Leading alternative lending platforms Funding Circle and Liberis have partnered with food order and delivery firm Just Eat. Just Eat acts as an intermediary on behalf of some 30,000 small businesses across the UK.
Those businesses – mostly take-away food outlets – will now have access to Funding Circle loans and Liberis advances. The firm will advertise the availability of both loan options in an initial email blast today.
Funding circle is the world’s largest small business focused marketplace lender, specialising in term loans. The platform has facilitated over £2bn of loans to businesses in the UK, and also has a presence in the UK and Europe.
Liberis is a leading provider of merchant cash advance in the UK. Merchant cash advance is generally shorter duration than term lending. The money advanced by Liberis and others like it is repaid as set percentage of the amount borrowed, meaning that the term attached to the loan is flexible. Repayments are extracted as a fixed percentage of the card payments received by a small business borrower.
As part of the new programme, small business applicants from within Just Eat's customer base will be eligible for an exclusive 5 per cent cashback on all repaid cash advances with Liberis.
The most obvious difference between Just Eat’s new partners is the way each firm funds loans. Funding Circle is a marketplace lender, taking in money from both individuals and retail investors. Liberis, on the other hand, lends off its balance sheet, with its lending capital coming from only a handful of partners, including Shawbrook Bank. Both lenders have taken money from the British Business Bank.
While both firms cater to small businesses, Liberis typically services smaller businesses than Funding Circle. CEO Rob Straathof told AltFi in an exclusive interview that Liberis borrowers would probably be ranked by Funding Circle as D or E risk loans, or perhaps higher still. But he also said that Liberis’ unique method of taking repayments significantly de-risks the lending proposition.
This is not the first high profile origination partnership to be struck by Liberis, or indeed by Funding Circle.Liberis teamed up with Worldpay in December 2015, and the deal has proved highly lucrative for the platform. Liberis can use Worldpay data to hone in on and pre-approve customers for funding. This has become one of its most effective origination strategies. Funding Circle has originations deals in place with such well-known firms as Sage and PwC.