A strategic partnership has formed within the UK’s alternative finance space.
ArchOver and GapCap have signed a formal Service Level Agreement which will enable the two platforms to refer business to one another. Both ArchOver and GapCap make loans to small businesses that are secured against invoices. ArchOver lends larger amounts which are secured against the balance of a business’s accounts receivable. GapCap is a selective invoice finance provider, providing financing against individual unpaid invoices.
The newly forged relationship will see SMEs referred whenever the other platform is better suited to the needs of an applicant. The platforms may also combine to extend a double layer of finance – with ArchOver providing a fixed term loan for basic working capital and GapCap offering top up facilities to meet the cyclical needs of the business.
ArchOver arrived on the alternative finance scene in September 2014 as the UK’s first “secured and insured” P2P platform. The company has facilitated a little shy of £17m in cumulative lending to date, according to the Liberum AltFi Volume Index UK. GapCap – which launched shortly before ArchOver – sources its lending capital from specialist funds, including Advance Global Capital (AGC). The company closed out a £1m Series A Round in October 2015, shortly after securing a £5m debt capital commitment from a family office.
"Both organisations work in the same sector, but from different ends of the business spectrum. We often come across situations where we are either not in a position to help or are perhaps not the right people. The arrangement with GapCap means that, in some instances, we won't need to turn the borrower away, but to send them along to GapCap who might be able to provide the help required."
Alex Fenton, Founder and CEO of GapCap, also weighed in:
"We are both operating independently in a busy and competitive sector and that situation will remain. However, this sensible collaboration can benefit UK SMEs trying to find the right funding solution to suit their particular circumstances."
Fenton is right to note the increasingly competitive nature of the small business lending space, which is in part a product of the contributions of the very largest online lenders. Collaborations of this kind – which will often simply amount to the formalisation of an existing arrangement – will help both ArchOver and GapCap to shore up their respective niches.
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.