on the rebuildingsociety.com blog
Last year, Taylor Made Property Management Limited tested the crowdfunding waters. They applied for a loan of £103,500 on rebuildingsociety.com; a loan that was fully funded and successfully completed in January 2015. Now, they’re back; this time with a loan application seeking £125,000. The company is the first to make the most of the new changes to the marketplace that we recently introduced, regarding security-dependent interest rate reduction.
Taylor Made Property Management Limited was incorporated in October 2014 with the express purpose of taking over the Preston-based Martin & Co. franchise. This purchase was successful, and the company began trading a few months later.
The funds the company raised through their first crowdfunding efforts in early 2015 were used as planned; to purchase the existing residential letting agent, Woodholme Residential Lettings Limited. The purchase was successful completed on 28th February 2015, just over a month after the loan completed on rebuildingsociety.com.
Richard Taylor has extensive knowledge of the property industry, both in terms of running his business, and as a landlord. We spoke to him about the company’s recent history, their future plans, and the appeal of crowdfunding.
Richard, thank you for talking to us today. Tell us, what made you come back to rebuildingsociety, rather than seeking additional funding elsewhere?
The more traditional funding sources make it so difficult to refinance or even borrow as a business that the obvious choice when looking at refinancing was to come back and see what could be done through rebuildingsociety.com, who I have a track record and history with. I knew that my application would be judged on actual business viability, which I would have the ability to discuss with someone, rather than on a set of rules and criteria that a computer processes and rejects with no human interaction.
Is this interaction something you experienced during your first crowdfunding experience with us?
Yes; and I think the opportunity to communicate directly with lenders is a definite plus. It’s a great way for those who struggle to get more ‘traditional’ sources of funding to begin or progress their business ideas.
How has your company progressed since you completed the loan in early 2015, nearly two years ago now?
It’s been an interesting two years. Regarding the business I acquired, there was a lot that needed to change to bring it up to speed with the industry, and embrace some of the technological changes that would enhance the service offered to tenants, landlords and vendors.
This led to changes in personnel, and so much of the first year was taken up with simply steadying the ship and implementing correct procedure, all of which I am pleased to say were well received. We did not lose any landlords or properties; in fact, we added over 20 properties to our fully-managed portfolio.
The second year has been about building on that success, and we now have a steady, reliable team who are on board with the direction in which the business is going. This is great, because it has allowed me to take a more holistic approach to the development of the company, and to look at areas of potential growth and diversification.
What have been some of these areas of potential growth?
Well, for example, we have had particular success in the vibrant student market in Preston. We now have about 270 rooms available for the 2017/18 academic year, which includes 244 rooms in new, purpose-built, private student halls, which we are the only agent in Preston to be marketing. We have also been working with a number of developers, both locally and nationally, who have seen the potential in Preston and are looking to convert and build residential properties for both the sales and rental markets.
You are currently seeking £125,000 of funding through rebuildingsociety.com. If the loan is fully funded, what will you use the money for?
A large part of it, £75k, will be used to pay off the existing loan with rebuildingsociety. The remaining £50k will be used to fund a strong marketing campaign for the next 12 months, to help us increase our market share in the sales market, as well as reach some other key business development objectives and provide some stability in terms of cash flow.
We recently introduced some changes regarding security-dependent interest rate reductions, and you are the first company to benefit from these changes. What are your views on these improvements?
This is something that has definitely benefited me in applying for this loan. I think the improvements are a plus for both parties, as it encourages the borrower to provide better levels of security which can help reassure lenders that the security offered can genuinely repay the loan should the worst happen.
Why should lenders consider lending to your business?
I have an excellent track record of repayment, which will obviously continue with the new loan. There are a number of challenges facing the housing market at the moment; I believe that we have a good, strong business model with a clear vision of the areas of development and improvements needed to ensure that we can continue in spite of these changes.
With this in mind, what do you hope the future holds for Taylor Made Property Management?
Further growth of the franchise, both within the current geographical area and then potentially expanding to surrounding areas, as well as diversification into property development.
