New alternative lending association nears launch

By Ryan Weeks on 11th January 2017

P2P/Marketplace LendingAlternative Credit

New association of direct lending platforms sets founding principles and membership criteria.

New alternative lending association nears launch

The Association of Alternative Business Finance (AABF), a proposed addition to the alternative lending sector, is rumoured to be nearing launch. Its seven founding members are all direct lending platforms for small businesses, which write loans off their own balance sheet. While the association is said to be open to allowing peer-to-peer lenders to join, there are currently none among the founding cast. These are: The Just Loans Group PLC, Liberis, Credit4, YesGrowth, Catalyst Finance, Capify UK and Fleximize.

In the UK, these platforms operate within something of an association vacuum. The alternative finance sector’s best-known industry bodies are the P2PFA and the UKCFA, but both of these are geared towards representing companies which use an online marketplace to fund deals (whether debt, equity or rewards based).

The emergence of the AABF somewhat mirrors developments stateside, where The Small Business Finance Association and the Innovative Lending Platform Association represent a diverse range of alternative lenders which do not conform to the requirements of the Marketplace Lending Asscociation.

In addition to having to meet various transparency, operational and credit related standards, members of the AABF must specialise in one of the following product types: business cash advance (sometimes known as merchant cash advance), term lending including corporate bond issue, invoice funding/discounting, lines of credit including revolving credit facilities, trade finance, bridging, asset finance or peer-to-peer lending.

The inclusion of peer-to-peer looks to be something of an outlier, given that it sits within a long list of products (rather than funding mechanisms), but we understand that it is intended to reflect the association’s openness to peer-to-peer lenders joining.

The association’s principles, broadly speaking, are transparency, responsibility, fairness and security. The business lending sector is not regulated anywhere near as strictly as its consumer counterpart, and the association has been talked about by members as a means of safeguarding the interests of customers.

Fee/cost disclosure is front and centre among the transparency related requirements. There is an ongoing debate in the UK’s alternative business lending sector about the appropriateness of mandating the usage of APRs for short term lenders.

A key initiative for the AABF is to create a centralised database for fraudulent applicants and personal guarantees, in order to limit the ability of borrowers to take out a loan from multiple vendors at the same time.

There is no clear launch date at present, but we understand that the association expects to launch in the first quarter of the year.

Comments

Martin Rutland

26 Jan 2017 11:00am

Pamela - please contact me at martin.rutland@aabf.co.uk if you would like further information.

Rupert Taylor

18 Jan 2017 09:27pm

Hi Barry. Thanks for your question. We did indeed host the initial dinner at which the idea was conceived. However, we have not received any payments, nor do we have any expectations at this stage that we will do so. That said - exhibiting or sponsoring at AltFi Europe on the 30th March might be a fine way for the AABF to confirm their arrival!

Barry James

18 Jan 2017 06:22pm

Is there any truth in the rumour that AltFi is behind this, and seeking to play a leading and profitable role?

Pamela Weir

17 Jan 2017 08:56pm

How do we join membership? or Find their contact information?

AltFi Amsterdam Summit 2018

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.

5th November 2018


Companies in this Article:

Catalyst Finance
YesGrowth
Fleximize
Liberis
Credit4
Capify

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