Uncategorized

on the rebuildingsociety.com blog

Miscellaneous articles covering a variety of business-related topics can be found within the uncategorized category.

13th Jul, 2017

Preparing to Take a Business Loan

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” ― Abraham Lincoln

All businesses, at one time or another, will likely need to raise finance to grow or fill in a temporary gap in cash flow. Raising finance is easiest done by taking some time to first prepare both yourself and your business. Following some pointers and planning ahead can save you both time and money – and probably a lot of headaches…
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06th Jul, 2017

Voluntary Arrangements

rebsoc-footerAs part of our service to our lenders, we undertake recovery action and legal enforcement on defaulted loan accounts. This is done on your behalf with the intention of recovering your invested funds. At certain times during this recovery process, we endeavour to give lenders a role to shape our recovery action and have their say in the acceptance or rejection of any repayment offers we may receive.

Such occasions include the submission of an Individual Voluntary Arrangement (IVA) or Company Voluntary Arrangement (CVA). This blog post will look a little closer at both instruments and discuss what lenders may want to look for in assessing whether those arrangements may be in their interests.
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31st May, 2017

Make P2P Lending Work For You

Apply-for-a-loanWhether you are new to peer-to-business lending or are a seasoned professional, you should regularly consider whether your lending strategy is working for you. We’ve put together a short list of things you should consider as a peer to business lender not only on rebuidlingsociety.com, but across other platforms too?
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26th Jan, 2017

How to Get Your Loan Approved and Funded

15-10-26-shimon-keene-clarity-about-confusionNavigating your way through a loan process can often prove to be challenging and may seem like a long road obfuscated by a fog of red-tape and administration.

At rebuildingsociety.com we have made our processes as simple and transparent as possible to help you navigate the path to a successful loan application. You can either refer to our handy flowchart or digest the information below.
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12th Jan, 2017

FinTech North 2017

Following the success of the inaugural event in 2016, FinTech North 2017 is once again set to take place during Leeds Digital Festival week and aims to attract 350 delegates and support from the FinTech community in the Leeds City Region, across the UK, and internationally.

FinTech North 2017 will be hosted on the 26th April 2017 at aql in Leeds. The goal of the event is to generate collaboration and knowledge share within the financial services and technology community and to generate tangible economic benefits for the region.
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23rd Nov, 2016

The A-E of Reasons to Take a Business Loan

 Net worthAsset Purchase

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.
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11th Nov, 2016

The Return of an International Sweet Treat

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


07th Nov, 2016

Our Recoveries Arsenal

Save money and finance for banking conceptAny investment involves risks. Whilst we pride ourselves on our ability to minimise the possibility of the borrower not repaying through our careful selection of businesses that meet our lending criteria and our proactive approach to credit control, there will unfortunately always be occasions where a business will fail and cannot repay capital and interest as agreed.

In this situation, it becomes necessary to commence our legal enforcement process to enforce the security offered by the borrower to secure the loan. Whilst this is not an option we take lightly, we are confident that our security requirements and our close working relationship with credit control agents, debt recoveries experts and in-house and external legal agents, we are well prepared to utilise the many tools at our disposal to recover the debt.
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24th Oct, 2016

Changes to the Marketplace

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.

If you have not already done so, please read more about the risks associated with lending to businesses.


11th Oct, 2016

Loan Book Security

Loans on rebuildingsociety.com carry varying types and levels of security, but what does this mean?

What is security?

Loans on rebuildingsociety.com can carry the following types of security.

  • Personal Guarantee
  • Corporate Guarantees
  • All Asset Debentures
  • 1st and 2nd Priority Charge Legal charges over property

Each loan profile will highlight what security is being offered on the particular loan. The headline information can be found on the Overview tab. Every loan on rebuildingsociety.com, unless otherwise stated carries at least a Personal Guarantee.


Security on a loan is the instrument that will be used to recover funds owed should a borrower fall into arrears and their account declared to be in default. The security will allow you or rebuildingsociety.com on your behalf to try and recover the money owed to you. Therefore, generally speaking, the more security offered by a borrower the greater the chance of recovering the debt if things go wrong.

Should it affect my lending decision?

In deciding to lend to a business, the security offered by the borrower should act to give you a higher level of comfort in your decision.
While each lender has their own underwriting system and investment strategy, generally speaking when assessing a business before bidding to lend, you should carefully assess the merits of the business itself rather than solely focusing on the security being offered. This is because loan security should only be a back-up to the lending decision itself as it only becomes a factor should the business be unable to maintain repayments and default. Many lenders may consider it prudent to first assess the business’s ability to repay the loan through assessment of the accounts and other information supplied before assessing the security as a later consideration.

It is important to note that whilst all loans on rebuildingsociety.com carry some level of security, recovery of funds owed to you are never guaranteed.

How is the Rebs loan book secured?

Rebuildingsociety,com has some of of the most stringent criteria on security being offered on its loans when compared to other platforms. What we mean by this is that whilst many of our competitors may offer loans of over £200,000 ‘unsecured’ (without a personal guarantee, or with a personal guarantee but nothing else), we insist that all loans carry at least one Personal Guarantee from the main directors or shareholders, and where the loan is for more than £50,000 we require extra security in addition to a personal guarantee.

How has this changed over time?

We try and source a variety of different businesses with a variety of different security so that there are opportunities to suit a diverse range of risk appetites.

We’ve taken a look into the level of security offered on all loans. Taking into account that many loans carry more than one type of security, we have only taken into account the ‘primary’ security on the loan. So for example; where a loan is secured on a PG, Debenture and 2nd Charge, we regard the 2nd charge as the ‘primary security’ as it is generally regarded as the strongest of the three and as such we have not included the other ‘secondary security’ in the graphs below.

The below pie chart illustrates the current primary security levels of all active loans in the Rebs loan book.

* Data is for all loans currently Active and Performing in the Loan Book

70.99% of the current active loan book is secured with more than a personal guarantee, with over 32% currently secured on a legal property charge.

Over time our lender base have asked us to provide them with more property secured lending opportunities, a call we have tried to answer.

* Data takes into account all loans fully funded and accepted over the course of the loan book

The graph below shows the change in percentage of all loans over the years secured by the various primary security types. As you’ll be able to see, the number of loans secured only on a personal guarantee has decreased year on year since 2014, whilst the proportion of loans secured by 2nd charges has increased year on year at a higher rate. This year already, we have secured more of our loan book on 1st and 2nd legal charges than any year prior to it .

Going forward, we will continue to try and source creditworthy businesses backed with higher levels of security.


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