Onwards and upwards.
rebuildingsociety.com will be occupying new Leeds City Centre offices from the beginning of July in a move that will see our operations, technology and management team take up space in Cloth Hall Court and the Innovation Hub, both in close proximity to Leeds Rail Station.
We’re leaving our Queen Square office behind after 4 and a half years, but our new location will allow us to continue to play a large and ever-growing role in the local business landscape, as well as providing all the necessary facilities for rebuildingsociety.com to position itself at the forefront of innovation in the UK peer-to-business lending scene.
The platform will continue to function as normal while we settle into our new surroundings, although we may be a little slower than usual in responding to emails between June 26th and June 29th – so please bear with us!
23rd Jun, 2015
Attempts by some in the banking world to associate peer to peer lending with “shadow banking” simply don’t pass muster.
Shadow banking typically refers to hedge fund, private equity and other activities of the type that the International Monetary Fund says contributed to the economic crisis that began in 2007. As bank leaders try to paint peer to peer lending with that same brush, leaders in the P2P industry like Zopa founder Giles Andrew have been quick to distance themselves from shadow banking as a label and approach to finance.
“When Zopa became the first P2P platform to launch in 2005, we knew that persuading consumers to trust us with their cash was crucial to our business. This meant being a transparent and responsible lender from the start, extending credit to “super-prime” borrowers and building a risk function robust enough to withstand the seismic economic shocks that came along a few years late,” Andrew stated. “The activities of the P2P lender that I helped set up, Zopa, are as far from shadowy as the most diligent regulator could hope for. A founding principle of P2P lending is to ensure that platforms are open and transparent about lending.”
Likewise, rebuildingsociety.com endeavours to uphold the highest standards of financial integrity, user trust and transparency.
“It’s great that people are beginning to think of the peer to peer industry as trustworthy enough to be considered an alternative to the banks, but the differences between the two models are noteworthy,” said Adam Knott, rebuildingsociety.com’s Digital Marketing Manager. “rebuildingsociety.com will always strive to offer a fair and transparent service and a genuine choice for investors and borrowers alike.”
As the banking model is challenged by alternatives, it may continue to vilify those it views as competitors. However, good peer to peer lenders will continue to pursue a promising financial model with a spirit of fairness and honesty.
17th Jun, 2015
Emma Mander and her mother Kath have noticed holes in the soft play centre market in their South Manchester neighborhood, and they are collaborating to fill those needs. If they successfully purchase the local Anchors Away play centre, they plan to make it more accessible to disabled children and infants and make the space more enjoyable for parents.
“The business has a good base line to build on; there are many areas within the business that can be developed, all of which will create more custom and more awareness of the play centre,” Emma Mander explains.
01st Jun, 2015
One of the businesses currently listed on our marketplace, Aspirations Apprenticeships and Training Ltd, have taken the time to explain where their business came from and where it’s headed.
Aspirations Apprenticeships and Training Ltd are an organisation established for the benefit of local business and young people entering the world of work. Their aim is to help employers and individuals realise their full potential.
Aspirations started on its current trajectory a year after its inception when the owners recognised that the passion and dedication to the business of their MD, Yvonne Lalley, surpassed their own, and that it was in the best interest of the business for them to pass ownership to Yvonne.
Yvonne developed her experience through working as the proprietor of a café for just over 11 years. Young adults who had learning difficulties frequented the café with their carers as part of their daily activities, and Yvonne recalls enjoying the relationship that she built with the young adults. “They had limited communication, but their body language showed me they fully enjoyed themselves whilst in my company.” Building on this experience, Yvonne decided to become a volunteer in an independent home for adults with physical disabilities and behavioural or emotional problems. Yvonne says, ”I helped to teach them life skills, and hopefully this enabled them to become more independent. It was really rewarding to support them to have a better quality of life. I moved to the role on a full time basis; I stayed in this line of work for over 5 years.”
Maintaining her passion for the business, Yvonne has worked hard over the last 18 months and has achieved growing the business in to a profitable one. Aspirations now has a staff of 6 and is thrilled to now have a new Operations Director – Clare Gutteridge who has many years experience, working for a number of the leading colleges in the Further Education sector. She has project managed the recruitment and delivery of Intermediate and Advance Apprenticeships with blue chip companies including BMW, Jaguar Land Rover and Caterpillar. Clare already had a working relationship with Aspirations while she was at Birmingham Metropolitan College as the main account manager, and will be a huge asset to the team as the business expands their delivery into the Apprenticeship market.
Clare’s skills include:-
- Monitoring project risks and scope creep to identify potential problems and proactively identify solutions to address them in advance
- Escalating promptly any issues that may impact on operations
- Producing stage plans, highlight reports, risk logs
- Ongoing reporting regarding delivery performance.
