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Finance Industry Opinion

Business Finance The other options

Frank Murphy Director at Haines Watts Liverpool tells us how business borrowing is changing, as Crowdfunding continues to grow.

Business Finance  The other options

"It is a very simple but exciting idea and one which we believe will appeal to many of our clients and businesses across the North West in general."
Frank Murphy, Director

Previously, sourcing finance for your business involved asking your bank for large sums of money, not often an easy task.  Along came Crowdfunding!  Paving the path of opportunity in helping small business owners (many of whom have been previously rejected by High Street Banks) to appeal directly to smaller investors.

Crowdfunding is often referred to as the “Bank of Joe Public” or the “Peoples Bank”.  Here at Haines Watts we have developed a relationship with Funding Circle, giving our clients access to one of the world’s biggest workplace lending platforms.  When businesses borrow money from Funding Circle, they are actually borrowing from not just one, but from potentially hundreds of individual lenders.

Funding Circle was founded in 2010 and has so far loaned more than 1.2 billion pounds to small and medium sized companies, making it the UK’s 3rd largest net lender to small businesses, after RBS and Lloyds Banking Group.  It is a market place that connects established businesses that are looking to borrow money, with people/investors who want to lend.

“People who want to make their savings work better for them can lend any amount of money to a business, even from as little as £20 and this can earn returns on their investment of up to 7%pa.  My fellow Directors and I have recently met with Funding Circle executives and having been really impressed with the work they are doing, agreed it was something we would really like to introduce and offer to clients whom are looking to borrow money.”

Around 1,500 businesses have now accessed finance via Funding Circle, provided by almost 49,000 individual lenders, one of which is the Government owned British Business Bank, which has invested more than 40 million pounds.  Loans range in the region of £5,000 to £1,000.000, with loan periods of up to 5 years and borrowers can typically access funds within one week making it even more attractive.

“We regularly have clients who ask our advice about raising capital and now we can show them just how Funding Circle works, what they need to do to qualify for a loan and how to apply.  By assisting our clients in the application process, can also mean reduced arrangement fees and quicker access to the funds of which they require!”