Funding Circle turns out to be proper rubbish!
- Thread starter Geoff T
- Start date
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businessfunding
Don't post after the pub
The point I was making is that crowd funding is actually a consensus, so if it got listed and only raised £25K then that is the view of 'the market'
On the other hand, if that was pre-underwrite feedback it is just the view of Funding Circle. I recently raised £150K crowd loan for a company which Funding Circle ceilinged at £50K
If this is an invention or new product to the market it is important to understand how the cashflow will work as there will typically be a delay - hence equity might be a better option
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I'm such a grump this morning but actually I read this post and thought ... "Good! I'm glad that funding for 90k wasn't so easy for someone who isn't prepared to put their house up as security".
I might be being a bit of a misery but surely irresponsible lending is what caused the credit crunch in the first place.
I'd like to see this person have a choice of either a) use the £25k wisely and be a bit more creative with organic/self-funding growth plans or b) put up their house so they are more committed to making it work
I might be being a bit of a misery but surely irresponsible lending is what caused the credit crunch in the first place.
I'd like to see this person have a choice of either a) use the £25k wisely and be a bit more creative with organic/self-funding growth plans or b) put up their house so they are more committed to making it work
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Yeah, makes sense, but its neither here or there. if you have a PG you would have to sell the house (potentially) to make up any monies owed under the PG.
On FC you need to specify whether a guarantee is available - if not you are lucky to get any sort of investment at all. To date I not seen a single listing without a guarantee being offered.
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businessfunding
Although the terminology is confusing unsecured loans will always be supported by PGs. Other than for public companies
I half agree with Maxine - it is alwAys an interesting conversation. We are guessing slightly but this appears to be an established and successful business which is adding a new dimension, so a charge might be ioverkill.
I half agree with Maxine - it is alwAys an interesting conversation. We are guessing slightly but this appears to be an established and successful business which is adding a new dimension, so a charge might be ioverkill.
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I'm such a grump this morning but actually I read this post and thought ... "Good! I'm glad that funding for 90k wasn't so easy for someone who isn't prepared to put their house up as security".
I might be being a bit of a misery but surely irresponsible lending is what caused the credit crunch in the first place.
I'd like to see this person have a choice of either a) use the £25k wisely and be a bit more creative with organic/self-funding growth plans or b) put up their house so they are more committed to making it work
Aye but when the loan is spread thinly over a few thousand people, does that soften the blow if it goes Pete Tong?
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I think you need a business with 2-3 years worth of accounts and a minimum turnover of £100,000 to be listed on there.
I understand the frustration. Some will argue its neither here or there... if I am lending someone £90k, £45k or £30k etc I would demand their house as security... as would all sensible investors... but FC includes people offering as little as £20 and encourages people the 1% rule (i.e. invest in 100 not a few businesses). Therefore, depending on the bidding, most are not serious investors but people taking a punt to contribute into the loan... for a few thousand pounds or under I think its silly to be requesting guarantees especially on property.
Others will argue it doesn't matter if you are investing in whole or part (i.e. a syndicate/consortium) there should be security behind the loan. I think when you are considering lending money as a punt in small amounts you must take the full risk. If you are insecure then don't invest. You obviously do not think the business is worthwhile.
This is the problem with investment entrepreneurs face - investors do not want to waste their time on making too small investments, banks are banks (need no introduction on their lending practices) and you now have the new-ish crowd funding methods where ordinary people invest small amounts of money suitable for small projects.
Companies like FC is for gluing them together so they can make bigger loans collectively; but the concept doesn't entirely work, FC has no money of their own to invest and its a very poor method of getting investment, as FC themselves encourages these small time investors (in the grand scheme of things) not to invest in a few worthwhile projects wholeheartedly, but to spread widely and thinly amongst many different businesses (they suggest around 100) to ensure their own agenda where no one pitches a business and gets no offers which would make FC looks cr@p.
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It's the attitude to funding that get's me sometimes - as if that magic number on a forecast is absolutely do or die in terms of getting a business of the ground and there's no alternative or compromise to having 100% of funding before anything can happen.
I work in direct marketing and over the last few years I have seen lots of different types of people and businesses come and go. The ones who make it work are the ones to will make the most of what they have / can get even if it's short of their ideal.
