OPEN BANKING SPEEDS UP P2P LOANS
Linked Finance, Ireland’s leading peer-to-peer (P2P) digital lending platform, has launched a new ‘Open Banking’ service. This enables loan applicants to share their bank account information and transaction data with the lender quicker than before. According to CEO Niall O’Grady: “Customers no longer need to go through the hassle of locating and printing bank statements. The speed of our application will be faster as it requires fewer time-consuming actions from our SME borrowers.” Since its establishment in 2013, Linked Finance has arranged c.€177m in debt finance for over 3,000 borrowers. O’Grady, a former Permanent TSB executive who took the helm in 2019, says Linked Finance will move into positive EBIDTA territory this year. Linked Finance does not seek security for its loans. For the average funding requirement of €110,000, the loan is advertised at rates ranging from 7.5% to 12% or more, depending on the risk attached. Bids are sought from people with cash seeking a higher return than a bank deposit rate. O’Grady cautions lenders against putting too much cash in a single loan, instead advocating a spread of small loans and a mix of interest rates across a spread of business sectors. Lenders can preprogramme their profile so money filters into their favoured plays. For lenders with some risk appetite, says O’Grady, the platform is attractive because cash can be flowing back to them after 30 days of making a successful loan bid.
FGLS-arranged loan has been also c.€300,000. According to the SBCI, 70% of FGLS borrowers are family businesses.
In February 2021, Close Brothers became an on-lender for FGLS, with an allocation of €30m from the SBCI. Under the FGLS arrangement, Close Brothers provides asset finance of between €25,000 and €3m, with an initial maximum loan interest rate of 4.5% per annum for loans under €250k, and 3.5% for loans over €250,000. Loans are unsecured up to €500,000, and interest-only repayments may be available at the start of the loans, subject to credit approval. One of the unique selling points of Close Brothers Commercial Finance is that many of its executives not only have experience lending to sectors but have often worked in them, says Paul Stephens, Head of Corporate and Asset Based Lending. The specialist lender has been active in Ireland for 12 years and employs staff in both the Republic and Northern Ireland. Parent company Close Brothers Group is listed on the FTSE250, with a loan book that totalled £8.7bn in December 2021. “We have a unique offering with offices in both territories which all operate under the same banner,” says Stephens. “Working as a single team means we can support businesses that also cover the whole island. We have about €1bn worth of lending into the Irish SME community, and we deal with small businesses, mid-level corporates and others. There are a lot of people out there looking for working capital facilities to fund growth.” Close Brothers Commercial Finance offers asset-based lending. “It enables businesses to raise higher levels of funding by releasing the value of invoices, along with other assets, such as vehicles, property and inventory,”
‘People are looking for working capital facilities to fund growth’
explains Stephens. “We also offer cashflow loans alongside our other products. We deal with many sectors, including recruitment, manufacturing, energy, and food and drink. Most of the time, when a firm approaches us, we have an expert available who can really understand their sector’s needs. Other specialist areas of Close Brothers which deal in the marine, aviation and printing sectors are also accessible to Irish borrowers.”
Another SBCI risk-sharing scheme is the Brexit Impact Loan Scheme. This is a successor to the Brexit Loan Scheme and will make up to €330m in low-cost lending available to eligible Brexit-impacted businesses through participating financial providers. Loans of up to six years are available for investment and working capital purposes, and loans of up to €500k (at a minimum) are available without requiring security. Some elements of refinancing are also available through the scheme. BILS loans are available from Permanent TSB, AIB, Bank of Ireland and five Metamo Credit Unions. In addition to Close Brothers, SBCI has also partnered with a number of other providers of liquidity products. Bibby Financial Services Ireland: provider of invoice finance. Capitalflow: leasing and hire purchase finance. Fexco Asset Finance: asset finance. Finance Ireland: leasing and hire purchase finance. SME Finance & Leasing Solutions: leasing and hire purchase finance.