P2P Lending Service Investly Launched Today

P2P lending service Investly launched today offering business loans to companies financed by both private and institutional investors. All investment opportunities offered have undergone a thorough pre-screening process including business plan validation, financial analysis as well as credit evaluation.

Once the requested loan amount is filled Investly uses an reverse auction with investors underbidding each other and lowering the interest rate for the business until the auction ends.

The first investment opportunity Investly has live is the chance to lend to Sepapaja OÃœ, a blacksmith who is planning to use the investment to scale up up their business by purchasing a larger pneumatic hammer, lathe and various other tools. According to Stig Paju, the manager of Sepapaja OÃœ, they decided to use the service because: ‘by using Investly we are able to enhance our production, widen our product portfolio and serve more clients. As a positive by-product, our investors will help us to spread the word and gain even more customers.’. The interest rate offered is 15% p.a., but may sink if investor demand is higher than the loan amount. The loan is rated credit grade A by Investly.

Investly is open to international investors from the European Union and Switzerland. I was able to test-drive the platform during the just ended closed alpha. Transfering money in via a SEPA transfer and bidding was fast and easy.

To accelerate the development of the service, Investly will be participating in the BusinessTech accelerator run by Startup Wise Guys – a technology accelerator with a global reach based in Tallinn, Estonia. Investly was chosen from among 150 applicants to part-take in the program alongside 10 other teams from all over the world. Over the next 3 months, they will go through an intensive mentoring, service development and marketing process; ending with investor days both in Tallinn, Estonia and London.

Siim Maivel, CEO of Investly told P2P-Banking.com:  ‘Building on the launch in Estonia, we have ambitious expansion plans with preparations under way to enter new markets, with the UK to follow later in the year.’.

A Visit With Assetz Capital

On Wednesday I flew to Manchester on invitation of p2p lending service Assetz Capital and met with Managing Director Andrew Holgate and his team. I learned how they operate and we spent the day discussing various aspects of p2p lending.

Assetz Capital does p2p lending to businesses secured by assets – mostly property. While the loans are big (usually the minimum loan size is 100,000 GBP), investors can lend starting with amounts of just 20 GBP. But typical investments are higher. In fact their first loan, which was for the amount of 1.5M GBP was funded by just 150 investors. Andrew Holgate pointed out that since each loan is backed by a security there is not as much need for investors to diversify to spread risk as with other p2p lending platforms.

Assetz Capital went live in April 2012. The founders and the management have extensive experience in finance, especially SME funding. One of the founders, Stuart Law, is the CEO of Assetz Group which has a 15 years track record in property investments. Assetz Capital could utilise the huge existing database of over 65,000 customers of Assetz Group when it started marketing its loan offers to investors.

Initially the main task at hand was to build trust. Trust not only on the investor side, but also from brokers, the main source of loan requests. Brokers wanted to be able to rely on the referred, approved loan requested getting funded within reasonable time (e.g. 2 weeks). While this was challenging in the beginning, Holgate says Assetz Capital has no problem now of getting multiple large loans funded simultaneously. Some of the loans fill as fast as 4 to 5 hours.  To get there Assetz Capital integrated underwriters into the process.

After Assetz Capital has thoroughly vetted the applying business and the underlying security – in fact every business is visited in person by an employee of Assetz Capital, it is presented to large investors which will then check the offer themselves and underwrite it – effectively saying they are prepared to finance large chunks of the offer.

Once the loan is on the marketplace, investors bid on it. Investors do see all documentation available on the loan and Assetz Capital says investor scrutiny and feedback is very valuable. Each loan request has a Q&A section where investors can comment.  Between funding and drawdown it usually takes a few weeks, depending on circumstances. In this time all documentation required is completed (e.g. first or second charges).

Assetz Capital is 100% owned by the management. Even so the business is very young it already turned profitable.

Broader product range

Assetz Capital started p2p lending with loans backed by real estate. Gradually they are now moving in financing a broader range of loan purposes, but always backed by asset securities. Assetz Capital wants to become the single access point for SME finance needs, as banks are no longer fulfilling that role. A surprising point in the talks for me was, when Holgate said, that actually their interest rates are higher than those charged by the banks, which is possible since many SMEs don’t get the funding they need from the banks any more.

On the investor side Assetz Capital will take steps to reduce the average time-span between funding and drawdown for investors. The company also considers in the medium term to grade loans into risks classes. At the moment different risks perceived by the risk manager at Assetz Capital are priced into the interest rates of the loans. So far Assetz Capital has refrained from assigning risk grades as it might be seen as giving investment advice to investors, which Assetz Capital does not do. Assetz Capital might also make it easier for investors to automatically invest into loans of a given risk/interest range. So far this was not necessary as the majority of investors enjoyed the process of the individual selection of loans. Continue reading

Interview with Martijn van Schelven, Founder and CEO of Geldvoorelkaar

Interview with Geldvoorelkaar founder Martijn van Schelven.