You can find Taylor Made Property Management’s loan profile here.
23rd Nov, 2016
Assets can often be purchased through a hire purchase agreement, but where this option is unavailable a business loan can fill the funding gap and allow you to spread the cost of potentially expensive equipment. In some instances the asset can act as security for the loan which will somewhat reduce the risk.
In 2015 more than £29 billion in finance was provided by members of the The Finance & Leasing Association to assist with asset purchases. This figure is further boosted by the work being carried out by the Peer-to-Peer funders who offer an alternative route to finance outside of the traditional sources.
Business acquisition is the process of acquiring another company in order to build on strengths or weaknesses of the acquiring company. The aim is often to aid growth in a quicker manner than would normally occur organically. We have also supported new business owners who are able to show experience in their field of purchase and where security is strong to support the acquisition.
Successful businesses typically have a healthy cash flow, but even the best run businesses can experience fluctuations and cash flow finance can be an effective way to ease cash flow issues during busy periods. For short term options, businesses can use credit cards and overdrafts where appropriate. Longer term requirements such as construction firms covering a shortfall before they are paid by their customers and import/export or retail businesses making large inventory purchases to save money a loan can offer timely support to help plug this gap in finance. Another popular option is invoice financing and it’s important to consider the best fit for your organisation before entering in to any agreements.
A fairly common use of a loan is to consolidate other debt. This may seem confusing but there are three main reasons why a business may wish to take this route; businesses can spread the cost of an expensive loan over a longer period, combine several smaller loans into one more manageable loan or they may wish to refinance at a better rate.
Some debt consolidation companies have a bad reputation and Money Saving Expert, Martin Lewis rightly warns his readers to be wary of these in this excellent piece on his website.
The key here is to make sure the deal is the right one for you. Are the savings on the monthly payments going to help you and your business to succeed? Once you have considered the likely rate and repayments on the consolidation loan you will be in a better position to decide if this is the right move for you, but whatever you do, do not blindly accept a deal without considering the benefits or potential pitfalls.
If you are looking to grow your business, expansion can take many forms. There are a plethora of options for expansion including taking on new employees, larger offices, additional sites, product diversification and taking your product online. You may find a cash injection from a loan helpful in achieving your desired growth. It can help to pay for the new revenue stream in it’s early stages before it starts to pay for itself and could help you to achieve your planned expansion earlier than you may have through organic growth.
Before taking a loan for expansion you should be confident that you have planned effectively and considered the relative risks and challenges. If the expansion is unsuccessful for any reason you will still be expected to pay the remainder of the loan from your existing profit, so it is vital that there is a clear route to profit before accepting finance to fund the project.
11th Nov, 2016
In 2014, Candy Hero Ltd. came to rebuildingsociety.com looking for an influx of funds in order to expand. They planned to use the investment to boost wholesale sales, strengthen equity and then open a new UK store in time to maximise Christmas time sales.
Candy Hero Ltd. was founded in December 2008, by two entrepreneurial siblings with a mission to bring unique, specialist and delicious sweets from all over the world to sweet-toothed customers in the UK and Europe.
The online shop was launched in 2009, to be followed later by high street shops in York and Leeds. Visit one of their shops, and prepare to be tempted by Birthday Cake Golden Oreos, exploding cinnamon candy, Nerds, giant lollipops, wasabi candy and boxes of Jelly Belly Buttered Popcorn Jelly Beans, to name just a few from the vast collection. The 10,000 square foot warehouse in Bradford sees around 4,000 unique product lines carefully handled by employees individually chosen to fit the company’s high energy, innovative ethos.
