A short update on the arrival of a new product in the peer-to-peer lending market.
Nascent peer-to-business lender Funding Empire has tied up with The Business Lending Exchange (BLX) to launch a new asset-backed product. BLX – a lender and broker of funding to small businesses – will be instrumental in delivering the new product. Every asset-backed loan will be subject to the tried-and-tested credit assessment process of BLX. Such loans will be made available to the platform’s investors from tomorrow onwards. Investors will be able to start lending via the product from as little as £20. Expected gross yields sit at 10% per annum.
These asset-backed loans will be amortizing – a structural facet that Funding Empire also views as unique. Parag Patel, Managing Director of the platform, explained:
“This is the first step in an ambitious plan to deliver a number of different peer-to-peer investment products that we have designed to cater for all kinds of investors and their varying risk profiles."
“Asset finance offers funding for businesses and is a long established traditional finance product backed by tangible security. In this new model our lenders will receive monthly capital and interest repayments, unlike many other asset backed lending repayment structures that defer payment of capital and sometimes also interest, until the end of the loan term."
“We have had huge demand for a non-property based, asset backed product that provides monthly income - and we’ve responded to that demand.”
The asset-backed loans will range up to £50,000 in value, with a maximum loan term of 36 months. Loans of this variety will be initially originated by BLX – before being funneled through to the Funding Empire platform, should they meet with the platform’s strict pre-screening criteria. Investors commit money to the loans at a fixed rate. This represents a departure from the platform’s bread-and-butter unsecured loans, the pricing of which is variable – depending on investor demand.
Funding Empire is following in the footsteps of its semi-namesake – the original peer-to-business lender – Funding Circle, which also began life making unsecured loans to SMEs before branching out into the asset-backed lending space.
John Stickley, Chairman of BLX, offered his thoughts:
“Through our collaborative venture, many more small business owners and entrepreneurs will be able to develop their businesses, employ more people and thus further strengthen the UK economy.
“I am sure this will provide even more opportunities for investors to make a good return on their capital, while at the same time being able to help SMEs raise desperately needed, asset backed working capital.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.