

We’re on-hand to talk about the move to fixed rates on the forum. You can join the conversation here.

Loans defaulted last week

Ground source heating supplier. Loan 5535. Risk band C

This Stafford business has been running since 2007 and is likely to enter a formal insolvency process in the coming weeks.

Aerospace specialists. Loan 10159. Risk band A

This Monmouthshire business was established in 2006 and has ceased trading.

Engineering consultancy. Loan 4478. Risk band A+

This Cumbria business has been running since 2004 and is consulting a debt charity.

Project management company. Loan 11517. Risk band C

This Country Durham business was established in 2003 and has been unable to make repayments since June.

Legal practice. Loan 5940.  Risk band A

This Devon business has been running since 2009 and has been unable to repay the agreed three-month payment plan.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans and they will provide you with updates in the loan comments section on your summary page. Read more about how our collections and recoveries process works on our blog.

Enjoy lending, The Funding Circle Team

Tips for positioning your company for successful expansion (part two)

There’s no doubt that UK small businesses are driving economic growth. Research from the Centre for Economics and Business Research found that although high-growth small businesses represent just 1% of UK businesses and only 3.4% of the total UK economy, they generated 36% of UK economic growth in 2014 and created two in three new jobs (68%) between 2012 and 2013. The key, however, is in making sure your company’s growth is sustainable.

In this 2-part series we’ve been looking at 6 steps to ensure you have the infrastructure in place to expand effectively and sustainably. The first 3 steps outlined in our previous post were to articulate your brand and proposition, define your universe of new prospects and get a customer database. The final 3 steps are outlined below:

Generate awareness of your company and your offering

The biggest problem small businesses have when expanding is that no one in the new market knows you. LinkedIn conducted research on the sales cycle and found that just 2% of sales are made on the first contact with a company, whereas 80% of sales are made by the 12th contact. This shows that there are a myriad of different touch points within the purchasing process, and you need to be there at as many as possible.

Those touch points could be reading a story about you in a trade magazine, reading a white paper from your website, or seeing a post on an industry LinkedIn group. All this activity helps position your company as an authority, which psychology research has found to be a key influence on human behaviour (and therefore purchasing decisions).

Once there is awareness in the market, lead generation activity becomes easier and more cost effective.

Put cost-effective lead generation activity in place

Once you’ve defined your universe, you’ll be able to determine the most effective lead generation channels for the different people involved in the decision making process. Do purchasing managers search for suppliers on Google? If so, you need to make sure you’re on the first page of search results. The number one position in Google’s search results receives 18.2% of all click-through traffic. The second position receives 10.1%, the third 7.2%, the fourth 4.8% and all others are under 2%.

Do key managers spend lots of time away from their desk? In that case, email marketing may be more effective than direct mail or telesales.

The key is to think about all of the potential touch points and cover as many of them as possible, always measuring your activity so you can refine your approach and dedicate your resource to what is most effective.

Love your customers to death

The classic 80/20 rule says that 80% of a company’s future revenue will come from 20% of its existing customers. It is particularly important to nurture your existing customers when undertaking expansion, because you don’t want to expand at the expense of retention.

You need to make sure you have the infrastructure – be it distribution, customer service, logistics, production – to serve the customers your sales team converts. And then you need to keep them engaged so that they buy from you again.

From streamlining the quotation, ordering and deliver paperwork through to service level agreements on queries and regular customer newsletters, you need to take every opportunity to show customers you value their business and want to be a long-term partner.

Taking the time to make sure you have the right fundamentals in place will ensure you are targeting the right prospects, appealing to your current customers, using the most cost effective lead generation channels and are ultimately on the right route to achieving sustained growth that will stand the test of time.

We hope this 2-part series has been helpful in positioning your business for expansion. Let us know what you want to find out in our next business tips post in the comments section below.

By Tim Witcherley, Cognition Agency

You read more marketing tips by downloading any of Cognition’s free eguides.

Cognition is a full-service marketing agency and a Funding Circle borrower. It’s known for its commercial approach, linking marketing activity to revenue and growth.

If you’re interested in taking out a Funding Circle business loan, you can apply online at anytime.

 

Funding Circle launches across Europe to help more small business access finance

Today we’re excited to announce that we’re joining forces with Zencap, to create the first truly global marketplace lending platform and to help millions of businesses across Europe access finance.

charlie image

Zencap currently operates in Germany, Spain and the Netherlands, and has experienced strong growth over the past 18 months with more than €35 million lent to 520 businesses. They are Continental Europe’s leading marketplace for small business loans and will now operate as Funding Circle across Europe.