The sweet importers and retailers’ first loan application was a great success; brothers and co-owners Frank and Leo managed to raise the target £50,000 from investors. Candy Hero Ltd. invested the money they raised into the wholesale distribution of imported sweets, snacks, and groceries. They decided not to open a shop, as they were unable to find an adequate unit within their chosen city. Instead, they focused on their online sector. In the last two years, the company has:
- grown turnover significantly; 2015 to 2016 saw 83% growth
- increased their stock-holding capacity from 5,000 to 10,000 square feet
- acquired a great number of additional wholesale customers
- built a proprietary pre-order system
- co-ordinated a huge UK product range comprising around 10,000 lines available for pre-order and export
- improved internal systems with strong procedures that improve staff training processes
- added powerful price and margin controls and mitigated currency fluctuations
Frank commented on their experiences with rebuildingsociety:
“They provided a smooth process prior to listing the application, support throughout, and a platform that is clear and easy-to-use. Rebuildingsociety is a very impressive social business that is a powerful tool when you need extra finance above and beyond what may have been already possible.”
Perhaps one of the keys to their online funding success was the company’s open-door policy. Frank discusses business with his team quite openly, “from the top to the bottom of the organisation, in response to any question.” Therefore, he embraced the discussion forums available on rebuildingsociety.com, believing that “talking business with lenders in a peer-to-peer environment with the same openness and clarity builds up the confidence to invest in us.”
Now, Candy Hero is back with a new loan application. The return borrowers are well-supported by rebuildingsociety’s lender base, something they hope will help them fund their £300,000 loan application. If successful, the team plan to refinance £184,000 to achieve cheaper interest per month and fewer capital repayments per month, and use additional capital to add to the stock cycle.
When asked why they decided to return to Rebuildingsociety, Frank explained that while their bank is very supportive, recently offering them a new import loan facility, they cannot approve a loan of this size. As he commented: “The only method of gaining a loan of this size would be crowdfunding and the only place I want to crowdfund is Rebuildingsociety.”
Read about the company on their website, and find out more about their loan application at rebuildingsociety.com.
Lending to businesses carries risk. Past returns are not necessarily a guide to future returns. Any unrepaid capital is at risk of arrears or default. To find out more please visit http://reb.so/risk
24th Oct, 2016
We’ve been working hard to bring you good quality borrowing applications for you to consider. Currently businesses that are eligible to borrow through rebuildingsociety.com, must have at least two years history, an average turnover of £50,000 a quarter and offer at least a personal guarantee as security. The average final rate paid by borrowers on our loan book is over 20% APR*, this rate is paid usually regardless of the security offered in support of the loan.
Currently, the risk rating given to the borrower drives the maximum starting rate for bids. To incentivise applicant borrowers to offer more or better security we are introducing a modifier to the maximum rate ceiling on the loan auction.
Whilst we currently take security into account during the underwriting process, it is not a significant factor in determining the risk rating given to the borrower, and therefore has little bearing on the cost of the finance.
From the 26th October 2016, the starting rate on a loan will be driven by the security strength and Loan To Value (LTV) score of the security rather than the final risk rating. The underwriting of the loan will be done in the same manner as before and risk ratings between A+ and C will continue. The weightings attributed to the determination of the Risk Rating in our model will remain unchanged, therefore a loan that was rated as C risk earlier, will still be rated as a C rated loan, allowing you still to view the suggested relative risk of the business.
The Changes in Practice
What is it?
A new borrower incentive to encourage borrowers to offer more and better security in support of their loan.
How does it work?
The borrower can offer a wide variety of security to support their loan. We’ve assigned a nominal value to the different types of security, making some security ‘more valuable’ than others. For example a 1st charge on a property will be deemed a more valuable form of security than a company debenture, and as such they will be rewarded with a lower starting interest rate.
The more security added, the more the starting rate will be reduced* as the security added works in a cumulative way linked to the loan to value ratio.
The starting maximum rate will never be modified lower than 5% of the standard maximum rates, which are currently as follows:
- A+ = Max rate 11%
- A= Max rate 14%
- B= Max rate 17%
- C= Max rate 20%
Therefore a C rated loan will never have a maximum starting rate of less than 15%.
The security we can accept from a borrower is ranked in priority below.