What is Geldvoorelkaar about?

Geldvoorelkaar.nl is about crowdfunding. We provide funds through our website for both SME as well as consumer lending. We provide loan-based funds. Borrowers borrow money and pay the investors back on annuity basis. Loans are on average 75.000 EUR. At this moment we mediate in approximately 2,500,.000 EUR each month. We facilitate screening on published projects, contracts and payment schedules between borrowers and lenders. Our start up was December 2010 and up till now we have approximately arranged credit for 500 companies. The total amount funded up till now is  31.5 milion EUR of which approximately  17.5 million EUR was funded in 2013.

What are the three main advantages for lenders?

  1. Direct ROI through annuity / interest
  2. Transparency on published projects, accessible and easy way of funding
  3. Extra incentives on most projects

What are the three main advantages for borrowers?

  1. Easy understandable debt against low costs
  2. Extreme commercial spin off, in addition to the funding
  3. Investors are not shareholders, but do act as such. Funded entrepreneurs keep their own independency

Martijn van Schelven

How did you start Geldvoorelkaar? Is the company funded with venture capital?

Me and my companion Edwin Adams were both one of the first franchisees for ING Bank Netherlands. A successful franchise concept which sadly was ended due to reorganisation within the bank. Our own bankshops were bought back by the bank. This money was invested in the development of Geldvoorelkaar. We are 100% independent.

Is the technical platform self-developed?

The platform was developed based on our own ideas. Centric (http://www.centric.eu/EU/Default) , a software engineer, developed the technical side of our platform and our backoffice. Continue reading

Rocket Internet Launches Second P2P Lending Service: Zencap

Rocket Internet, the venture fund of the Samwer brothers, launches a second p2p lending service (after Lendico in December). Zencap will facilitate loans from 10,000 to 150,000 Euro to companies. To qualifiy the company has to be trading for at least two years, have solid financials and total revenue of more than a 100,000 Euro. Nominal interest rates range from 4 to 14.6%. Zencap charges borrowers 1 to 4.5% origination fees (dependant on loan term; possible are 6 to 60 months). Lenders can start lending with 100 Euro and are charged 1% or all repayments. Zencap expects default rates between 0% and 10% depending on credit grade.

Christian Grobe, founder and CEO of Zencap says (translation from German original): “About 99% of all companies in Germany are SMEs, who together generate yearly revenues of over 2000 billion Euro. SMEs are the backbone of the German economy. Getting loans is a long and bureaucratice process for these companies, often ending in frustration, since 20% of all loan negotiations with German banks fail (source: KfW-Mittelstandspanel). We want to remove these hurdles with Zencap and offer SMEs an easy and unbureaucratic altenative to banks.”


Zencap founders Dr. Christian Grobe und Dr. Matthias Knecht, both previously worked at McKinsey & Company (photo source: Zencap)

Lending Club Launches Business Loans

A huge step for Lending Club. Yesterday they launched loans to businesses. Lending Club business loans will range from 15,000 US$ to 100,000 US$ initially, with plans to increase to 300,000 US$ in the future. The loans carry fixed interest rates starting at 5.9% with terms of one to five years and no prepayment penalties. While Lending Club already offered loans that were used for “business purposes” in the past, these were actually consumer loans – the borrower was an individual rather than a company. Obviously the application process and the evaluation of creditworthyness needed to be redesigned for this type of loans.

This will have a big impact on the p2p lending market in the US. It vastly increase the potential market size and will enlarge the choice of loans that investors can lend to.

For more detailed coverage see:

Seven Players Join Forces to Promote Alternative Business Funding

In the UK 7 innovative finance companies have joined forces and launched the Alternativebusinessfunding.co.uk website to inform SMEs what alternative funding methods they offer. Two p2p lending services Zopa and Funding Circle, two p2p equity (crowdinvesting) services Crowdcube and Seedrs as well as three other services Pension-Led Funding, Platform Black and MarketInvoice participate in this non-bank funders collaberation.
These platforms account for 85% of alternative finance for businesses market and have provided more than 580 million GBP to SMEs between them.

Screenshot

The information website works like this:
1. Enter the amount of funding you require.
2. After each question you will see the lights change dependant on which funder suits your criteria.
3. At the final question click on any green (or amber) traffic lights for your preferred funder details.
4. All that is left now is for you to approach your funder of choice about sourcing SME finance.