Together as one business we combine their established home grown team and local knowledge, with our experience and innovative technology. The European business will operate separately from Funding Circle in the UK, so there will be no change to your lending experience; investors based in the UK will continue to lend to businesses in only the UK. 

Since launching in the UK in 2010, the Funding Circle marketplace has helped 12,000 businesses access more than $1.5 billion of finance in the UK and US. We’re excited to be taking this technology to Europe, so we can help businesses borrow in a faster and more efficient way whilst giving investors the opportunity to make a return on their money.

Commenting on today’s news, Samir Desai CEO and co-founder of Funding Circle said: “Our vision is to help millions of businesses across the world sidestep the outdated and inefficient banking system and borrow from investors. Today’s news is the next exciting stage of this journey. We have been hugely impressed with what the Zencap team have achieved so far. By coming together we combine Funding Circle’s leading position in the UK and US with Zencap’s deep understanding of local markets to create the first truly global marketplace lending platform.”

Today’s news is the next step towards a global revolution in the way small businesses access finance. We’re over on the forum talking about this, so please do join the conversation.

The Funding Circle team

News

No tricks, just treats | Weekly Lending Review

Week 42: 12 – 16 October 2015

Halloween’s approaching, but don’t be afraid. We’ve put together a list of ideas to make sure your friends and family have a frighteningly fun time. Read our guide to a spooky Halloween on the blog.

New loans available to you

There are currently 33 loan requests on the marketplace, and thousands of loan parts available for you to buy.

The total value of new loans listed on the Funding Circle marketplace was £13,839,260 averaging at £83,145 per loan. The largest loan value was £463,000 and the smallest loan value was £6,000.

Business loans available to bid on:

Loan parts available for you to buy:

Your actual return may be higher or lower as by lending to businesses, your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 12-Oct represents the week of 12th – 16th October 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)
Yield WLR 42

 

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

Loans listed WLR 42

Listed loan value per week

Loan value WLR 42

Total amount lent

Amount lent WLR 42

Loan parts available to buy from other investors

Loan parts WLR 42

News you should know

We’re always keen to hear your feedback

Would you be happy to provide a testimonial about your experience of Funding Circle? Provide feedback in just a couple of minutes by clicking here.

Things we’re talking about

We’re on-hand to talk about the move to fixed rates on the forum. You can join the conversation here.

Loans defaulted last week

Night club. Loan 2970. Risk band C

This Oxfordshire business has been running since 2006 and has proposed a Company Voluntary Arrangement.

Garage. Loan 10070. Risk band A

This Derbyshire business was established in 2005 and is being placed into Creditors Voluntary Liquidation.

Online bookshop. Loan 3133. Risk band C

This Surrey business has been running since 2008 and has been placed into Creditors Voluntary Liquidation.

Marketing agency. Loan 7170. Risk band A

This London business was established in 2005 and is being placed into insolvent liquidation.

Convenience store. Loan 9128. Risk band C

This East Sussex business has been running since 2003 and has proposed a Company Voluntary Arrangement.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans and they will provide you with updates in the loan comments section on your summary page. Read more about how our collections and recoveries process works on our blog.

Enjoy lending, The Funding Circle Team

Fixed interest rate roundup and an interview with a borrower in The Times | Weekly Lending Review

Week 41: 5 – 9 October 2015

Fixed interest rates have been on the marketplace for just over two weeks since launching on Monday 28th September, so we wanted to share some initial insights into the trends we’re seeing on the marketplace which you can read about on the blog.

Thank you to everyone who has provided feedback. If you have any additional questions you can join us on the forum or send us an email: contactus@fundingcircle.com

New loans available to you

There are currently 30 loan requests on the marketplace, and thousands of loan parts available for you to buy.

The total value of new loans listed on the Funding Circle marketplace was £12,277,540 averaging at £75,704 per loan. The largest loan value was £415,000 and the smallest loan value was £5,160.

