SMEs in Scotland have benefitted from almost £1m of vital growth finance in the past six months thanks to the country’s first specialist crowdlending platform.
Since its launch in September 2014, LendingCrowd in Edinburgh has facilitated the cash for fast-growing businesses via over 500 investors that have signed up to its platform.
The UK alternative finance market, of which peer-to-business lending is a fast-growing part, is expected to be worth around £4.4 billion by the end of the year (according to Nesta figures) if current growth continues.
So what is crowdfunding or crowdlending? The process enables borrowers to access finance easily and quickly from investors, who have the potential to earn returns from 5.95% to 12.25%* by bidding amongst other investors, to offer SMEs a competitive rate.
LendingCrowd enables investors to support successful UK SMEs and to secure attractive returns* on their investments, as well as enabling businesses to access finance easily and quickly from an alternative funding source. Investors have a complete choice of risk categories, with corresponding returns, from a minimum investment of £20 up to tens of thousands.
Co-founded by entrepreneur Bill Dobbie and CEO Stuart Lunn, LendingCrowd has already attracted a steady influx of Scottish and UK-wide investors and dynamic borrowers, and has ambitious plans for 2015. These include bringing new finance products to market through its website and enabling it to compete in a rapidly expanding marketplace.
Lunn, who has worked with high growth tech companies for over 10 years, says the platform can offer investors a fresh and alternative way to grow their money while also enabling successful British SMEs to secure the capital they need for growth and expansion.
“LendingCrowd is Scotland’s only dedicated peer-to-business lending platform, providing opportunities in local emerging sectors. One of the key benefits of the LendingCrowd platform is our highly-experienced in house credit risk team who carefully vet each and every loan application. We have heavily invested in the lending platform to enable both borrowers and investors to use the service as quickly and efficiently as possible.”
Further products and services for 2015 include a Personal and ISA product which builds on existing features such as a new Loan Exchange that enables investors to buy and sell loan parts.
LendingCrowd expects the 2015 Budget to bring some positive outcomes for the alternative finance sector including the inclusion of debt-funded Peer-to-Peer investments into an ISA product.
Seema Paterson, LendingCrowds’ Head of Corporate Affairs says this will allow those who invest in P2P to ‘self-elect’ and include these investments in their ISA, saying:
“We expect that people will soon be able to offset losses from one loan against interest earned from other P2P investments. Furthermore we’re hoping to see some moves to support business. For example the CBI has urged George Osborne to offer more support for medium-sized companies by granting them more investment allowances and extending R&D credits.
“We are hoping that increases in personal allowances and pension reforms will give people more options to invest extra funds they may have and Peer-to-Business crowdlending is one of many options for reinvesting capital. For example, from April, many future retirees will have the option to take out and reinvest a lump sum from their pension into a P2P investment of their choosing.”