- 1st Charge Commercial Property
- 1st Charge Non Residential Property
- 2nd Charge Commercial Property
- 2nd Charge Non Residential Property
- 1st Charge Residential Property
- Fixed Asset Debenture
- 2nd Charge Residential Property
- All Assets Fixed and Floating Debenture
- Corporate Guarantee
- Personal Guarantee Insurance
Therefore, depending on the LTV on the security, a 1st legal charge taken on a commercial property in support of a loan will be ranked higher than a loan with an All Assets Debenture and may be achieve a lower maximum loan rate. Similarly, based on the above a loan secured on a 1st charge non residential property with an exceptional LTV will not achieve a better rate than a loan secured on a 1st commercial charge that also has an exceptional LTV, unless the former is accompanied by additional security.
Personal Guarantee’s do not qualify for a reduction in the interest rate as this is a mandatory requirement for all loans.
Why are we introducing it?
We have received feedback that the security being offered should have a more direct effect on the rate of loans. As such, we are rewarding borrowers who choose to back their loan with additional security. In the long run this should result in a higher percentage of secured loans and an increased rate of recovery.
When will it be introduced?
The security discount will apply to all new loans from Wednesday 26th October 2016.
How will this affect you and your use of the site?
The bidding process of the site remains unchanged as does indicative risk rating given to each loan, the only change will be the maximum starting rate of any loan that achieves the reward.
Will this be applied to historic loans?
No, but existing borrowers who reapply for new finance may qualify for the ceiling rate reduction.
Will this reduce my returns?
We expect any reduction in average gross returns to be offset by an improvement in net returns.
As ever you should always review each loan application in detail before lending. Where you have questions in regard to an application you should put these to the borrower via the discussion forum on each application.
11th Aug, 2015
Part of what draws many borrowers to crowdfunding is a sense of control over the outcome of their loan. Did you know that borrower behaviour can have a serious impact on a loan’s interest rate?
A few simple behaviors can make all the difference in your loan’s competitiveness — and more competition means a better rate when your application completes. Here are a few ways you, the borrower, can incfluence your rate.
1. Engage with questions on discussion forums.
Potential lenders want to hear from you — whether it’s to get to know you better, to get your feedback on concerns and questions about the loan, or to get your financial information. If you respond quickly and cheerfully to their queries, this will boost confidence and improve the likelihood of securing their support.
2. Provide as much information as you can on your loan profile.
Upload accounts, any awards, and all positive information or data that is going to frame you and your business in a positive light. This is the flipside of number one: Get as much information about yourself and your loan into your profile as possible so lenders don’t have to go digging or turn to the discussion board to find the answers they need to make an informed decision about lending to you. Your page should make clear who you are, what your business is, what the loan is for, and why lenders can trust that their investment will have positive results for them.
3. Show how you benefit the community.
Demonstrate the social good you do, or find another way to show a human side to the business. Crowdfunding is different from other finance models, in part because the lending process feels personal. If you can demonstrate the ways that your business helps people, whether by providing a service people need or advancing a positive value or cause, lenders will respond. Remember that in the end, a lender’s decision isn’t about you, it’s about how the loan makes them — and their wallet — feel.
4. Promote your campaign among family, friends, colleagues and existing customers.
To gain the trust of strangers, first demonstrate the trust of your network. Encourage people who know you best and who have benefited from your business to become lenders in the early days of your loan. The concept of seed funding is critical across the crowdfunding world: Those who get funding in the early days are far more likely to successfully fund the project, while projects that flounder early usually fail. Remember — you’re not just asking for a favour, you’re giving those you know a chance to make a beneficial investment.
07th Aug, 2015
Our weekly round-up of peer-to-peer and crowdfunding news.
U.S. peer-to-peer lenders have released a list of six best practice guidelines that lenders can use to protect borrowers. The announcement comes on the heels of news that the U.S. Treasury Depart is gathering more information about peer-to-peer lending. The “Small Business Borrowers’ Bill of Rights” calls for more transparency, responsible underwriting and non-discriminatory access to credit, among other safeguards.