Business loans available to bid on:

Loan parts available for you to buy:

Your actual return may be higher or lower as by lending to businesses, your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 5-Oct represents the week of 5th – 9th October 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

yield WLR 41

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

loans listed WLR 41

Listed loan value per week

loan value WLR 41

Total amount lent

Amount lent WLR 41

Loan parts available to buy from other investors

loan parts WLR 41

News you should know

September industry news

The Times interviewed borrower Verto Homes, who are building 21 environmentally friendly family homes in Cornwall, and Funding Circle was ranked No. 1 in Business Insider’s 17 hottest fintech companies in Britain. Read our roundup of last month’s industry news on the blog.

Things we’re talking about

Trick or Treat?

Halloween’s approaching, but don’t be afraid. We’ve put together a list of ideas to make sure your friends and family have a frighteningly good time. Pick your poison on the blog.

Loans defaulted last week

Home insulation specialists. Loan 10851. Risk band A+

This Manchester business has been running since 2003 and is looking to be placed into creditors voluntary liquidation.

Food wholesaler. Loan 1368. Risk band A

This London business was established in 2006 and the borrower has become unresponsive.

Bus service operator. Loan 11003. Risk band D

This Glasgow business has been running since 2010 and ceased trading on 26 July 2015.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans and they will provide you with updates in the loan comments section on your summary page. Read more about how our collections and recoveries process works on our blog.
Enjoy lending, The Funding Circle Team

Trick or treat? Funding Circle’s guide to a spooky Halloween

Halloween’s approaching, but don’t be afraid. We’ve put together a list of ideas to make sure your friends and family have a frighteningly fun time.

Pick your poison

Specialists in fair-trade family treats, York based Choc Affair, who borrowed £60,000 in 2013, have a range of Halloween chocolates great for kids and grown-ups alike! We like the look of their Chocolate Skull Lolly, made with delicious creamy milk or white chocolate.

Hopping popping frog chocolateOr there’s the creatively creepy Hopping Popping Frogs from James Chocolates in Somerset, who borrowed £60,000 through the marketplace in 2014. They’re hand-painted and should surprise your guests with delicious popping candy. We recommend just biting their heads off!

Pumpkin perfection

Whether you’re a seasoned professional or a frightened first timer, pumpkins and Halloween go hand in hand. Why not carve a pumpkin that will make your neighbours jealous, and help the community, by purchasing through family-run business Annie’s Fruit Shop (Who borrowed over £30,000 in October 2015). While you’re at it why not order some bobbing apples too…

Ghoulish gowns and other fancy dress

Utopia halloween fangsUtopia Costumes borrowed £30,000 in 2014 and is one of the UK’s leading suppliers of theatrical costumes for professional and amateur stage shows! Based in Scotland, they have a range of Halloween goodies, including masks, scars, teeth and wigs, to help make you look gruesome.

Or try something wicked from Sensible Supplies, an Aladdin’s cave full of goodies, including sweets and decorations. They stock over 700 different Halloween costumes and we visited them back in 2013:

Not a trick or treater?

If you’re looking to keep your eerie efforts more low key, why not fill your home with seasonal flowers? Combined florist and gift shop, The Flower Emporium in Stockport, who borrowed £5,000 in September 2015 to refurbish, have a beautiful range of seasonal bouquets more likely to delight than fright.

Are you interested in lending to businesses?

Support small businesses in the UK and you can earn a great return. It takes minutes to sign up online and you can use our investor information guide to help you get started. We have thousands of loans which you can be a part of, making it quick and easy to build a diversified portfolio. Remember, by lending to businesses your capital is at risk.

Does your business need finance?

We’ve helped more than 12,000 businesses in both the UK and US access finance. You can apply online in less than 10 minutes and check your business’ eligibility in 30 seconds.

Enjoy Lending. The Funding Circle Team

 

A roundup of the first week with fixed interest rates

Fixed interest rates have been on the marketplace for just over a week since launching on Monday 28th September, so we wanted to share some initial insights into the trends we’re seeing. Many of you have asked for some details about how the first week has been, so we hope you find the below useful.

Highlights

1) You helped 175 businesses across the UK access finance last week and £6.3 million of new fixed rate loans were listed on the partial loans marketplace.

2) 8 businesses had their loans listed and accepted in one day, meaning committed funds are being used efficiently and businesses are accessing loans faster than before.

3) Secondary market liquidity has increased with more loan parts selling, as a proportion of those listed, than previous weeks.

Speed of funding loans on the primary market

Before launching fixed rates we expected the average time taken for loans to fund to decrease. Last week, many of you will have seen loan requests filling particularly quickly, which was mainly caused by an increase in available funds and fewer loans available to lend to:

1) In the week before fixed interest rates launched, £5.4 million of loans were listed on the partial marketplace, compared to £6 million and £6.3 million listed in the previous 2 weeks. This created more available funds for the week commencing 28th September, contributing to loans filling quickly.