- Understanding and document project requirements
- Expanding and monitor the Apprenticeship qualification delivery
- Manage employer/client expectations by ensuring the delivery of the highest quality service
- Acting on employer/client feedback
- Monitoring staff and team performance
“By providing an excellent standard of training, we try to inspire all learners in the hope that they can develop confidence, self-esteem and ambition to progress in the work environment,” said Yvonne.
Our mission is to ensure that young people and adults deserve the best opportunities to succeed as independent, well balanced and employable people, and that those in work are upskilled within their chosen profession in order that they can achieve and progress. In providing qualified trainers who have experience in engaging hard to reach/marginalised sections of the populace (e.g.. disadvantaged families, individuals with addiction issues) we believe we deliver an excellent programme of training in Employability Skills.”
“To meet the increasing demand from the partners we are looking to maintain our relationship with Birmingham Metropolitan College but also expand our association with other colleges and have now successfully completed due diligence with West Cheshire College, The Manchester College, The City of Liverpool College and Hugh Baird College. This will enable us in the coming academic year to increase our provision to include Intermediate and Advanced Apprenticeships in Health & Social Care, Management, Hair and Beauty, Animal Care, and other sector areas. This enhances our outstanding relationship with the Awarding Body, NCFE who have graded us a grade 1 operation, which makes us a centre of excellence.”
“We are also extremely proudto have gained a new working partnership with HMS Prisons which has identified a niche delivery market, which will find us supporting offenders who are close to release, enabling them to have the necessary employability skills to reintegrate into society. We are also looking at working with life term offenders who have no release date who will be working closely with us to deliver the courses to their peers – this will be full cost recovery work, paid through OLASS (Offending Learning and Skills Service) funding stream by HMS Prisons, which will further increase our revenue, and our aim is to expand this service to private prisons. This contract will potentially increase by another £150k pa profit to the business.”
26th May, 2015
Why do businesses get turned down when they apply for finance? What can they do to change no into yes? And are there alternative finance routes for businesses that are rejected by the banks?
61% of small business owners looking for loans from high street banks have their applications rejected – that’s one finding of research from Pepperdine University. It leaves many applicants asking, “Why not?”
It’s much more difficult for smaller businesses to get bank loans than it is for larger firms. But it’s not only an issue for those looking for loans; a lack of access to finance for businesses affects all of us. “GDP growth in highly developed economies is significantly driven by the private sector and by entrepreneurial activity in particular.”
Research found that 89% of small business owners have laid out strategies for growth, but 68% of them are missing the financial resources they need to execute those strategies. One clear and logical conclusion is that the economy, and jobs growth, are on a pretty tight leash.
So what are the most common reasons loan applications from small businesses are rejected by the banks? And in our new economy, do alternative finance routes provide any advantages for the small business owner?
Quality of earnings and/or cash flow (29%)
Quality of earnings and quality of cash flow refer to earnings attributable to higher sales or lower costs – and not to profits that are not stable and core to the business, such as those resulting from holding back payments to vendors, and such as would be generated if a cafe were to sell off a property, for example.
This is a big factor for banks, and it’s becoming increasingly more integral to the underwriting model for P2P.
Insufficient collateral (23%)
Banks required collateral for all loans of $1 million, the Pepperdine survey found; but they required collateral for only 63% of loans of $100 million.
Here there is a significant difference between the banks and our P2P Lending model. Many small businesses do not have much in the way of collateral that can be used to settle with creditors if a loan defaults. We therefore do not usually reject loan applications on this basis. However, loans must be supported by a directors’ guarantee, and the combined estimated value of the directors’ net worth must at least cover the loan requirement.
Debt load (13%)
The debt ratio of a business is one of the most heavily weighted factors in our underwriting risk tool. Where a business is too highly geared and we are not able to help consolidate some loans, the business will usually fail our risk assessment. Here again, there are no significant risk assessment differences between P2P and the banks. However, with a highly geared business, we look at options around consolidating their debts with other lenders, to make managing their cash easier and cheaper; and following this, a business may pass our risk assessment.
Size of company (6%)
Typically our borrowers are owner-managers with between 2 and 15 staff. In our experience, a passionate director with a track record usually impresses lenders more than does a CV-heavy board / management team.
Customer concentrations (6%)
This is not usually a significant factor in our risk assessment, because there is a significant difference in the relevance of this factor across different sectors. However, lenders on our platform will often request more information on the clients of a business.
Insufficient credit (5%)
We work primarily with businesses that are in their first 10 years of trading, so it is not unusual for applicants to have no business credit history. However, this does not mean they are not ready for it. It may be the case that a business will struggle to service the loan amount they are requesting, but a more manageable sum can help them build credit history and rapport with lenders, with a view to refinancing at a later stage.