The ones who I personally have seen set up limited companies, borrow as much as possible with lesser commitment tend to faff about with business plans and are quick to blame everyone else when the sales targets aren't met or the operational side doesn't deliver the margin that's been predicted and low and behold the business fizzles out
But maybe I have read this thread wrong if it's an established, low risk, profitable business looking to expand
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But maybe I have read this thread wrong if it's an established, low risk, profitable business looking to expand
If that is the case then there are probably alternative avenues open for finance
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businessfunding
Me numbers - you are right, the bar to get into a crowd lender is pretty high - typically 2 years filed accounts, no losses solvent and turnover >£100k. Though in this case it isn't clear whether money has been offered or funding circle have given a verbal indication of what they will list. For various reasons I would guess the latter
It is flawed to suggest that small investors are taking a punt and should expect losses for many reasons. The majority of crowd lenders are pretty serious - there is a minimum commitment needed (£5k I think). They buy in £20 lots which gives them flexibility to sell on the secondary market. Corporate Nd private investors or lenders are always advised to spread the risk. That doesn't make it ok to make losses
The platform takes on a lot of responsibility for due diligence. If they get a reputation for listing bad business the investors will migrate to another platform
Perhaps the biggest difference between crowd lenders and commercial lenders is their attitude to bad debt. Commercial lenders will have a provision and will be fairly pragmatic about debt within that level. The public are less consistent and will kick and scream at any default - even within prescribed parameters
Maxine has a very relevant point everyone wanting to borrow money will rave about it being a 'no brained' and rant about how stupid lenders are for not seeing the opportunity. It is very telling to see their reaction when they are asked to put their money where their mouth is
In this case, the journey is just beginning. There are plenty more avenues to explore
It is flawed to suggest that small investors are taking a punt and should expect losses for many reasons. The majority of crowd lenders are pretty serious - there is a minimum commitment needed (£5k I think). They buy in £20 lots which gives them flexibility to sell on the secondary market. Corporate Nd private investors or lenders are always advised to spread the risk. That doesn't make it ok to make losses
The platform takes on a lot of responsibility for due diligence. If they get a reputation for listing bad business the investors will migrate to another platform
Perhaps the biggest difference between crowd lenders and commercial lenders is their attitude to bad debt. Commercial lenders will have a provision and will be fairly pragmatic about debt within that level. The public are less consistent and will kick and scream at any default - even within prescribed parameters
Maxine has a very relevant point everyone wanting to borrow money will rave about it being a 'no brained' and rant about how stupid lenders are for not seeing the opportunity. It is very telling to see their reaction when they are asked to put their money where their mouth is
In this case, the journey is just beginning. There are plenty more avenues to explore
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- Original Poster
- #19
The OP hasn't pledged anything to my friend.
I said I'd ask questions in ukbf but make sure I protect his ID. I can understand the disquiet about him not being prepared to "bet the farm" on this, but the guys in his late 50's and doesn't want to spend his retirement as a homeless bankrupt!
Bit more info... My friend has sign making firm with a solid customer base, good cash flow on his invoices (I should know!) and he got the option to get this kit which will print onto different media/materials which would give him the option to dramatically increase his product range with minimal on costs...
So, any real ideas/options - or should I just tell him his dream is dead cos when he needed help we just caught ukbf in grumpy cynical mode?
Sorry. But this guy has built a workable business plan that I know could work. I'm trying to help two friends here... Either there are options or there aren't...
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businessfunding
Hi Geoff. Loan compAnies only give fleeting attention to potential, they are far more interested in proven ability to repay based on historic information and trends
You really wouldn't give up after a single set back? Avenues to explore include:
Alternative crowd lenders
Asset finance (on new kit and or against existing assets)
Invoice finance
Any mix of the above!
You really wouldn't give up after a single set back? Avenues to explore include:
Alternative crowd lenders
Asset finance (on new kit and or against existing assets)
Invoice finance
Any mix of the above!
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Not at all. I think they are more likely to get a return (of some description) as the risk is shared and investors have the confidence of others effectively recommending the venture to invest in. Like you and Maxine clearly state the amount might be small but it doesn't mean the money will be thrown around without a care in the world.
There is no restrictions of only being able to invest a certain amount per each business although there is likely to be a minimum and maximum range of investment. This means if someone is only willing to go for the minimum amount (say £20) or under 5% of the total loan, that is a punt. If you have a larger budget to invest and want a return you would offer more - not all or most - but more.
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There are a couple of invoice finance companies that have their own asset finance arms if that's an avenue that may be of interest
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