2) A small number of investor accounts were filling a high proportion of loans in the opening minutes of a loan request. This activity breaches our terms and conditions, as there is a  20% funding limit in place for each loan.

The median time to fund loans increased as the week progressed, from 1 hour on Monday, when an electronics company in Nottingham had their vehicle loan fund in just one minute, to 26 hours on Friday.

Whilst we want the marketplace to help businesses with fast access to finance, we recognise that some investors want time to carry out their own research. We’re working to strike a balance between fast access to finance and time for due diligence as we move forward.

How have fixed rates affected the secondary market?

The secondary market enables you to buy and sell loan parts with other investors, meaning you can build a diversified portfolio quickly.   

Over the past week and since fixed rates have launched, liquidity on the secondary market has increased with 94% of business loan parts sold when listed at par, 80% of loan parts sold with a discount and 45% sold with a premium, excluding property loan parts. This is based on the number of loan parts listed and sold in each week.

We’ve also seen a sustained rise in the proportion of loan parts sold at a discount since the beginning of September, further improving liquidity for you. Autobid has been updated so it can buy loan parts listed at a discount, and the maximum discount available when selling loan parts has also been increased from 3% to 20%.

LPs sold

What about property?

A lower proportion of property loan parts have sold during this period in comparison to business loan parts and this difference can be attributed to the cashback promotion we have been running on property loans. Comparing the lines on both graphs, discounted loan parts are selling for both business and property loans at a similar rate of 80%.

property LPs

Buyer rates on the secondary market

The weighted average buyer rates for loan parts which are currently on the secondary market are listed below, shown beside the current fixed interest rates on the primary market. These are gross interest rates, before fees and estimated bad debts and data is correct as of 5th October. Your actual return may be higher or lower as your capital is at risk.

primvssec

Conclusion

We hope the information provided has been a useful snapshot of the marketplace today, a week and half since launching fixed interest rates for new loans. We are working to strike a balance between the experience of both investors and borrowers, so we will continue to monitor the speed of loans funding and take steps to ensure time is given to review lending opportunities.

The current funding process has proved to be more efficient than before, and we hope you see the benefits of your money working harder for you soon.

We’re over on the forum to help answer any further questions you have.

The Funding Circle team

Did you lend to Verto Homes? September industry news

Newspapers - Copy

EIB turns to peer-to-peer lending for UK companies

Top notch coverage in the Financial Times last week as the European Investment Bank discussed their plans to work with us. They are preparing to lend £100 million through our platform, and believe our model is a dynamic way to channel government-backed funds for small businesses. The EIB were quoted saying: “This is an interesting direct model for supporting small businesses, which has the potential to be quite efficient”.

Smart housebuilders stand out from the crowd

In this article, Kathryn Hopkins discusses the battle with the banks as a house building business, Verto, struggled to access finance quickly in order to build homes in Newquay. After turning to Funding Circle, it took only three weeks to secure their first loan, and they are now building 21 homes in the area. To date, your lending in the property sector has mainly gone towards funding residential developers, such as Verto Homes, who specialise in building eco-homes in Cornwall. Read more about these types of loans on our blog.

Funding Circle, H&R Block partner to offer loans to small businesses

Across the pond, we announced an exciting new partnership with Block Small Business, giving thousands more small American businesses greater access to finance. Our agreement will mean that Block Small Business will refer small business clients looking for finance to Funding Circle. We believe that by working in partnership, we can help more small businesses grow, and bring investors more lending opportunities on the marketplace. More coverage found here.

Four funds advisers tip for a retirement income portfolio

Following the new pension freedoms introduced earlier this year, pensioners now have many different ways to maximise their retirement income, depending on what they want to achieve. This interesting article from the Telegraph looks at the ‘drawdown’ route and examines different types of funds available. Alongside these funds, marketplace lending is listed as another option to earn an attractive return.

The 17 hottest fintech companies in Britain ranked

And finally, Funding Circle was ranked as one of the hottest fintech companies in Britain. We are very pleased to have this recognition, as it means we are truly making a difference to investors and small businesses across the UK, and it’s all thanks to your lending. We were also spotted on the Tech Track rank list, which you can read here.