China’s move toward regulation of online lending both legitimizes a growing industry and indicates the government’s support of traditional banks.
“Regulation will standardise operations and expose the industry to sunlight. Practices that were seen as existing in a grey area will be forbidden,” says Xu Hongwei, chief executive of Online Lending House, a website that tracks the P2P industry. “But regulation will also increase operating costs, causing some of the lower ranking and weaker players who can’t make the cut to go bankrupt. And it will raise barriers to entry. Average people won’t be able to get in any more.”
“The Wired 100,” Wired
Wired is releasing its annual list of 100 most influential people in tech-related fields, and this year UK-based P2P service Funding Circle Team made the list at number 92. Wired notes, “Funding Circle now has access to over 38,000 investors, who lent £100m to small businesses in Q1 2015 alone. The company hopes to hit $1bn in loans this year.”
BankFacil has raised venture capital so it can make consumer loans easier and cheaper. The three-year-old online lending startup mostly competes with banks, as alternative finance is a nascent industry in Brazil. Founder and CEO Sergio Furio hopes to secure a large enough volume of loans to be able to offer markedly better interest rates than other lenders, including banks.
The UK is generating 72 percent more P2P lending capital per capita than the U.S., according to new research from Business Insider. Several factors, including a friendly regulatory environment, very high rate of online access and early adoption contribute to this. Business Insider subscribers can read the full report.
29th Jul, 2015
rebuildingsociety.com is offering an interest-free business loan to one company this summer
Since we launched in 2012, we’ve helped over 120 businesses successfully obtain loans via our community of private investors. This summer, we’re offering one lucky business the chance to win a completely interest-free loan up to £25,000.
How will it work? All loan applications received by rebuildingsociety.com before August 31 will be eligible. The loan that completes with the lowest interest rate will have its interest payments for the first £25,000 of the loan covered by rebuildingsociety.com — lenders will still receive their interest at the rate offered.
Borrowers that extend their loan periods are not eligible, and loans must be fully finalised by October 31st (the draw date) to qualify.
We’ve run this offer before with great success. In April 2014, Hippoprint.co.uk won an interest-free loan to be used for a guerilla marketing campaign.
Hippoprint co-owner Anthony Wood said: “Our new lenders include family and friends and other people who have had the opportunity to contact us directly with their questions. People are taking control of their finances more than ever and peer to business lending platforms are allowing them to make logical, ethical and moral decisions about how their money is invested.”
Apply today to be in with a chance
If you’re in the market for a loan for your limited company, LLP or PLC, there has never been a better time to turn to rebuildingsociety.com to make your financial goals a reality. More than 90 percent of the loans listed in our marketplace achieve their goals, and most do so in just 4-6 weeks.
To discuss a potential application with us please call our team on 0113 8150 244 or email us at firstname.lastname@example.org
24th Jul, 2015
“Minimum requirements for the UK trustmark will be set by a team from the Skoll Centre for Social Entrepreneurship at Oxford university’s Said Business School, working in partnership with the recently created trade body Sharing Economy UK,” the FT reports. Business secretary Sajid Javid backs the move, noting his commitment to making the UK a friendly place for a robust crowdfunding economy. The trustmark would aim to give users of services like taxi-alternative Uber and crowdfunding and peer-to-peer sites more confidence in which services to choose.
In a Q&A, Jessica Jackley sounds off on Kiva’s success, the future of microfinance and her new book. Of the industry’s future, she says: “As it is with many things these days, it will be more mobile and lighter weight. There will be different ways of categorizing and weighting reputation, not just in terms of credit scoring.”
The Smithsonian, the United States’ premier historical and preservation organization, has turned to Kickstarter to fund the restoration and display of the spacesuit Neil Armstrong wore on the moon. The institution has funding to preserve the suit, but hopes to raise $500,000 to prepare the suit for display during the moonwalk’s 50th anniversary in 2019. It’s the first of several planned collaborations with Kickstarter, museum officials stated.