Economic concerns (4%)
While we are all impacted by shifts in the economy, small businesses can be particularly vulnerable, so we’re not in the practice of calling in loans where we may feel exposed in a particular sector. Instead we look at alternative ways of supporting businesses through the difficult times, through our lender base and business aid / development contacts.
Obviously, the nature of lending is such that we can expect some of the restrictions that exist in high street banking to exist also in P2P. After all, people need to know the money they are lending is fueling a sound business. But P2P is geared for small businesses. In these reasons, we can get some insight into how the differences and similarities in the approval processes of banks versus P2P play out.
05th May, 2015
Nursing home has requested £750,000 for planned development work.
rebuildingsociety.com has listed its largest loan to date, in the shape of a £750,000 request for finance from Cleeve Hill Healthcare Limited. The funds are earmarked to be used for development of their premier nursing home, including the addition of new bedrooms, the conversion of existing bedrooms for more specialist care, and turning the house alongside the home into an 18-bed elderly mentally infirm unit.
Cleeve Hill provide residential, nursing and dementia care to Cheltenham and the surrounding area, and rebuildingsociety MD Daniel Rajkumar gave his thoughts on the listing:
“We’re delighted to be listing a business that offers such an invaluable service to their local community. Cleeve Hill’s business activity is what peer-to-business lending is all about – community-driven companies that make a huge difference to their local areas.”
21st Apr, 2015
It’s been a busy week for the political parties as they publish manifestos. While there are broad statements of intent, there is a concerning lack of detail around banking reform and mitigating the next banking crisis. With so much debate on austerity measures, political leaders are jockey to win points for their ideas on dealing with the symptoms, rather than tackling the cause. The banking system is far from fixed and there is sparse debate on the subject…
In the seven years before the financial crisis, lending to non-financial business accounted for just 8% of the total lending by UK banks. In fact, net lending to SMEs (that’s gross lending less repayments) was negative in the Bank of England’s most recent figures. Some of this is compensated with non-bank lending thanks to the rise of p2p lending and firms like rebuildingsociety.com
The banking system needs to do a better job of supporting businesses according to the manifestos of the three main parties published this week. Labour promise to “develop a banking system that works for businesses in every region and every sector in Britain”. The Conservatives “will continue to build a stronger, safer and more secure banking system that… provides businesses with the finance they need to grow and create jobs” and the Liberal Democrats pledge to “grow a competitive banking sector, support alternative finance providers and improve access to finance for business and consumers”.
But there’s a lot more to financial reform than supporting SMEs…
Do the political leaders really think that Basel III goes far enough?!
Do politicians really believe that the reforms of the last five years have fixed the financial system, and that this is something we no longer need to worry about? Experts continue to warn that the next crash could be just around the corner, and research from NEF shows that the UK remains uniquely exposed.
Meanwhile, mis-selling scandals continue to pop up with depressing regularity – even the Pensions Minister seems worried that the government’s latest pension reforms may build the next wave of mis-selling as unscrupulous dealers rush to take advantage of vulnerable pensioners. Have we reached the goal of a financial system that is stable, sustainable and fair?
The stakes could scarcely be higher. So why are our politicians so reluctant to talk about financial reform? Perhaps they are in the pockets of the industry…? Or maybe they just think that financial reform is not a voting issue – that ‘banker bashing’ has become unfashionable.
If the new government doesn’t seek to reform the financial system, then it’s even more important we work together to dis-intermediate finance. Bypassing the banks is one way you can play a small part in helping avert the next financial crisis.
Alas it seems we’ve got a long way to go on our mission; but while society needs work, we’ll keep rebuilding.
If you’re not a member and would like to help with the rebuild, please register here.
This article was inspired by posts from Positive Money and the New Economics Foundation. Please help spread awareness. There’s no excuse to be unprepared for the next crisis.
Photo Credit: CC: Rob Taylor
17th Apr, 2015
Who is embracing the finance revolution, and who’s stuck in the past?
Now that the main parties’ 2015 election manifestos have been launched and released for public consumption, we wanted to round up how each of the documents approaches the issue of business finance – and in particular, of course, the party’s attitude to crowdfunding, peer-to-business lending, or other alternative means of finance. (more…)
15th Apr, 2015
Cutting out the middle man allows for revolutionary campaigns.
Alternative finance is a world of two sides. On one hand, there’s the spreadsheets, the vital tens and hundreds that keep our economy ticking over; but on the other, there’s a community spirit that argues connecting people directly with businesses can have an overwhelmingly positive social impact. At rebuildingsociety.com, we believe the directness that the industry provides enables people to make better decisions about how to spend and raise money. (more…)
13th Apr, 2015
Seeds of opportunities for SMEs and investors have been sown: the House of Lords is leading the push for a European Capital Markets Union. Central to this will be the potential for better access to finance for SMEs, and more opportunities for investors.