News

Did you help 175 businesses access finance last week? | Weekly Lending Review

Week 40: 28 September – 2 October 2015

Last week, you and other investors helped 175 businesses across the UK access £12.3 million through the Funding Circle marketplace. Of the new loans listed, the South-East was the most popular business location, and property & construction was the most popular sector.

New loans available to you

There are currently 32 loan requests on the marketplace, and thousands of loan parts available for you to buy.

The total value of new loans listed on the Funding Circle marketplace was £11,807,640 averaging at £70,485 per loan. The largest loan value was £490,000 and the smallest loan value was £5,000.

Business loans available to bid on:

Loan parts available for you to buy:

Your actual return may be higher or lower as your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 28-Sept represents the week of 28th September – 2nd October 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

Yield WLR 40

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

Loans listed WLR 40

Listed loan value per week

Loan value WLR 40

Total amount lent

Amount lent WLR 40

Loan parts available to buy from other investors

Loan parts WLR 40

Loans defaulted last week

Swimming pool installations. Loan 10763. Risk band B

This Glasgow business has been running since 1995 and was placed into compulsory liquidation on 24 August 2015.

Energy efficient combi-boiler installers. Loan 9218. Risk band B

This Dundee business was established in 2011 and has breached terms within their loan contract.

Plant hire. Loan 7687. Risk band B

This Essex business has been running since 2001 and was placed into administration on 24 August 2015.

Synthetic ceramic specialists. Loan 480. Risk band B

This Kent business was established in 1990 and was placed into administration on 9 April 2015.

Online retailer. Loan 1706. Risk band C

This Lancashire business has been running since 2009 and the guarantors have instructed a debt charity.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works on our blog.

Enjoy lending, The Funding Circle Team

Summary from our September investor evening

On Thursday 17th September we welcomed 60 investors to our office in London, to talk about the decision to move to fixed interest rates for new loans. We filmed the whole event, so those unable to attend could hear what was discussed.

Since announcing our intention to make this change we’ve received a great deal of feedback, so thank you to all of you for taking the time to give us your thoughts. We have answered some of your key questions on the blog, and used these questions as the focus for the evening.

We’ve put together a 5 minute highlight videos below of the key points discussed. You’ll hear from co-founders Samir Desai, James Meekings and Andrew Mullinger, and from Tom Eilon who works on special projects.

You can watch the whole event in the video below. The team answered questions throughout the evening rather than having a Q&A section at the end and the key points have been noted below. Unfortunately the sound was not good during the first 5 minutes, but levels out after. The whole filmed event lasted for appox. 2 hours.

Key moments can be found at the following times:

0 – 0.05 hours Introduction

0:05 – 0.12 hours Why we’re moving from an auction model

0:12 – 0.22 hours Answers to some of the most popular questions we’ve received.

These include, “How is Funding Circle different to a bank?”, “How will the rates be set?”, “How can you manage loans filling quickly?” and “ What about secondary market liquidity?”

0:22 – 0:25 How are rates set and what returns can investors expect?

0:37 – 0:40 Diversification

0:40 Lending to small businesses in the US

0:46 and 0:58 – 1:00 Autobid

0:49 – 0:57 What will happen to the Q&A with borrowers?

1:00 – 1:04 How are we attracting more businesses to Funding Circle?

1:04 – 1.15 Risk management and loan performance

1.26 – 1.29 Looking ahead

We will post a roundup of our first week with fixed interest rates in the coming days, and hope you enjoy the video. 

If you have any questions about fixed interest rates, please get in touch and we’ll be happy to help or you can join us on the forum.

The Funding Circle team

Tips for positioning your company for successful expansion (part one)

There’s no doubt that UK small businesses are driving economic growth. Research from the Centre for Economics and Business Research found that although high-growth small businesses represent just 1% of UK businesses and only 3.4% of the total UK economy, they generated 36% of UK economic growth in 2014 and created two in three new jobs (68%) between 2012 and 2013.

The key, however, is in making sure your company’s growth is sustainable. It requires a proactive and strategic approach to expansion, so you outperform market trends and smash the competition, but without overextending your resources or reducing the service levels you provide.

There’s no point in your sales team winning lots of new business if you don’t have the infrastructure to service and retain it. Research by Mintel revealed businesses that approach marketing by building the proper foundation see a 42% increase in effectiveness and return on investment.