“Crowdfunding as a vehicle for protest,” Los Angeles Times
Individuals supporting both liberal and conservative causes and individuals have turned to crowdfunding to show their support, in addition to or even instead of other forms of protest and solidarity. The Times sites several high profile examples of campaigns, successful and not, to use crowdfunding to support anti-gay businesses and police officers accused (and in some cases convicted) of racist violence.
15th Jul, 2015
In the midst of ongoing debate about the new budget announced last week, peer to peer lenders and borrowers can take comfort in a new program that will boost security and reliability in the industry.
Starting April 6 2016, the government will operate the Innovative Finance ISA, which extends ISA eligibility to peer to peer loans. The chancellor’s office is also investigating whether to add crowdfunded debt securities and equities to the list of eligible transactions. For rebuildingsociety.com and other peer to peer lending operations, this is welcome news.
“The announcement to launch the Innovative Finance ISA is major step forwards for savers looking to earn a passive income from their interest earnings,” said rebuildingsociety.com Managing Director Daniel Rajkumar. “Without the volatility of share prices and with continuously compounding yields, the Innovative Finance ISA has the potential to outperform others, where traditional financial institutions have creamed the margins for too long.”
Leaders of other platforms have also been outspoken in their support of the move.
“The Chancellor seems determined to unblock finance, allow innovation to flourish and crucially give savers and investors more control over their money. I see the Innovative Finance ISA as part of that new spirit,” said RateSetter CEO Rhydian Lewis. “It will be an immediate boost for hundreds of thousands of everyday investors and has the potential to move the dial on the availability of small business and personal finance in this country.”
The addition of the Innovative Finance ISA is just one small piece of a complicated budget plan that has seen some debate as to its likely impacts. We’ll have our eyes on whether other crowdfunding and peer to peer transactions become eligible for ISAs, and look forward to the launch of the Innovative Finance ISA next year.
09th Jul, 2015
The threat to traditional banking is growing.
From PayPal to peer to peer lending, methods of money management outside of traditional banks have boomed in the last few years. While evidence that they’re creating competition that threatens banks’ foothold in the economic market is still growing, they are expanding options and forcing banks to think smarter as customers begin exploring new ways of storing, transmitting and growing their money.
And peer to peer lending and other programs certainly have banks’ attention. In recent comments, the CEO of the Canadian Imperial Bank of Commerce confirmed that banks will have to adjust to new competition from peer to peer and other markets. Victor Dodig said the bank is looking for ways to leverage interest in Bitcoin and other new technologies to its benefit.
““We can play in that space,” Dodig says. “Will clients move in droves to these new technology platforms to do their lending? I don’t think so.” But, he adds, “Competition always changes the dynamic on pricing. Will there be pressure over time? Of course there will be.”
Other platforms, like Apple Pay and Google Wallet, have facilitated millions of transactions around the world. Executives from Accenture noted that “As banks recover from the downturn, non-banks are taking advantage by proceeding aggressively with digital innovations and capturing more and more of the banking value chain. Accenture estimates that competition from non-banks could erode one-third of traditional bank revenues by 2020.”
Digital wallet services from Google, Apple, Samsung and more have become part of people’s daily payment processes. Each has slightly different offerings in terms of security, ease of use, and compatibility with different devices, digital apps and services. Google continues to tweak Wallet, since it hasn’t been as successful as originally predicted. Of course, many such services integrate directly with bank accounts and existing credit cards, functioning more as an intermediary than an entirely new money management method.
Dodig argues that one deterrent for new financial systems like peer to peer is ongoing uncertainty about security and financial regulations: “Clients that have money with an institution want to make sure that it’s stable and secure, because (deposit) insurance only gives you protection to a certain level,” said Dodig.
However, over time, regulations are becoming clearer and alternative financial models are demonstrating their success and security. rebuildingsociety’s Digital Marketing Manager, Adam Knott, said: “Banks are keeping a keen eye on institutions like rebuildingsociety.com, because they realize the potential for disruption and competition as more individuals and organizations reduce their reliance on traditional banking.”