Industry News

Peer to Peer is the Future of Business Finance

Future of Business Finance
Lily Bridgwood
Written by Lily Bridgwood

Imagine a world where the future of business finance no longer depend on banks.                             

In business, sometimes you need more than a crystal ball to accurately predict future outcomes.  However, when it comes to the future of business finance, we have already seen more than just a glimpse of what may be to come.

Wrapped up under the ‘AltFi’ (Alternative Finance) banner, peer-to-peer (P2P) business finance has gone from humble beginnings to one of the most viable options British small and medium sized businesses (SME’s) have to finance their organisations.

While P2P is a relatively new concept in the field of lending and borrowing. Due to its relatively quick decision process and flexibility for business borrowers, it has become a preferred way to borrow money for many companies.  In fact, the P2P industry has now provided UK businesses with more than £4 billion in funding since its inception.

Recessional Impacts

When a huge finance gap emerged from the credit crunch, traditional lenders were often unable to provide businesses with the required funding. Those of you who follow Roger Martin-Fagg will probably know that this is due to the funding structure of banks. They made it relatively expensive for them to lend to SME’s versus say home mortgages with this situation continuing today. This left many organisations at risk of either stagnation or a battle for survival. Thus, came a need for alternative business finance methods.  However, out of the ashes of the credit-crisis, P2P lending emerged.

There are many advantages to obtaining funding through a P2P lender. Without doubt the speed of the application can be one of them.  Leading business P2P funding platforms, such as Assetz Capital, don’t match loans to rigid profiles. Instead they take their time to understand the business and its future income generation opportunities.  Then help to create a workable and affordable loan solution to any good business.

The flexibility of lending is also important, and by offering interest-only periods, partial amortisation only over loan term (bullet), ad hoc facility repayments and early repayment (usually without Early Redemption Charges), these options are all structured to meet specific needs of a company and their business finance approach. Over 95% of Assetz Capital’s loans are not standard amortising loans.

“P2P has been instrumental to helping businesses”

P2P also brings transparency to new levels – a stark contrast to traditional banking.  Stuart Law, founder and CEO of Assetz Capital explains, “All fees and costs are very clearly outlined in our ‘Decision in Principle’ letter and Offer Letter, and we work very hard to be transparent across all of our processes.”

Law also explains how P2P has been instrumental in helping a wide variety of businesses. “We have huge amounts of capital available from private and institutional investors. They are keen to lend to good businesses whether it’s a £100k or a £7m loan required. We lend both young and well established businesses and also sometimes those that have been in difficulty in the past. Due to understanding the whole lifecycle of a business. Over 10% of our loans were made to businesses under three years old. As well as those that had some form of past adverse information.”

“We also appreciate that there are many highly credit worthy businesses out there. Bu that they still find it difficult to obtain the right funding when they actually need it. In many cases respectable and stable business looking for funding are turned away. Due simply to the sector they operate in. At Assetz Capital we assess each application for a loan based on its individual merits – there’s absolutely no sector bias and it is based upon hundreds of man years of active lending and credit experience in the team.”

“It’s like banking as it used to be before sales of credit cards and the like got in the way. With highly experienced business bank managers able to work face to face with a borrower on their funding requirement. Thus proposing a custom solution. A breath of fresh air.”

Box Out: Business Finance Case Study: NorVap

When Skipton-based NorVap wanted to expand their premises and take on more staff, they were unable to obtain a loan big enough from the banks. Having discussed the situation with Assetz Capital, we were able to secure them a £100,000 loan. This was made up of individual investors who lent amounts ranging from £20 to £100.

NorVap was established in 2012 and at the time of the loan, was a two-year-old company manufacturing anaesthesia vaporisers for the medical and veterinary markets. Their new aluminium model has replaced the heavier brass unit and 85% of their vaporisers are now being sold in foreign markets. In the US alone they supply a number of major companies. These include Vetamac, Jorgensen Vets and Hartland Medical.

To optimise this international success they had to expand their business quickly. They found that Assetz Capital was able to offer the assistance they needed when more traditional finance routes were unavailable.

“The process was quick, easy & simple”

The funds received were used to move the business into a 7,000 square foot premises and to recruit an additional three staff members. This allowed NorVap to produce lighter and better value aluminium Vaporisers in-house. Thus reducing the cost of production whilst maintaining their quality, despite the sharp increase in demand.

Phillip Gostling, CEO of NorVap, said: “We’re always hearing from the Government that exports are key to the economic recovery. But unfortunately that message doesn’t seem to have trickled down to the banks, who were unwilling to help. We were able to secure funding through Assetz Capital and thankfully the process was quick and simple – they took a serious look at the business, even coming to visit us on site, and got things moving without delay.”

Please register with Assetz Capital for more information on their investment opportunities.

Stuart Law
Founder and CEO of Assetz Capital


About the author

Lily Bridgwood

Lily Bridgwood

Lily is the Partnerships Associate at OFF3R. She has previous work experience in both the corporate and start-up environments. She joined the OFF3R team in October having recently graduated with First-Class Honours in International Business from the University of Edinburgh.