In this blog (part one) and the next (part two) we’ll be looking at 6 steps to ensure you have the infrastructure in place to expand effectively and sustainably. The first 3 steps are:

Articulate your brand and proposition

Does what you say about yourself reflect your future business? If your company has relied on organic growth, chances are your branding hasn’t evolved to keep pace with the change. It’s very common for high-growth small businesses to have a logo, visual identity and key messages that are out of date.

The problem with this scenario is that your first impression (such as your website, brochure, etc) doesn’t reflect who you actually are. You therefore find yourself in situations where prospects will say to your sales people, ‘I had no idea you did all that from looking at your website.’ And there will be prospects who you never meet, or never know anything about, because your brand and proposition doesn’t reflect how you help customers achieve their goals or overcome their challenges.

In many cases, there will be new players that look and sound better than you, even though you know they offer an inferior product or service.

Thus, when you’re preparing for expansion you need to make sure your brand communicates the story you want to tell, so that you resonate with a target audience that knows nothing about you and is going to be comparing you to an incumbent or other potential suppliers. (For tips on how to make an impact on customers and stand out from the competition, download Cognition’s guide, ‘Creating a Brand.’ )

Define your universe of new prospects

To expand successfully you need to fill in the detail between knowing there’s a big untapped market out there and knowing who the specific companies and decision makers are that will help make that expansion a reality.

Let’s take an example of a Midlands-based manufacturer. You have a solid book of repeat orders for your widget and you’re selling them into the key Midlands original equipment manufacturers, to the point where you’ve saturated the region. The next logical step is to expand beyond the Midlands, because you know there’s business to be had nationally. But who do you approach first?

This is where good market intelligence is worth its weight in gold. Rather than going for a scattergun approach, the right data enables you to target your sales and marketing resource to where the likeliest prospects are, so you can focus on those who will offer your business the greatest lifetime value. (For more information on defining your customers, read Cognition’s blog, ‘4 steps to ensure you have the right customers.’)

Taking our manufacturer example, an analysis of registered companies and their finances might show there is a high concentration of original equipment manufacturers taking on new projects in the North West, but that those projects are driven by public grants and have long procurement processes. As a result, you might be better off targeting smaller companies in Yorkshire that will be purchasing lower volumes, but will give you a lower cost of sale and more repeat business.

Get a customer database

Once you know your universe, you need to have the IT infrastructure in place to track your sales and marketing activity. That comes in the form of a Customer Relationship Management (CRM) system. There are lots of systems out there with a range of functionality. The important thing is that you have a way of tracking the people you have contact with, and how they interact with your sales and marketing.

Think of your CRM system as a barrel. Once you’ve identified your universe, you get the contact details for the decision makers at all the prospect companies and put them in that barrel. You can target them with the right message at the right time, so that the greatest possible proportion of those contacts convert into customers.

What’s next?

We hope this has been helpful in understanding the first steps to positioning your company for successful expansion. Stay tuned for the next installment where we’ll run through generating awareness of your business, putting cost-effective lead generation activity in place and loving your customers to death.

By Tim Witcherley, Cognition Agency

You read more marketing tips by downloading any of Cognition’s free eguides.

Cognition is a full-service marketing agency and a Funding Circle borrower. It’s known for its commercial approach, linking marketing activity to revenue and growth.

If you’re interested in taking out a Funding Circle business loan, you can apply online at anytime.

Picture story: Marvellous millinery, thanks to more than 2,000 investors

Husband and wife team, Alex and Zofia Torun-Shaw set up Laird Hatters in 2008, looking to offer an antidote to the usual homogeneous high street. Purveyors of stylish headwear, the couple sell an assortment of hats and caps, including brightly-coloured trilbies and caps in a range of tweeds from Lovat; Harris and Donegal.

There are now six Laird shops from Covent Garden to Cambridge, and a luxury store in the City. The couple pride themselves on each shop being an unstuffy, friendly place to buy quality and affordable headwear. Alex says ‘We have customers popping in for a chat and that tells us we’ve got it right.’

Laird Hatters has borrowed £140,000, across two business loans, from more than 2,000 Funding Circle investors to expand their range of handmade hats and caps. In June we met Alex and Zofia to find out how the loan has helped their business.

In this picture story below, Alex and Zofia discuss their experience of Funding Circle.

Laird new hat shop

Laird husband and wife

Laird traditional hat

Laird high street

Laird London College of Fashion

Laird stores

Laird two business loans

Laird thank you investors

Laird 2 years criteria

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