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The Funding for Lending scheme is reported to be fuelling a resurgence in the housing market, but there are doubts over its effectiveness in getting funds to businesses.
Many would say loosening controls over lending to individuals and businesses got us into this mess in the first place, but to rule out profitable businesses with dynamic leaders looking to grow, lenders are surely missing the opportunity to back a winner.
The unfortunate news about HMV, Jessops and Blockbuster this week has turned even your most casual observer into a retail expert.
Anyone can take a look down their local high street and forecast the next big failure, but at rebuildingsociety.com we’re excited about the next generation of high street retail and the signals these failures tell us about the future of the financial services market as we draw the comparisons between the two.
At the heart of this is value and choice. (more…)
It’s something not many of our lenders have chosen to do so far, but there is the option on our community pages of asking our borrowers questions about their financials or plans, in fact any part of their business that you feel is important.
You might like the look of an opportunity, but just want to be clear in your mind about an existing debt or the future plans of the business. If it’s a 5 year loan, what is planned to change in that time?
Lenders are entitled to ask these questions and we encourage the debate. To get started, have a look at the Marketplace and then select a business. From the borrower homepage, choose the discussion tab and enter your question. Borrowers are notified of the question and encouraged to reply as soon as possible to keep the auction process moving.
Businesses and consumers are increasingly driven by ethically minded decisions. In the aftermath of a financial crisis which has exposed the worst aspects of financial services, investors are more inclined to see their money out towards to good use, rather than supporting reckless speculation.
Peer-to-peer lending does this. With the dual benefits of loans for growing SMEs and above-average returns for individuals, it is curing two of the most noticeable after effects of the crisis.
The market leader, Funding Circle, has done much to raise the profile of the market and should be congratulated for it, but there is another way to connect businesses and lenders…
With Funding Circle you dont get to choose the loans, so you a dependant on trusting their credit risk team. As a public company, they have shareholder pressure to lend, since this is the primary driver of their revenues. But we know that economic cycles can impact on confidence and business performance, so wheras you might choose to hold off from lending in a recession, its unlikely that Funcing Circle will self-sabotage their busienss model.
The BuyBack Guarantee allows risk adverse lenders to share the risk with other lenders on the platform with an appetite for higher risk and reward. This innovation is unique to rebuilding society and works well for new lenders.
We facilitate relationships between businesses and their lenders by encouraging lenders to go the extra mile and earn their interest by simply helping out businesses where they can. Examples of this are:
We’re passionate about rebuilding society by changing attitudes and habits towards money and ultimately making it all go further.
There’s a saying turnover is vanity, profit is sanity. The same is true when it comes to lending, its good to have volume, but a healthy net return is more important. At the time of updating this post, we had average Net Return of 7.7% pa vs Funding Circles 5.5% pa.
If you have an IF ISA, we’ve made it quick and easy for you to transfer you your IF ISA account to us.
Here’s a letter from rebuildingsociety.com’s Julian Wells, published in Mortgage Strategy’s 7th January 2013 issue:
I was interested to read that Bank of England executive director of financial stability Andrew Haldane argue that increasing use of technology in organising loan finance could see intermediaries become “surplus links in the chain”.
In an interview with the Independent, Haldane said improvements and innovation in technology, such as peer-to-peer lending and crowd-funding sectors, could see execution-only become a “a more realistic possibility”.
He said: “With an information-based web, the disintermediated model of finance becomes a more realistic possibility.”
A number of brokers took exception to Haldane’s talk of disintermediation on Mortgage Strategy Online.
But I think there’s some confusion here – the term ‘intermediation’ means something different in the banking industry than it does to all of us.